It was an essential move and one that many voters celebrated. In fact, if you ask the average person who controls America’s energy policy, you’ll likely hear “the federal government.” Some in Washington would love for that to be true — it would make imposing one-size-fits-all mandates much easier — but it’s neither accurate nor legal.
Under our federalist system, energy and environmental regulation are a shared responsibility between federal and state governments. Federal agencies like the EPA and the Federal Energy Regulatory Commission set national standards and oversee interstate matters. But states retain authority over their own power generation mix, resource planning and in-state permitting decisions.
This isn’t a quirk of policy. It’s embedded in landmark laws such as the Clean Air Act and the Federal Power Act. The Clean Air Act sets national air quality standards but leaves it to the states to develop State Implementation Plans tailored to their own circumstances. The Federal Power Act prohibits federal jurisdiction over “facilities used for the generation of electric energy.” In West Virginia v. EPA, the Supreme Court reaffirmed that the EPA cannot force states to restructure their generation portfolios through regulation.
When cooperative federalism works, it empowers states to innovate, protect ratepayers and prioritize reliability. When it fails, it enables states to hide bad policy behind the federal government. The difference lies in leadership and priorities.
Utah offers a master class in how to do it right. Last year, Republican Gov. Spencer Cox signed HB 374. The bill sets a clear hierarchy for energy planning: adequate, reliable, dispatchable, affordable, sustainable, secure and clean — in that order. Utah understands that sustainability means nothing if the lights don’t stay on. HB 374 charts a path to develop Utah’s abundant resources while keeping affordability and reliability at the top of the list. That’s cooperative federalism delivering for ratepayers.
North Carolina also demonstrates how state control works proactively for ratepayers. Lawmakers eliminated an arbitrary 2030 emissions target. They kept their long-term carbon neutrality goal for 2050 but chose a more economically responsible path to get there. Recently, the state tabled offshore wind development after determining it wasn’t cost-effective — a decision made with North Carolinians, not federal bureaucrats, in mind.
Ohio is moving to strengthen in-state generation. House Bill 15, which just took effect, incentivizes producing more power within Ohio’s borders, reduces the regulatory process, ends subsidies and aims to lower electricity costs. It’s a clear rejection of the idea that Washington should dictate how Ohio keeps the lights on.
Not every state uses its authority wisely. Colorado is a cautionary tale. Since 2010, the state’s legislative and executive branches have grossly overstated federal EPA rules to justify an aggressive war on reliable power — beginning with the so-called Clean Air-Clean Jobs Act. Lawmakers claimed the federal Clean Air Act would “likely require” coal plant closures, a statement that was misleading at best.
This example showcases the constitutionally limited role the federal government can — and should — play in energy policy. Recently, the EPA partially rejected Colorado’s Regional Haze Plan because it tried to force the closure of the Ray D. Nixon coal plant against the will of its owner, Colorado Springs Utilities. The EPA made clear that the Clean Air Act does not authorize states to mandate plant shutdowns over an owner’s objection.
The EPA’s rejection of Colorado’s overreach underscored that states can’t misuse federal law to force plant closures. But federal overreach has also been a problem. The Trump administration’s regulatory reforms have restored balance by rolling back federal overreach and giving states room to chart their own energy futures. This is a win for cooperative federalism. States including North Carolina, Ohio and Utah are using that flexibility to double down on reliability, affordability and common sense. Others, like Colorado, are taking a different path, and while they remain free to do so, they will have to own the consequences and answer to voters.
Energy and environmental attorney Michael J. Nasi summed it up in congressional testimony: “It is undisputed that the Clean Air Act as a whole … [is] infused with fundamental principles of ‘cooperative federalism.’ While EPA gets to determine [the best system of emission reduction], it is the states that get to decide what individual, existing sources must do to comply.”
Energy policy is not, and should never be, the sole domain of the federal government. Cooperative federalism recognizes that states are best positioned to balance environmental goals with the practical realities of keeping the lights on. Some states are seizing that opportunity to protect ratepayers and strengthen reliability. Others are abusing it to advance ideological agendas.
The solution isn’t to give Washington more power — it’s to demand better leadership in the states. When voters understand that their governor and legislature have real authority over energy policy, they can reward good decisions and punish bad ones at the ballot box. That accountability is the cornerstone of America’s federalist system of government, and it works when states take responsibility.
Amy O. Cooke is the visiting energy policy fellow at the State Policy Network.
Governing’s opinion columns reflect the views of their authors and not necessarily those of Governing’s editors or management.
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