STATE OF CONNECTICUT

DEPARB'!ENT Of ENVIRON:\fENTAL PROTECTION

In the maner of

The State ofConnecticut and

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Stone Container Corpofation

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Trading Agreement

and Order No. 8124 A

\Vhereas, the Commissioner ofEnvironmental Protection ("Commissioner") and Stone

Container Corporation ("SeC") 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 (DERC) trading to reduce nitrogen oxide ("NOx")

emissions will achieve this result in a timely and cost-effective marmer.

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, A. At the request and with the agreement ofsec, the Conunissioner finds the

following:

1. This Trading Agreement a.11d Order 5upercedes Trading Agreement and Order

8124 issued on January 15, 2002.

2. sec is a corporation that operates a paper mill facility at 125 Depot Road in

Uncasville Connecticut ("Jacility").

3.. At the facility, SCC operates fuel burning equipment consisting of a Riley

dual-fired steam Boiler ("boiler") whicb is capable of burning No.6 fuel oil or

natural gas.

4. The boiler is subject to' Section 22a-174-22, Regulations of Connecticut State

Agencies ("Regulations") penaining to the control ofNOx.

5. Official U.S. Environmental Protection Agency ("EPA") Reference Method

7E stack testing perfonned on September 12,2000 resulted in NOx emission

rates set [onh in Table 1.

(?rio:ed 00 Recyded ?zper)

19 Elm S~~:e: • Htrlford, C1 06106.5127

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Stone Container Corporation 2

Table I

Trading Agreement

and Order 8124 A

NOx Emission Rates and Allowable Limits (Ibsf:\-LlVIBtu) I

Boiler Fuel He:lI input Emission R2teS SC:lck ~e1:l

(MMBtulbr) Stack Test FUR AlloYl':l.ble Test Tost

Limit Date Du,

Riley No.6 fuel Oil 199.5 0.342 0.389 0.250 9/12/00 9/12/05

Natural Gas I . 99.5 0.055 0.086 0.200 I 9/12/00 9112105

6. When burning No.6 fuel oil, NOx emissions from the boiler exceed the

allowable limit as specified in Table 22-1, Section 22a-174-22 of the

Regulations. When bwning natura) gas, . Ox emissions from the boiler are

below the allowable limit as specified in Table 22-1, Section 22a-174-22 of

the Regulations.

7. To reduce emissions SCC removed. the air preheater and installed a flue gas

recirculation system, a low-NOx burner, and an economizer on the boiler

8. Pursuant to Section 22a-174-22(j) ofthe Regulations, sec proposes to

generate approved discrete emission reduction credits ("DERCs") while

burning natural gas and using a portion ofthe DERCs while burning residual

oil until April 30, 2007 in accordance with this Trading Agreement and Order.

9. see proposes to use a full load emission rate ("FLER") identified in Table I

for the purposes of calculating DERCs required.

10. When properly documented by SCC, and approved by the Commissioner, the

reductions in NOx emissions identified above, and as computed in accordance

with the teIDls of this Trading Agreement and Order, will confonn to the

requirements of Section 22a-174-22G)(3) ofthe Regulations. Specifically, the

reductions will be:

Real because they result in a reduction of actual emissions released into

the air, net of any consequential increase in acrual emissions resulting

from shifting demand. The emission reductions are properly measured,

recorded and reported.

Quantifiable because they are based on stack test data as applied in an

appropriate reliable and replicable protocol, providing the rate and total

mass amount of reduction.

Surolus because they are not required by any Connecticut starute or

regulation mandated by a current State Implementation Plan ("SIP"). and
Stone Container Corporation 3 Trading Agreement

and Order 8124 .-Ie

are not currently relied upon in any applicable attainment plan, any

reasonable further progress plan or milestone demonstration.

Permanent because the advanced control systems and installation

capabilities are in place and operating, and an appropriate tracking system

is in place to monitor all data required to verify and quantify the creation

ofDERCs.

