


                                       
                 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                            REGION IX AIR DIVISION




                          Technical Support Document 
                                      for
                              EPA's Rulemaking
                                    for the
                     California State Implementation Plan
                                       
               South Coast Air Quality Management District's 
Rule 1111, Reduction of NOx Emissions From Natural-Gas-Fired, Fan-Type Central Furnaces




                              
                            Prepared by: Kevin Gong

	August 4, 2015







Agency:	South Coast Air Quality Management District (SCAQMD)

SIP Approved Rule:	Adopted November 6, 2009, approved into the SIP August 4, 2010 in 75 FR 46845

Subject of this TSD:	SCAQMD Rule 1111, Reduction of NOx Emissions From Natural-Gas-Fired, Fan-Type Central Furnaces
   *                         Submitted version was amended September 5, 2014
   *                         Submitted to US EPA April 7, 2015


RULE SUMMARY
Rule 1111 establishes oxides of nitrogen (NOx) emission limits from natural-gas fired fan-type central furnaces.

This rule is a point of sale rule that applies to all home and commercial furnaces with a rated heat capacity of less than 175,000 BTU, or for combination heating and cooling units with a cooling rate of less than 65,000 BTU. 

The 2014 amendments extend a compliance date for one type of furnace and establish an emissions fee option for manufacturers unable to meet the requirements through a 36 month transition period following the compliance date.

The District estimated a NOx emissions reduction of 2.5 tons per day by 2023, from previous revisions to the rule according to the California Air Resources Board Rule Evaluation Form. There are no additional emissions reductions that would result from this amendment.

Other rule provisions include definitions, allowable test methods and procedures, certification procedures for furnaces, records requirements for manufacturers, and a rebate incentive program for early compliance.

EVALUATION CRITERIA 
The following criteria were used to evaluate the submitted rule.  

1.	Enforceability - Section 110(a)(2)(A) of the Clean Act Act (CAA) requires that the rule be enforceable. The Bluebook (Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations, EPA, May 25, 1988) and the Little Bluebook (Guidance Document for Correcting Common VOC & Other Rule Deficiencies, EPA Region 9, August 21, 2001) were used to help evaluate compliance with this requirement.  

      2.	Stringency - Section 172(c)(1) of the CAA requires nonattainment areas to implement all reasonably available control measures (RACM), including such reductions in emissions from existing sources in the area as may be obtained through the adoption, at a minimum, of reasonably available control technology (RACT), as expeditiously as practicable. In addition, ozone nonattainment areas classified as moderate or above must require RACT for all major sources of NOx (CAA § 182(f); 40 CFR § 51.912(a)). 
      
      SCAQMD regulates an ozone nonattainment area that is classified as an Extreme nonattainment area for the 1-hour and 8-hour ozone standards, and Nonattainment for the 2006 and 1997 24 hour PM2.5 standards (40 C.F.R. § 81.305). However, Rule 1111 regulates area sources that are too small to exceed the major source threshold and is therefore not subject to ozone RACT.
      
      3.	SIP Relaxation - CAA Section 110(l) prohibits EPA from approving any SIP revision that would interfere with any applicable requirement concerning attainment and reasonable further progress (RFP) or any other applicable requirement of the CAA. In addition, CAA §193 prohibits the modification of any SIP-approved control requirement in effect before November 15, 1990, in a nonattainment area.
      
      4.	Economic Incentive Programs (EIPs) - EPA's guidance (Improving Air Quality with Economic Incentive Programs, EPA-452/R/01-01-002, January 2001) outlines key principles that must be incorporated in an EIP in order to receive EPA SIP approval. Emission reductions generated through implementation of EIPs must be surplus, quantifiable, enforceable, and permanent, among other requirements.
      
EPA EVALUATION - A summary of our evaluation of the four criteria follows.

      1. 	The certification process, identification requirements for compliant and non-compliant units, and enforcement mechanisms in this point of sale rule are clear. However, the inclusion of the emission fee option and rebate incentive program both merit further analysis as EIPs.
      
      2. 	The NOx emissions of furnace units subject to this rule do not exceed the major source threshold, and are not subject to ozone RACT requirements. Even if RACT were required, we believe that Rule 1111 implements RACT-level controls for NOx emissions for the following reasons:
      
      	a)	The NOx emission limit for new furnaces is comparable to, or more stringent than, other limits in similar rules found in other jurisdictions (see, e.g., Bay Area Air Quality Management District Regulation 9, Rule 4 and Sacramento Metropolitan Air Quality Management District Rule 414).
      
      	b)	This rule's development was a part of a technology forcing effort to assess and support the development of new furnace designs with lower NOx emissions rates compared to what was then commercially available. We are not aware of any efforts to develop applicable furnace technologies that have demonstrated that lower-emission units are technically and economically feasible.
      
      	c)	EPA has not issued a Control Techniques Guideline for furnaces covered by this rule, and we are not aware of any other federal, state or local regulations or guidance suggesting more stringent requirements for these sources have been demonstrated to be technically and economically feasible.
      
