TRENTON, N.J. – A new federal rule that will allow mercury-emitting power plants to continue polluting by trading credits with cleaner plants is “deeply flawed” and will prevent serious environmental improvements, New Jersey’s attorney general said Wednesday in filing suit against the EPA.

“These rules are deeply flawed and contrary both to science and the law,” said Attorney General Peter C. Harvey, whose lawsuit against the Environmental Protection Agency was filed on behalf of 11 states, including Maine.

Wednesday’s filing challenges a rule known as “cap-and-trade” that will allow power plants to buy emissions reduction credits from plants whose emissions fall below target levels, rather than installing their own mercury emissions controls.

EPA spokeswoman Eryn Witcher issued a statement defending the new regulations. Cap-and-trade is to take effect in 2010.

“The Clean Air Mercury Rule represents the first time the United States or any other country in the world has regulated mercury emissions from power plants and it will dramatically reduce mercury emissions by 70 percent,” the statement reads. “EPA will vigorously defend the Clean Air Mercury Rule against any challenge.”

Mercury from smokestacks can wind up in waterways and ultimately be consumed by humans who eat tainted fish. The toxic metal causes nerve damage, which can be harmful to children and fetuses even at low levels of exposure.

The cap-and-trade rule sets a nationwide cap on allowable pollution, then allocates an amount to each state, which then sets limits on each plant. Plants that exceed the limit can buy pollution credits from plants emitting less mercury pollution than they’re allowed.

After studying the health hazards posed by emissions from coal-fired power plants, the EPA in 2000 decided to regulate the utilities under a standard requiring them to install the strictest emissions control technology available. In March, the agency delisted power plants from the standard, and nine states – also led by New Jersey – sued.

While the standard would have reduced coal-fired plant emissions to about 5 tons a year by 2008, the new EPA rule is unlikely to achieve an emissions reduction to 15 tons a year until 2026 or later, Harvey’s office said.

Coal-fired plants are the country’s largest source of uncontrolled mercury emissions, generating an estimated 48 tons per year nationwide. Besides New Jersey and Maine, the other states in the lawsuit are California, Connecticut, Massachusetts, New Hampshire, New Mexico, New York, Pennsylvania, Vermont and Wisconsin.