~~~

Exhibit 3

STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

'-"-~'/

In the matter of

The State ofConnecticut a.."1d

Allegheny Ludlum Corporation

l

l

)

Trading Agreement

and Order No. 8188

Whereas, the Commissioner ofEnvironmental Protection ("Commissioner") and Allegheny

Ludlum Corporation ("ALe") agree that it is in Lbe public mterest that they work cooperatively

to improve the air quality within the State ofConnecticut and that the use of discrete emissions

reduction credit ("DERC'') trading to reduce nitrogen oxide (''NOx'') emissions will achieve

this result in a timely and cost·effective manner:

A. With the agreement ofALe, the Commissioner finds the following:

1. Allegheny Ludlum Corporation o~ns and o'perates a specialty steel processing

facility in Wallingford, Connecticut, ("facilIty").

2. At the facility, ALe operates three (3) boilers os. 1,2 and 3 (''boilers'') which

burn #2 fuel oil ("#2 oil') and natural gas; and one (1) process mixed aCId pickle

tub ("mixed acid tub scrubbers'') which produces NOx emissions and these units

are subject to Section 22a-174-22 oithe Regulations of Connecticut State Agencies

("Regulations''). Prior to April I, 2000, ALe burned #6 fuel oil ("#6 oil'') in the

boilers on occasion.

3. Section 22a-174-22(k) bfthe Regulations requires that an o'WIIer or operator subject

to an emission limitatlOD under Section 22a-174-22 of the Regulations conduct an

emission test to demonstrate compliance no later than May 31,1995. ALe did not

conduct DEP witnessed emission testing ofthe mixed acid tub and the boilers until

December 1998.

4. By virtue ofthe above ALe violated Section 22a-174-22(1<) ofthe Regulations.

5. The Dep3.J.-tment ofEnvironmental Protection ("DEP") v.'itnessed emission test of

the representative boiler No.2, conducted December 18 through 21, 1998, shows

that the representative NOx emission rate for boilers Nos. 1,2, and 3 when

operating on # 6 oil, was 0.3711bsIMMBtlJ, which is above the Section 22a·174·22

ofthe Regulations allowable emission rate of 0.25 IbslNlMBtu for the boilers.

6. The first DEP witnessed emission test ofthe mixed acid tub scrubbers Nos. I and

2, conducted December 30, 1998, shows the combined weighted average iOX

emission rate was 895 ppm, which is above the Section 22a-174-22 ofthe

Regulations allowable emission rate of 700 ppmvd for process emissions.

7. A second DEP witnessed emission test ofthe mixed acid tub scrubbers Nos. 1 and

2, performed 011 May 18, 2000, shows that the combined weighted average NOx

emission rate was 877.5 ppmvd, which is above the Section 22a·174~22 ofthe

Regulations allowable emIssion rate of700 ppmvd.

8. .By virtue oftne above, ALe violated Section 22a·j 74-22 (e) ofthe Regulations.

lnitials~Vz,i ( ?rinted on Reeyeled ?,per)

79 Elm S,ree, • Hlrtford. CT 06106·5127

IlllrVIdep.s'2 le.e t. Us

An Equal Opporlllnily Emp/a~u

Date:

-
Alle2:henv Ludlum Corooration Trading Agreement and Order No. 8188

9.

to.

11.

12.

13.

14.

15.

16.

17.

18.

During the period June 1, 1995 through March 31, 2000, ALC's excess NOx

emissions from boilers Nos. 1,2. and 3 are estimated to total 17.29 tons (0 tons

ozone and 17.29 tons non-ozone).

During the period June 1,1995 through October 31, 2000 ALC's excess NOx

emissions from the mixed acid tub scrubbers No.1 and No.2 are estimated to total

37.89 tons (19.59 tons ozone and 18.30 tons non-ozone).

Pursuant to Section 22a-174-22 ofthe Regulations, ALC proposes to enter into a

Trading Agreement and Order to comply with: 1) the allowable NOx emission rates

in Table 22-1 for boilers Nos. 1,2, and 3, when burning #6 oil; and, 2) the

allowable NOx emissions limits set forth in Section 22a~174~22(e)(2)(G)of the

Regulations when operating the mixed acid tub scrubbers Nos. I and 2.

ALe has converted the system so that #2 oil will fuel boilers Nos. 1,2, and 3, and

#6 oil will no longer be burned in boilers Nos. 1,2, and 3.