      3. 	There is a previous version of Rule 1111 approved by EPA into the SIP in 2010. 
      
      	The 2014 amendments extend the compliance date from October 1, 2014 to April 1, 2015 for one type of furnace. EPA received the 2014 amendments to Rule 1111 from CARB after April 1, 2015 and approval would therefore not relax the SIP in effect. A 300 day sell-through provision allows units manufactured before the applicable compliance date to be sold within the district after the new limits come into effect, as long as they still meet the old 40 nanograms NOx per Joule limit. 
      
      	The inclusion of a mitigation fee option for the sale of noncompliant units for up to 36 months after the compliance date effectively extends compliance deadlines. The District has addressed both of these relaxations of effective compliance dates through set-aside emissions reductions as documented in a May 20, 2015 letter addressing foregone NOx emissions reductions and the District's 2012 Air Quality Management Plan.
      
      	We propose to determine that our approval of the submittal would comply with CAA §§110(l) and 193 because the proposed SIP revision would not interfere with the on-going process for ensuring that requirements for RFP and attainment of the NAAQS are met.
      	
      4.	The CAA explicitly allows states to use EIPs as measures in SIPs (§110(a)(2)(A)). Rule 1111 includes two provisions that are defined as EIPs under EPA's 2001 EIP guidance. The fee option for manufacturers allowing additional time to procure and sell compliant furnaces, and the rebate program for early adoption of compliant furnaces both fall under the definition of "financial mechanism programs."
      
      	Evaluating an EIP's integrity involves analysis of the following four elements in the context of emissions and emissions reductions attributed to the program:  surplus, quantifiable, enforceable, and permanent. 
      
      	The rebate program was evaluated in a previously approved submittal and is already approved in the SIP. We will not evaluate the rebate provision in this TSD. 
      
      	The mitigation fee option is available for 36 months following a compliance date, and manufacturers wishing to use this flexibility must comply with additional administrative requirements to document the number of non-compliant units sold in a year in order to calculate the total amount of fees due to the District at the end of a year. The District's 2012 Air Quality Management Plan includes reductions from this rule (CMB-03, Table 4-4, page 4-22), starting in 2018 after the provisions allowing for a rebate for early compliance, or mitigation fee for late compliance, have expired. 
      
      	Any emissions reductions attributable to Rule 1111 while these EIPs are in operation cannot be credited in a SIP as surplus. As a result of this requirement from EPA's guidance, the District has included the expected reductions from this rule for that period in a set-aside account (Letter from Dr. Phillip Fine, dated May 20, 2015). Because the District acknowledges that emissions reductions will be foregone during the period in which the EIP is effective, there is no need to evaluate this EIP's integrity further.

RECOMMENDATIONS FOR THE NEXT RULE REVISION  -  We have no recommendations at this time for future revisions to this rule.

EPA ACTION 
      
The submitted Rule 1111 fulfils relevant CAA requirements. EPA staff recommends the approval of Rule 1111 into the California State Implementation Plan.

REFERENCES 

1.	South Coast Air Quality Management District Rule 1111, "Reduction of NOx Emissions From Natural-Gas-Fired, Fan-Type Central Furnaces," September 5, 2014.

2.	Letter dated April 7 2015, from Richard Corey, Executive Officer, California Air Resources Board, to Jared Blumenfeld, Regional Administrator, US EPA Region 9, with enclosures including "SCAQMD Staff Report  -  Proposed Amended Rule 1111  -  Reduction of NOx Emissions From Natural-Gas-Fired, Fan-Type Central Furnaces", Comments Attachment, and other SIP submittal documents.

3.	"Improving Air Quality with Economic Incentive Programs," January 2001 (EPA-452/R-01-001).

4.	"Final 2012 Air Quality Management Plan," South Coast Air Quality Management District, February 2013.

5.	Comment from Idalia Perez to South Coast Air Quality Management District, US EPA, July 18, 2014.

6.	Letter dated May 20, 2015 from Phillip Fine, Deputy Executive Officer, SCAQMD to Andrew Steckel, Rulemaking Office Chief, US EPA Region 9.

7.	Bay Area Air Quality Management District Regulation 9, Rule 4, "Nitrogen Oxides From Fan Type Residential Central Furnaces," December 7, 1983.

8.	Sacramento Metropolitan Air Quality Management District, Rule 414, "Water Heaters, Boilers, and Process Heaters Rated Less Than 1,000,000 BTU per Hour," March 25, 2010.

9.	Technical Support Document for EPA's Notice of Proposed Rulemaking for the California State Implementation Plan  -  South Coast Air Quality Management District's Rule 1111, Reduction of NOx Emissions from Natural Gas-Fired, Fan-Type Central Furnaces" by Idalia Perez, US EPA, June 2010.
