STATE OF CONNECTICUT '~ DEPARTMENT OF ENVIRONMENTAL PROTECTION

-~in the matter of

The State of Connecticut and

Combustion Engineering, Inc.

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Trading Agreement

and Order No. 81;4 A

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Whereas, the Commissioner of Environmental Protection ("Conunissioner") and Combustion

Engineering, Inc. ("CE") 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 discrete emission

reduction (''DERe'') trading to reduce nitrogen oxide C"NOx'1 emissions will achieve this result in

a timely and cost-effective manner:

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

I. This Trading Agreement and Order 5upercedes Trading Agreement and Order 8154

issued on December 11, 1997, Trading Agreement <4,d Order 8154 Modification issued

on June 3, 1998, Trading Agreement and Order 8154 Modification 2 issued on April 29,

1999, and Trading Agreement and Order 8154 Modification 3 issued on April 21, 2002.

2. CE is a corporation, which owns and operates a facility involved in engineering, support

services and research and development for combustion equipment at 2000 Day Hill

Road in Windsor, Connecticut ("facility").

3. At the facility, CE operates fuel·buming equipment which consists ofthree (3) dual-fuel

burning boilers 3, 4 and 5 (''boilers'') capable of burning natural gas, No.2 fuel oil or

No.6 fuel oil which boilers are subject to Section 22a-174-22 ofthe Regulations of

Connecticut State Agencies ("Regulations") pertaining to the control of NOx emissions.

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

testing perfonned on 3/4/98, 4/22/97 and 4/18/97 for the boilers, resulted in NOx

emission rates as follows:

Table 1

CE - NQx Emission Rates and R.\CT Limits Obs/MMBtu)

Unit Reg. R· Fuel IHeal Input Stack Allowable Use IEmissions I Next

or Permit P- (MMBtul Test Rate Rate FLER Test Date Test Due

Boiler No.3: No.6 oil 14.3 0.338 0.25 0.39 2128102 2128107

R-212-09 No.2 oil 14.3 0.18 0.20 NIA

Nat. Gas 13.8 0.11 0.20 N/A

Boiler No.4: No.6 oil 30.8 0.403 0.25 0.47 2114/02 2114/07

R-212-10 No. 2 oil 30.8 0.17 0.20 NIA

Nat. Gas 30.8 0.10 0.20 NIA

Boiler No.5: No.6 oil 30.8 OJ I7 0,25 0.37 2/13/02 2/13/07

P·212·0S No.2 oil 30.8 0.098 0.20 NIA

Nat. Gas 30.8 0.101 0.20 NIA

(P~lDlecl OD Recycled Paile:)

79 El:n SuecI • Hanlon:!, CT 06106·5127

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An Equgl Opporlu"il)' Employtr
Combustion Engineering Inc. 2 Trading Agreement and Order 8154 A

5. When burning No.6 fuel oil in boilers 3, 4 and 5, CE exceeds the NOx allowable

emission rate limit specified in Section 22a-I74-22(e) of the Regulations.

6. Pursuant to Section 22a-174-220) of the Regulations CE proposes to comply with

Section 22a-174-22(e) of the Regulations, when burning No.6 fuel oil in boilers 3, 4 and

5 through the use of approved DERCs at the facility until April 30, 2007.

7. CE proposes to use the full load emission rates ("FLERs") shown in Table I above for

the purposes ofcalculating DERCs required for the boilers.

8. The Commissioner, in accordance with the provisions ofTrading Agreement and Order

No. 8154 A, pursuant to Section 22a-174-22 of the Regulations, approved the NOx

DERCs referenced in Table 2 of this Trading Agreement and Order. DERC creation

serial numbers assigned by the Department to these previously approved DERCs are

provided in Table 2 of this Trading Agreement and Order. Unused DERCs are subject

to the vintage restrictions of this Trading Agreement and Order. Dates after which the

unused DERCs will no longer be eligible for use as a result oithe vintage resnictions are

provided in Table 2 ofthis Trading Agreement and Order in the expiration date column.

Table 2

Purchased APproved DERCs

y..,. Ozone season Tons Non-ozone season Tons Expiration Date

Pre-1999 SIN not assigned 17 12131/04

2000 SIN not assimed t4 12131/05

2001 SIN not .assi~ed 9 SIN not assi2Ded 6 12131/06

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

pursua.."1t [0 Section 22a-174-220) ofthe Regulations, hereby allows CE to comply with

Section 22a-174-22 of the Regulations at the- facility through use of emissions DERC

trading.

