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Hoosier Energy Rural Electric Cooperative, Inc. Settlement

(Washington, DC - July 23, 2010) The U.S. Environmental Protection Agency (EPA), the Justice Department, and the state of Indiana announced that Hoosier Energy Rural Electric Cooperative, Inc. has agreed to pay a civil penalty of $950,000 and install and upgrade pollution control technology at its two coal-fired power plants in Indiana to resolve violations of the Clean Air Act. The settlement, filed in federal court today, will reduce harmful air pollution by more than 24,500 tons per year and requires Hoosier to spend $5 million on environmental projects.

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Overview of Company and Facility Locations

Hoosier Energy Rural Electric Cooperative, LLC (Hoosier), headquartered in Bloomington, Ind., is a generation and transmission cooperative. Hoosier provides electric power to 17 member electric distribution cooperatives in central and southern Indiana and one member cooperative in Illinois.

Hoosier owns and operates two coal-fired electric generating stations in Indiana with a total gross coal-fired capacity of about 1,358 megawatts (MW).

  • Merom Generating Station (Merom), Sullivan County

The Merom plant has two coal-fired boilers, Unit 1 (547 gross MW) and Unit 2 (547 gross MW) that began commercial operation in 1982 and 1983. At that time, both units were equipped with flue gas desulfurization (FGD) technology to control emissions of sulfur dioxide (SO2). In 2004, Hoosier installed selective catalytic reduction (SCR) technology to control emissions of nitrogen oxides (NOx).

  • Ratts Generating Station (Ratts), Pike County

The Ratts plant has two coal-fired boilers, Unit 1 (132 gross MW) and Unit 2 (132 gross MW) that began commercial operation in 1970. The units are not equipped with any add-on pollution control technology but they do operate with low-NOx burners, a type of combustion control.

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On August 26, 2009, EPA issued a notice of violation (NOV) to Hoosier. EPA alleged that in 2008, Hoosier made modifications at the Merom plant without first complying with the New Source Review program's pre-construction obligations, which include, obtaining pre-construction permits and establishing an emission limitation based upon Best Available Control Technology, in violation of:

  • The Clean Air Act (CAA) Prevention of Significant Deterioration provisions, 42 U.S.C. §§ 7470-7492
  • The Prevention of Significant Deterioration provisions of the Indiana State Implementation Plan (Indiana SIP)
  • Title V of the Clean Air Act and the Indiana Title V regulations

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Injunctive Relief

The consent decree secures injunctive relief at all four coal-fired units within Hoosier's electric generating system. Upon full implementation, EPA expects a combined reduction of 24,515 tons of nitrogen oxides (NOx), sulfur dioxides (SO2), particulate matter (PM), and sulfuric acid mist (H2SO4) from the 2009 baseline. Hoosier estimates the cost of the injunctive relief required by this consent decree through the end of 2015 to be between $250 and $300 million.

The settlement will require Hoosier to:

  • Install and operate a reagent injection system to control sulfuric acid mist emissions, and achieve an emission rate of 0.007 lb/mmBTU, this requirement is a "first" in a coal-fired power plant settlement
  • Upgrade the existing SCRs at Merom to achieve and maintain an emission rate of 0.080 lb/mmBTU
  • Install and continuously operate selective non-catalytic reduction (SNCR) technology at the two Ratts units
  • Upgrade the existing FGDs at Merom to a design removal efficiency of 98 percent and meet unit-specific emission limitations
  • Optimize existing PM controls and meet unit-specific emission limitations
  • Comply with plant-wide and system-wide tonnage limitations for NOx and SO2
  • Annually surrender any NOx and SO2 allowances that Hoosier does not need in order to meet its regulatory obligations

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Pollutant Reductions

As compared to Hoosier's 2009 emissions, EPA expects the following emission reductions as a result of this settlement:

  • System emissions of SO2 reduced by about 19,827 tons per year
  • System emissions of NOx reduced by about 1,845 tons per year
  • System emissions of PM reduced by about 1,539 tons per year
  • Emissions of H2SO4 at the Merom plant reduced by about 1,304 tons per year

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Health and Environmental Effects

The pollutants reduced under this settlement are known to have numerous adverse, significant environmental and health effects. Sulfur dioxides and nitrogen oxides can be converted to fine particulate matter once in the air. Fine particulates can be breathed in and lodged deep in the lungs, causing a variety of health impacts, including premature death. Other health and environmental impacts from the pollutants addressed in this settlement include the following:

  • Sulfur Dioxide - High concentrations of SO2 affect breathing and may aggravate existing respiratory and cardiovascular disease. Sensitive populations include asthmatics, individuals with bronchitis or emphysema, children and the elderly. Sulfur dioxide is also a primary contributor to acid deposition, or acid rain.

