Exhibit 3

STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

1'1 the matter of

The State ofCormecticut

and

US Naval Submarine Base

New London

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Trading Agreement

and Order

No.8201 (CC)

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

United States Naval Submarine Base New London ("SUBASENLON"), agree that it is in

the public interest that they work cooperatively to improve the air quality within the State

ofConnecticut 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 of SUBASENLON, the Commissioner

finds the following:

I.

2.

3.

4.

Initials~

SUBASENLON is a branch of the United States government that owns

and operates a Naval Submarine training and maintenance facility at Route

12, Crystal Lake Road in Groton, Connecticut ("facility"). Groton,

Connecticut is a serious non-attainment area for ozone.

At the facility, SUBASENLON operated a Keeler Company steam boiler

No.1 S, ("boiler") which burned #2 oil and natural gas and was subject to

Section 22a-174-22, Regulations of Connecticut State Agencies

("Regulations") pertaining to the control ofnitragen oxide (''},Tax'')

emISSIons.

On April 3D, 1998 boiler No.1 S was pennanently shut down and the Navy

has requested to use the. resulting pennanent reduction in NOx emissions

from' that unit to create continuous emission reduction credits ("CERes")

for use or trade.

The average annual NOx emissions from the equipment was 8.29 tons,

based on the two year period, 1995 and 1996, shown to be most

representative of nonnal source operations prior to dismantling the subject

equipment, in accordance with the U.S. Environmental Protection

Agency's "Emissions Trading Policy Statement", published December 4,

1986, (Federal Register Volume 51, Number 233), as determined by the

Department ofEnvironmental Protection based on the Air Bureau's

Emission Inventory_;dat~ on Recycled Paper)

79 film Street j Hartford. CT 06106-5127 Date 6'..<J.02.

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SUBASENLQN Trading Agreement and Order 8201 (CC)

5. Boiler No. IS and boilers Nos. 1,2 and 3 were used to generate emission

reductions offsets for SUB~ENLON's heat recovery gas turbine permit

TO. P-0096 (hereby incorporated into this Trading Agreement and Order

by reference) by using a permit limit restricting the heat input from these

boilers to a maximum of 836,284 M:MBtu per year.

6. Prior to using boiler No.1 S to create CERes for purposes other than

described in Permit No. P-0096 above, SUBASENLO must obtain a

permit modification to maintain its emission offsets after removing boiler

No.1 S by reducing the maximum heat input for boilers Nos. 1, 2 and 3

from 836,284 MMBtu per year to 725,750 MMBtu per year.

7. Pennit #0096 was modified by the DEP to remove boiler No. IS from the

permit and contains a pennit limit restricting the heat input for boilers

Nos. 1,2 and 3 to 725,750 MMBtu per year.

8. As properly documented by SUBASENLON, and approved by the

Commissioner. the reductions in NOx emissions identified above, and as

computed in accordance with the terms ofthis Trading Agreement and

Order, confonn with the provisions ofthe u.s. Environmental Protection

Agency's "Emission Trading Policy Statement". published December 4,

1986, (Federal Register Volume 51, Number 233, pertaining to the

creation ofCERes. Specifically, the reductions are:

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

The emission reductions are properly measured, recorded and reported.

Quantifiable because they are based on Emissions Inventory Data derived from

AP-42 factors.

Surolus because they are not required by any 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.

Pennarlen~ because the boiler has been shut down and will not be operated in the

future.

Enforceable because the CERCs are approved by the Commissioner under this

Trading Agreement and Order.

B. The Commissioner has determined and SUBASENLON agrees to the

following:

1. The boiler No. IS permit 070-038 is hereby null and void, and

SUBASENLON hereby waives the right, if any to the administrative

Initials(fl£. 2
SUBASENLON Trading A2reement and Order 8201 (CCl

proceedings pursuant to Section 22a-3a-5(d) ofthe Regulations.