C. With the· agreement of CE, the Commissioner, acting under Connecticut General Statues

Sections 22a-6, 22a-174, 22a·174, 22a-176, and 22a-177, orders CE as follows:

1. Upon issuance oftbis Trading Agreement and Order, at the facility CE shall comply

with Section 22a-174-22 ofthe Regulations through emission reduction trading until CE

achieves permanent compliance with the emission standards in Section 22a-174-22 (e)

ofthe Regulation or by April 30, 2007, whichever is earlier as follows:

a. CE shall use approved DERCs as required under this Trading Agreement and

Order;

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

NOx emission limits as allowed under this Trading Agreement and Order; and

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Combustion Engineering Inc. 3 Trading Agreement and Order 8154 A

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c. CE shall comply during the operation of the boilers with the FLERs shown in

Table 1 above Oflhis Trading Agreement and Order.

2. DERC Use. Until April 30, 2007, before the first day of each month CE shall have in its

possession sufficient approved DERCs for such month based on the following

calculation:

a. Before the first day of each month, CE shall estimate DERCs required for such

calendar month boilers when burning No.6 fuel oil and using the appropriate

FLER from Table I as follows:

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

x NOx allowable limit))}+2000 lbs/ton.

Where:

• Allowable limit = allowable limit rate in Ibs/M1vfBtu shown in Table

I of this Trading Agreement and Order.

• FLER = full load emission rate in lbsl1'vlJvfBtu as shown in Table 1 of

this Trading Agreement and Order.

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

rate.

• Fuel beatin!2: value = 150,000 BTU per gallon

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

actual DERCs used in the preceding calendar month for the boilers when burning

No.6 fuel oil using the FLER from Table I above and as follows:

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

NOx allowable lirnit))}+2000 lbs/ton.

3. CE 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 assigned) each month in accordance with the appropriate

emission rates and limits in this Trading Agreement and Order; the number of

DERCs used during the ozone season and non-ozone season (the remainder of the

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. CE shall maintain and submit such

records to the Commissioner in accordance with Section 22a-174-22 of the

Regulations.

4. Record Keepimz. CE 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. CE shall provide the records

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Combustion Engineering Inc. 4 Trading Agreement and Order 8154 A

specified above to the Commissioner within thiny (30) days of receipt of a

wrinen request from the Commissioner. All records shall be maintained in

accordance with Sections 22a-174-4 and 22a-174-22 of the Regulations.

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

of this Trading Agreement and Order, CE hall include with the Annual Emission

Statement provided to the Commissioner, for each unit in the averaging set during

the previous 12 moqth calendar year a record of each sale or other transfer, and

use of any and all-.ofthe DERCs approved within and subsequent to issuance of

this Trading Agreement and Order until all such DERCs have been used. CE

shall also include NOx emissions from each boiler using or generating DERCs,

and the amount of all DERCs used including serial number (if assigned) and

approved DERCs generated andlor 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 CE

choose to discontinue the generation ofDERCs, CE will notify the Commissioner

upon discontinuance.

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

may use NOx allowances, through April 30, 2007, pursuant to Section 22a-174-

22 (j) of the Regulations to achieve all or a portion ofthe reductions required by

Section 22a-174-22 of the Regulations. Any allowance used for compliance with

Section 22a-174-22(e) of the Regulations shall be subject to all restrictions and/or

requirements applicable to DERCs contained in this Trading Agreement and

Order;

a. In order for ONC to use NOx allowances, CE shall create 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 Ox Retirement Account (Account II>

CTOOOOOOO300 in the NATS).

7. DERC Doubling. At a minimum, DERCs required shall be adjusted upwards by

100% ifDERCs are not in CE's possession prior to the first day of each month

for use. However, based on the gravity of noncompliance, the Commissioner

may require additional upward adjustment.

8. Vintae:e Restriction. For the purposes of compliance with Section 22a-174-22 of

the Regulations, DERCs/allowances shall only remain valid for five (5) calendar

years from the year ofthe generation/allocation ofsuch DERCslallowances.

DERCs/allowances older than five (5) calendar years from their

creation/allocation are not valid for use for compliance with Section 22a-174·22

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Combustion Engineering me. 5 Trading Agreement and Order 8154 A

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of the Regulations. Notwithstanding the above, DERCslaiiowances

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.

9. FLER Exceedance. Noncompliance with an established FLER shall subject CE

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 IbslM:MBtu, multiplied by the total heat input

during the period of noncompliance divided by 2000 Ibs/ton. Ifthe period of

noncompliance 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

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. FLER Modification. FLERs set forth in Tables 2 and 3 ofthis Trading

Agreement and Order may be modified only after the consent ofthe

Commissioner by written modification ofthis Trading Agreement and Order.

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

shall conduct NOx emission tests oftbe units at least once every five years

commencing from the dates ofthe NOx emission tests for the boilers as provided

in Table 2 ofthis Trading Agreement and Order.

12. Extension. No later than April 30, 2007 for the boilers, CE shall comply with the

requirements in Section 22a-174-22 (d) (I) ofthe Regulations. However, after full

program review of this and other Trading Agreements and Orders and if determined to

be appropriate, the Commissioner may grant written extension ofthis Trading

Agreement and Order.

