FOR IMMEDIATE RELEASE ENRD

THURSDAY, NOVEMBER 30, (202) 514-2007

2006 TDD (202) 514-1888
WWW.USDOJ.GOV

United States Announces Clean Air Act

Settlement
with PSEG Fossil LLC for Violations of
2002 Consent Decree
Utility Required to Pay Significantly Increased
Penalties and Reduce Emissions
WASHINGTON – The U.S. Environmental Protection Agency (EPA) and the U.S.
Department of Justice today announced that they have lodged with federal district
court in New Jersey, a Clean Air Act (CAA) settlement with PSEG Fossil LLC
related to PSEG’s failure to comply with a 2002 consent decree requiring
installation of pollution controls at its coal-fired power plants in Jersey City and
Hamilton, N.J. This new settlement, which was done in coordination with the state
of the New Jersey and which is subject to court approval, secures additional air
pollution reductions, tighter controls, valuable environmental projects and a
significant penalty.

Under the terms of today’s settlement, PSEG will be required to pay a civil penalty
of $6 million—$4.25 million to the federal government and $1.75 million to New
Jersey. PSEG will also perform environmental mitigation projects valued at $3.25
million to reduce particulate matter from diesel engines in New Jersey.

“The new agreement with PSEG will benefit New Jersey’s environment,” said Alan
J. Steinberg, EPA Regional Administrator. “The agreement contains new, more
stringent requirements than those to which we originally agreed. Failure to comply
with a consent decree is serious business, and we will hold the parties accountable
until every obligation is satisfied. These changes will advance our commitment to
improving air quality for New Jersey and its neighbors.”

“PSEG failed to live up to its obligations under the 2002 Consent Decree, putting
air quality and public health at risk,” said Granta Y. Nakayama, EPA Assistant
Administrator for the Office of Enforcement and Compliance Assurance. “This new
agreement shows that there are serious consequences to violating court orders like
the 2002 Consent Decree, and that EPA will take the necessary steps to enforce its
prior agreements to ensure that the public is protected from excessive air pollution.”

“This amended settlement provides increased public health benefits over the original
settlement,” said Sue Ellen Wooldridge, Assistant Attorney General for the Justice
Department’s Environment and Natural Resources Division. “The new hardware
commitments in the Amendment add assurance that toxic mercury emissions will be
dramatically reduced and will also provide important long-term reductions in NOx
and SO2 emissions.”

The amended agreement, signed by the United States and the state of New Jersey,
requires the electric utility to accelerate the installation of air pollution control
equipment at its Mercer plant, to install additional control equipment that was not
previously required and to carry out a host of interim pollution control measures in
exchange for delaying the installation of pollution controls required under the
original timeline at the Hudson Plant.

Under the 2002 consent decree, PSEG was required to install pollution control
equipment at the Mercer and Hudson plants to reduce sulfur dioxide, nitrogen oxide
and particulate matter (PM), and take steps to reduce mercury and carbon dioxide
emissions. The utility did install pollution control equipment for nitrogen oxides
known as selective catalytic reduction (SCR) at its Mercer plant. SCR is capable of
reducing nitrogen oxides (NOx) by approximately 90%. However, PSEG Fossil has
failed to take the necessary steps to install required pollution control equipment at
the Hudson facility as required by the original settlement.

To compensate for the pollution reductions not achieved due to PSEG’s

noncompliance, PSEG will be required to install an acid gas scrubber—state-of-
the-art technology for removing sulfur dioxide from exhaust gases produced by the
power plant -- at one of the Mercer plants by 2010, two years earlier than the
previous requirement to install it by 2012. PSEG will also install an acid gas
scrubber at the other Mercer plant in 2010 as required by the 2002 agreement. PSEG
Fossil must also now meet a new NOx emissions limit at the Mercer plant starting
Jan. 1, 2007. In addition, the company will install baghouses or dust collection
chambers at its Mercer plant, which were not required under the original agreement,
to cut pollution more than a less effective technology it was previously using.
Lastly, PSEG is required to use carbon injection systems, not previously required, to
reduce mercury emissions from the Mercer facility.

At the Hudson Power Plant, PSEG will be required to take interim steps to reduce
emissions of NOx, sulfur dioxide (SO2) and PM until the required pollution control
equipment is installed or the unit is shut down. These interim measures include
year-round operation of the existing NOx control equipment utilizing selective non-
catalytic reduction to reduce NOx, use of ultra-low sulfur coal, compliance with
annual emission caps for NOx and SO2, and operation of an electrostatic
precipitator and a fly ash conditioning system to control PM. Installation of
permanent controls will be delayed until Dec. 31, 2010, unless PSEG chooses to
shut down the unit altogether in 2008. If PSEG does not shut down the Hudson
facility and installs permanent controls, PSEG will also be required to install a more
effective baghouse than previously required and use a carbon injection system to
reduce mercury emissions from this facility after the pollution control equipment is
installed.

As a result of the more stringent emission limits and installation of controls, the new
settlement will likely result in ever greater reductions in air pollution than agreed to
in the original consent decree. For the period of the consent decree, PSEG will
significantly reduce its emissions of NOx by 534 tons, SO2 by 257 tons and fine
particle emissions by 252 tons.

The utility has also elected to shut down other fossil fuel burning units in Kearny,
N.J. These shutdowns will further reduce air pollution. PSEG will be required to
install continuous emissions monitoring systems that measure pollutants emitted
into the atmosphere in exhaust gases for soot and mercury at its Hudson and Mercer
plants. These new requirements will enable the company to continuously track these
pollutants and enable it to take appropriate steps to address any problems observed.
The EPA will use information from these monitors to determine PSEG’s compliance
with the emissions limits.

Should PSEG fail to meet the requirements of the amended consent decree, they
will be subject to stipulated penalties, ranging from $10,000 per day to $32,500 per
day contingent on the type and length of the violation. The amendment also imposes
new recordkeeping and reporting obligations to ensure that PSEG stays on schedule
with the terms of the agreement.

SO2 and NOx are significant contributors to acid rain; NOx also increases low level
ozone, which causes smog; fine particulate matter causes haze. All of these
pollutants cause severe respiratory problems and exacerbate cases of childhood
asthma.

The modified consent decree, which is subject to a 30-day public comment period
and final court approval, is available on the Justice Department Web site at
http://www.usdoj.gov/enrd/Consent_Decrees.html. More about the EPA’s efforts in
combating air pollution is available at http://www.epa.gov/Region2.

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