2. Subject to paragraph C.2 ofthis Trading Agreement and Order the

Commissioner hereby approves 8 tons of CERes from the actual

reductions in NOll emissions from the shutdo\Vn of boiler No. IS. The

Department has assigned these approved reductions of NOx emissions

with the credit creation serial number CT98/820l(CC)P-038NOX(l-8).

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

Agreement and Order, pursuant to Section 22a-174-3a ofllie Regulations,

will allow approved sources within Connecticut to use a total of 8 tons of

NOx CERes as emission offsets for new or modified sources for

compliance with the requirements of Subdivision (4) of Subsection (1) of

Section 22a-174-3a ofthe Regulations and/or for other purposes as

approved by the Commissioner in accordance with the Regulations.

4. CERCs approved under this Trading Agreement and Order shall remain

valid until they are used; however, ifthe NOx RACT limits are adjusted

downward in later revisions of Section 22a-174-22 of the Regulations and

these CERCs have not been used, these CERes may also be adjusted

downwardly.

C. With the agreement of SUBASENLON, the Commissioner, acting under

Sections 22a-6, 22a-171, 22a-174, 22a-176, and 22a-l77 ofthe Connecticut

General Statutes, orders SUBASENLON as follows:

1. SUBASENLON shall not exceed the maximum heat input limitation of

725,750 M:MBtu per year for boilers ros. 1,2 and 3.

2. SUBASENLON shall not operate boiler No. IS.

3. No later than 30 days after a sale, or other transfer or use, SUBASENLON

shall submit a record of each sale or other transfer, or use of any and all

CERCs (including serial numbers, if assigned) approved within this Trading

Agreement and Order to the DEP. These reports shall be on a fonn

prescribed by the Commissi9ner.

4. No later than March I of every year after issuance ofthis Trading

Agreement and Order, SUBASENLON shall include with the "Annual

Approved CERC Sales and Use Report" to the Commissioner, a record of

each sale or other transfer, and use by SUBASENLON (including serial

numbers if assigned) of any and all ofthe CERCs approved within this

Trading Agreement and Order for the previous calendar year until all such

CERCs have been used. These reports shall be on a form prescribed by the

Commissioner. This reporting may cease if a central registry is approved by

the Commissioner.

InitialsM 3
SUBASENLON Trading Arrreemenl and Order 820 I ICCl

5. SUBASENLON shall retain records and supporting documentation as

described in this Trading Agreement and Order for a minimum of five years,

commencing on the date such records were created. SUBASENLON shall

provide the records specified above to the Commissioner within thirty (30)

days ofreceipt of a written request from the Commissioner.

6. Approvals. SUBASENLON shall use best efforts to submit to the

Commissioner all documents required by this Trading Agreement and Order

in a complete and approvable fOm1. Ifthe Commissioner notifies

SUBASEl\1LON that any document or other action is deficient, and does not .

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

SUBASENLON 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 ofthe 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

submitted 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.

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

"Commissioner" means the Commissioner or a representative of the

Commissioner; "Ozone season" means the period from May t ihrough

September 30 in any given calendar year, and ''NOx RACT" means NOx

Reasonably Available Control Technology. 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.

8. 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 ofany 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 no~ce is deposited in the U.S. mail or is

personally delivered, whichever is earlier. Except as othenvise 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 performed by the next day which is not

a Saturday, Sunday or Connecticut or federal holiday.

9. 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 SUBASENLON's chief

L-litials~ 4 Date 6-6.,,) oQ"<-
SUBASENLON Tradin. AlITeement and Order 8201 (CGl

executive officer or a duly authorized representative ofsuch officer, as those

terms are defined in §22a-430-3(b)(2) of tbe Regulations ofConnecticut

State Agencies, and by tbe individual(s) responsible for actually preparing

sucb document, and SUBASENLON or SUBASENLON's cbief 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

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

investigation, including my inquiry ofthose individuals responsible for

obtaining the infonnation, 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 §53a·157b of the Connecticut General Statutes and

any other applicable law."

