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STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

In the maner of

The State of Connecticut,artd

Borough ofNaugaruck

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Trading Agreement

and Order No. 8247

\Vhereas, the Commissioner of Environmental Protection ("Commissioner") and

Borough of Naugatuck ("Naugatuck") agree that it is in the public interest that they work

cooperatively to improve the air quality within the State of Connecticut and that the use

of discrete emission reduction credit ("DERC'1 trading to reduce nitrogen oxide (''NOx'')

emissions will achieve this result in a timely and cost-effective manner:

A. With the agreement of Naugatuck, the Commissioner ofEnvironmental Protection

("Commissioner'') finds the following:

1. This Trading Agreement and Order 5upercedes Consent Order 1626 issued on

February 14, 2001 and Consent Order 1626 Modification 1 issued on July 31,

2002.

2. Naugatuck owns a treannent facility located at 500 Cherry Street, Naugatuck,

Connecticut ("facility").

3. At the facility, Naugatuck owns fuel-burning equipment that consists ofrwo

Nichols multiple-hearth sewage sludge incinerators, west mcinerator permit

no. 109-0001 ("west incinerator") and east incinerator permit no. 109-0002

("east incinerator") which are subject to Section 22a-174-22 of the

Regulations of Connecticut State Agencies ("Regulations''). The east and

west incinerators are operated by U.S. Filter Operating Services.

4. Emissions testing performed in November 2001, on the east and west

incinerators resulted in NOx emission rates as follows:

(PriMed on Recycled hper)

79 Elm Street • Hartford, CT 06106 - 5127

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Borough of Naugatuck Trading Agreement and Order

No. 8247

Table I

Nauoatuck - NOx Emission Rates aDd Allowable Limits (Ibs!MMBtu) . Emission Fuel Maximum Emission FLER AJlowable Test Next

Units capacity Test Rate Date Emission

Test Due

East sewage 1.2 dry 0.53 0.58 0.33 1118/01 1118/06

Incinerator sludge and tonsllrr

No.2 fuel

oil

West sewage 1.2 dry 0.55 0.60 0.33 lImOI lIm06

Incinerator sludge and tonsllrr

No.2 fuel

oil

5. When operating the east and west incinerators, Naugatuck exceeds the NOx

allowable emission rate limit specified in Section 22a-174-22(e), of the

Regulations as shown in Table lofthis Trading Agreement and Order.

6. Pursuant to Section 22a-174-220) of the Regulations, Naugatuck proposes,

when operating the east and west incinerators, to acquire and use DERC

trading to comply with the applicable emission limitations contained in

Section 22a-174-22(e) of the Regulations until May 1, 2007 at the facility in

accordance with this Trading Agreement and Order.

7. Naugatuck proposes to use Full Load Emission Rates ("FLERs'l identified in

Table 1 ofthis Trading Agreement and Order for the purposes of calculating

the DERCs required.

8. The Commissioner, in accordance with the provisions of Section 22a-174-

22(j) ofthe Regulati()ns, allows the use of approved unused NOx DERCs

referenced in Table 1 of this Trading Agreement and Order. These DERCs

are subject to the vintage restrictions ofthis Trading Agreement and Order.

Dates after which the unused DERCs will no longer be eligible for use as a

result of the vintage restrictions are provided in Table 1 ofthis Trading

Agreement and Order in the expiration date column.

Table I

Yen of Ozone season NOx DERC Ozone Non-ozone season NOx Non· Expiration

Generation origination season DERC origination ozone Date

NOx se2.son

DERCs NOx

DERC

1998 Bristol Resource Recoverv 13 Bristol Resource Recovery 18 12131/04

Pre-2000 United I1luminarin~ 22 United Illuminating 35 12131104

Pre-20()() I United Illuminatin2 13 N/A NIA 12131/04

Pre-2000 N/A N/A United IIIwni.narin~ 19 I 12131104

Pre·2000 Bristol Resource Recovery IS N/A N/A 12131104

Pre-2000 N/A N/A Wisvest-Connecticut, LLC 18 12131/04

2002 PSEG 3 N/A N/A 12131/07

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Borough of Naugatuck Trading Agreement and Order

No. 8247

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B. The Commissioner in accordance with the provisions of this Trading Agreement

and Order, pursuant to Section 22a-174-22(j) of the Regulations hereby allows

Naugatuck to comply with Section 22a-174-22(d) ofthe Regulations through use

ofDERC trading to achieve the NOx emission reduction required by Section 22aI74-22(d)(I) of the Regulations.

