UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

REGION 1

5 POST OFFICE SQUARE, SUITE 100

BOSTON, MA 02109-3912

Memorandum

Date: May 23, 2016

Subject: Technical Support Document: Analysis Of Actual NOx Emissions In Each Of The 

Connecticut Nonattainment Areas

From: Donald Dahl

Environmental Engineer

To: Files

I have analyzed Connecticut’s SIP submittals regarding emission trading and agreement orders 

that allow facilities to create and/or use NOx emission reduction credits to comply with the NOx

emission limits in Section 22a-174-22. Based on the following analysis, I recommend that EPA 

propose approval of the trading and agreement orders as listed in Table 1.

Table 1 – List of Source Specific Trading Agreement and Orders

Trading Agreement and 

Order Number(s)

Name of Facility or Facilities Facility Location(s)

8116B Modifications 1 and 

2, 8302

Connecticut Resource 

Recovery Authority

Hartford

8154A Modifications 1 and 2 Combustion Engineering, Inc. Windsor

8181A Modifications 2 and 

3, 8219A Modification 2, 

8251 Modifications 2 and 

3

Devon Power LLC Milford

8109 Modifications 1, 2, and 

3, 8291, 8291 

Modification 1

Hamilton Sundstrand

Corporation

Windsor Locks

8093C Modifications 2 and 

3, 8136A Modifications 1 

and 2, 8296

Pfizer Groton
2

8119A Modifications 2 and 

3, 8304

City of Norwich, Department 

of Public Utilities

Norwich

8241 Modifications 2 and 3, 

8244 Modifications 2 and 

3, 8253 Modifications 2 

and 3, 8301, 8305

PSEG Power LLC, PSEG 

Fossil LLC, PSEG Power 

Connecticut LLC

Bridgeport (Trading 

Agreement and Order 

8305 also applies to a 

unit in New Haven)

8115B Modifications 1, 2, 

and 3

University of Connecticut Storrs

8221A Modifications 1 and 

2, 8222A Modifications 1 

and 2, 8288, 8288 

Modification 1

Dominion Nuclear

Connecticut, Inc.

Waterford

8180A Modifications 2 and 3 Connecticut Jet Power LLC Branford, Greenwich, and 

Torrington

8300 (Order supersedes 

8180-8184 and 8251) 

NRG Energy, Inc.,

Middletown Power LLC,

NRG Middletown Operations 

Inc.,

Montville Power LLC,

NRG Montville Operations 

Inc.,

Norwalk Power LLC,

NRG Norwalk Harbor 

Operations Inc.,

Connecticut Jet Power LLC

Branford, Greenwich, and 

Torrington, Middletown, 

Norwalk, Milford, 

Montville

8306 (Order supersedes 

8213A,

8214A, 8215A, 8216A, 

8217A, and 8218A)

NRG Energy, Inc.,

Middletown Power LLC,

NRG Middletown Operations 

Inc.,

Montville Power LLC,

NRG Montville Operations 

Inc.,

Norwalk Power LLC,

NRG Norwalk Harbor 

Operations Inc.

