PSEG Fossil LLC Amendment to 2002 Consent Decree 

Fact Sheet 

November 30, 2006 

Overview: On July 26, 2002, the United States District Court for the District of New Jersey 

approved a judicial settlement between the United States Environmental Protection Agency 

(USEPA), the State of New Jersey, and PSEG Fossil LLC (“PSEG Fossil”) to resolve PSEG 

Fossil’s violations of the Clean Air Act. The settlement required PSEG Fossil to install and 

operate state-of-the-art controls for sulfur dioxide (SO2), nitrogen oxide (NOx), and particulate 

matter (PM) emissions on every coal-fired unit it operates, to retire SO2 and NOx allowances, 

and to undertake environmental projects. 

In late 2005, USEPA learned that PSEG Fossil would not be able to comply with the December 

31, 2006 deadlines in the 2002 Consent Decree to install a flue gas desulfurization (FGD) device 

(also known as a “scrubber”) to control SO2 and a baghouse to control PM on its highest 

polluting power plant, Hudson Unit 2. USEPA also learned that PSEG Fossil would not comply 

with a May 1, 2007 deadline to install a selective catalytic reduction device (“SCR”) to control 

NOx at Hudson Unit 2. 

Subsequently, USEPA, New Jersey, and PSEG Fossil began negotiating an amendment to the 

2002 Consent Decree. The Amendment imposes $6.0 million in civil penalties for PSEG 

Fossil’s anticipated failure to comply with the 2002 Consent Decree, provides a new timeline to 

PSEG Fossil to install controls, imposes interim emission reduction measures and requires 

additional pollution reductions to ensure that the environment will be made whole despite PSEG 

Fossil’s prospective violations of the 2002 Consent Decree. In addition, PSEG Fossil will 

implement a host of diesel engine retrofit/replacement projects for the State of New Jersey 

valued at $3.25 million. With these new requirements, the Amendment is “environmentally 

neutral” to the 2002 Consent Decree, and achieves permanent reductions beyond that required 

for in the 2002 Consent Decree. 

State Partnerships: The State of New Jersey, as a party to the 2002 Consent Decree and coplaintiff in the original lawsuit, was instrumental in negotiating this Amendment. This 

Amendment is another excellent example of how the state and federal government can work 

together to protect the environment and public health. 

Affected Power Plants: The Amendment requires pollution reductions and imposes new 

deadlines on power plants included in the 2002 Consent Decree, including Hudson Unit 2, 

Mercer Unit 1 and Mercer Unit 2. In addition, the Amendment requires the shutdown of two 

uncontrolled oil-fired units, Kearny Units 7 and 8. 

1
Environmental Neutrality: The proposed changes to the 2002 Consent Decree will be at a 

minimum “environmentally neutral.” This means that an Amendment has to achieve the same or 

greater emission benefits as the original 2002 Consent Decree and such emission reductions must 

take into consideration when they are achieved. This is known as “quantitative and temporal 

neutrality,” respectively. 

In addition to installing the required controls at Hudson by the extended duedates, the 

Amendment achieves quantitative neutrality for SO2, NOx, and PM by requiring PSEG Fossil 

to: 

• Achieve an emission rate on its SCRs at Mercer Units 1 and 2 of 0.100 lbs./mmBtu on a 

90 day rolling average, by January 1, 2007; 

• Advance installation and operation of an FGD on Mercer Unit 2 from 2012 to 2010; 

• Operate two new baghouses to control PM and mercury emissions from Mercer Units 1 

and 2 by December 31, 2008; 

• Limit fuel to 100% ultra low-sulfur coal by May 1, 2007, comply with an SO2 emission 

rate, and meet annual tonnage caps for SO2 and NOx at Hudson Unit 2 until PSEG installs 

an FGD or shuts down the unit; 

• Install carbon injection systems to make best efforts to achieve a 90% reduction in 

mercury emissions at Hudson Unit 2, Mercer Unit 1 and Mercer Unit 2; 

• Shut down Kearny Units 7 and 8 (two uncontrolled oil-fired units), and surrender any 

SO2 allowances allocated to those units in excess of the operational needs for PSEG 

Fossil’s compliance with the amendment and the 2002 Consent Decree.; 

• Install PM and Mercury Continuous Emission Monitoring Systems (CEMS). 

Table 1, below, identifies the specific changes to the 2002 Consent Decree effected by the 

Amendment as it relates to Hudson Unit 2, Mercer Unit 1 and Mercer Unit 2. 

In addition to considering the quantity that must be reduced to achieve neutrality with the 2002 

Consent Decree, the Amendment also takes into consideration PSEG Fossil’s delay in failing to 

timely install and operate pollution controls. In short, a ton of air pollution reduced today is 

more valuable to public health than a ton of air pollution reduced at some later date. To achieve 

this “temporal neutrality,” USEPA and New Jersey discounted the emission reductions that 

were later in time than those reductions under the 2002 Consent Decree. To the extent that the 

discounted emission reductions fell short of the emission reductions under the 2002 Consent 

Decree, the Amendment requires PSEG Fossil to surrender three times that amount in 

allowances. For example, the Amendment requires that, to achieve temporal neutrality for NOx, 

an additional 410 tons of NOx be eliminated through the purchase and surrender of that quantity 

of NOx allowances (1 allowance equals 1 ton of emissions). This amendment also requires 

PSEG Fossil to surrender an additional 820 NOx allowances, as a “premium”over and above the 

amount of allowances necessary to achieve temporal neutrality. In total, 1,230 NOx allowances 

will be surrendered. 