On April 1, 2000, ALC discontinued burni..1.g #6 oil in boilers Nos. 1,2, and 3 to

comply with the emissions limits in Section 22a-174-22(e) ofthe Regulations until

a Tradmg Agreement and Order could be established for their facility.

Pursuant to Section 22a-174-220) ofthe Regulations, ALe acquired and used

approved DERCs monthly, as specified in Section C. ofthis Trading Agreement

and Order to compensate for the excess NOx emissions from June I, 1995 until

March 31, 2000 for the boilers and from June I, 1995 until October 31, 2000 for the

mixed acid tub scrubbers.

Section 22a-174.22(j) of the Regulations allows the o-wner or operator ofa source

to use emission reduction trading to offset excess NOx emissions. Such reductions

shall be, at a minimum, equivalent to those emission reductions that would be

achieved by complying With all applicable emissions limitations in Section 22a174-22 ofthe Regulations.

A third DEP witnessed emission test perfom1ed on November 2 and 3, 2000 ofthe

mixed acid tub scrubbers Nos. 1 and 2, shows that the combined weighted average

NOx emission rate for the mixed acid tub scrubbers Nos. 1 a...id 2 is 396 pprnvd

which meets the 700 pprnvd allowable emission rate set forth in Section 22a-174-

22(e) ofthe Regulations.

On October 31, 2000, ALC obtained a total of 117 tons (43 tons ozone and 74 tons

non-ozone) of approved DERCs.

On October 31, 2000, in accordance with the requirements contained in paragraph

C.I ofthis Trading Agreement and Order, ALC retired a total of 110.36 tons of

approved DERCs, including a 100% premium to compensate for the excess

emissions of NOx that were emitted for the period from June I, 1995 throngI1

October 31, 2000, as follows:

a. For boiler Nos. 1,2, and 3: 17.29 tons of non·ozone season DERCs.

b. For mixed acid tub scrubbers: 19.59 tons of ozone and 18.30 tons of nonozone season DERCs.

c. For having insufficient DERCs on hand prior to use for boiler Nos. 1,2, and

3 and the mixed acid tub scrubbers: 19.59 tons of ozone season DERCs and

35.59 tons ofnon~ozone season DERCs.

Initials:0_£ V C~ 2
AlIee:heny Ludlum Corooration Trwin. A~eement and Order No. 8188

20.

19. For boilers Nos. 1..2, and 3, prior to burning #2 oil, on March 15,2001, ALC

received an approved pennit modification to bum #2 oil in boilers Nos. 1,2, and 3.

By agreein~ to the issuance ofthis Trading Agreement and Order, ALe does not

admit that tmdings A.3. through A.IO. are correct.

B. The Commissioner, in accordal1ce with the provisions of this trading agreement and order,

pursuant to Section 22a-174-22(d)(3) ofthe Regulations, hereby allows ALC to comply with

Section 22a-174-22(d)(J) ofthe Regulations through use ofDERC trading.

C. With the agreement ofALe, the Conunissioner, acting under Connecticut General Statutes

Sections 22a-6, 22a-17 I, 22a-174, 22a-176, and 22a-I77, orders ALC as follows:

I. Retrospective NOx Emissions

ReJatin2' to emissions on or before October 31, 2000, ALC shall obtain and retire a

total of 110.36 tons of approved DERCs, including a 100% premi;nn to compensat~

for the excess emISSIOns ofNOx that were ermtted for the penod tram June I, 199)

through October 31, 2000, as follows:

a. For boibr Nos. I, 2, and 3: 17.29 tons of non-ozone season DERCs.

b. For mixed acid tub scrubbers: 19.59 tons of ozone and 18.30 tons of nonozone season DERCs.

c. For having insufficient DERCs on hand prior to use for boiler Nos. I, 2. and

3 and the mixed acid tub scrubbers: 19.59 tons ofozone season DERCs and

35.59 tons of non-ozone season DERCs.

