Last week, the U.S. Court of Appeals for the Fifth Circuit upheld the Texas Commission on Environmental Quality’s (TCEQ) issuance of an amended New Source Review (NSR) air permit to multinational joint-venture Port Arthur LNG. See Port Arthur Community Action Network v. Texas Commission on Environmental Quality.1 This decision should end a four-year dispute over a TCEQ air permit to authorize construction of a new LNG plant and export terminal on the Gulf Coast. Petitioner Port Arthur Community Action Network (PACAN), has until November 10, 2025, to file a writ of certiorari in the United States Supreme Court.
The Fifth Circuit ruling applied the Texas Supreme Court’s holding of a certified question to settle the meaning of “best available control technology” (BACT) in the context of TCEQ NSR air quality permitting. The Texas Supreme Court held that BACT means “the best pollution control technology that is currently available, technically practicable, and economically reasonable,” and “has already proven, through experience and research, to be operational, obtainable, and capable of reducing emissions.” 2 Relying on the Supreme Court’s holding, the Fifth Circuit concluded that methods or technologies lacking supporting operational data did not represent BACT, even if the same emission control devices were authorized as BACT in another permit for a similar facility.
Viewed on its own, the Fifth Circuit’s opinion resolves a narrow technical issue under the Texas Clean Air Act (TCAA). For air permitting in Texas, the decision elicits several significant takeaways:
- Environmental non-governmental organizations (eNGOs) are increasingly sophisticated users of the Texas contested case hearing process to stall and block permits on technical and environmental issues, as observed in an earlier alert.3 eNGOs will continue to make aggressive use of the Texas contested case hearing process in the next few years to continue supporting anti-oil and gas and anti-plastics initiatives. Applicants should expect prepared opponents litigating on policy positions who have substantial command of the facts and law applicable to permit applications.
- Proposals for Decision (PFDs) by administrative law judges (ALJs) at the State Office of Administrative Hearings (SOAH) do not always align with the views of the TCEQ Commissioners, and lengthy litigation is not always avoidable. The delays in this case resulted in a nearly four-year delay. Building in time for potential delays and submitting a robust BACT analysis are important components of a defensible air permitting strategy.
- The Texas Supreme Court confirmed that TCEQ’s case-by-case BACT evaluations in existing permits do not necessarily establish the same control technology as BACT for other similar facilities.
- TCEQ generally takes a studied, real-world, and data-oriented approach to its programmatic implementation—BACT determinations are no different.
TCAA Background
A permit applicant must satisfy BACT for each air contaminant it seeks to emit from a proposed new or modified facility. BACT is “an air pollution control method for a new or modified facility that through experience and research, has proven to be operational, obtainable, and capable of reducing or eliminating emissions, and is considered technically practical and economically reasonable for the facility.” 4 The TCAA mandates that TCEQ require proposed new and modified facilities to “use at least the best available control technology, considering the technical practicability and economic reasonableness of reducing or eliminating the emissions resulting from the facility.” 5
Case History
The Fifth Circuit’s decision is the latest episode in an already colorful procedural history. In 2019, Port Arthur LNG sought permit authorization from TCEQ to build a new liquefied natural gas liquefaction plant and export terminal. The TCEQ Executive Director’s staff reviewed the permit application and determined that the applicant’s proposed emissions limits of 9 parts per million (ppm) nitrogen oxides (NOx) and 25 ppm carbon monoxide (CO), achieved via use of Dry Low NOx burners and good combustion practices, satisfied BACT for proposed gas-fired refrigeration compression turbines.
After the Executive Director completed a technical review, but before the TCEQ Commissioners evaluated Port Arthur LNG’s application, TCEQ separately issued an air quality permit to an unrelated facility, Rio Grande LNG. Rio Grande LNG’s permit established more stringent emission limits of 5 ppm NOx and 15 ppm CO for the same type of turbines and method of control. In Port Arthur LNG’s contested case hearing before SOAH, local environmental organization PACAN challenged the proposed emissions limits and control methods in Port Arthur LNG’s draft permit, arguing that the recently permitted limits of the not-yet-constructed Rio Grande LNG terminal set a per se standard for BACT. The ALJ’s proposal for decision agreed with PACAN that Port Arthur LNG failed to show why it could not meet the lower limits in the Rio Grande LNG permit. The TCEQ Commissioners disagreed with the ALJ’s analysis and interpretation of the agency’s rules and guidance related to BACT in the proposal for decision and issued the permit to Port Arthur LNG with the emissions limits as originally proposed and reviewed by the Executive Director in 2020.
