A federal appeals court has ruled that the United States Energy Department exceeded its authority when it ordered a coal-fired power plant in the US state of Michigan to remain open beyond its planned retirement, dealing a setback to the Trump administration's effort to keep ageing coal facilities operating.

The US Court of Appeals for the District of Columbia Circuit ruled unanimously on Friday that there was no emergency under federal law that justified keeping the 64-year-old JH Campbell Generating Plant online. Energy Secretary Chris Wright invoked emergency powers last year, arguing that the plant was needed to maintain reliable electricity in the region.

President Donald Trump declared a national energy emergency in an executive order in January last year, citing demand increases from artificial intelligence and data centre growth.

Judge Cornelia Pillard, writing for the three-judge panel, said the emergency provision of the Federal Power Act was intended as a "narrow, last-resort backstop." She said the authority could be used only when immediate action was required, and states or utilities could not address the problem themselves.

Pillard also described the reversal of the plant's "long and carefully planned retirement" as "disruptive".

The plant, operated by Consumers Energy, had been scheduled to close in May 2025, but the company has continued operations under energy department orders. That has cost about $259m, according to financial filings, with opponents warning that the expense could ultimately fall on families and businesses in midwestern US states.

Michigan Attorney General Dana Nessel, a Democrat, whose office joined counterparts in Illinois and Minnesota in challenging the orders, welcomed the ruling. She said the appeals court had "thrown out DOE's order that had zero basis in reality".

The Energy Department defended its use of emergency powers, saying the orders helped prevent blackouts and "likely saved hundreds of lives" during periods of peak demand, particularly during severe winter storms in late January and early February. The department said that during the winter storm peak, coal generation in affected areas increased by 25 percent compared to the previous year.

The Michigan case is one of several legal disputes that have emerged across the country. Secretary Wright issued another emergency order, just hours after the ruling, to a coal plant in Centralia, Washington, to remain in operation. Similar orders have been issued for plants in Indiana, Colorado and Florida, as well as an oil and gas plant in Pennsylvania.