Middletown, Montville, 

Norwalk

8114A Modifications 1 and 2 CYTEC Industries Wallingford

8182A Modifications 2 and 

3, 8213A Modifications 2 

and 3, 8214A 

Modifications 2 and 3, 

8215A Modifications 2 

and 3

Middletown Power LLC Middletown
3

8183A Modifications 2 and 

3, 8216A Modifications 2 

and 3, 8217A 

Modifications 2 and 3

Montville Power LLC Montville

8184A Modifications 2 and 3 

8218A Modifications 2 

and 3

Norwalk Power LLC Norwalk

8134A Modifications 1 and 

2, 8289

United Technologies

Corporation

East Hartford 

8240 Modifications 2 and 3, 

8243 Modifications 1 and 

2

PSEG Power Connecticut 

LLC

New Haven

8120A Modifications 1 and 

2, 8293, 8293 

Modification 1

Sikorsky Aircraft Corporation Stratford

8123A Modifications 1 and 2 Algonquin Gas Transmission 

LLC, Algonquin Gas

Transmission Company

Cromwell

8261 Modifications 1 and 2, 

8299

Algonquin Power Windsor 

Locks LLC

Windsor Locks

8249 Modifications 2 and 3, 

8298

Capitol District Energy Center 

Cogeneration Associates

Hartford

8272, 8279, 8303 NE Hydro Generating 

Company, First Light 

Hydro Generating 

Company

Preston

8269, 8269 Modification 1, 

8297

Cascades Boxboard Group

Connecticut, LLC

Versailles

8110A Yale University New Haven

1) Analysis Demonstrating Trading and Agreement Orders are Consistent 

with EPA Guidance

EPA issued a guidance document “Improving Air Quality with Economic Incentive Programs” 

(EIP Guidance). (See EPA-452/R-01-001, January 2001)1. This guidance applies to discretionary 

economic incentive programs (EIPs). EPA’s final action on these discretionary economic 

incentive programs occurs when EPA acts on a state’s request to revise the SIP. I have reviewed 

the source-specific TAOs with respect to the expectations of the EIP Guidance. 

 

1 See https://www3.epa.gov/ttn/caaa/t1/memoranda/eipfin.pdf
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Fundamental principles that apply to all EIPs are integrity (meaning that credits are based on 

emission reductions that are surplus, enforceable, quantifiable, and permanent), equity, and 

environmental benefit. These fundamental principles can apply to an EIP in its entirety (the 

programmatic level) or to individual sources (the source-specific level). In addition, EIPs that 

allow sources to purchase credits to demonstrate compliance with reasonable available control 

technology (RACT) need to meet additional requirements specified in section 16.13 of the EIP 

Guidance. I have evaluated the Connecticut trading orders against these three fundamental 

principles, additional requirements for sources subject to RACT, and applicable Clean Air Act 

requirements. Connecticut’s trading orders are fully consistent with these fundamental principles 

and the requirements for sources subject to RACT, and I recommend that EPA approve these 

trading orders as part of Connecticut’s SIP.

The basis of my recommendation is as follows:

Analysis of the fundamental principle of integrity?

The fundamental principle of integrity consists of the qualities of being surplus, enforceable, 

quantifiable, and permanent. 

1. Integrity element one - surplus 

Emission reductions are surplus if the reductions are not presently relied upon in any other 

air quality-related programs such as the SIP, SIP-related requirements such as transportation 

conformity, other adopted state measures not in the SIP, Federal rules that focus on reducing 

precursors of criteria pollutants such as new source performance standards, or a consent 

decree. Emission reductions measured by sources on a retrospective basis are surplus if the 

source’s actual emissions are below its baseline allowable or historical actual emissions, 

whichever is lower, and the inventories reflect actual emission information as appropriate. 

Each source-specific trading order Connecticut submitted sets emission limits based on the 

most stringent applicable emission rate under the Clean Air Act. Credits are only generated 

when a permitted facility’s emissions are below the emission rate2. Therefore the credits 

produced are in addition to reductions from other requirements of the Clean Air Act.

2. Integrity element two - enforceable

Emission reductions use, generation, and other required actions in the EIP are enforceable on 

a programmatic basis if they are independently verifiable, define program violations, and 

identify those liable for violations. For enforceability, both the State and EPA should have 

the ability to apply penalties and secure appropriate corrective actions where applicable. 

 

2 The TAOs EPA is acting on today consist of either modifications to TAOs previously approved by EPA or are for 

a different time period than the previously EPA-approved TAO. 
5

Citizens should also have access to all the emissions-related information obtained from the 

source so that citizens can file suits against sources for violations. Required actions must be 

practicably enforceable in accordance with other EPA guidance on practicable enforceability. 