d. -Retrospective excess NOx emissions above shall be calculated as follows:

(al Boilers Nos.!. 2. and 3 (#6 Qil) DERCs

Boiler Nos. 1,2. and 3 total (actual) monthly excess NOx emissions

(tons/mo.) = {[(total monthly #6 oil heat input) x ((oil full load emission

rate (UFLER") of0.371IbslMMBtu) - (0.9) design margin x 0.250

IbslMMBtu NOx allowable limit))]}+2000 pounds/ton

(b) Mixed Acid Tub Scrubbers Nos. 1 and 2 DERCs

(i) For oeriod June 1, 1995 Lirouw ADri130. 2000

Mixed acid tub scrubbers Nos. I and 2 (Actual) DERCs (tons) {[((895

mixed acid tub FLER in ppmvd) (0.95 design margin x 700 ppmvd))/895

ppmvdj·x [(8.575 poundsl'nour) x (total actual daily operating hours)jj) +

2000 pounds/ton .

(ii) For Deriod Mav I. 2000 throu.h October 31. 2000

Mixed acid tub scrubbers Nos. 1 and 2 (Actual) DERCs (tons) = {[((925

mixed acid tub FLER in ppmvdl (0.95 design margin x 700 ppmvd»)/925

ppmvdj x [(19.4 poundslhour) x (total actual daily operating hours)]} +

2000 pounds/ton

2. On October 31. 2000. as documented in spreadsheets showing excess NOx

emissions and DERCs retired, and DERC Sales Agreements signed by ALC (hereby . . -=-ringorporated into this Trading Agreement and Oider as Attachments I and 2), the

ImbaIs: y c...!( 3 Date: s-/l.;/G;J-
Alleghenv Ludlum Coruoration Tradiu!2: Acreement and Order No. 8188

terms and conditions of Parawaph c.1. (a), (b) (c) and (d) were met as described in

Paragraphs A.17 and A.l8 ot thIS Trading Agreement and Order.

3. Future Emissions for the mixed acid tub scrubbers Nos. 1 and 2:

a. ALC shall maintain a minimum exhaust flow rate for each mixed acid tub

scrubber of 1800 dscfrn except during periods ofstartup, shutdown or

malfunction.

b. Within sixty (60) days ofthe issuance ofthis Trading Agreement and Order,

ALe shall install and operate an exhaust flow monitor, warning device and a

data-recording device, acceptable to the Commissioner, on each ofthe two

mixed acid tub scrubbers. The data recording device shall record and store the

differential pressure data representative ofthe exhaust gas flow rate of each

mixed acid tub scrubber. ALC shall operate and maintain flow-monitoring

equipment at all times during operation ofthe mixed acid tub scrubbers. Data

shall be stored continuously for a minimum ofsix (6) months. The recordins:

device will capture data for at least 95 percent ofthe operating time. A warmng

device shall be installed to alert the operator to take corrective action ifthe

exhaust flow rate for a mixed acid tub scrubber falls below 1800 dscfin during

nonnal operation.

c. Records ofthe exhaust flow rate and corrective action activities shall be

maintained at the facility for a .minimum period ofsix (6) months.

d. Emissions testing: In lieu ofinstalling continuous 'emi?sions monitoring

(OEM) on the mixed acid tub scrubbers, ALe shall conduct emissions testin.§?

on the mixed acid tub scrubbers.' Withi.TI sixty (60) days of the issuance ofthIS

Tradin~ Agre.en~ent and O~der, ~LC shall ~ubmit a NOx Emission Testing pJaLl

to.~e l,..;OmmISSlOner for h1S revIew and wntten approval. Such plan shall, at a

mInImum:

1) Provide for emissions testing each calendar year commencing in the

year 2002;

2) Be designed to demonstrate compliance with the allowable emission

rate limit of700 ppmvd for appropriate processes in Section 222-174-22

of the Regulations; and

e. After two (2) consecutive years of demonstrating compliance with the

allo\vable emission rate limit of700 ppmvd for. appropriate processes in

Section 22a-174-22 ofthe Regulations, ALC may submit in writing, for the

Commissioner's review and written approval, a request to allow ALC to return

to a longer emissions testing period not to exceed every five (5) years, with

such time period commencing from the date ofthe last emisslOn test.

4. Emission Testing Protocol for the mixed acid tub scrubbers Nos. 1 and 2.

a. ALC shall submit to the Commissioner for his review and \""ritten approval an

Tntent-To-Test ("ITT'? protocol not less than thirty (30) days prior to the

emissions testing reqUIred pursuaI).t to paragraph C.3.d. and C.3.e. afthis

Trading Agreement and Order. The ITT protocol shall include at least:

1) The Department ofEnvironrnental Protection's Bureau of Air

Management Test Fom1 No.1, "Intent to Test";

4
AlleQ:henv Ludlum Corooration TradingAQIeement and Order No. 8188

b.

