D.C. Circuit Limits DOE’s Emergency Authority to Keep Power Plants Running

On September 11, 2026, the D.C. Circuit vacated a Department of Energy (DOE) order requiring Consumers Energy to continue operating the J.H. Campbell coal-fired power plant in Michigan under Section 202(c) of the Federal Power Act. People of the State of Michigan v. U.S. Department of Energy, No. 25-1159 (D.C. Cir. Sept. 11, 2026). The decision limits DOE’s ability to use its emergency authority to override state and regional decisions concerning generation retirements.

Background. Consumers Energy had planned for several years to retire Campbell in May 2025 and replace its generation with a combination of new and expanded resources. The Michigan Public Service Commission approved that plan after concluding it would improve resource adequacy, and the Midcontinent Independent System Operator (MISO) separately determined that Campbell was not needed to satisfy applicable reliability criteria.

Just days before Campbell’s scheduled retirement, however, DOE invoked Section 202(c), finding an emergency based principally on potential summer capacity concerns in MISO and ordering Campbell to remain available. DOE subsequently extended that initial order several times, ultimately issuing a total of six orders that required the plant to remain available for over a year.

Ruling. The States of Michigan, Illinois, and Minnesota, and a group of environmental and public-interest organizations, challenged the initial order in the D.C. Circuit. In a unanimous decision, the three-judge panel rejected DOE’s interpretation of Section 202(c). According to the court, an “emergency” under the statute means a grid-reliability risk requiring immediate action by DOE in particular. Section 202(c) is therefore a “narrow, last-resort backstop,” not a mechanism for DOE to second-guess ordinary state and regional resource-adequacy planning.

That distinction proved fatal to DOE’s order. The court emphasized that DOE had identified only the “mere possibility” of supply shortfalls, without specifying their severity, timing, location, or likelihood. Moreover, the record showed that Michigan and MISO had mechanisms available to address reliability concerns and that MISO had projected sufficient capacity for the relevant period.

The court was even more dismissive of DOE’s alternative reliance on reliability risks projected several years into the future. Those concerns, it held, belong to the ordinary resource-planning process undertaken by states, utilities, Regional Transmission Organizations (RTOs) such as MISO, and the North American Electric Reliability Corporation (NERC)—not to Section 202(c)’s emergency regime.

Holding that DOE had exceeded its statutory authority, the D.C. Circuit vacated the agency’s initial order. Because that order “ha[d] already expired,” the court explained that its decision would have no disruptive consequences. The court did not address the order currently in effect, which requires the plan to remain open through November 14, 2026.

Why it matters. The decision does not eliminate DOE’s Section 202(c) authority. DOE may still intervene where a reliability problem requires immediate federal action, including circumstances in which a future problem requires action now and state authorities cannot or will not respond in time. In particular, the D.C. Circuit explained that DOE’s order “might have been appropriate” if the agency had “pinpointed a concrete supply issue” that was “likely to trigger a blackout in an identified area.” But the opinion sharply constrains the use of Section 202(c) as a broader federal tool for preserving generating units based on generalized or long-term reliability concerns.

A larger message is one of federalism and statutory limits. The Federal Power Act leaves generation and long-term resource adequacy principally to states, utilities, and the RTOs. DOE’s emergency authority allows it to step outside that system only when the ordinary system cannot timely address a genuine electricity emergency. Because DOE could not make that showing for Campbell, the court held that the agency had exceeded its statutory authority and vacated the order.

Next steps. The government may choose to seek rehearing en banc or ask the Supreme Court to take up the case. If left unchallenged, the ruling could impact six similar DOE 202(c) orders issued to coal-fired power plants across five states.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.