For City Council Meeting May 13, 2025
TO: Honorable Mayor and City Council
FROM: Tanya Williams, City Manager
Title
Request City Council to Consider Adopting Resolution No. 8343, Opposing South Coast Air Quality Management District Proposed Amended Rules 1111 and 1121 Related to the Regulation of Air Emissions from Residential and Business Natural Gas Furnaces and Water Heaters.
Body
RECOMMENDATION
Staff recommends that the City Council consider adopting a Resolution opposing South Coast Air Quality Management District Proposed Amended Rules 1111 and 1121 related to the regulation of air emissions from residential and business natural gas furnaces and water heaters.
BACKGROUND
The South Coast Air Quality Management District (SCAQMD) will consider two Proposed Amended Rules (PARs), Rule 1111 and Rule 1121, regulating the emissions from residential and commercial furnaces and emissions from residential water heaters. The proposed amendments to the rules seek to transition to zero-emission space and water heating appliances, based on future effective dates, when existing appliances need to be replaced. The proposed Resolution seeks to oppose the two rules based on the costs to transition and seeks additional time and assistance to affected residents and businesses.
ANALYSIS/DISCUSSION
One of the functions of SCAQMD is to adopt rules that help the region meet federal air quality standards. Rule 1111 governs emissions from residential and commercial furnaces, while Rule 1121 covers residential water heaters. The proposed amendments to these rules would require the transition to zero-emission space and water heating appliances over time, with requirements taking effect when existing appliances are replaced.
On June 7, 2024, SCAQMD’s Governing Board approved similar updates to Rule 1146.2, which will require both new and existing residential and commercial buildings to use zero-emission water heaters, including natural gas-fired pool heaters, larger water heaters, small commercial units, boilers, and process heaters starting January 1, 2026.
While the environmental goal of reducing nitrogen oxide (NOₓ) emissions is important, the Draft Socioeconomic Impact Assessment (SIA) for PARs 1111 and 1121 outlines significant financial, equity, and infrastructure challenges. According to the SIA, switching to electric heat pump furnaces could cost homeowners without existing air conditioning approximately $6,200 per unit, totaling $2.94 billion across the region. Wall and floor furnace replacements are estimated to add another $180 million and switching to electric water heaters is projected to cost $1.78 billion, based on an incremental cost of $400 per unit.
These costs do not account for potential upgrades to electrical panels or service connections, which are likely in older homes. Although the SCAQMD has proposed a “Go Zero” incentive program, current funding levels and rebate amounts may not be sufficient to make the transition financially feasible, as residents must pay the full cost upfront before receiving partial reimbursement.
The expected emissions benefit of these rules, roughly 10 tons per day of NOₓ reductions, is relatively small compared to the 351 tons per day generated by all sources in the South Coast Air Basin. As a result, the cost-effectiveness of the proposed changes has been questioned by many stakeholders. Additionally, there are equity concerns, as low-income households, seniors, and mobile home residents may be disproportionately burdened by the high upfront costs and logistical challenges.
Given these concerns, a resolution opposing SCAQMD’s Proposed Amended Rules 1111 and 1121 has been prepared, citing the significant financial and logistical burdens the rules would place on residents, businesses, and local governments. While supporting clean air goals, the resolution raises concerns about affordability, technological readiness, and the short implementation timeline. It urges SCAQMD to consider more balanced, equitable, and cost-effective alternatives.
ENVIRONMENTAL IMPACT
This request is not a “Project” as defined by the California Environmental Quality Act (CEQA). Pursuant to Section 15378(a), a “Project” means the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. According to Section 15378(b), a Project does not include: (5) Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.
GENERAL PLAN CONSISTENCY
Approval of the proposed action also complies with the following City of Rialto Guiding Principles, General Plan Goals and Policies:
Our City government will lead by example, and will operate in an open, transparent, and responsive manner that meets the needs of the citizens and is a good place to do business.
LEGAL REVIEW
The City Attorney's Office has reviewed the resolution and approved it as to form.
FINANCIAL IMPACT
Operating Budget Impact
Approving this action has no impact to the General Fund operating budget.
Capital Improvement Budget Impact
Approving this action has no impact to the City’s capital improvement budget.
Licensing
A Business License application and payment of a Business License tax is not required for this action.