Exhibit 3

STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

In the matter of

The State of Connecticut and

Stone Container Corporation

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Trading Agreement and Order No. 8124

Whereas, 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 ofCOImecticut and that the use of

emission reduction trading will achieve this result in a timely and cost-effective manner:

A. At the request and with the agreement ofsec, the Commissioner finds the following:

1. sec is a corporation that operates a paper mill facility at 125 Depot Road,

Uncasville, Connecticut ("facility").

2. At the facility, see operates a Riley Boiler (''Boiler'') with a maximum rated

capacity of99.5 Million British Thermal Units ("MMBTl.r) per hour. The 1990

Department ofEnvirorunental Protection ("DEP") Emissions Inventory, using

emission factors from AP-42,lists a total of79.2 tons ofNOx from the Boiler

when firing residual oil. The most representative year for establishing a basis

for historical emissions is 1992, when the Boiler fired natural gas and residual

oiL The 1992 NOx emission, based on the lower or actual or allowable

emissions, actual fuel data, and stack test was 40.9 tons. The Boiler is subject to

Section 22a-174-22, Regulations of Connecticut State Agencies ("Regulations')

pertaining to the control of Nitrogen Oxides (NOJ.

3. In April 1995, sec removed the air preheater, and installed a flue gas

recirculation system, a lo~-NOJ; burner, and an economizer on the boiler.

4. Official U.S. Environmental Protection Agency ("EPA'') Reference Method 7E

stack testing perfonned on the dates indicated in Table 1, resulted in NOx emission rates

set forth in Table 1.

1

(Prim:d on R:cycJed Paper)

79 Elm Streel • Hartford. CT 06106· SI27

hllp:lld ep.slate.CI. us

An Equo! Opporrunil)' Emp/nyu

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Date J/3/02
Stone Container Corporation Trading Agreement

and Order #8124

Table I NOx Emission Rates and RACT limits (IbslMMBtu)

Emission: Rates

Boiler Fuel Stack Test Dale Stack Test FLER RAer

Residual

Oil August 13, 1995 .318 .363 .150

Natural

G" August 13,1995 .072 .086 .200

Riley

Residual

Oil September 12, 2000 .342 .389 .250

Natural

G" September 12, 2000 .055 .066 .200

5. The Boiler has dual-fuel capability; residual oil and natural gas. When firing

residual oil, the Boiler exceeds the NOx Reasonably Available Control

Technology ("RACT") limit as specified in Table 22-1, Section 22a-174-22 of

the Regulations. \¥hen burning natural gas, the Boiler complies with the NOx

RACT limit as specified in table 22-1, Section 22a~174·22 ofthe Regulations.

6. The full load emission rate ("FLER") includes a self-imposed buffer of 20 % for

natural gas and J4% for residual oil. From the May 31,1995 through September

II, 2000 tlie FLERs shall be .363 iblMMBtu for residual oil and .086 IblMMBtu

for natural gas. On and after September 12, 2000 the FLERs shall be .389

Ib/MMBtu for residual oil and .066 IblMMBtu for natural gas.

7. Pursuant to Section 22a-174-'22(j) ofthe Regulations, see proposes to comply

by creating discrete emission reduction credits ("DERCs") while burning natural

gas and using a portion ofthe DERCs while burning residual oil. . .

8. SCC shall discount DERCs as follows:

(a) Ten (10) percent ofthe DERCs generated by the facility will be permanently

removed from all calculations to assure a benefit to the envirorunent.

(b) Twenty (20) percent ofthe DERCs generated will be permanently removed

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Stone Container Corporation

from all calculations for uncertainties.

Trading Agreement

and Order #8124

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

emission reductions identified above will conform to the requirements of

Section 22a-174-220)(3) of the Regulations. SpecificalIy, the reductions \ViII

be:

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

the air, net of any consequential increase in actual emissions resulting from

shifting demand. The emission reductions will be properly measured, recorded

and reported.

Quantifiable: because they are based on Stack Test Data as applied in an

appropriat~ reliable and replicable protocol, providing the rate and total mass

amount ofreduction.

Surplus: because they are not required by a.."1Y Connecticut statute or regulation

mandated by a current State Implementation Plan (SIP), and are not currently

relied upon in any applicable attainment plan, any reasonable further progress

plan or milestone demonstration.