Enforceable because the DERCs are approved by the Commissioner

retrospectively after the submission by SCC of the seasonal or annual

reports that will docwnent their creation.

II, The Commissioner in accordance with the provisions of Trading Agreement

and Order 8124, plh-suant to Section 22a-174-22 oftbe Regulations, approved

the NOx DERCs referenced in Table 2 ofthis Trading Agreement and Order.

DERC creation serial nwnbers assigned by the Department to these previously

approved reductions ofNOx emissions are provided in Table 2 ofthis Trading

Agreement and Order. DERCs are subject to the vintage resmctions' of this

Trading Agreement and Order. Dates after which the unused DERCs will no

longer be eligible for use as a result ofthe vintage restrictions are provided in

Table 2 ofthis Trading Agreement and Order.

Table 2

PreYIOUs y Annroved DERC,Generated

Year of Ozone Season NOx Ozone Non-Ozone Season NOx Non-olone El:pir:ltion

Generation DERC serial numbers Season DERC serial numbers Season Date

DERCs DERCs

1995 O95/8124(DC)NOxoz1 -3 I 3 O95/8124IDC NOxnozl-6 6 12J31!04

1996 096/8I24(0 :'lNOxozl I I I CT96/8I 24(DC NOxnozl-3 3 12131/04 I

1997 N/A I 0 CT97/8124(DC)NOxnoz1 1 I 12131104

1998 CT98/8124(DC)NOxozl I 1 CT9S/8124(DC)NOxnoz 1-3 3 I 12/31/04

1999 CT99/8124(DC NOxoz1 I 1 CT99/8 I24(DC)NOxnoz 1-6 I 6 12/31/04

2000 CTOO/8124(DC)NOxozl 1 CTOO/8124(DC NOxnoz1 I 1 I 12131/05

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

and Order, pursuant to Section 22a-174-22U) ofthe Regulations, hereby allows

SCC to:

1. Comply with Section 22a-174·22 of the Regulations through use ofDERC

trading; 3.11d

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2. Upon sufficient documentation as described on this Trading Agreement

and Order, generate additional DERC, Upon issuance of an addendum to

tl-:1is Trading Agreement and Order the Commissioner may approve the

generation of additional DERCs by SCC retrospectively. Approved
Stone Container Corporation , Trading Agreement

and Order 8124 A

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DERCs generated by SCC may be held by SCC or transferred to other

persons in accordance with this Trading Agreement and Order.

e. With the agreement ofsec, the Commissioner, acting under Sections 22a·6, 22a171, 22a-174, 22a-176, and 22a-177 of the Connecticut General Statutes, orders

SCC as follows:

1. Upon issuance,of this Trading Agreement and Ordersec may generate

approved DERCs as allowed under this Trading Agreement and Order until

April 30, 2007; and

2. Upon issuance ofthis Trading Agreement and Order, at the iacility. sce shall

comply with Section 22a-174-22 oftbe Regulations through emission

reduction trading. Until SCC achieves pennanent compliance with the

emission standard in Section 22a·l74·22(e) ofthe Regulations or by April

30,2007 which ever occurs earlier:

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

Agreement and Order, and

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

applicable NOx emission limits as allowed under this Trading

Agreement and Order.

c. SCC shall comply duiing operation of the boiler with the FLERS

shown in Table 1 oithis Trading Agreement and Order.

3. DERC Generation.

a. Upjt May 1,-2007, when operating the boiler on narural gas,

sec may calculate the amount ofDERCs generated, as

follows:

DERCs (tons) generated = (Actual Fuel Use in MMBtu) x

{(allowable limit) - (FLER)} x (0.70)' +2000 Ibs/ton.

Where:

• Allowable limit= in IbslMMBtu as shown in table 1 of this

Trading Agreement. and Order.

• FLER= full load emission rate in IbsIM.1v!Bru as shown in

table 1 of this Trading Agreement and Order.

