


                                       
              UNITED STATES ENVIRONMENTAL PROTECTION AGENCY (EPA)
                            REGION IX AIR DIVISION




                          Technical Support Document 
                                      for
                              EPA's Rulemaking
                                    for the
                  California State Implementation Plan (SIP)
                                       
        San Joaquin Valley Unified Air Pollution Control District's 
            Rule 4905, Natural-Gas-Fired, Fan-Type Central Furnaces




                              
                            Prepared by: Kevin Gong

	October 5, 2015







Agency:	San Joaquin Valley Unified Air Pollution Control District (SJVUAPCD or the District)

SIP Approved Rule:	Adopted November 20, 2005, approved into the SIP May 30, 2007, 72 FR 29886

Subject of this TSD:	SJVUAPCD Rule 4905 Natural-Gas-Fired, Fan-Type Central Furnaces
                         Submitted version amended January 22, 2015
                         Submitted to EPA April 7, 2015


RULE SUMMARY
Rule 4905 establishes oxides of nitrogen (NOx) emission limits from natural-gas fired fan-type central furnaces. NOx is a precursor to both ozone and fine particulate matter (PM2.5).

This is a point-of-sale rule that applies to all home and commercial furnaces with a rated heat capacity of less than 175,000 British thermal units per hour (BTU/hr), or combination heating and cooling units with a cooling rate of less than 65,000 BTU/hr. 

The 2015 amendments expand applicability to include equivalent furnaces for commercial buildings and furnaces for manufactured homes, strengthen NOx limits on newly installed furnaces, allow for a 300 day sell-through period following the compliance date for furnaces complying with the old limit but not the new limit for each furnace category, and establish an emissions fee option for manufacturers through a 36 month period following the compliance date.

The District estimates that 2.1 tons per day of NOx emissions reductions will be achieved upon full turnover of all furnaces to compliant units in 2036, according to the emission reduction analysis for these amendments. 

Other rule provisions include definitions, allowable test methods and procedures, certification procedures for furnaces, and records requirements for manufacturers.

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

1.	Enforceability 
	Section 110(a)(2)(A) of the Clean Air 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)). 
      
      SJVUAPCD regulates an ozone nonattainment area that is classified as an Extreme nonattainment area for the 1-hour and 1997 and 2008 8-hour Standards (40 CFR § 81.305). Rule 4905 regulates area sources that are too small to exceed the major source threshold of 10 tons per year for Extreme ozone nonattainment areas (see CAA § 182(e) and (f)) and is therefore not subject to major source ozone RACT requirements under CAA section 182(b)(2) and (f). Nonetheless, SCAQMD must implement all RACM/RACT for NOx necessary to demonstrate attainment as expeditiously as practicable and to meet any reasonable further progress (RFP) requirements (CAA § 172(c)(1), 40 CFR §§ 51.912(d), 51.1112(c)) . 
      
      SJVUAPCD also regulates a PM2.5 nonattainment area that is classified as a Moderate for the 2006 24-hour PM2.5 standard and Serious for the 1997 annual and 24-hour PM2.5 standards  (40 CFR § 81.305). CAA sections 172(c)(1) and 189(a)(1)(C) require Moderate PM2.5 nonattainment areas to implement RACM, including RACT, as expeditiously as possible. Therefore, SJVUAPCD must implement RACM, including RACT, for PM2.5 and PM2.5 precursors. EPA has interpreted the RACM/RACT requirement under 189(a)(1)(C) to include control measures that are technologically and economically feasible and not "absurd, unenforceable, or impracticable" (see, e.g., 57 FR 13560, 80 FR 15372). Additional control measures for natural gas-fired furnaces may be required pursuant to CAA section 172(c)(1) if those additional measures are reasonably available and either: the area cannot practicably attain by the statutory attainment date, or additionally reasonably available measures will advance attainment in the area when considered collectively (see, e.g., 80 FR 15375-76). 
      
      SJVUAPCD also regulates a Serious nonattainment area for the 1997 annual and 24-hour PM2.5 standards (40 CFR § 81.305). CAA section 189(b)(1)(B) requires serious PM2.5 nonattainment areas to implement best available control measures (BACM), including best available control technology (BACT), within 4 years after reclassification of the area to serious. Therefore, SJVUAPCD must implement BACM, including BACT, for PM2.5 and PM2.5 precursors. BACM represents a more stringent and potentially more costly level of control than RACM (see, e.g., 80 FR 15405), so a separate analysis for PM2.5 RACM beyond that for BACM is not necessary.
      
      3.	SIP Revisions
      	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 section 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 for the EIP to be approved into a SIP. 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. 	Enforceability
      	The certification process, identification requirements for compliant and non-compliant units (the latter of which are allowed to be stored in the District for sale elsewhere), and enforcement mechanisms in this point of sale rule are clear. Table 1 of the rule outlines the more stringent emission limits for four categories of furnaces, and their respective compliance dates. The addition of the emission fee option to Rule 4905 is evaluated below as an EIP.
      