2) System operating parameters indicative ofproper operation, including,

but not limited to the mixed acid tub steel throughp'ut and, for each nUxed

acid tub scrubber, the exhaust gas flow rate and NOx emissions rate in

ppmvdand Ibslhr.

The ITT protocol shall provide that ALC shall perform testing as specified in

Sections 22a-174-5 and 22a-174-22 ofthe Regulations, including operating the

mixed acid tub process at not less than ninety percent (90%) ofits maximum rated

or pemlitted, whichever is less, capacity.

e.

d.

c.

5.

ALC shall perform all testing required by paragraph C.3.d and C.3.e in accordance

with the approved ITT protocol.

In conducting and performing the testing required by paragraph C.3.d and C.3.e,

and in analyzmg the results ofsuch testing, ALC shall adhere to methods specified

in Sections 22a-174-5 a:.,d 22a-174-22 ofthe Regulations and as approved by the

United States Environmental Protection Agency ("EPA'') and the Commissioner.

ALC shall schedule all emissions testing so as to 'allow the Commissioner to be

present during such testing and to independently verify facility operations, air

pollution control equipment parameters, and testing procedures.

Within sixty (60) days after completing any emissions testing ~equired by this Trad.in~

Agreement and Order, ALC shall submit to the Commissioner a written report providmg

the results ofsuch testing. Within thirty (30) days of a notice from the Commissioner

indicating any deficiencies in the emissions testing report, ALe shall submit a revised

report.

a.

o.

c.

ALC shall document and record monthly totals ofsteel throughput in tons, process

hours of operation, and NOx emissions m accordance with the emission rates a..,d

limits set forth "in Section 22a-174-22 (e) of the Regulations. Such records sball be

maintained and provided to the Commissioner in accordance with Section 22a174-4(c)(I) ofthe Regulations.

ALC shall retain records and supporting documentationas described in this

Trading Agreement a..,d Order for a minimum offive (5) years, commencing on

the date such records were created.

.-\LC shall provide the records specified above to the Commissioner within thirty

(30) days ofreceipt of a written request from the Commissioner..

6. Full comoliance. ALC shall not be considered in full compliance witb this Trading

Agre~ment and Order un~il all actions required by this Trading Agreement and Order

have been completed as approved and to the Commissioner's satisfaction.

7. Aoprovals. ALe shall use best efforts to submit to the Commissioner all doclUDents

required by this Trading Agreement and Order in a complete 2nd approvable form. Ifthe

Commissioner notifies Ale that any document or other action is deficient, and does not

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

correct the deficiencies and resubmit it within the time specified by the Commissioner

or, if no time is specified by the Commissioner, within thirty (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

~er rion as submitted or perfonned ~i with such conditions or modifications as the

Initials: YC§t 5 Date: ';0).
.tUleghenv Ludlum Corporation TradiTIO AoreemeTIt and Order No. 8188

Commissioner deems necessary to carry out the purposes of this Trading Agreement and

Order. Nothing in this paragraph shall excuse noncompliance or delay.

8. Definitions. As used in this Trading Agreement and Order, "Commissioner" means the

Commissioner or a representative ofthe Commissioner. The date of "issuance" ofthis

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.

9. 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, whichever is earlier. 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 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 submitted or performed

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

10. Certification ofdocuments. Any document, including but not ILllited to any notice,

which is required to be submitted to the Commissioner under this Trading Agreement

and Order shall be signed by ALe's chief executive officer or a duly authorized

representative ofsuch officer, as those tenns are defined in Section 22a-430·3(b)(2) of

the Regulations ofConnecticut State Agencies, and by the individual(s) responsible for

actually preparing such document. ALC's chief executive officer or authorized

representative and each such individual shall certify in writing as follows:

"I have personally examined and am familiar with the infonnation submitted in this

document and all attachments thereto, and I certify, based on reasonable investigation,

including my inquiry ofthose individuals responsible for obtaining the information, that

the submitted infonnation 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 ofthe Connecticut General

Statutes and a."1y other applicable law."

i 1. Noncompliance. This Trading Agreement and Order is a final order ofthe

Commissioner with respect to the matters addressed herein, and is nonappealable and

immediately enforceable. Failure to comply with this Trading Agreement and Order may

subject ALC to an injunction and penalties.