Perma.'1ent: because the flue gas recirculation system and low-NO" burner will

be in place and operating, and an appropriate tracking system is in place to

monitor all data required to verify and quantify the creation of DERCs.

Enforceable: because the DERCs are approved by the Commissioner

retrospectively after the submission by sec ofthe seasonal or annual report that

will document their creation.

10. For the period ofJanuary 1995 through December 2000, SCC emitted 4.4 tons

of excess NOx emissions from the Boiler while burning residual oil. In the that

time period, sec created 24.3 non-ozone season nERCs and 6.1 ozone season

DERCs from the Boiler while buming natural gas. Ten (l0) percent of these

DERCs are retired and permanently removed from all calculations to assure a

benefit to the environment, and twenty (20) percent are removed for

uncertainties; leaving 27.4 ,approved DERCs (21.9 non~ozone season, and 5.5

ozone season) available for use.

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Date 1/3/02
Stone Container Corporation Trading Agreement

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11. Approved DERCs are defmed for the purpose of this order as those, which the

Commissioner has provided written authorization for use in compliance with

Section 22a·174-22 of the Regulations.

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

Order, and pursuant to Section 22a-174-22(d)(3) ofthe Regulations, hereby allows

sec, and approved sources within Connecticut, to use 5.5 tons ofozone season NOx

DERCs and 21.9 tons of non-ozone season NOx DERCs for purposes ofcompliance

under Section 22a-174-22(j) ofthe Regulations to achieve all or a portion ofthe

nitrogen oxide emission reductions required by Section 22a-174-22 and/or as emission

offsets for new sources for compliance with the requirements of Section 22a-174-3(1)(5)

ofthe Regulations. DERC creation serial numbers assigned by the Department to these

approved reductions ofNOx emissions are provided in Table 2 of this Trading

Agreement and Order:

Table 2: NOx DERC Serial Numbers

Year Ozone Season Non-Ozone Season

1995 CT95/8124(DC)NOxozl-3 CT95/8124(DC)Noxnonozl-6

1996 CT96/8124(DC)Noxozl CT96/8124(DC)Noxnonozl-3

1997 N/A CT97/8124(DC)Noxnonoz 1

1998 CT98/8124(DC)Noxozl CT98/8124(DC)Noxnonozl-3

1999 CT99/8124(DC)Noxozl CT99/8124(DC)Noxnonoz1-6

2000 CTOO/8124(DC)NOxozl CTOO/8124(DC)Noxnonoz1

8.2. Upon sufficient documentation as described below, the Commissioner may provide

written approval of the generation of additional DERCs by see retrospectively.

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

persons

in accordance with this Trading Agreement and Order.

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B.3. The Commissioner, in accordance with the provisions ofthis Trading Agreement and

Order, pursuant to Section 22a-174-22(d)(3) ofthe Regulations, hearby allows see to

comply with Section 22a-174-22(d)(l) ofthe Regulations through use ofDERC

trading.

C. With the agreement ofSCC, the Commissioner, acting under Sections 22a-6, 22a-17 J,

22a-174, 22a-176, and 22a-l77 ofthe Connecticut General Statutes, orders SCC as

follows:

I. Upon issuance ofthis Trading Agreement and Order SCC shall comply with the

FLER's shown in table 1 above during operation of the Boiler.

2. On and after the date ofissuance of this consent order, and prior to May 1,2003

or until SCC achieves compliance with the emission standards in Section 22a·

I74-22(e) ofthe Regulations, whichever occurs earlier, see shall have in its

possession required, approved DERCs.

3. On and after the date ofissuance ofthis consent order, and prior to May I, 2003

or until sec achieves compliance with the emission standards in Section 22a174-22(e) ofthe Regulations, whichever occurs earlier, SCC shall document

and record the amounts of natural gas and number 6 oil (collectively referred to

as "fuel") and DERCs used by the Boiler each month, and provide such records

in accordance with the following and Section 22a-174-22 of the Regulations:

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 in IbsIMMBtu - (0.95 x .25 IbslMMBtu))

2000lbhon .

b. Document that sufficient approved DERCs are available for the Boiler no

later than the first of each calendar month to assure compliance for, at a

minimum, that calendar month. DERCs required shall be adjusted upwards by

100% if approved DERCs are not in seC's possession prior to use. However,

based on the gravity ofthe noncompliance. the Commissioner may require

additional upward adjustment;

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c. No later than the tenth day of each month, calculate DERCs used in

the preceding calendar month for the Boiler as foIIows:

