EXHIBIT 4.15
                                 TRUST AGREEMENT
                                       OF
                            COVANTA CAPITAL TRUST III

     THIS TRUST AGREEMENT is made as of July 16, 2001 (this "Trust Agreement"),
by and among Covanta Energy Corporation, a Delaware corporation, as sponsor (the
"Sponsor"), and Wilmington Trust Company, a Delaware banking corporation, as
Delaware trustee (the "Trustee"). The Sponsor and the Trustee hereby agree as
follows:

1.   The trust created hereby shall be known as "Covanta Capital Trust III" (the
     "Trust"), in which name the Trustee or the Sponsor, to the extent provided
     herein, may conduct the business of the Trust, make and execute contracts,
     and sue and be sued.

2.   The Sponsor hereby assigns, transfers, conveys and sets over to the Trust
     the sum of $10. The Trustee hereby acknowledges receipt of such amount in
     trust from the Sponsor, which amount shall constitute the initial trust
     estate. The Trustee hereby declares that it will hold the trust estate in
     trust for the Sponsor. It is the intention of the parties hereto that the
     Trust created hereby constitute a business trust under Chapter 38 of Title
     12 of the Delaware Code, 12 Del. C.ss. 3801, et seq. (the "Business Trust
     Act"), and that this Trust Agreement constitutes the governing instrument
     of the Trust. The Trustee is hereby authorized and directed to execute and
     file a certificate of trust with the Secretary of State of the State of
     Delaware in accordance with the provisions of the Business Trust Act.

3.   The Sponsor and the Trustee will enter into an amended and restated Trust
     Agreement satisfactory to each such party and substantially in the form
     included as an exhibit to the 1933 Act Registration Statement (as defined
     below), to provide for the contemplated operation of the Trust created
     hereby and the issuance by the Trust of the Preferred Securities and Common
     Securities referred to therein. Prior to the execution and delivery of such
     amended and restated Trust Agreement (i) the Trustee shall not have any
     duty or obligation hereunder or with respect to the trust estate, except as
     otherwise required by applicable law, and (ii) the Sponsor shall take or
     cause to be taken any action as may be necessary to obtain prior to such
     execution and delivery any licenses, consents or approvals required by
     applicable law or otherwise. Notwithstanding the foregoing, the Trustee may
     take all actions which the Sponsor deems necessary, convenient or
     incidental to effect the transactions contemplated herein. The Trustee
     shall not have any duty or obligation under or in connection with this
     Trust Agreement or any document contemplated hereby, except as expressly
     provided by the terms of this Trust Agreement, and no implied duties or
     obligations shall be read into this Trust Agreement against the Trustee.
     The right of the Trustee to perform any discretionary act enumerated herein
     shall not be construed as a duty.

4.   The Sponsor hereby agrees to (i) reimburse the Trustee for all reasonable
     expenses (including reasonable fees and expenses of counsel and other
     experts), (ii) indemnify, defend and hold harmless the Trustee and the
     officers, directors, employees and agents of the Trustee (collectively,
     including the Trustee in its individual capacity, the "Indemnified
     Persons") from and against any and all losses, damages, liabilities,
     claims, actions, suits, costs, expenses, disbursements (including the
     reasonable fees and expenses of counsel), taxes and penalties of any kind
     and nature whatsoever (collectively, "Expenses"), to the extent that such
     Expenses arise out of or are imposed upon or asserted at any time against
     such Indemnified Persons with respect to the performance of this Trust
     Agreement, the creation, operation, administration or termination of the
     Trust, or the transactions contemplated hereby; provided, however, that the
     Sponsor shall not be required to indemnify an Indemnified Person for
     Expenses to the extent such Expenses result from the willful misconduct,
     bad faith or gross negligence of such Indemnified Person, and (iii) advance
     to each such Indemnified Person Expenses (including reasonable fees and
     expenses of counsel) incurred by such Indemnified Person, in defending any
     claim, demand, action, suit or proceeding prior to the final disposition of
     such claim, demand, action, suit or proceeding upon receipt by the Sponsor
     of an undertaking, by or on behalf of such Indemnified Person, to repay
     such amount if it shall be determined that such Indemnified Person is not
     entitled to be indemnified therefor under this Section 4. The obligations
     of the Sponsor under this Section 4 shall survive the resignation or
     removal of the Trustee, shall survive the termination, amendment,
     supplement, and/or restatement of this Trust Agreement.