C. With the agreement of Naugatuck, the Commissioner, acting under Connecticut

General Statues Sections 22a-6, 22a-174, 22a-174, 22a-176, and 22a-I77, orders

Naugatuck as follOws:

1. Upon issuance ofthis Trading Agreement and Order, at the facility,

Naugatuck shall comply with Section 22a-174-22 ofthe Regulations through

DERC trading. Until Naugatuck achieves permanent compliance with the

emission standard in Section 22a-174-22(e) ofthe regulation or by April 3D,

2007 whichever occurs earlier:

a. Naugatuck shall use approved DERCs as required under this Trading

Agreement and Order;

b. Naugatuck shall have in its possession sufficient approved DERCs to meet

applicable NOx emission limits as allowed under this Trading Agreement

and Order; and

c. Naugatuck shall comply during operation ofthe east and west incinerators

with the FLERS shown in Table 1 ofthis Trading Agreement and Order.

2. DERCuse.

a. Until April 30, 2007, before the first day of each month, Naugatuck shall

have in its possession sufficient approved DERCs for the east and west

incinerators based on the following calculations.

Before the first day of each month, Naugatuck shall estimate DERCs

required for such month for the east and west incinerators as follows:

Estimated DERCs (tons) «estimated fuel use in MMBtu) x «(FLER)-

(0.95 x 0.33 IbslMMBtu»J +2000 pounds/ton;

Where:

• Allowable limit = 0.33 IbslMMBtu as shown in table I of

this Trading Agreement and Order.

• FLER - full load emission rate in IbsIM:MBru as shown in table I of

this Trading Agreement and Order.

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Borough of Naugatuck Trading Agreement and Order

No. 8247

• Discount (.95) = %5 design'margin applied to the allowable limit.

• Fuel heating value is derived from the the amounts of all sewage

sludge and No.2 oil (collectively referred to as "fuel")

3.

b. No later than the twentieth day of each month, calculate and pennanently

retire DERCs used in the preceding calendar month for the east and west

incinerators as follows:

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Actual DERCs (tons) = «actual fuel use in MMBtu) x «FLER)-(0.95 x

0.33 IbslMMBtu))}+2000 pounds/ton.

Naugatuck shall make and keep records of: daily fuel use and fuel type;

excess NOx emissions; the number ofDERCs in its possession, created,

purchased and used (by serial number if ass.igned) each month in

accordance with the appropriate emission rates and limits in this Trading

Agreement and Order; the number ofDERCs used during the ozone .

season and non-ozone season (the remainder ofthe year); during the ozone

season; as well as documentation attesting to the fact that approved

DERCs used during the ozone season were generated during the ozone

season. Generator certification of this fact shall be sufficient. Naugatuck

shall maintain and submit such records to the Commissioner in accordance

with Section 22a-174-22 ofthe Regulations

4. Record Keeping. Naugatuck shall retain records and supporting

documentation as described in this Trading Agreement and Order for a

minimum offive years, commencing on the date such records were

created. Naugatuck shall provide the records specified above to the

Commissioner within thirty (30) days of receipt of a written request from

the Commissioner

5. Annual Emission Statement. No later than March 1 of every year after

issuance ofthis Trading Agreement and Order, Naugatuck shall include

with the Annual Emission Statement provided to the Commissioner, a

record of each sale or other transfer, and use of any and all ofthe DERCs

approved within and subsequent to issuance ofthis Trading Agreement

and Order until all such DERCs have been used or are no longer in

Naugatuck's possession. Naugatuck shall also include actual NOx

emissions from the east and west incinerators' and the amount of all

DERCs used (including serial numbers (if assigned) and approved DERCs

generated and/or purchased from other facilities), generated and/or

approved for the previous calendar year. These reports shall be on a form

prescribed by the Commissioner and shall be in monthly increments.