12. False statements. Any false statement in any infonnation submitted pursuant to this

Trading Agreement and Order is punishable as a criminal offense under §53a~J 5ib of the

Connecticut General Statutes and any other applicable law.

=--', -/ Initials: _V-L.-==Cfl;",-~ __ 6
Alleghenv Ludlum Cornoration Trading A2Teement and Order No. 8188

13. Notice oftransfer: liability of ALC. Until ALC has fully complied with this Trading

Agreement and Order, ALC shall notify the Commissioner in writing no later than thirty

(30) days after transferring 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. ALe's obligations und~ this Trading Agreement and

Order shall not be affected by the passage oftitle to any property to any other person or

municipality.

14. Commissioner's Dowers. 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 ofla-w, prevent or abate pollution, recover costs and natural resource

dac.-nages, and to impose penalties for past, present, or future violations oflaw. If at any

time the Commissioner determines that the actions taken by ALC 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 ALC to underiake

furLher investigation or further action to prevent or abate violations or pollution.

15. ALC's obligations under law. Nothing in this Trading Agre,..~ent and Order shall relieve

ALC of other obligations under applicable federal, state and local law.

16. No assurance bv Commissioner. No provision ofthis Trading Agreement and Order and

no action or inaction by the Commissioner shall be construed to constitute a:., assurance

by the Commissioner that the actions taken by ALC pursuant to this Trading Agreement

2.J.id Order will result in compliance.

17. Access to site..Any representative ofthe Department ofEnvironmental Protection may

enter the facility without prior notice for the purposes ofmonitoring and enforcing the

actions required or allowed by this Trading Agreement a.'1d Order.

18. No effect on riQhts of otl-ter oer.:oOns. This Trading Agreement and Order neither creates

nor affects any rights of persons or municipalities that are not parties to this Trading

Agreement and Order.

19. Notice to Commissioner of cha!:!!zes. \Vithin fifteen (15) days ofthe date .A.LC becomes

aware of a change .in any infonnation 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, ALC shall submit the correct or omitted

information to the Commissioner.

20. Notification ofComoliance. In the event that ALe 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 docwnent required hereunder, ALC 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, ifunavoidabJe,

a is minim1zed to the greatest extent possible. Within five (5) days' ofthe}Attiaynotice,

Initials: VC4; 7 Date: .;;'J2,I!Q;).. ,
AlleQ"nenv Ludlum Comoration Trading AQTeement and Order No. 8188

Ale shall submit in \¥TIting 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 ALe shall

comply with any dates which may be approved in writing by the Commissioner.

Notification by ALC shall not excuse noncompliance or delay, and the Cormnissioner's

approval of any compliance dates proposed shall not excuse noncompliance or delay

unless specifically so stated by the Commissioner in writing.

21. Submission of documents. Any document required to be submitted to the Commissioner

under this Trading Agreement and Order shall, unless othe:rvvise specified in this Trading

Agreement and Order in writing by the Commissioner, be directed to:

Mr. Roland 1. Severance Jr., PE

Department of Environmental Protection

Bureau ofAir Mana~ement

Emissions and CJedlt Trading Section

79 Elm Street, 5 Floor

Hartford, Connecticut 06106-5127

a...~ .I

Initials: _!...Y--,c:..=,,-n..""'l..__ 8 Date: .s::P. , /~n
Alle£henv Ludlum Coruoration Trading A~eement and Order No. 8188

ALe 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 ALe to the terms and conditions of the Trading Agreement and Order.

c,-'JJegheny Lu~~orporation /

BY Signature: II 2-Af~~ Typ:: N2Jc-ne: T~rre.ncp. L. Har.t~Id j

Type Title: President - .Ulegheny Rodney

Date: s;-/.J. tIOJ / /

Entered as a final Trading A~Fnt and Order~a?irnmiSSioner ofEnvironrnental Protection

numbered 8188 tllis '/= dayor // 2002.

rJ

Cl-/A6d A"dlKUI J. Rocque, Jr.

y1Th71iSSiOner

CITY OF WALLINGFORD LA.>m RECORDS

MAILED CERTIFIED MAIL, RETURN RECEIPT REQUESTED

Certified Document No.

\IDEPJ\SYS2\USERS\RSEVER.....~'\. TR...OING-iUS.....TRADlNGORDERS\ALG-LD1'--N J88 o!der'.818!J.~der( 4-2S-G2).do:

9