For the purposes of determining the number ofDERCs generated
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and Order 8124 A

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SCC shall discount DERCs as follows:

I. Ten (10) percent of the DERCs generated by the facility will

be pennanently removed from all calculations to assure a

benefit to the environment.

ii. Twenty (20) percent ofthe DERCs generated will be

p~nnanently removed from all calculations for uncertainties.

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4. In requesting DERC approval, SCC shall provide docwnentation

containing monthly operating reports of actual fuel usage and DERCs

generated net ofthe thirty (30) percent discount.

5. DERC Use. Until April 30, 2007, before the first day of each month SSC shall

have in its possession sufficient approved DERCs for such month based on the

following calculation.

a. Before the first day of each month, calculate projected DERCs

required for the next calendar month for the boiler as follows:

DERCs (tons) (Estimated Fuel Use in MMBtu) x {(FLER) - (0.95

x NOx allowable limit» +2000 Ibs/ton.

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

DERCs used in the preceding calendar month for the boiler

as follows:

DERCs (tons) (Actual Fuel Use in MMBtu) x {(FLER) -

(0.95) x (allowable limit) +2000 Ibs/ton.

6. SCC shall make and keep records of: daily fuel use and fuel type; excess

NOx emissions; and the number ofDERCs iri its possession, created,

.purchased and used (by serial' number if assigned) each month in

accordance with the appropriate emission rates and limits in this Trading

Agreement and Order; the nwnber ofDERCs used during the ozone

season and non-ozone season (the remainder ofthe year); 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. SCC shall maintain and

submit such records to the Commissioner in accordance with section 22a174-22 of the Regulations.

7. Record KeepinQ. sce .shall ~etain records and supporting documentation

as described in this Trading Agreement and Order for a minimum offi-i.:e

years, commencing on the date such records were created. sec shall
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and Order 8124 A

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provide the records specified above to the Commissioner wilhin [hirry

(30) days of receipt ofa written request from the Commissioner.

8. .A..nnual Emission Statement. No later than March 1 of every year after

issuance ofthis Trading Agreement and Order, SCC shall include with

the Annual Emission Statement provided to the Conunissioner. a record

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

approved wi~n and subsequent to issuance ofthis Trading Agreement

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

possession. sec shall also include actual NOx emissions from the boiler

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 rep0rls

shall be on a fonn prescribed by the Commissioner and shall be in

monthly increments. Should see choose to discontinue the generation of

DERCs, SCC will notify the Commissioner upon discontinuance.

9, Allowance Use. Pur.;uant to Section na-174-22(d)(3) of the Regulations,

SCC may use NOx allowances, through April 30, 2007, pur.;uanl to .

Subsection Cj) of Section 22a-174-22 ofthe Regulations to achieve all or

a portion of the reductions required by Section 2220-174-22 of the

Regulations. Any allowance used for compliance with Section 12a-174-

22(e) ofthe Regulations shall be subject to all restrictions a.fJ.d/or

requirements applicable to DERCs contained in this Trading Agreement

and Order;

a. In order for SCC to use NOx allowances, SCC shall create a

general ~ccount in EPA's NOx Allowance Tracking System

("NATS"); and .

b. Each allowance used for compliance with Section 2120-174-22 of

the Regulations shall be equivalent to one DERe. Allowances

shall be considered used for compliance with Section 22a-174-22

of the Regulations when they are transferred from the facility's

NOx general account in the NATS to the CT State NOx

Retirement Account (Account ill CT0000000300 in the NATS).