Should Naugatuck choose to discontinue the generation ofDERCs,

Naugatuck will notify the Commissioner upon discontinuance.

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Borough of Naugatuck Trading Agreement and Order

No. 8247

6. Allowance Use. Pursuant to Section 22a-174-22(d)(3) of the Regulations,

Naugatuck may use NOx allowances, through April 30, 2007, pursuant to

Section 22a-174-220) of the Regulations to achieve all or a ponion oithe

reductions required by Section 22a-174-22 ofthe Regulations. Any

allowance used for compliance with Section 22a-174-22(e) ofthe

Regulations shall be subject to all restrictions andlor requirements

applicable to DERCs contained in this Trading Agreement and Order;

a. In order for Naugatuck to use NOx allowances, Naugatuck shall

cre~te a general account in EPA's NOx Allowance Tracking

System (''NATS''); and

b. Each allowance used for compliance with Section 22a-174-22 of

the Regulations shall be equivalent to one discrete emission

reduction credit. Allowances shall be considered used for

compliance with Section 22a-174-22 ofthe Regulations when they

are transferred from the facility's NOx general account in the

NATS to the CT State NOx Retirement Account (Account ill

CTOOOOO00300 in the NATS).

7. DERC Douhling. At a minimum, DERCs required shall be adjusted

upwards by 100% ifDERCs are not in Naugatuck's possession prior to the

first day of each month. However based on the gravity ofthe

noncompliance, the Commissioner may require additional upwards

adjustment.

8. Vintage Restriction. For the purposes of compliance with Section 22a174-22 ofthe Regulations, DERCslal10wances shall only remain valid for

five (5) calendar years from the year ofthe generation/allocation ofsuch

DERCsiallowances. DERCsiallowances older than five (5) calendar years

from their creation/allocation are not valid for use for compliance with

Section 22a-174-22 ofthe Regulations. Notwithstanding the above,

DERCs/allowances generated/allocated prior to calendar year 2000 are

valid for use for compliance with Section 22a-174-22 of the Regulations

up to and including December 31, 2004.

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9. FLER Exceedance. Noncompliance with an established FLER shall

subject Naugatuck to make restitution by matching the quantity of

emissions (''true up") caused by the exceedance plus a 100% premium.

The true up in tons ofDERCs shall be equal to the FLER exceedance in

IbsIMMBru, multiplied by the total heat input during the period of

noncompliance divided by 2000 lbs/ton. lithe period of nODcompliance is

not known., the time period from the completion of the last/previous

Department witnessed emission test through the date the FLER

compliance is achieved as approved by the Commissioner shall be used.

However, nothing in this Trading Agreement and Order shall affect the

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Borough of augatuck Trading Agreement and Order

No. 8247

Commissioner's authority to institute any proceeding or take any other

action to require additional upward adjustment, based on the gravity of

any alleged noncompliance or violation oflaw.

10. FLER Modification. FLERs set forth in Table 1 ofthis Trading

Agreement and Order may be modified only after the consent ofthe

Commissioner by written modification ofthis Trading Agreement and

Order.

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11. Emissions'Testing. Pursuant to Section 22a-174-22(k) ofthe Regulations,

Naugatuck shall conduct NOx emission tests of the east and west

incinerators at least once every five years commencing from the dates of

the NOx emission tests for the east and west incinerators as provided in

Table 1 of this Trading Agreement and Order.

12. Extension. No later than April 30, 2007, with respect to the east and west

incinerators Naugatuck shall comply with the requirements of Section'

22a-174-22(d)(I) ofthe Regulations. However, after full program review

of this and other Trading Agreements and Orders and, if detennined to be

appropriate, the Commissioner may grant a written extension of this

Trading Agreement and Order.

13. Future Compliance Report. On or before September I, 2006, Naugatuck

shall submit a report indicating how the facility shall comply with sectio~

22a-174-22 ofthe Regulations with respect to the east and west

incinerators on and after May I, 2007.

14. Full compliance. Naugatuck shall not be considered in full compliance

with this TradingAgreement and Order until all actions required by this

Trading Agreement and Order have been completed as approved and to

the Commissioner's satisfaction. .

