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On January 14, 2026, the U.S. Court of Appeals for the Fifth Circuit upheld the Texas Commission on Environmental Quality's (TCEQ's) decision to grant a third New Source Review (NSR) construction commencement deadline extension for a proposed Texas LNG liquefied natural gas terminal in Brownsville. The South Texas Environmental Justice Network (STEJN) had challenged the extension, arguing that TCEQ should have applied its general application procedures in 30 Tex. Admin. Code (TAC) Chapter 50. Had STEJN prevailed, the permit application would have been subject to renewed public notice and a new technical review. While the ruling was largely anticipated and confirms the governing extension framework, the importance of timing considerations in project permitting and implementation remains paramount.
Practical Considerations for NSR Permit Extensions
This challenge highlights several practical considerations for project developers:
- Plan ahead to avoid timing pitfalls. Build sufficient margin into project schedules to prevent construction commencement deadlines from jeopardizing implementation.
- Monitor delays early. Track potential setbacks to ensure extension requests are submitted with enough time to secure approval before the 18‑month periods expire.
- Maintain documentation. Keep verifiable records of project expenditures and commitments so that, if a second or third extension becomes necessary, the required financial demonstration can be readily supported.
- Anticipate potential permit challenges for petrochemical and energy projects. The Texas contested case process provides a formidable vehicle for challenging permits, and environmental nongovernmental organizations are increasingly sophisticated at leveraging it to advance policy objectives.
Background
Texas LNG sought multiple extensions over several years as the project experienced delays. The original permit required construction to begin by November 12, 2021. TCEQ granted two 18‑month extensions under 30 TAC §116.120(b), first moving the deadline to May 13, 2023, and then to November 12, 2024.
- First extension: granted at Texas LNG's request.
- Second extension: granted based on Texas LNG being a party to litigation it had not initiated regarding the permit's issuance, and the company's submittal of updated best available control technology (BACT) and federal applicability analyses.
With the litigation still unresolved, Texas LNG requested—and received—a third extension to May 12, 2026, under §116.120(c), which allows one additional extension if the permit holder has spent or committed to spend at least 10% of the estimated total project cost (up to $5 million). Although Texas LNG again submitted updated BACT and federal applicability analyses, TCEQ neither reopened the underlying permit nor conducted a new technical review. Instead, the TCEQ executive director evaluated the request solely under the criteria in §116.120.
The Rules at Issue
The dispute before the Fifth Circuit centered on whether the third extension request triggered the broader application‑processing requirements of 30 TAC §50.133. That rule governs action on permit applications and requires the executive director to complete a technical review, prepare a draft permit, issue a preliminary decision, and initiate public notice and comment.
STEJN argued that an extension request is an "application" under Chapter 50 and therefore must follow those procedures. TCEQ, however, applied 30 TAC §116.120, the NSR‑specific rule governing construction‑commencement extensions.
Under §116.120:
- Subsection (b) authorizes the executive director to grant a first extension upon request, and a second extension if the permittee demonstrates compliance with TCEQ rules and the Texas Clean Air Act and either (1) is a party to litigation it did not initiate regarding the permit's issuance, or (2) has spent or committed to spend at least 10% of the project's estimated cost (up to $5 million).
- Subsection (c) authorizes a third and final extension if the permittee meets the 10% expenditure or commitment requirement.
Unlike Chapter 50, §116.120 does not require a new technical review, draft permit, or public notice.
The Court's Reasoning
The Fifth Circuit applied the familiar canon that a specific regulatory provision controls over a general one when both could apply. The court held that Chapter 116's targeted NSR extension provisions govern construction commencement extensions and that Chapter 50's general application procedures do not displace that framework.
The court also rejected STEJN's argument that a third extension under §116.120(c) requires the same emissions demonstration needed for a second extension under §116.120(b). Nothing in the text, the court explained, suggests that the emissions compliance showing required for a second extension carries over to a third.
The court further noted that even if §116.120 required a renewed emissions analysis for a third extension, substantial evidence supported TCEQ's decision. Texas LNG demonstrated that the original BACT determinations remained current and that the project continued to qualify as a minor source. The company also demonstrated compliance with the more stringent PM2.5 significant impact level, which became effective three months before TCEQ granted the third extension.
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