Summary
Michigan’s Air Pollution Control Exemption, created as part of the state’s effort to clean up air, now costs local governments billions of dollars in property-tax revenue while providing limited ongoing verification of compliance, according to an investigation distributed by the Associated Press.
The exemption was designed to use taxpayer-backed tax breaks to encourage pollution-reduction investments, under a framework adopted alongside the Air Pollution Act of 1965. Under the law, if industrial facilities add pollution-control features such as incinerators or scrubbers, the exemption allows them to stop paying millions of dollars in property taxes to local governments, with the process tied to an initial state environmental review.
BridgeDetroit’s review of 344 exemption certificates filed by manufacturers since 2015 analyzed exemptions for nearly $9 billion of equipment and property meant to curb pollution. The investigation found that nearly half of the exempted facilities later received violations, according to online records maintained by the state’s air-quality division.
Across the last decade, the investigation reported that pollution-control exemptions have cost local governments around $1.2 billion in property taxes, citing Michigan Department of Treasury records and tax expenditure reporting. It also reported that some exemptions were awarded for pollution reductions that companies were already legally required to perform.
Critics said the exemption’s structure leaves communities paying the price when enforcement does not track the promised compliance. Eric W. Lupher, president of the Citizens Research Council of Michigan, questioned whether the state is “giving something away when we don’t have to,” adding that if government is going to administer incentives, it should do so in a way that verifies results.
Lupher also criticized what he described as a paperwork-based system, saying it amounts to “collecting pieces of paper and filing them in a cabinet,” and argued that the law should be administered properly or removed as a tool to promote better behavior.
EGLE officials said they are aware of air-quality violations in the state, but do not revisit exemption certificates after the initial EGLE recommendation. Chris Ethridge, assistant director at EGLE’s Air Quality Division, said the division does not receive money or allocations to fund staff dedicated to reviewing the exemption program, and described the division as “pretty strapped from a resource perspective” for the reviews needed in the first place.
A representative for the Michigan Manufacturers Association said the presence of violations should “absolutely not” be considered in connection with the exemption. Mike Johnston, executive vice president of government affairs and workforce development at the association, said companies already must follow the law under operating permits issued by EGLE, and said eliminating a tax exemption would effectively pile on additional penalties “and double dipping” against competitors who must comply.
Municipal governments, which lose property-tax revenue tied to the exemptions, generally have limited involvement in the process. The investigation said municipalities are mostly cut out of decisions leading to issuance, after which they have 21 days to object; it reported that concerns raised after implementation must be taken to court.
The investigation described the financial impact in Detroit and in smaller communities as particularly significant where tax revenue from industry is a meaningful share of local budgets. It reported that in Detroit, the exemption meant the loss of $46 million in taxes over the last decade, and said that in River Rouge, exemptions over the same period equate to what it would have cost to replace lead lines in about half of the city’s households. It also reported that in Detroit the tax breaks offered are enough to operate the city’s more than 20 libraries for a year.
In smaller jurisdictions, the investigation reported that the exemption can affect municipal finances sharply. In Port Sheldon, the investigation said the township received exemptions tied to Consumers Energy’s J.H. Campbell coal-fired plant, noting that the plant began operations in 1962 and that the first exemption for the facility was issued in 1974 for $816,766 in equipment, according to EGLE online exemption reports.
It reported that Consumers Energy used the exemption to shield $2.9 billion in taxable property statewide, citing analysis by Good Jobs First. The investigation said Port Sheldon collected community feedback in 2024 to update its Master Plan and Economic Resiliency Plan and that 72% of respondents cited the loss of tax revenue linked to the Consumers Energy plant closure among their concerns.
The investigation also reported that despite those tax breaks, EGLE said the plant emitted more particulate matter or soot in 2019 than permitted and that EGLE did not trigger a review of the exemptions. It said the township’s 2024 tax revenue was $17 million and that Consumers’ exemptions meant $122 million did not come to city coffers over the decade, excluding additional sales-tax exemptions that were also described as part of the incentives.
In Monroe, near the Ohio border, the investigation said Consumers Energy’s rival DTE Energy received nearly $350 million in property tax exemptions over the past decade, describing it as equivalent to about half of the city’s overall tax revenue. It reported that DTE has faced a history of state and federal enforcement, including a 2010 EPA lawsuit over upgrades to the Monroe plant that did not include nitrogen oxides and sulfur dioxide controls, and later violations that led to an administrative consent order in 2015.
The investigation reported that DTE’s case was settled in 2020, with DTE fined $1.8 million and ordered to invest $5.5 million in mitigation, and said that after the settlement DTE violated state air quality laws four more times at the Monroe plant, according to EGLE. A DTE spokesperson told the investigation that the company is committed to providing reliable, clean and affordable energy and that it invests in pollution controls while using available tax incentives such as the Air Pollution Control Exemption.
The investigation also cited a Gerdau Special Steel plant in Monroe that it said received 13 EGLE violations in the last decade. It reported that Gerdau received a notice last year for violating five conditions of its permit over a three-year period, and that in July it received its latest violation for failing to continuously monitor carbon monoxide emissions.
Gerdau communications manager Lindsey Erb told the investigation that the company has greatly improved its ability to minimize and prevent the release of air pollutants and said that the violations cited did not result in excess emissions or adverse effects on the community. Erb also said EGLE did not issue fines for the most recent violations, while the investigation reported that EGLE assessed fines for a DTE violation in 2015 and for a Gerdau violation in 2016 and that negotiations for a consent order were underway.
The overall picture described in the investigation centers on the relationship between tax breaks and enforcement. It reported that nearly half of the businesses receiving the exemptions have violated air quality laws at their facilities, received state citations, signed escalated legal enforcement orders, or faced federal court actions by the EPA alleging Clean Air Act violations, while EGLE officials said they lack capacity to revisit exemptions after the initial review.