10. DERC Doubling. At a minimum, DERCs required shall be adjusted

upwards by 100% ifDERCs are not in SCC's possession prior to the firs!

day of each month. However, based on the gravity of the noncompliance.

the Commissioner may require additional upward adjustment

II. FLER Exceedance. Noncompliance with an established FLER shall

subject sec to make restitution by matching the quantity of emissions

("nue up") caused by the exceedance plus a 100% premium. The rrue up

in tons of DERCs shall be equal to the FLER exceedance in IbsIMMBru,
Stone Container Corporation 7 Trading Agreement

and Order S114 A

multiplied by the total heat input during the period of noncompliance

divided by 2000 Ibs!ton. If the period of noncompliance is not known,

the time period from the completion ofthe 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

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 of law.

12. FLER Modification. The FLER's set forth in Table I of this Trading

Agreement and Order may be modified only after the consent of the

Commissioner by written modification of this Trading Agreement and Order.

13. Emissions Testing. Pursuant to Section 22a-174-22(k) ofthe Regulations;-

SCC shall conduct NOx emission tests of the boiler at least once every five

years commencing from the dates of the NOx emission tests for the boiler as

provided in Table I of this Trading Agreement and Order.

14. Vinta2e Resniction. For the purposes of compliance with Section 22a-174-22

ofthe Regulations, DERCslallowances shall only remain valid for five (5)

calendar years from the year ofthe generation/allocation ofsuch

DERCs/allowances. DERCs/alJowances generated/allocated more than five

(5) calendar years ago are not valid for use for compliance with Section 22a174-22 ofthe Regulations. Notwithstanding the above the DERCsiailowances

generated/allocated prior to calendar year 2000 shall be valid for use until

December 31,2004.

15. Extension. No later than April 30, 2007, with respect to the boiler,SeC 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

wrinen extension of this Trading Agreement 'and Order.

16. Future Comoliance Reoort. On or before September 1,2006, SCC shall

submit a repon indicating how the facility shall comply with section 22a-174-

22 ofthe Regulations with respect to the Boiler on and after May I, 2007.

17. FuII comoliance. SCC shall not be considered in full compliance with this

Trading Agreement and Order until all actions required by this Trading

Agreement and Order have been completed as approved and to the

Commissioner's satisfaction.

18. Aoorovals. SCC shall use best effons to submit to the Commissioner all

documents.required by this Trading Agreement and Order in a complete and

approvable form. If the Commissioner notifies SCC that "any document or
Stone Container Corporation s Trading Agreement

and Order 8124 A

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other action is deficient, and does not approve it with conditions or

modifications, it is deemed disapproved, and SCC shall correct the

deficiencies and resubmit it within the time specified by the Commissioner or,

ifno time is specified by the Commissioner, within 30 days of the

Commissioner's notice of deficiencies. In approving any document or other

action under this Trading Agreement and Order, the Commissioner may

approve the document or other action as submined or performed 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.

19. Definitions. As used in this Trading Agreement and Order, "Approved

DERCs" are those for which the Commissioner has provided written

authorization for use in compliance with Section 22a-174-22 of the

Regulations; "Commissioner" means the Commissioner or a representative of

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

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

Trading Agreement and Order is the date the Trading Agreement :!Dd Order is

deposited in the U.S. mail or personally delivered, whichever is earli"er.

20. 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 Trading Agreement and Order, including but not limited to notice of

approval or disapproval of any document 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 submined or performed by

the next day which is not a Saturday, Sunday or Connecticut or federal

holiday.

21. 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 see or, ifsee is not an

individual, by SCC's chief executive officer or a duly authorized .

representative ofsuch officer, as those terms are defined in Section 21a-430-

3(b)(2) of the Regulations ofConnecticut State Agencies, and by the

individual(s) responsible for actually preparing such document, and sec or

SCC's chief executive officer and each such individual shall cenify in \","riting

as follows:

"I have personally examined and am familiar with the information submitted

in this documenl and ail anaclunents Iherelo, and I cenify, based on
Stone Container Corporation 9 Trading Agreement

and Order 8124 A

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reasonable investigation, including my inquiry of those individuals

responsible for obtaining the information, that the submined 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 Jaw."

