A federal court rejected the U.S. Department of Energy's emergency order to delay coal plant retirements, blocking a bid to preserve baseload generation capacity.
A federal appeals court on Friday vacated the U.S. Department of Energy's emergency order requiring the owners of a coal-fired power plant in Michigan to delay its planned retirement, finding that the move usurped state authority over generating resources. The U.S. Appeals Court for the District of Columbia Circuit ruled that the DOE lacked authority under the Federal Power Act's section 202(c) to order Consumers Energy to run its majority-owned, 1,420-MW J.H. Campbell power plant past its May 31, 2025, retirement date.
The court emphasized that the federal government had previously issued stopgap generation orders only in response to transitory emergencies caused by war, extreme weather events, market manipulation, or unplanned, short-term unavailability of specific generation units. States, the court said, bear the responsibility to plan for and avert reliability risks on an ongoing basis, informed by assessments from federal, regional, and load-serving entities. The Michigan Public Service Commission and the Midcontinent Independent System Operator had both approved the plant's retirement after extensive reviews.
The suit was brought by Earthjustice, representing the Sierra Club and Urban Core Collective. The Michigan attorney general argued the case on behalf of Illinois, Michigan, and Minnesota, while other petitioners included the Natural Resources Defense Council, Michigan Environmental Council, Environmental Defense Fund, Environmental Law and Policy Center, Vote Solar, the Ecology Center, and the Union of Concerned Scientists.
Under section 202(c), an "emergency" requires a grid reliability risk calling for immediate action by the DOE—a condition the court found unmet in the Campbell case. The court rejected what it called the Department's "sweeping conception" of its emergency authority, noting that such a position "would empower it to pick its preferred power sources in Michigan—or, presumably, any other state—and order them to operate without regard to the multiple procedural and substantive constraints built into state reliability planning processes." The court characterized section 202(c) as providing only a "limited backstop mechanism" for addressing certain electricity supply emergencies.
"The complexity and advance planning that go into states' assurances of resource adequacy do not imply that DOE must have vast, top-down emergency power to pick its favorite generators to run at all costs," the court said. "The Department's reading of 'emergency' invites frequent federal interventions that are unsupported by the statute and threaten the stability of the energy market." The DOE had justified its order by citing "fragments" of two documents and a MISO presentation it claimed showed the region faced an emergency.
This decision is among the first court rulings on various legal challenges to DOE orders preventing fossil-fueled power plants from retiring. The department has generally argued that the plants needed to keep operating due to medium- to long-term potential for electric supply shortfalls. Since issuing its initial 90-day order for the Campbell plant, the DOE has issued similar orders affecting six other power plants, all but one of which is coal-fired, and has reissued all the orders before expiration.
Through June 30, the net cost of complying with the DOE emergency orders was $259 million after applying MISO revenues of $239 million, according to a Consumers Energy filing with the Securities and Exchange Commission on July 28.
Michael Lenoff, an Earthjustice attorney, said in a press release: "The court rebuked the Trump administration's abuse of emergency powers. The DOE needs to stay in its lane and use its emergency powers only in actual emergencies. Preventing the market-driven retirements of coal plants to advance a coal-friendly agenda is not a proper use of emergency powers."
The DOE indicated it could appeal the ruling to the U.S. Supreme Court. A DOE spokesperson defended the orders in an email, stating: "The Energy Department's emergency orders, including at Campbell, prevented blackouts and likely saved hundreds of lives during peak capacity events this past year." The spokesperson noted that the emergency orders were "essential" for maintaining grid stability during Winter Storm Fern in January, when coal-fired generation in affected regions increased 25% compared to the same period the previous year, and the Campbell plant operated at over 650 MW daily between January 21 and February 1.
"The Department of Energy will continue to protect and defend energy security for all Americans," the spokesperson said.