      2. 	Stringency
      
      	PM2.5 RACM/RACT and BACM/BACT
      
      	SJVUAPCD asserts that Rule 4905 implements BACM for PM2.5 because it is the most stringent rule in the country for this source category. In particular, SJVUACPD compared Rule 4905 to similar natural gas-fired furnace rules in other jurisdictions (South Coast Air Quality Management District Rule 1111, Bay Area Air Quality Management District Regulation 9 Rule 4, Sacramento Metropolitan Air Quality Management District Rule 414) and found no requirements that were more stringent than those already in Rule 4905. We agree with SJVUAPCD that Rule 4905 implements BACM/BACT for PM2.5 for natural gas-fired furnaces for the following reasons: 
      
 The NOx emission limit for new furnaces is comparable to, or more stringent than other limits in similar rules found in other jurisdictions such as Bay Area Air Quality Management District Regulation 9, Rule 4, Sacramento Metropolitan Air Quality Management District Rule 414, and South Coast Air Quality Management District Rule 1111.
      
 This rule's development was a part of a technology forcing effort (in partnership with the South Coast Air Quality Management District) 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 other efforts to develop applicable furnace technologies that have suggested currently feasible lower emission units.
      
 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.
      
 The District calculated the absolute cost effectiveness (total annual cost for compliance compared to total emissions reductions) to be between $30,590 and $40,808 per ton of NOx reduced. Neither SJVUAPCD nor we are aware of any other technology or furnace type that could serve as an alternative to natural gas-fired fan-driven central furnaces in a home heating application while emitting similar levels of NOx.
      
      	Ozone RACM/RACT
      
      	We believe that Rule 4905 implements all reasonably available controls for NOx emissions for natural gas-fired furnaces for the same reasons noted in our PM2.5 BACM/BACT evaluation.
      
      3. 	SIP Revisions
      	There is a previous version of Rule 4905 in the California SIP, approved by the EPA in 2007. 
      
      	The 2015 amendments expand applicability to include additional classifications of natural gas-fired furnaces, and strengthen the emission limits for all classes of furnaces to eventually reach 14 nanograms per Joule of NOx by 2018. A sell-through provision allows units that were manufactured before the applicable compliance date to be sold within the district for 300 days following the compliance date, as listed in Table 2 of the rule, if they meet the old emission limit of 40 nanograms per Joule of NOx. In addition, the 2015 amendments allow the sale of non-compliant units after the applicable compliance date in exchange for the payment by the manufacturer of an emissions fee for each non-compliant unit sold, if they meet the old emission limit of 40 nanograms per Joule of NOx. This mitigation fee option for the sale of noncompliant units effectively extends compliance deadlines by 36 months. 
      
       	Our EIP analysis in section 4 below further evaluates this provision. However, this provision does not constitute a SIP "relaxation" as the new emission limits are more stringent that the current SIP-approved requirements, and the existing 40 nanograms per Joule limit will still be in effect during the mitigation fee period.
      
      	We propose to determine that our approval of the submittal would comply with CAA sections 110(l) and 193 because the proposed SIP revision strengthens the SIP and would not interfere with the on-going process for ensuring that requirements for RFP and attainment of the NAAQS are met and would not weaken any SIP control requirement that was in effect before November 15, 1990.
      	
      4.	Economic Incentive Programs
      	The CAA explicitly allows states to use EIPs as measures in SIPs (see, e.g. CAA § 110(a)(2)(A)). The mitigation fee option in Rule 4905 falls under the definition of "financial mechanism program," which is a type of EIP. See 2001 EIP Guidance Section 8. However, SJVUAPCD and the California Air Resources Board (CARB) have not relied on emission reductions from the rule until after expiration of the mitigation fee option. In particular, CARB's review of the District's "2015 Plan for the 1997 PM 2.5 Standard" indicates that the District intends to claim reductions from this rule starting in 2018 (0.2 tons per day of winter average NOx in 2018).  This corresponds to the expiration of the mitigation fee options for non-weatherized units in non-manufactured homes, which the District expects to comprise the vast majority of sales in the District.  Since reductions are not credited to this rule until the mitigation fee option for these categories of furnaces expires, we do not need to ensure that the reductions associated with the mitigation fee are surplus, quantifiable, enforceable and permanent. Accordingly, we have not evaluated Rule 4905 with respect to these principles.

RECOMMENDATIONS FOR THE NEXT RULE REVISION
We have no recommendations for the next rule revision.
 
EPA ACTION  - The submitted Rule 4905 strengthens the SIP and fulfils other relevant CAA requirements. EPA staff recommends the approval of Rule 4905 into the California SIP.

REFERENCES 

1.	San Joaquin Valley Unified Air Pollution Control District Rule 4905, Natural-Gas-Fired Fan-Type Central Furnaces, January 22, 2015.

2.	Letter dated April 7 2015, from Richard Corey, Executive Officer, California Air Resources Board, to Jared Blumenfeld, Regional Administrator, EPA Region 9, with enclosures including "SJVUAPCD Final Staff Report  -  Amendments to Rule 4905" and other SIP submittal documents.

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

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

5.	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.

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

6.	Letter dated June 25, 2015, from Richard Corey, Executive Officer, California Air Resources Board, to Jared Blumenfeld, Regional Administrator, EPA Region 9, with enclosures including "2015 Plan for the 1997 PM2.5 Standard," "Staff Report  -  ARB Review of San Joaquin Valley PM2.5 State Implementation Plan" and other SIP submittal documents.