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15. Approvals. Naugatuck shall use best efforts to submit to the

Commissioner all docwnents required by this Trading Agreement and

Order in a complete and approvable fonn. Ifthe Commissioner notifies

Naugatuck that any document or other action is deficient, and does not

approve it with conditions or modifications, it is deemed disapproved, and

Naugatuck shall correct the deficiencies and resubmit it within the time

specified by the Commissioner or, if no time is specified by the

Commissioner, within 30 days ofthe Commissioner's notice of

deficiencies. In approving any document or other action under this

Trading Agreement and Order, the Commissioner may approve the

docwnent or other action as submitted or perfonned or with such

conditions or modifications as the Commissioner deems necessary to carry

out the purposes ofthis Trading Agreement and Order. Nothing in this

paragraph shall excuse noncompliance or delay.

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!:Sorougn or NaugatucK 1raamg Agreement and Order

No. 8247

16. Definitions. As used in this Trading Agreement and Order,

"Commissioner" means the Commissioner or a representative of the

Commissioner; and "Ozone season" means the period from May 1 through

September 30 in any given calendar year. The date of "issuance" of this

Trading Agreement and Order is the date the Trading Agreement and

Order is deposited in the U.S. mail or personally delivered, whichever is

earlier. Approved DERCs are defined for purposes of this Trading

Agreement and Order as those for which the Commissioner bas provided

wrinen au!h0rization for use in compliance with Section 22a-174-22 ofthe

Regulations.

17. Dates. The date ofsubmission to the Commissioner of any document

required by this Trading Agreement and Order shall be the date such

document is received by the Commissioner. The date of any notice by the

Commissioner under this Trading Agreement and Order, including but not

limited to notice of approval or disapproval of any docwnent or other

action, shall be the date such notice is deposited in the U.S. mail or is

personally delivered, whichever is earlier. Except as otherwise specified

in this Trading Agreement and Order, the word "day" as used in this

Trading Agreement and Order means calendar day. Any document or

action which is required by this Trading Agreement and Order to be

submitted or performed by a date which falls on a Saturday, Sunday or a

Connecticut or federal holiday shall be submitted or performed by the next

day which is not a Saturday, Sunday or Connecticut or federal holiday.

18. Certification of documents" Any document, including but not limited to

any notice, which is required to be submitted to the Commissioner"under

this Trading Agreement and Order shall be signed by Naugatuck or, if

Naugatuck is not "an individual, by Naugatuck's chief executive officer or

a duly authorized representative ofsuch officer, as those terms are defined

in Section 22a-430-3(b)(2) ofthe Regulations of Connecticut State

Agencies, and by the individual(s) responsible for actually preparing such

docwnent, and Naugatuck or Naugatuck's chief executive officer and each

such individual shall certify in writing as follows:

"I have personally examined and am familiar with the information

submitted in this docwnent and all attachments thereto. and I certify.

based on reasonable investigation, including my inquiry ofthose

individuals responsible for obtaining the information, that the submitted

information is trUe, accurate and complete to the best ofmy knowledge

and belief. I understand that any false statement made in the submitted

information is punishable as a criminal offense under Section 53a-157b of

the Connecticut General Statutes and any other applicable law."

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Borough of Naugatuck Trading Agreement and Order

No. 8247

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19. Noncompliance. This Trading Agreement and Order is a final order of the

Commissioner with respect to the maners addressed herein, and is

nonappealable and immediately enforceable. Failure to comply with this

Trading Agreement and Order may subject Naugatuck to an injunction and

penalties.

20. False statements. Any false statement in any infonnation submined pursuant

10 this Trading Agreement and Order is punishable as a criminal offense under

Section 53a.l~7b ofthe Connecticut General Statutes and any other

applicable law.

21. Notice oftransfer; liability ofNau2atuck. Until Naugatuck has fully complied

with this Trading Agreement and Order, Naugatuck shall notify the

Commissioner in writing no later than 15 days after transfening all or any

portion of the facility, the operations, the site or the business which is the

subject ofthis Trading Agreement and Order or after obtaining a new mailing

or location address. Naugatuck's obligations under this Trading Agreement

and Order shall not be affected by the passage of title to any property to any

other person or municipality.