At the source-specific level, the source must be liable for violations, the liable party must be 

identifiable, and the State, the public, and EPA must be able to independently verify a 

source’s compliance. The EIP Guidance outlines enforcement elements common to all 

trading EIPs in Chapter 6.0. 

Each facility participating in trading NOx credits has been issued a source-specific trading 

order containing enforceable conditions for quantifying, recording, and reporting DERCs. 

Each trading order establishes the monitoring/testing protocol used for quantifying emissions 

based on either a periodic stack test for developing an emission rate or continuous emission 

monitors that directly measure NOx emissions. Each trading order establishes reporting 

requirements which includes emissions based upon the approved monitoring/testing protocol, 

the number of credits the source generated, if any, and credits the source previously banked 

or purchased to cover its emissions. The State also reviews all of the sources subject to 

trading orders to determine which sources did not meet the specific conditions of their 

trading orders. Connecticut has authority to enforce the trading orders and the underlying 

RACT requirements of RCSA section 22a-174-22 pursuant to RCSA section 22a-174-12. By 

approving these source-specific trading orders, they will become part of the SIP and be 

enforceable by both EPA and citizens. 

3. Integrity element three - quantifiable

The generation or use of emission reductions by a source is quantifiable on a source-specific 

basis if the source can reliably calculate the amount of emissions and/or emission reductions 

occurring during the implementation of the program, and replicate the calculations. The EIP 

Guidance further states that when quantifying results, sources must use the same 

methodology used to measure baseline emissions, unless there are good technical reasons 

that this approach is not appropriate. Common elements for quantifying results of an EIP are 

included in Chapter 5.0 of the EIP Guidance. All EIPs should incorporate provisions for 

predicting results, addressing uncertainty, approving quantification protocols, and emission 

quantification methods. For a reduction to be certified as an emission reduction credit (ERC), 

the reduction must be real, quantifiable, and surplus at the time the ERC is generated. 

Each source-specific trading order contains a protocol for quantifying emissions. Continuous 

Emission Monitors (CEMs) are used to quantify emissions at electric generating units that 

are creating ERCs. CEMs at these facilities are also used to determine if the source needs to 

use DERCs to comply with NOx RACT. For sources without CEMs, the protocol requires the 

source to determine a NOx emission rate through stack testing. The source is also required to 

maintain fuel use records. Each trading order contains an equation that calculates NOx

emissions on a mass basis using the results from the most recent stack test, CEMs data and/or 

fuel records. The generation and use of credits is therefore quantifiable.
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4. Integrity element four - permanent 

To satisfy the EIP Guidance expectations for permanence, Connecticut’s trading program 

must ensure that no emission increases (compared to emissions if there was no EIP) occur 

over the time defined in the SIP. On a source-specific basis, the permanence expectations are 

met if the sources participating in the EIP commit to actions or achieve reductions for a 

future period of time as defined in the EIP. 

Each source-specific trading order expires five years from the issuance date. This allows 

Connecticut to determine every five years if emission trading is still the best mechanism for 

reducing NOx emissions at an individual source. Issuing new trading orders every five years 

also allows the State to take into account any new CAA requirements that become effective 

after the initial trading order was issued. 

On an annual basis, sources must report to Connecticut all DERCs generated and used. The 

State reviews each credit generated and assigns an identification number to each credit. The 

annual reports allow the State to determine both the generator and user of each credit.

Because each credit generated receives an individual identification number, the State can 

reliably track their use. 

Analysis of the fundamental principle of equity?

The equity principle is composed of two elements--general equity and environmental justice.

1. Equity element one - general equity

General equity means that an EIP ensures all segments of the population are protected from 

public health problems and no segment of the population receives a disproportionate share of 

a program's disbenefits. EIPs should specifically protect communities from disproportionate 

impacts from emission shifts and foregone emission reductions.

