A law meant to clean Michigan’s air now costs the state billions with little oversight

Michigan Companies Receive Billion-Dollar Tax Breaks While Violating Environmental Laws

Over the past decade, Michigan municipalities have lost more than $1.2 billion in local tax revenue through pollution control tax exemptions granted to industrial companies—many of which continue to violate environmental regulations despite these financial benefits.

The Air Pollution Control Exemption, created alongside Michigan’s Air Pollution Act of 1965, was designed to incentivize companies to reduce harmful emissions by offering property tax breaks for installing pollution control equipment. Under the program, automotive manufacturers, coal plants, and other industrial facilities can avoid paying millions in local property taxes if they add features like incinerators or scrubbers to their operations.

However, a BridgeDetroit investigation found troubling gaps in oversight and enforcement. After reviewing 344 pollution control tax exemption certificates granted since 2015, covering nearly $9 billion in equipment, reporters discovered that nearly half of the exempted facilities have violated air quality regulations—all while local governments forfeit crucial revenue.

“Why are we doing it? If all we’re doing is collecting pieces of paper and filing them in a cabinet, that’s hardly a government program as anybody would envision administering it,” said Eric W. Lupher, president of the Citizens Research Council of Michigan. “If we’re going to do it, let’s do it right, or let’s take the law off the books and find a different way to promote good behavior.”

The exemptions are granted indefinitely by the three-person Michigan State Tax Commission after an environmental review by the Michigan Department of Environment, Great Lakes and Energy (EGLE). Local governments, which bear the financial burden of lost revenue, have minimal say in the process and just 21 days to object before exemptions take effect. Afterward, municipalities must resort to court action to address concerns.

EGLE officials admit they lack resources to monitor compliance after initially recommending exemptions. “Our division does not receive money or any sort of allocations to fund staff to be able to do this,” explained Chris Ethridge, assistant director at EGLE’s Air Quality Division. “We’re pretty strapped from a resource perspective.”

This oversight gap allows companies to continue benefiting from tax breaks despite environmental violations. EGLE issues citations but doesn’t reassess exemption eligibility when violations occur.

Industry representatives defend the current system. Mike Johnston of the Michigan Manufacturers Association argued that violations should not affect tax exemptions since companies already face separate penalties for non-compliance. “It would be a piling on and double dipping on the penalty side if you also eliminate a tax exemption,” Johnston said.

For large cities like Detroit, the exemption has meant losing $46 million in tax revenue over the past decade—enough to run the city’s entire library system with money to spare. But smaller communities face even more severe impacts.

In Port Sheldon Township, Consumers Energy has received dozens of exemptions for its J.H. Campbell coal plant since the 1970s. Over the past decade, these exemptions have cost the small community $122 million—approximately $2,300 per resident annually. Despite these tax breaks, the plant has still violated emissions standards, with EGLE noting it released more particulate matter than permitted in 2019.

Similarly, in Monroe, DTE Energy has received nearly $350 million in property tax exemptions over ten years, equivalent to $1,734 per resident annually or 50% of the city’s tax revenue. The company has repeatedly violated air quality laws, even after being sued by the EPA in 2010 for upgrading its Monroe plant without installing required pollution controls. Despite settling that lawsuit in 2020 with a $1.8 million fine and agreeing to invest $5.5 million in mitigation efforts, DTE has received four more violations at the Monroe facility.

A DTE spokesperson stated the company remains “committed to providing reliable, clean and affordable energy” and is “working toward phasing out coal at our power plants by 2032.” The company noted that despite tax savings, it “continues to be one of the largest property taxpayers in many Michigan communities.”

The Gerdau Special Steel plant in Monroe has also received tax exemptions while accumulating 13 EGLE violations in a decade. The company says it has “greatly improved its ability to minimize and prevent the release of air pollutants” and claims recent violations “did not result in any excess emissions or adverse effects on the community.”

Environmental advocates find the situation alarming. Nick Leonard, executive director of the Great Lakes Environmental Law Center, expressed concern about EGLE’s lack of enforcement capacity: “If they don’t have the resources to enforce this program, it means they don’t have the resources to adequately enforce air quality laws in general, which would be troubling in itself. EGLE is asleep at the wheel.”

This investigation was supported by the Kozik Environmental Justice Reporting Grants through the National Press Foundation and the National Press Club Journalism Institute.