DERCs (tons) - Actual Fuel Use in MMBtu x (FLER in IbsIMMBtu - (0.95 x .25 IbsIMMBtu))

2000 Iblton

d. Document and record monthly consumption of fuel and DERCs;

e. No later than March I of each year this Consent Order is in effect,

include with its annual emissions report to the Commissioner, the

monthly r:ate offuel conswnption for the Boiler and DERCs used

by the Boiler for the previous calendar year;

f. Retain records and supporting docwnentation as described in this

section for a minimum of five years, commencing on the date such

records were created;

g. Maintain documentation to attest to the fact that DERCs used

during the ozone season were generated during the ozone season.

The ozone season is from May 1 through September 30 in any

calendar year. Generator certification ofthis fact shall be sufficient;

and;

h. Provide the records specified above to the Commissioner within

thirty (30) days ofreceipt of a written request from the

Commissioner.

4. When operating the Riley Boiler on natural gas, Stone Container shall

calculate the amount·ofDERCs generated, as follows:

DERCs generated (tons) Actual Fuel Use in MMBtu x (.20 IbsIMMBtu - FUR in IbsIMMBtu) x .70

2000lblton

5. rn requesting DERC approval, Stone Container shall provide documentation

containing monthly operating reports of actual fuel useage and DERCs generated

net ofthe thirty (30) percent discount.

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6. No later than May I, 2003, SCC shall comply with the requirements of Section

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

and other Trading Agreements and Orders and, if deteITIlined to be appropriate, the

Commissioner may grant a written extension ofthis Trading Agreement and Order.

7. The FLER's may be adjusted upon satisfactory demonstration to the Department

and written approval by the ·Commissioner.

8. Pursuant to Section 22a.174-22(k) ofthe Regulations, SCC shall conduct NOx

emission testing ofthe Boiler at least once every five years commencing from

the later date identified in Table I ofthis Trading Agreement and Order.

9. Noncompliance with the established FLER shall subject SCC to make restitution

by matching.lhe 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 lbsIMMBtu, multiplied by the total heat input during the period of

noncompliance divided by 2000 Ibslton. If the period of non-compliance is not

known, the time period from completion ofthe last/previous Department

witnessed stack 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 effect 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.

10. Approvals. sec shall use best efforts to submit to the Commissioner all

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

approvable fOITI1. Ifthe Commissioner notifies sec that any document or other

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

deemed disapproved, and sec shall correct the deficiencies and resubmit it

within the time specified by the Commissioner or, if no tiJ?e is specified by the

Commissioner, within 30 days ofthe Commission~'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

submitted or performed or with such conditions or modifications as the

Commissioner deems necessary to cany out the purposes ofthis Trading

Agreement and Order. Nothing in this paragraph shall excuse noncompliance or

delay.

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and Order #8124

11. Definitions. As used in this order, "Commissioner" means the Commissioner of

Environmental Protection or an agent ofthe Commissioner. ''Residual oil"

means any fuel oil ofNe. 4, 10. 5, or No.6 grades, as defined by Commercial

Standard C.S. 12-48. "Ozone season" means the period from May 1 through

September 30 in any given calendar year. ''Issuance'' means the date this

Trading Agreement and Order is deposited in the U.S. Mail or the date it is

personally delivered, whichever is earlier.

12. 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 document or other action, shall be the date such

notice is deposiled 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 perfonned. by a date which falls on a Saturday, Sunday or a

Connecticut or federal holiday shall be submitted or perfonned by the next day

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

13. 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 the responsible corporate

officer ofsec or a duly authorized representative ofsuch officer, as those tenns

are defined in Section 22a-430-3(b)(2) ofthe Regulations, and by the individual

or individuals responsible for actually preparing such document, each ofwhom

shall examine and be familiar with the information submitted in the document

and all attachments thereto, and shall make inquiry ofthose individuals

responsible for obtain0g the infonnation to determine that the information is

true,.accurate, and complete, and each of whom shall c~rtify in writing as

foHows:

"I have personally examined and am familiar with lhe information submitted in

this document and all attachments thereto, and I certify that based on reasonable

investigation, including my inquiry ofthose individuals responsible for

obtaining the infonnation, the submitted information is true, accurate and

complete to the best ofmy knowledge and belief. I understand that any false

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statement made in the submitted infonnatiol1 may be punishable as a criminal

offense wlder Section 22a·175 of the Connecticut General Statutes or, in

accordance with Section 22a·6 ofthe Connecticut General Statutes, under

Section 53a·157b ofthe Connecticut General Statutes, and in accordance with

any other applicable statute."