Connecticut has determined the majority of emission credits are generated at a few electric 

generating units and some other large industrial boilers that have continuous emission 

monitors. These sources are large emitters that can economically decrease emissions on a 

large scale. However, sources using emission credits are much smaller emitters of NOx and 

are spread throughout the State. Therefore, while the benefit of emissions reductions may be 

higher in certain geographic areas, the impact from sources using credits will not severely 

impact one geographic area over another. The emission analysis submitted by the CT DEEP 

and reviewed by EPA demonstrates these facts. 

2. Equity element two - environmental justice
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The environmental justice (EJ) element applies if the EIP covers VOCs and could 

disproportionately impact communities populated by racial minorities, people with low 

incomes, and/or Tribes. The Connecticut trading program does not allow emission trading of 

VOC credits. Therefore, today’s actions allowing the trading of NOx emission credits does 

not create an EJ issue.

Analysis of the fundamental principle of environmental benefit?

All EIPs must be environmentally beneficial and can demonstrate this principle through more 

rapid emission reductions or faster attainment than would have occurred without the EIP.

A discrete emission reduction credit program (DERC) described in the EIP meets the 

expectations for the environmental benefit principle. The ability to generate DERCs provides an 

incentive for early compliance and more rapid emission reductions. Connecticut sources that 

create emission credits through their respective trading orders must discount the actual credits 

generated by 10%. In addition, Connecticut discounts the credits generated or used at some 

sources depending on certain conditions, such as an additional 10% discount rate for sources 

using stack tests in lieu of continuous emission monitors. These various discount rates result in 

greater emission reductions then would otherwise be achieved without trading, resulting in an 

environmental benefit. 

Analysis regarding the RACT sources?

Sources must use the presumptive RACT limit in the baseline calculation. Sources are not 

allowed to use an alternative RACT limit in determining the baseline emission rate. 

The EIP Guidance also contains guidance for RACT emission limits with long averaging times 

and prohibits emission credits generated outside of the ozone season from being used during the 

ozone season.

Connecticut’s trading orders limit sources requiring credits for excess emissions during the 

ozone season to only use credits generated during the ozone season.

Conclusion:

I have concluded, after review and analysis of the source-specific TAOs, that they are consistent 

with the EIP Guidance. 
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2) Analysis Demonstrating the Trading Agreement and Orders Result in 

NOx RACT Level Emission Reductions in Each of Connecticut’s 

Nonattainment Areas

When EPA designated areas for the 2008 ozone standard, Connecticut was divided into two 

separate areas, the Greater Connecticut Area and the New York-N. New Jersey-Long Island NYNJ-CT area. Connecticut’s NOx emissions trading program does not prohibit a source in one 

nonattainment area from purchasing and using NOx emission credits created by a different source 

located in the other of Connecticut’s two nonattainment areas. Such a structure could, in theory, 

lead to a level of NOx emissions in one of Connecticut’s two nonattainment areas that exceed the 

levels required by NOx RACT. For example, if all of the sources creating the emission credits 

resided in a different nonattainment area than the sources using the emission credits, the 

emission reductions achieved in the nonattainment area containing the sources using the 

emission credits may not be sufficient to meet RACT-level emissions. However, before a 

definitive determination could be made as to whether emissions from all of these emission creditusing sources in the nonattainment area actually exceeded RACT-level emissions, the process of 

determining what RACT-level emissions actually are for these sources, including using emission 

credits or converting NOx allowances into emission credits, would have to be made. 

A state could, on a case-by-case basis, determine RACT-level emissions for a single source on 

the basis of economic and/or technological feasibility. Unless a case-by-case analysis of this kind 

is conducted for each source, necessary to support an alternative RACT limit, accurately 

quantifying the emission increase from such single-source NOx RACT actions would be 

speculative. However, in the 2014 RACT analysis, Connecticut provided information that a 

valid, justifiable, alternative RACT emission limit for some of the sources within the emission 

trading program may actually have been higher than the emission limit in RSCA 22a-174-22, 

due to the cost of emission controls for that particular source to control its emissions to the 

emission levels contained in RSCA 22a-174-22. 

