Photo of J.H. Campbell Generating Plant by flickr (photo, license)
On September 11, 2026, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit” or “Court”) issued an opinion vacating the Department of Energy’s (“DOE”) Order directing Consumers Energy Company to keep the J.H. Campbell Generating Plant in operation finding that it exceeded its authority under section 202(c) of the Federal Power Act (“FPA”). Oral arguments were held on May 15, 2026 before Judges Srinivasan, Pillard and Wilkins.
Background
Consumers Energy Company owns and operates the J.H. Campbell Generating Plant, a coal-fired power plant in Michigan that was scheduled to shut down on May 31, 2025. On May 23, 2025, the DOE issued Order No. 202-25-3 directing the Midcontinent Independent System Operator (“MISO”) and Consumers Energy Company to ensure the plant remains available for operation for at least 90 days. The DOE has since issued five subsequent continuation orders, the latest of which was issued on August 14, 2026, requiring the plant to remain in operation for a total of 450 days through November 14, 2026. The DOE has denied all requests for rehearing of these orders.
The States of Michigan, Illinois and Minnesota, as well as various public interest organizations petitioned the D.C. Circuit for review of the DOE’s Order No. 202-25-3. The petitioners requested the Court to set aside the DOE’s emergency order, arguing that the DOE failed to demonstrate that the claimed electricity shortage and accompanying long-term reliability concerns qualify as section 202(c) emergencies. Even if the DOE appropriately determined a section 202(c) emergency existed, it went beyond its section 202(c) authority by failing to demonstrate that operation of the power plant would “best meet the emergency,” and that requiring generation without minimizing hours of operation goes beyond operation “during hours necessary to meet the emergency” and fails to “minimize[] adverse environmental impacts.”
The DOE responded that it had broad discretion under section 202(c) to respond to threats facing the electricity grid, and that such an order falls within its emergency authority. The DOE further stated that even if the Court found an error in the Order, it should remand to the DOE for further findings without vacatur so as not to “impair the agency’s ability to issue section 202(c) orders to protect public health and safety.”
D.C. Circuit Decision
The D.C. Circuit vacated the DOE’s Order, finding that section 202(c) gives the DOE narrow authority to intervene only in the face of an electricity emergency not otherwise addressable by states or their utilities.
Based on the text and statutory structure, and supported by the DOE’s historical interpretation and limited exercise of the statute, the Court defined a section 202(c) “emergency” as “an electricity shortage that is or will in the future be acute and is not being timely addressed by planning for resource adequacy by the state, its utilities, or an RTO… requir[ing] immediate, essentially last-resort action by DOE outside the ordinary reliability planning process.” The Court rejected the DOE’s broad interpretation, finding it to invite frequent, unjustified, federal interventions that threaten the stability of the energy market.
Next, the Court found that the circumstances identified by the DOE were insufficient to meet the statutory requirement of an emergency. The Court found that the DOE’s assertions of an electricity supply shortfall, without specifics about the potential severity, timing, location, or likelihood of such shortfall, did not warrant an emergency federal response since reasonable alternative to address shortages were available. The Court further rejected the DOE’s longer-term reliability and resource adequacy concerns as justifying the Order, finding that long-term resource adequacy risks generally do not necessitate immediate action by the DOE as they are routinely resolved through coordinated, forward-looking decision-making within the ordinary resource adequacy system.
In vacating the DOE’s Order, the Court determined that the Order’s deficiency cannot be redressed on remand because it relies on the DOE’s misconception of the nature and scope of its section 202(c) emergency authority.
While the petitioners specifically sought review of Order No. 202-25-3, the Court’s decision will likely have implications for the DOE’s subsequent orders for the J.H. Campbell Generating Plant. Stakeholders interested in the DOE’s similar directives to other coal-fired plants, including Centralia Unit 2 (Washington), R.M. Schahfer Generating Station Units 17 and 18 (Indiana), F.B. Culley Generating Station Unit 2 (Indiana), Craig Station Unit 1 (Colorado), and Stanton Unit 1 (Florida), we anticipate will be analyzing the court’s decision, as well. The DOE has 90 days from the entry of judgement to seek certiorari from the Supreme Court. In addition to the present proceeding at the D.C. Circuit, there are three proceedings at the Federal Energy Regulatory Commission (“FERC”) addressing the recovery and allocation of costs associated with keeping the Campbell Generating Plant operational which will be impacted by the Court’s opinion.
One proceeding, a complaint by Consumers Energy Company, was held in abeyance by the D.C. Circuit pending resolution of the present proceeding, with motions to govern future proceedings due by November 30, 2026 (FERC Docket No. EL25-90; D.C. Circuit Case Nos. 25-1285, 26-1040 (consolidated)). Consumers Energy Company filed a complaint requesting FERC use its section 202(c) authority to order MISO to add a rate schedule allowing Consumers Energy Company to recover the costs associated with the DOE Orders “net of market revenues.” FERC granted Consumers Energy Company’s complaint and directed MISO to make a compliance filing to adopt the regional cost allocation mechanism proposed by Consumers Energy Company, with a clarification regarding the specific allocation methodology. FERC also dismissed arguments that cost recovery may not be warranted if the DOE Order is set aside. The State of Michigan and various public interest organizations petitioned the D.C. Circuit for review of FERC’s orders on the complaint. Upon motion by the State of Michigan, the D.C. Circuit held the case in abeyance.
In compliance with FERC’s order on the complaint, MISO filed a compliance filing proposing revisions to its Tarif to add a provision allocating the costs of keeping the J.H. Campbell Generating Plant available to operate (FERC Docket No. ER25-3425). FERC rejected MISO’s initial compliance filing based on concerns about the specific methodology MISO proposed to use for allocating costs among market participants, and directed MISO to submit a new compliance filing with a revised allocation methodology. FERC has not yet ruled on MISO’s revised compliance filing or Consumers Energy Company’s cost recovery filings, which were directed by FERC’s order on the complaint (FERC Docket No. ER26-1138 et al.).
This article is for informational purposes only and is not intended to provide legal advice. It is important to consult your own attorney regarding any legal matters or concerns. For legal assistance or further information on this subject please contact: Sean M. Neal, Michael R. Postar, Andrea I. Sarmentero Garzón, or Rose Eisenberg.
