DTE Energy lawyer asks judge to decide on utility’s liability for Zug Island air pollution

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A DTE Energy lawyer asked a federal judge Monday to decide whether the utility is liable for the Clean Air Act violations of its Zug Island subsidiary EES Coke Battery.

The motion comes in a bench trial that began Sept. 15 in the EPA’s Clean Air Act lawsuit against EES Coke Battery. DTE Energy was added to the lawsuit as a defendant last year. 

Investor authority and business consolidation are not enough to prove DTE liable for the violations, said Michael Hindelang, an attorney for DTE Energy, EES Coke Battery, and other DTE-owned companies named in the lawsuit. 

Hindelang’s motion came under Rule 52(c) of federal civil procedure, which lets a judge decide on an issue once a party has been fully heard on that issue. 

U.S. District Judge Gershwin Drain said he would render an opinion “first thing” Tuesday morning on Hindelang’s motion. 

Who operates Zug Island’s EES Coke Battery?

An “affirmative act” must have occurred if DTE is to be held liable for EES Coke Battery under the Clean Air Act, Hindelang said.

In the 6th Circuit Court actual control test, a parent company must take actions to be deemed an operator, Hindelang said, adding that “authority to control” is insufficient to reach such a conclusion.

Drain ruled against DTE Energy’s motion for summary judgment in the lawsuit Aug. 25, and said there is evidence demonstrating that DTE Energy exercised control over EES Coke Battery’s emissions, supporting a finding that the utility is an operator of the facility under the Clean Air Act.

Hindelang said that financial expert Dan Leistra-Jones, who was called as a witness by the U.S., could not identify a DTE board act involving EES Coke Battery, or any time that a DTE employee directed funds not to be spent. 

“That’s the crux of the argument, that there was a decision not to install pollution controls,” Hindelang said. “Dan Leistra-Jones was promised as the witness that can identify whether there was a dollar spent or not spent, or any affirmative act by defendants, and he could not,” Hindelang said. 

EES Coke controls itself, and EES officers make decisions at the facility, Hindelang said. Services are provided upon request, and DTE subsidiaries pay for the services they contract, he said. 

In response to Hindelang’s motion, Sasha Alvarenga, an attorney representing the United States, said that in the financial expert’s testimony, he said he’d never seen such an extensive list of services provided by a parent company. 

Leistra-Jones testified last week that EES Coke Battery’s parent companies have a “high degree of control” over subsidiaries in the form of inter-company agreements, and actions taken by DTE employees, Alvarenga said.

The expert witness gave the examples of a DTE Energy Services employee signing the 2014 permit application, and the state’s environmental regulatory agency interacting with a DTE employee as a point of contact, Alvarenga said. 

In order to make purchases more than $10 million, EES must obtain permission from DTE, Alvaranga said. Based on the corporate structure, the coke battery cannot function without the utility company, she said. 

“The defendant can’t say there’s no fact for operator liability, and we request that you deny this motion,” Alvarenga said to Drain.

Hindelang said the U.S. attorney talked about “authority and guidance,” not “acts,” Hindelang said, adding that there’s no evidence of any act. 

Liability cannot be based on untethered expert opinion, and financial control does not equal operator control, he said. 

These statements came at the close of the 18 hours the U.S. government spent making its case in the bench trial. 

EPA lawyer: Zug Island facility ‘violated the permit’

The EPA approved the Michigan Department of Environment, Great Lakes, and Energy’s permitting of EES Coke Battery in 2014, and decided in 2018 there was a violation in the form of a major modification of coke oven gas at underfire, Hindelang said Monday during cross-examination of Virginia Galinsky, an environmental engineer at the EPA Region 5 office.

The court needs to determine whether EGLE “meant what it said in the permit,” Hindelang said. 

Tom Benson, an attorney representing the United States, objected and said Hindelang went outside the scope of the argument by asking questions about liability and good faith efforts, which Benson said the EPA engineer can’t determine.

Galinsky said the EPA does not disagree with EES Coke Battery’s 2014 permit — it disagrees with the action taken after the permit.

Hindelang asked Galinsky, “as a lead technology person in this case,” whether she cares about the ramifications to the steel industry if EES Coke Battery closes. 

The coke from Zug Island, which is produced by heating coal in an oxygen-free environment, is a raw material in the steelmaking process.

Galinsky said she is not making testimony on whether good faith efforts were made. A shutdown of the facility is not a factor Galinsky considered for the lowest achievable emissions rate she calculated, she said.

Benson said the facility had opportunities to ask questions about the permit. Galinsky said EES Coke predicted its emissions, and its actual emissions went well beyond that amount.

Benson said the defendants have “gone on about” their good faith efforts, “when in fact they violated the permit.” 

Galinsky’s analysis for the lawsuit found that in the United States, building a new coke battery with desulfurization technology is feasible and not cost prohibitive to the industry.

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