To determine if each of the two distinct nonattainment areas in Connecticut achieve RACT-level 

emission reductions, regardless of whether a source using DERCs purchases them from a source 

that created the DERCs in the other nonattainment area or the source converted a NOx allowance 

into a DERC from a source outside of the nonattainment area, CT DEEP and EPA analyzed 

emission trading data for the period of time the TAOs were in effect to determine if more 

emission reduction credits were being used for compliance than were generated or created in any 

of Connecticut’s two nonattainment areas. In effect, within each nonattainment area, the question 

is, were actual emissions from sources creating emission reduction credits sufficiently below 

RACT allowable emission rates in order that they offset the actual emissions from sources that 

were above the RACT allowable emission rates. As shown in Table 2, the emission trading 

program achieved more actual emission reductions from sources creating DERCs than the NOx

emissions actually emitted by the sources whose actual emissions were above the RACT 
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emission rates in RSCA 22a-174-22 (i.e., the sources using the DERCs to meet RACT) in each 

nonattainment area. 

Table 2 – Actual NOx Emissions Increases and Decreases3

Time Period Greater Connecticut Area New York-N. New Jersey-Long 

Island NY-NJ-CT Area

Actual 

Emissions (tons) 

Below NOx limit 

in RSCA 22a174-22

Actual 

Emissions (tons) 

Above NOx limit 

in RSCA 22a174-22 

Actual 

Emissions (tons) 

Below NOx limit 

in RSCA 22a174-22

Actual 

Emissions (tons) 

Above NOx limit 

in RSCA 22a174-22

2007-2013 910 683 5667 405

It is important to note that although the actual emissions listed in Table 2 differ from the number 

of DERCs (or in the case of an MWC, ERCs) created and used during the 2007-2013 time 

period, the difference is attributable to a number of additional safeguards built into Connecticut’s 

trading regulations to ensure emissions reductions required by RACT will be attained. The 

safeguards used to calculate actual emissions above or below the emission limits contained in 

RSCA 22a-174-22 were: 

1. Before an emission credit can enter the bank and subsequently be used, the generating 

source under a TAO must retire 10% of the credits.

2. Sources that use emission credits to comply with an applicable RACT limit are required 

in a TAO to purchase more credits than the difference between what was actually emitted 

and what was allowed to be emitted pursuant to the emission limitation in RSCA 22a174-22. The procedure to do this is a requirement to reduce the allowable emission rate 

by 5% when calculating the quantity of emission reduction credits necessary. 

3. Electric peaking units are required to purchase seven tons of credits for every one ton of 

actual emissions during high electric demand days (HEDD). Connecticut instituted this 

ratio to address the fact that electric peaking units mainly operate on HEDD, which 

usually coincide with days upon which there are high ambient ozone levels.

Taken together, these factors demonstrate for the years of 2007-2013 (which are representative 

for the TAOs in question) a net environmental NOx emission reduction benefit was achieved in 

each of the State’s nonattainment areas, consistent with RACT-level emissions reductions, due to 

the State’s trading program4. Thus, although the TAOs issued by Connecticut allow trading 

between two nonattainment areas, the TAOs still resulted in an overall decrease in actual NOx

 

3 Table 2 provides summary level information for each nonattainment area. 

4 During the years 2007-2013 the number of DERCs created by sources within the Greater Connecticut 

nonattainment area was less than the number of DERCs used by sources within the same area. However, as shown in 

Table 2, when using the safeguards to convert DERCs into actual emissions, a net environmental benefit is achieved.
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emissions in both nonattainment areas, resulting in RACT-level emission reductions in each 

nonattainment area. This technical demonstration therefore also is consistent with the Court’s

holding in NRDC v. EPA, 571 F.3d 1245 (D.C. Cir. 2009). 

Conclusion

Based on the analysis contained within this document, I recommend EPA propose approval of 

the Connecticut Trading and Agreement Orders that allow sources within Connecticut to create 

and use NOx emission reduction credits to meet RACT requirements.