Because Port Arthur LNG is a natural gas facility, PACAN sought judicial review under the Natural Gas Act in the Fifth Circuit, rather than in Travis County District Court, as the Texas Administrative Procedure Act generally proscribes. A Fifth Circuit panel agreed with PACAN that the emissions limits issued to Rio Grande LNG were “successfully demonstrated” and acceptable as BACT and held that TCEQ was bound to apply Rio Grande LNG’s BACT consistently to Port Arthur LNG, a similarly situated applicant.6
Certified Question to the Texas Supreme Court
TCEQ petitioned for a rehearing en banc, and the Fifth Circuit vacated the panel’s opinion.7 The Fifth Circuit certified the following question to the Texas Supreme Court:
“Does the phrase “has proven to be operational” in Texas's definition of “best available control technology” codified at Section 116.10(1) of the Texas Administrative Code require an air pollution control method to be currently operating under a permit issued by the Texas Commission on Environmental Quality, or does it refer to methods that TCEQ deems to be capable of operating in the future?” 8
The Texas Supreme Court, examined the text of the Texas Clean Air Act and regulations in the Texas Administrative Code to arrive at a definition of BACT that neither precludes nor automatically accepts standard technologies that have been permitted but are not presently operational.9 Justice Blacklock wrote:
“The certified question essentially asks how TCEQ should decide whether a pollution control method ‘has proven to be operational.’ The disputed definition provides the answer to that question by directing that the proof must come ‘through experience and research,’ which we understand to mean demonstrated, real-world experience rather than the experience of previous permit applications.” 10
This means that the definition could include technologies permitted at Rio Grande LNG, but only if there is real-world data – data generated via experience and research – that has proven the technology to be “operational, obtainable, and capable of reducing or eliminating emissions,” 11 and not just theoretical proof in the form of a permit.
The Fifth Circuit’s Decision
Back at the Fifth Circuit, and with the Texas Supreme Court’s answer to the certified question in hand, the court examined PACAN’s evidence related to its claim that the more stringent limitations issued to Rio Grande LNG met the definition of BACT and should apply to Port Arthur LNG’s permit. The court noted that PACAN’s argument – that these limitations were BACT – rested on two primary pieces of data – (1) vendor data and (2) TCEQ’s approval of Rio Grande’s limitations12 – and held that this was insufficient to prove that “the pollution control method has already been demonstrated to be operational in the real world.” 13 Instead, the vendor data and TCEQ’s confidence that these limits are achievable, amount to the mere “theoretical proof of a method’s operability in the future,” and do not satisfy the requirements in the definition of BACT.14 The court therefore denied PACAN’s petition and upheld the permit as issued by TCEQ.
BACT in Texas Going Forward
The Texas Supreme Court’s opinion affirms that TCEQ determines BACT on a case-by-case basis without applying absolute requirements for any specific technology. Instead, to prove that a technology is operational, obtainable, and capable of reducing or eliminating emissions, air permit applicants are tasked with providing evidence of real-world research and experience sufficient to demonstrate that proposed BACT is proven to be operational.
For a proposed BACT analysis based on control at a facility already operating under a TCEQ permit, the battle line is likely to shift to how the operational data from that facility impacts the methods, technologies, and facilities of the project under review. But when TCEQ permit reviewers evaluate proposed BACT with new technology or emissions limitations that cannot be traced to a presently operating facility, the real work will be in providing operational data – what experience and research – to demonstrate that such limitations are obtainable.
Permit applicants should be familiar with the limits achievable by technologies that TCEQ has not previously approved. Such technologies may nonetheless be BACT if the operational data that supports their ability to control emissions is convincingly solid, whether via academic research, adoption in other jurisdictions, or anything else that qualifies as ‘experience and research’ sufficient to demonstrate the technology’s efficacy. As the Fifth Circuit decision illustrates, however, mere vendor guarantees coupled with an issued permit are not sufficient to clear this bar.
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