14. 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 subjectsec to an injunction and penalties.

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

this Trading Agreement and Order may be punishable as a criminal offense

under Section 22a-175 of the Connecticut General Statutes or, in al:curdauce

with Section 22a·6, under Section 53a-157b ofthe Connecticut General Statutes.

16. Notice oftransfer; liability ofsec and others. Until sec has fully complied

with this Trading Agreement and Order, SCC shall notify the Commissioner in

writing no later than fifteen (15) days after transferring all or any portion ofthe

facility, the operations, the site or the business which are the subject of!:his

Trading Agreement and Order, or obtaining a new mailing or location address.

Any license transfer shall be conducted in accordance with Section 22a-60 afthe

Connecticut General Statutes. SCC's obligations under this Trading Agreement

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

other person or municipality.

17. 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 violations oflaw

which are willful or criminally negligent or for which penalties have not been

specifically. provided in this Trading Agreement and Order, including but not

limited to violations of any permit issued by the Commissioner. If at any time

the Commissioner detennines that the actions taken by SCC pursuant to this

Trading Agreement and Order have not fully achieved compliance ,\lith Section

22a·174-22 ofthe Regulations, the Commissioner may institute any proceeding

against SCC andlor require SCC to undertake further investigation or further

action.

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Stone Container Corporation Trading Agreement

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18. seC's obligations under law. Nothing in this Trading Agreement and Order

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

law.

19. No assurance by 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 sce

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

prevent or abate pollution.

20. Access to records and facility. AIJ.y representative ofthe Department of

Environmental Protection may enter and inspect the facility and inspect and

copy records within normal business hours without prior notice for the purposes

ofmonitoring. and. enforcing. the actions required or- allowed by this Trading

Agreement and Order.

21. No effect on rights of other persons. This Trading Agreement and Order shall

neither create nor affect any rights of persons who or municipalities which are

not parties to this Trading Agreement and Order.

22. No Creation of Property Rights. This Trading Agreement and Order does not

create any property rights with respect to these DERCs.

23. Notice to Commissioner of changes. Within fifteen (15) days of the date sec

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 infoITIlation was omitted,sec

shan submit the correct or omitted infonnation to the Commissioner.

24. otification ofnoncompliance. In the event that SCC becomes aware that it did

not or may not comply, or cijd not or may not comply on time, with any

requirement ofthis Trading AgreeJ;Ilent and Order or of any document required'

hereunder, see shall by telephone immediately notifY the Bureau ofAir

Management and shall take all reasonable steps to ensure that any

noncompliance or delay is avoided or, ifunavoidable, is minimized to the

greatest extent possible. sec shall also notify the Commissioner in writing

within ten days ofbecoming aware ofthe noncompliance or potential

noncompliance stating the date, time, and duration ofthe noncompliance, the

reasons for the noncompliance or delay and all activities which sec and its

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agents, employees and representatives took to avoid or repair the results of the

noncompliance and prevent the noncompliance, and propose, for the review and

written approval ofthe Commissioner, dates by which compliance will be

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

by the Commissioner. Notification by SCC shall not excuse noncompliance or

delay, a...,d the Commissioner's approval of any compliance dates proposed shall

not excuse noncompliance or delay unless specifically so stated by the

Commissioner in writing.

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

Commissioner under this Trading Agreement and Order shall, unless otheiWise

specified in writing by the Commissioner, be directed to:

Mr. Michael LaFleur

Department ofEnvironmental Protection

Bureau of Air Management

Compliance and Field Operations

Emission and Credit Trading Section

79 Elm Street

Hartford, Connecticut 06106

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and Order #8124

SCC 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 s.ec to the tenns and conditions ofthe Trading Agreement and

Order.

Stone Container Corporation

Signature: ~l-tr

Type Name: Paul H. Haves

Type Title: _.cG",",,",,""""-',--,",,,a,,"-,-,",S"'",",-__

Date: 1/3/02

Issued as a final consent order ofthe Commissioner ofEnvironmental Protection on 1)5 20~

Commissioner

TOWN OF MONTVILLE

LAND RECORDS

MAILED CERTIFIED MAIL,

RETIJRN RECEIPT REQUESTED

Certified Document No.

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