13. Future ComDliance ReDort. On or before September 1, 2006, CE shall submit a report

indicating how the facility will comply with Section 22a-174-22 ofthe Regulations

after Apnl30, 2007.

14. Full comDliance. CE 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.

IS. Approvals. CE shall use best efforts to submit to the Commissioner all documents

required by this Trading Agreement and Order in a complete and approvable fonn. If

the Commissioner notifies CE that any document or other action is deficient, and does

not approve it with conditions or modifications, it is deemed disapproved, and CE 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 of the Commissioner's

notice of deficiencies. mapproving any document or other action under this Trading

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Combustion Engineering Inc. 6 Trading Agreement and Order 8154 A

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Agreement and Order, the Commissioner may approve the document or other action as

submined 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.

16. 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 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 has provided written authorization 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 docwnent 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 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 perfonned 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,

wIDch is required to be submined to the Commissioner under this Trading Agreement

and Order shall be signed by CE or, ifCE is not an individual, by CE's chief executive

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

§22a-430-3(b)(2) of the Regulations of COMecticu! State Agencies, and by the

individual(s) responsible for actually preparing such document, and CE or CE's chief

executive officer and each such individual shall certify in writing as follows:

"I have personally exarn.lned and am familiar with the information submitted in this

document and all anachments 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 §53a-157b of the

Connecticut General Statutes and any other applicable law."

19. Noncomoliance. This Trading Agreement and Order is a final order ofme

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 CE to an injunction and penalties.

20. False statements. Any false statement in any information submitted pursuant to this

Trading Agreement and Order is punishable as a criminal offense under §53a-157b of

the Connecticut General Statutes and any other applicable law.

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Combustion Engineering Lr:lc. 7 Trading Agreement and Order 8154 A

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Notice of transfer; liabilitv ofCE. Until CE has fully complied with this Trading

Agreement and Order, CE shall notify the Commissioner in writing no later than 15

days after transferring all or any portion ofthe facility, the operations, the site or the

business which is the subject afmis Trading Agreement and Order or after obtaining a

new mailing or location address. CE'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.

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Commissioner's pbwers. 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 CE 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 CE to undertake further

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

CE's obligations under law. Nothing in this Trading Agreement and Order shall relieve

CE 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 Corrunissioner that the actions taken by CE pursuant to this Trading

Agreement and Order will result in compliance or prevent or abate pollution.

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Access to facility. Any representative ofthe Department of Environmental Protection

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

the actions required or allowed by this Trading Agreement and Order.

No effect on ri 2hts of other persons. 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.

No Creation ofPropertv Rights. This Trading Agreement and Order does not create any

property rights with respect to these DERCs.

Notice to Commissioner of changes. Within fifteen (15) days ofthe date CE becomes

aware of a change in any information submitted to the Commissioner under this Trading

Agreement and Order, or that any such infonnation was inaccurate or misleading or that

any relevant information was omitted, CE shall submit the correct or omined

information to the Commissioner.

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29. Notification of noncompliance. In the event that CE becomes aware that it did not 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, CE 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

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Combustion Engineering Inc. 3 Trading Agreement and Order 8154 A

initial notice, CE shall submit in writing the date, time, and duration ofrhe

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

review and written approval of the Conunissioner, dates by which compliance will be

achieved, and CE shall comply with any dates which may be approved in writing by the

Commissioner. Notification by CE 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.

30. Submissi6n of documents. Any document required to be submitted to the

Commissioner untl.er this Trading Agreement and Order shall, unless othenvise

specified in this Trading Agreement and Order or in 'NT'iting by the Commissioner, be

directed to:

Mr. Roland L. Severance Jr., PE

Department ofEnvironmental Protection

Bureau of Air Management, 5th Floor

Emissions and Credit Trading Section

79 Elm Street

Hartford, Connecticut 06106-5127

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Combustion Engineering Inc. 9 Trading Agreement and Order 8154 A

CE consents to the issuance of this Trading Agreement and Order without funher notice. The

undersigned certifies that he/she is fully authorized to enter jnto this Trading Agreement and Order

and to legally bind CE to the tenns and conditions of the Trading Agreement and Order.

COl1lbusti

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Signature: L/S,(.{i~:I2'4~:J:~2::==--_ I

Type Narne: --,R".--"K=.e=-ir"h,--"K"n",au=e=-rh"a"'s"'e=---__

Type Title: Manager. Environmental Engineering

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Date: April 22, 2003

Issued as a final order of the Commissioner of Environmental Protection

on ---fflz,-,,&=, .,2003.

CITY OF WlNDSOR LA.NIl RECORDS

MAILED CERTIFIED MAIL,

RETURN RECEIPT REQUESTED

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