5.   The Sponsor, as sponsor of the Trust, is hereby authorized, in its
     discretion, (i) to file with the Securities and Exchange Commission (the
     "Commission") and execute, in each case on behalf of the Trust, (a) the
     Registration Statement on Form S-3 (the "1933 Act Registration Statement"),
     including any pre-effective or post-effective amendments to the 1933 Act
     Registration Statement (including the prospectus, prospectus supplements
     and the exhibits contained therein), relating to the registration under the
     Securities Act of 1933, as amended, of the Preferred Securities of the
     Trust and possibly certain other securities and (b) a Registration
     Statement on Form 8-A (the "1934 Act Registration Statement") (including
     all pre-effective and post-effective amendments thereto) relating to the
     registration of the Preferred Securities of the Trust under Section 12(b)
     or 12(g) of the Securities Exchange Act of 1934, as amended, including any
     amendments thereto; (ii) to file with the New York Stock Exchange, the
     Pacific Exchange or any other national stock exchange or The Nasdaq
     National Market (each, an "Exchange") and execute on behalf of the Trust
     one or more listing applications and all other applications, statements,
     certificates, agreements and other instruments as shall be necessary or
     desirable to cause the Preferred Securities to be listed on any of the
     Exchanges; (iii) to file and execute on behalf of the Trust such
     applications, reports, surety bonds, irrevocable consents, appointments of
     attorney for service of process and other papers and documents as shall be
     necessary or desirable to register the Preferred Securities under the
     securities or blue sky laws of such jurisdictions as the Sponsor, on behalf
     of the Trust, may deem necessary or desirable; (iv) to negotiate the terms
     of and to execute, deliver and perform on behalf of the Trust that certain
     Underwriting Agreement relating to the Preferred Securities, including the
     Pricing Agreement attached as an exhibit thereto, if any, in each case
     among the Trust, the Sponsor and the several Underwriters named therein,
     substantially in the form included as an exhibit to the 1933 Act
     Registration Statement; (v) to prepare, execute and deliver letters or
     documents to, or instruments for filing with, a depository relating to the
     Preferred Securities of the Trust; and (vi) to prepare, execute and deliver
     on behalf of the Trust any and all documents, certificates, papers,
     instruments and other writings as it deems desirable in connection with any
     of the foregoing.

     In the event that any filing referred to in this Section 5 is required by
     the rules and regulations of the Commission, an Exchange or state
     securities or blue sky laws to be executed on behalf of the Trust by a
     trustee, the Trustee, in its capacity as a trustee of the Trust, so
     required to execute such filings is hereby authorized and directed to join
     in any such filing and to execute on behalf of the Trust any and all of the
     foregoing, it being understood that the Trustee, in its capacity as a
     trustee of the Trust, shall not be required to join in any such filing or
     execute on behalf of the Trust any such document unless required to do so
     by the rules and regulations of the Commission, an Exchange or applicable
     state securities or blue sky laws.

6.   The Trustee is authorized to take such action or refrain from taking such
     action under this Trust Agreement as it may be directed in writing by the
     Sponsor from time to time; provided, however, that the Trustee shall not be
     required to take or refrain from taking any such action if it shall have
     determined, or shall have been advised by counsel, that such performance is
     likely to involve the Trustee in personal liability or is contrary to the
     terms of this Trust Agreement or of any document contemplated hereby to
     which the Trust or the Trustee is a party or is otherwise contrary to law.
     If at any time the Trustee determines that it requires or desires guidance
     regarding the application of any provision of this Trust Agreement or any
     other document, or regarding compliance with any direction it received
     hereunder, then the Trustee may deliver a notice to the Sponsor requesting
     written instructions as to the course of action desired by the Sponsor, and
     such instructions shall constitute full and complete authorization and
     protection for actions taken and other performance by the Trustee in
     reliance thereon. Until the Trustee has received such instructions after
     delivering such notice, it may refrain from taking any action with respect
     to the matters described in such notice.

7.   This Trust Agreement may be executed in one or more counterparts.

8.   The number of trustees of the Trust initially shall be one (1) and
     thereafter the number of trustees of the Trust shall be such number as
     shall be fixed from time to time by a written instrument signed by the
     Sponsor which may increase or decrease the number of trustees of the Trust;
     provided, however, to the extent required by the Business Trust Act, there
     shall at all times be one trustee of the Trust that shall either be a
     natural person who is a resident of the State of Delaware or, if not a
     natural person, an entity which has its principal place of business in the
     State of Delaware and otherwise meets the requirements of applicable
     Delaware law. Subject to the foregoing, the Sponsor is entitled to appoint
     or remove without cause any trustee of the Trust at any time. Any trustee
     of the Trust may resign upon thirty days' prior notice to the Sponsor.

9.   This Trust Agreement shall be governed by, and construed in accordance
     with, the laws of the State of Delaware (without regard to conflict of laws
     principles).

                                             [SIGNATURE PAGE FOLLOWS]


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     IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed as of the day and year first above written.

                                           COVANTA ENERGY CORPORATION,
                                           as Sponsor




                                           By: /s/ Louis M. Walters
                                              ________________________________
                                           Name:  Louis M. Walters
                                           Title: Vice President and Treasurer


                                           WILMINGTON TRUST COMPANY, as Trustee




                                           By: /s/ W. Thomas Morris, II
                                              ________________________________
                                           Name:  W. Thomas Morris, II
                                           Title: Administrative Account Manager