  • Particulate Matter - Particulate matter, especially fine particles, contains microscopic solids or liquid droplets that are so small that they can get deep into the lungs and cause serious health problems. Particulate matter is linked to a variety of problems, including increased respiratory symptoms such as irritation of the airways, coughing, or difficulty breathing, decreased lung function, aggravated asthma, and premature death in people with heart or lung disease.
  • Nitrogen Oxides - Nitrogen oxides can cause or contribute to a variety of health problems and adverse environmental impacts, such as ground-level ozone, acid rain, global warming, water quality deterioration, and visual impairment. Affected populations include children and people with lung diseases such as asthma. Exposure to these conditions can cause damage to lung tissue for people who work or exercise outside.

  • Sulfuric acid mist is a corrosive chemical and can severely burn the skin and eyes. It may cause third degree burns and blindness on contact. Exposure to sulfuric acid mist can irritate the eyes, nose, throat and lungs, and at higher levels can cause a buildup of fluid in the lungs (pulmonary edema). Asthmatics are particularly sensitive to the pulmonary irritation. Repeated exposures may cause permanent damage to the lungs and teeth. Sulfuric acid dissolves in the water in air and can remain suspended for varying periods of time; it is removed from the air as rain. Sulfuric acid in rain contributes to the formation of acid rain. For more human health effects see: Exposure to Sulfuric Acid.

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Environmental Mitigation Projects

This settlement also requires Hoosier to spend $5 million on environmental mitigation projects to address the impacts of past emissions. Hoosier must direct $200,000 to the US Forest Service for the improvement, protection, or rehabilitation of forests identified in Appendix A of the Consent Decree. The remaining $4.8 million may be spent on one or more of the following projects identified in Appendix A of the Consent Decree.

Coal Bed Methane Project

Hoosier will capture and combust methane from coal beds to generate at least ten (10) MW of electricity. Carbon dioxide emissions resulting from the combustion of methane will be supplied to a greenhouse for use as a fertilizer. Hoosier can spend no more than $1 million in project dollars to implement this mitigation project.

Wood Appliance Changeout and Retrofit Project

Hoosier will sponsor a wood-burning appliance changeout and retrofit project. To do this, Hoosier will provide incentives through rebates, discounts, and in some instances, actual replacement of old, inefficient, high polluting wood-burning technology or baseboard electric heating for newer, low emitting, energy efficient technology including geothermal heat pumps, EPA Phase 2 hydronic heaters, or EPA-certified woodstoves and hearth appliances.

Clean Diesel Retrofit Project

Hoosier will retrofit in-service, public diesel engines with emission control equipment designed to reduce emissions of NOx and volatile organic compounds (VOCs).

Solar Technologies Project

This project expands what EPA has previously included in past coal-fired power plant settlements beyond photovoltaic (PV) systems to include solar thermal water/space heating systems. Hoosier will install either PV systems or Thermal systems on public schools or nonprofit groups in Hoosier's service territory.

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Civil Penalty

Hoosier will pay $950,000 in civil penalties.

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State Partner

Indiana joined the United States in the lawsuit and is a party to the settlement. Indiana will receive $100,000 of the $950,000 civil penalty.

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Comment Period

The proposed settlement, lodged in the U.S. District Court for the Southern District of Indiana, is subject to a 30-day public comment period and final court approval. Information on submitting comments is available at the Department of Justice website.

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The Power Plant Enforcement Effort

The United States has filed lawsuits against several other utilities for alleged violations of the CAA. This series of cases seeks to bring the power plant industry into full compliance with the New Source Review and Prevention of Significant Deterioration requirements of the Clean Air Act. This settlement with Hoosier represents the twentieth judicial settlement under the power plants enforcement effort.

The total combined sulfur dioxide and nitrogen oxides emission reductions secured from these settlements will be over 2 million tons each year once all the required pollution controls have been installed and implemented.

For information on these settlements see: Coal-Fired Power Plant Enforcement Initiative

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Ilana Saltzbart
Air Enforcement Division
1200 Pennsylvania Ave., NW
Washington DC 20460
(202) 564-9935

Gregory Fried
Air Enforcement Division
1200 Pennsylvania Ave., NW
Washington, DC 20460
(202) 564-7016

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