22. Noncompliance. This Trading Agreement and Order is a final order ofthe

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 sec to an injunction and

penalties.

23. False statements. Any false statement in any infonnation submitted pursuant

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

Section 53a-157b of the COIUlecticut General Statutes and any other

applicable law.

24. Notice of transfer. liabilirv ofSCc. Until SCC has fully complied With this

Trading Agreement and Order, SCC 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.

sec's obligations Wlder this Trading Agreement and Order shall not be

affected by the passage oftitle to any property to any other person or

municipality.

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

affect the Commis·sioner'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 ~y time the Commissioner

determines that the actions taken by see pursuant to this Trading Agreement

and Order have not successfully corrected all violations, fully characterized

the extent or degree of any pollution, or successfully abated or prevented

pollution, the Commissioner may institute any proceeding to require sec to

undertake further investigation or further action to prevent or abate violations

or pollution. .

26. SCC's oblie:ations under law. Nothing in this Trading Agreement and Order

shall relieve sec of other obligations under applicable federal, state and local

law.

27. No assurance bv Com..-nissioner. No provision of this Trading Agreement and

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

constitute an assurance by the CommiSSioner that the actions taken by sec
Stone Container Corporation 10 Trading Agreement

2nd Order 8124 A

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pursuant to ihis Trading Agreement and Order will result in compliance or

prevent or abate pollution.

28. Access to facilitv. Any representative of the Department of Environmental

Protection may enter the facility v.rithout prior notice for the purposes of

monitoring and enforcing the actions required or allowed by this Trading

Agreement and Order.

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29. No effect on"fil2':hts of other persons. This Trading Agreement and Order

neither creates nor affects any rights ofpersons or municipalities that are not

parties to this Trading Agreement and Order.

30. No Creation QfPropertv Ri!lhts. This Trading Agreement and Order does not

create any property rights wiLl} respect to these DERCs.

31. Notice to Commissioner of chanS:!es. Within 15 days of the date sce

becomes aware 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 omined, sec

shall submit the correct or omitted infonnation to the Commissioner.

32. Notification ofnoncoffioliance. In the"event thatsec 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, sec 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 ppssible. Within five (5) days ofthe initial notice, see

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 of the Commissioner, dates by which compliance will be

achieved, and SCC shall comply with any dates which may be approved in

writing by the Commissioner. Notification by SCC shall not excuse

noncompliance or delay, and the Commissioner's approval of any compliance

dates proposed shall not excuse noncompliance or "delay unless specifically so

stated by the Commissioner in writing.
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and Order 8124 A

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33. 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 VvTiting by the

Commissioner, be directed to:

Mr. Michael lafleur

Deparnnent ofEnvironmental Protection

Bureau ofAir Management

Compliance and Field Operations Division

Emissions and Credit Trading Section

79 Elm Street

Hanford, Connecticut 06106
Stone Container Corporation 12 Trading Agreement

and Order 8114 A

SCC consents to the issuance of this Trading Agreement and Order without funher

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

Agreement and Order and to legally bind SCC to the terms and conditions of the Trading

Agreement and Order.

Stone Container Corporation.

Signature: _ .....(_V'v.:: 2r--.f/:.=' ",1/_',--A-,-V~/:.,---,-?----,,;_ ,L'.~'-'-'------

Typ-Nam··. .... .... P 1 au.... M Hayes

Type Title: __G=e"n..:e..:r..:a"1'--.:M"a=-n=a,,.8..:e..:r _

Date: --'-J--'/'-----_:.y~,~",-. _C_-=s _

Issued as a final order ofthe commisSi~f~epartrnent ofCJ·

Environmental Protection on , I V ,200D-',!

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...,;v--:-. , A...r'thur J.lRocque, Jr. ,_.

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CITY OF UNCASVILLE LAND RECORDS

MAILED CERTJFIED MAIL,

RETURN RECErPT REQUESTED

Ce..rtified Document No.