10. Noncomoljance. This Trading Agreement and Order is a final order of the

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 SUBASENLON to an injunction

and penalties.

11. 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 ofthe Connecticut General Statutes and any other

applicable law.

12. Notice oftransfer; liabilitv of SUBASENLON. Until SUBASENLON has

fully complied with this Trading Agreement and Order, SUBASENLON

shall notify the Commissioner in writing no later than IS days after

transferring all or any portion ofthe 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. Slj"BASE1\TLON's obligations

under this Trading Agreement and Order shall not be affected by the

passage oftitle to 3t,y property to any other person or municipality.

13. 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 oflaw. If at any time the Commissioner

determines that the actions taken by SUBASEl\TLON 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

proce.eding to require SUBASENLON to undertake further investigation or

furt..her action to prevent or abate violations or polJution.

rnitiaJs~ 5 Date I-:<s-·o"-""
SUBASENLON Trading AlZreement and Order 8201 (CCl

l4. SUBASE LON's obligations under law. Nothing in this Trading

Agreement and Order shall relieve SUBASENLON of other obligations

under applicable federal, state and local law.

15. 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

SUBASENLON pursuant to this Trading Agreement and Order will result

in compliance or prevent or abate pollution.

16. Access to facilitv. Any representative ofthe 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.

17. No effect on r1szhts orother persons. This Trading Agreement and Order

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

parties to this Trading Agreement and Order.

18. No Creation ofPronerty Rights. This Trading Agreement and Order does

not create any property rights with respect to these CERCs.

19. Notice to Commissioner of chaJ1Q:es. Within 15 days ofthe date

SUBASENLON 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 omitted, SUBASENLON shall submit the correct or

omitted information to the Commissioner.

20. Notification ofnoncomolia."lce. ill the event that SUBASEl\JLON becomes

aware that it did hot or may not comply. or did not or may not comply on

time, with any requirement of this Trading Agreement and Order or of any

document required hereunder, SUBASENLON shall immediately notify by

telephone the individual identified in the next paragraph and shall take all

reaso~able steps to ensure that any noncompliance'or delay is avoided or. if

unavoidable. is minimized to the greatest extent possible. Within five (5)

days of the initial notice, SUBASEN'LON 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

SUBASENLON shall comply with any dates which may be approved in

writing by the Commissioner. Notification by SUBASENLON shall not

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

compliance dates proposed shall not excuse noncompiiance or delay unless

specifically so stated by the Commissioner in writing.

Initials 6 Date /-.zv-.o"L
SUBASENLQN

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Trading Agreement and Qrder 8201 (CC)

Submission of documents. Ally 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:

Mr. Roland 1. Severance Jr., PE

Department of Envirorunental Protection

Bureau ofAir Management

Compliance and Field Operations Division

Emissions and Credit Trading Section

79 Elm Street, 5th Floor

Hartford, Connecticut 06106-5127

lnitials~ 7 Date 6-.z.r-<> .......
SUBASENLQN Trading A",eement and Order 8201 ccg

SUBASENLON consents to the issuance of this 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 legaI"ly bind SUBASENLON to the terms and conditions of the

Trading Agreement and Order.

By the United States Naval Submarine Base New London ("SUBASENLON")

Type Name: R. W. RUPLE, CAPTAIN USN

Type Title: _-'C:::O"'MMi=AN=DI"N"'G'-"-OFF""'I"'C"ER"--- _

Date: 25 JUh'E 2002

Entered as a final consent qr9,elRfthe CommJss~r ofpnvironmental Protection numbered

8201(CC) this <---'l~ dayn· 2002.

L~~~1;L4 I

ur 1. Rocque, Jr.

~mmiSSioner

MAILED CERTlFIED MAIL,

RETURN RECEIPT REQUESTED

Certified Document No.

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