22. Commissioner's powers. Nothing in this Trading Agreement and Order shall

affect the Commissioner's authority to institute any proceeding or take any

other action to prevent or abate violations oflaw, prevent or abate pollution,

recover costs and natural resource damages, and to impose penalties for past,

present, or future violations of law. If at any time the Commissioner

detennines that the actions taken by Naugatuck pursuant to this Trading

Agreement and Order have not successfully corrected all violations, fully

characterized the ext;nt or degree'ofany pollution, or successfully abated or

prevented pollution, the Commissioner may institute any proceeding to

require Naugatuck to undertake further investigation or further action to

prevent or abate violations or pollution.

23. Naugatuck's obligations under law. Nothing in this Trading Agreement and

Order shall relieve Naugatuck of other obligations under applicable federal,

state and local law.

24. No assurance bv Commissioner. No provision ofthis Trading Agreement and

Order and no action or inaction by the Commissioner shall be construed to

constitute an assurance by the Commissioner that the actions taken by

Naugatuck pursuant to this Trading Agreement and Order will result in

compliance or prevent or abate pollution.

25. Access to facility. Any representative of the Department ofEnvironmental

Protection may enter the facility without prior notice for the purposes of

monitoring and enforcing the actions required or allowed by this Trading

Agreement and Order.

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J:Sorougn or J''1augatuCK l racmg Agreement and Urder

No. 8247

26. No effect on ri ghts of other persons. This Trading Agreement and Order

neither creates nor affects any rights of persons or municipalities that are not

panies to this Trading Agreement and Order.

27. No Creation ofPropertv Rie:hts. This Trading Agreement and Order does not

create any property rights with respect to these DERCs.

28.. otice to Commissioner of chane:es. Within 15 days ofthe date Naugatuck

becomes aWaI:e'of a change in any information submitted to the Commissioner

under this Trading Agreement and Order, or that any such information was

inaccurate or misleading or that any relevant information was omitted,

Naugatuck shall submit the correct or omitted infonnation to the

Commissioner.

29. Notification of noncompliance. In the event that Naugatuck becomes aware

that it did not or may not comply, or did not or may not comply on time, with

any requirement ofthis Trading Agreement and Order or of any document

required hereunder, Naugatuck shall immediately notify by telephone the

individual identified in the next paragraph and shall take all reasonable steps

to ensure that any noncompliance or delay is avoided or, if unavoidable, is

minimized to the greatest extent possible. Within five (5) days ofthe initial

notice, Naugatuck shall submit in writing the date, time, and duration ofthe

noncompliance and the reasons for the noncompliance or delay and propose,

for the review and written approval ofthe Commissioner, dates by which

compliance will be achieved, and Naugatuck shall comply with any dates

which may be approved in writing by the Commissioner. Notification by

Naugatuck shall not excuse noncompliance or delay, and the Commissioner's

approval of any compliance dates proposed shall not excuse noncompliance Of

delay unless specifically so stated by the Commissioner in writing.

30. Submission of documents. Any document required to be submitted to the

Commissioner under this Trading Agreement and Order shall, unless

otherwise specified in this Trading Agreement and Order or in writing by the

Commissioner, be directed to:

Mrs. Elizabeth McAuliffe

Department of Environmental Protection

Bureau ofAir Management

Emissions and Credit Trading Section

79 Elm Street

Hanford, Connecticut 06106-5127

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Borough of Naugatuck Trading Agreement and Order

No, 8247

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Naugaruck consents to the issuance ofthis Trading Agreement and Order without further

notice. The undersigned certifies that he/she is fully authorized to enter into this Trading

Agreement and Order and to legally bind Naugaruck to the terms and conditions of the

Trading Agreement and Order,

Borough of Naugatuck

Date:

Issued as a final order ofthe Commissioner ofEnvironmental Protection

on_0!-f-!.'~"-'"&!::...-'_, 2003

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onurusslOner

BOROUGH OF NAUGATUCK LAND RECORDS

MAILED CERTIFIED MAIL,

RETURN RECEIPT REQUESTED

Certified Docwnent No.

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