For SO2, PSEG was able to demonstrate temporal neutrality. However, for PM, there is a 

temporal shortfall of 2,856 tons. Since there is no applicable PM allowance program, PSEG 

2
3

Fossil will be required to surrender 2,856 SO2 allowances to address this temporal shortfall. 

Similarly, the amendment requires a premium of 5,712 SO2 allowances over and above the 

amount of allowances necessary to achieve temporal neutrality. In total, PSEG must surrender 

a total of 8,568 SO2 allowances, or three times the 2,856 SO2 allowances needed to achieve 

temporal neutrality for PM. 

Option to Shutdown Hudson Unit 2: PSEG Fossil is considering whether or not to shut down 

Hudson Unit 2 by December 31, 2008. If its decision is to shut down, PSEG Fossil may be 

ordered by the Department of Energy to operate Hudson Unit 2 to address energy reliability 

concerns, notwithstanding PSEG Fossil’s plans to shut it down. To address this situation, the 

Amendment requires that even in the face of such an order, PSEG Fossil shall not operate 

Hudson Unit 2 beyond December 31, 2010 unless it has installed the controls and complied with 

emission rates and pollution reduction measures in the Amendment. 

Planned Shutdown of Kearny Units 7 and 8: The Amendment requires the permanent 

shutdown of Kearny Units 7 and 8, two uncontrolled oil fired units in the PSEG Fossil system. 

The Amendment also requires the surrender of any pollution control permits issued for those 

units, as well as any excess SO2 or NOx allowances allocated to those units that are not otherwise 

needed for PSEG Fossil’s compliance in a given year with the Amendment and 2002 Consent 

Decree. 

Civil Penalty and Environmental Mitigation Projects: PSEG Fossil is required to pay a total 

civil penalty of $6.0 million to the United States and the State of New Jersey for prospective 

violations of the 2002 Consent Decree. The United States will collect $4.25 million in civil 

penalties. New Jersey will collect $1.75 million in civil penalties and will require PSEG Fossil 

to perform environmental projects valued at $3.25 million focused on reducing particulate matter 

from diesel engines in New Jersey. 
Table 1. Summary Comparison of Pollution Controls/Operating Parameters and Emission Limitations in 

2002 Consent Decree.

Hudson Unit 2 Mercer Unit 1 

2002 Consent Decree

Amendment 2002 Consent 

Decree

Amendment 2002 Consent D

SO2 Controls FGD Interim: use of ultra low 

sulfur coal until FGD 

FGD No change FGD 

SO2 Control 

Installation Date

12/31/06 12/31/2010 12/31/2010 No change 12/31/2012 

SO2 Emission Rate 0.15 lbs/ mmBTU on 

30-day avg; 0.25 lbs/mmBTU on 24-hr avg. 

Interim: Overall annual SO2 emissions cap and an SO2 emissions rate (30 day average) based on the use of ultra low sulfur coal until the FGD is installed. Final: 0.150 lbs/mmBTU on 30-day average; 0.250 lbs/mmBTU on 24-hour average 

0.15 lbs/ mmBTU on 30-day avg; 0.25 lbs/mmBTU on 24-hr avg. 

Final: 0.150 lbs/mmBTU on 30-day average; 0.250 lbs/mmBTU on 24-hour average 

0.15 lbs/ mmBTU 30-day avg; 0.25 lbs/mmBTU on 2avg. 

NOx Controls SCR Interim: use of ultra low 

sulfur coal and SNCR year round 

SCR No change SCR 

NOx Control 

Installation Date

5/1/07 SNCR operation by 

1/1/2007; SCR installation and operation by 12/31/2010 

5/1/05 No change 5/1/04 

4
Hudson Unit 2 Mercer Unit 1 

 2002 Consent 

Decree

Amendment 2002 Consent 

Decree

Amendment 2002 Consent D

NOx Emission Rate 0.10 lbs/ mmBTU on 

30-day avg; 0.15 lbs/mmBTU on 24-hr avg. 

Interim: Overall interim annual NOx emissions cap and an NOx emission rate (30 day average) based upon the use of ultra low sulfur coal until SCR is installed. Final: SCR NOx rate of 0.100 lbs/ mmBTU on 30-day avg; 0.150 lbs/mmBTU on 24-hr avg. 

0.13 lbs/ mmBTU on 30-day avg; 0.15 lbs/mmBTU on 24-hr avg. 

In addition to existing NOx emission rates, 0.100 lbs./mmBtu on 90-day avg. by 1/1/2007

0.13 lbs/ mmBTU 30-day avg; 0.15 lbs/mmBTU on 2avg. 

PM Controls Optimize ESP and 

install polishing baghouse 

Install Full size baghouse to replace ESP 

Optimize and/or upgrade existing ESP 

Install new baghouse to replace ESP 

Optimize and/or upgrade existing 

PM Control Installation Date

Optimization by 12/31/02; Baghouse by 12/31/06 

Operate existing ESP and fly ash conditioner by 1/7/2006; Install and operate baghouse by 12/31/2010 

12/31/02 (est.) 12/31/2008 12/31/02 (est.) 

PM Emission Rate 0.015 lbs/mmBTU 0.0150 lbs/mmBTU 0.03 lbs/mmBTU 0.0150 lbs/mmBTU 0.03 lbs/mmBTU Continuous Emission Monitoring Systems (CEMS) 

Mercury or PM CEMS 

Mercury and PM CEMS 

Mercury or PM CEMS 

Mercury and PM CEMS 

Mercury or PM C

Mercer Controls None Carbon Injection by 

Dec 31, 2010 

None Carbon Injection by Jan 

1, 2007 

None 

5