Fifth Circuit Upholds TCEQ's Third Construction Extension For Texas LNG Project

On January 14, 2026, the U.S. Court of Appeals for the Fifth Circuit denied a petition for review challenging the Texas Commission on Environmental Quality's ("TCEQ") approval of a third extension of the construction deadline for the Texas LNG Port of Brownsville liquefied natural gas ("LNG") terminal. The Court held that although environmental justice advocates had standing to challenge the extension, TCEQ's executive director acted within her delegated authority and the agency's decision was supported by substantial evidence under Texas administrative law. The ruling, South Texas Environmental Justice Network v. Texas Commission on Environmental Quality et al., Case No. 24-60580, clarifies the procedural and substantive standards governing construction-deadline extensions for New Source Review ("NSR") permits under Texas law and reinforces agency discretion when permittees satisfy the express requirements of the applicable regulation.

Texas LNG applied for minor-source NSR permits from the Federal Energy Regulatory Commission ("FERC") and TCEQ to build an LNG terminal on a 625-acre site bordering the Brownsville Ship Channel. After FERC and TCEQ granted the permits, those approvals were challenged in litigation, which in turn delayed Texas LNG's construction.

Under TCEQ regulations, a permit generally becomes void if construction does not begin by a specified deadline, but the rules allow up to three extensions. Texas LNG obtained its first extension in 2021 based on pandemic-related delays, its second extension in 2023 based on ongoing litigation challenging the permit, and its third extension in 2024 after demonstrating that it had spent, or committed to spend, more than ten percent of the project's estimated cost.

The South Texas Environmental Justice Network ("STEJN") moved to overturn the third extension, arguing that the permit had become void, the executive director lacked authority to grant the extension, and Texas LNG failed to demonstrate continued compliance with air-quality standards. TCEQ denied the motion by operation of law after failing to issue a decision. STEJN sought review in the Fifth Circuit under the Natural Gas Act's exclusive-jurisdiction provision.

The Fifth Circuit held that STEJN had associational standing. Members alleged concrete recreational, aesthetic, and religious injuries tied to anticipated air pollution and construction activity near sensitive lands. The Court found those injuries traceable to the challenged extension, since construction could not proceed without it, and potentially redressable through remand, even though the underlying permit was not directly at issue.

On the merits, the Court rejected STEJN's argument that the executive director was required to comply with general procedural rules in Chapter 50 of the Texas Administrative Code, which condition authority to act on prerequisites such as notice and comment. Applying standard principles of regulatory interpretation, the Court held that Chapter 116's specific delegation governs construction-deadline extensions for NSR permits and supersedes Chapter 50's general procedural framework. While § 116.120 imposes substantive requirements on the permit holder, it does not condition the executive director's authority on additional procedural steps before granting an extension.

Finally, the Court held that Texas LNG satisfied the express requirements for a third extension under § 116.120(c) because it had previously received a litigation-based extension under § 116.120(b)(1) and demonstrated that it had spent or committed to spend at least ten percent of the project's estimated cost, capped at $5 million.

The Court rejected STEJN's argument that Texas LNG was required to re-demonstrate compliance with Best Available Control Technology ("BACT") and updated National Ambient Air Quality Standards ("NAAQS"), concluding that the regulation's compliance language applies to first and second extensions, not to third extensions governed by subsection (c). For a third extension under § 116.120(c), a permittee must satisfy only the regulation's express conditions, and courts will not read additional technical reanalysis requirements into the rule absent clear text. Even if additional analyses were required, the Court found substantial evidence of continued compliance, including Texas LNG's ongoing minor-source status, PM_2.5 (particulate matter 2.5 microns or less in diameter) impacts well below applicable thresholds, and updated technical analyses confirming no change in BACT or emissions.

The decision provides greater certainty that construction-deadline extensions will be upheld where permittees strictly satisfy the text of § 116.120, and that agencies are not required to reopen technical analyses absent regulatory changes or project modifications. At the same time, the Court reaffirmed that environmental and community groups may establish standing to challenge post-permit agency actions that enable construction causing alleged concrete harm. Overall, the Fifth Circuit adopted a deferential approach to agency permitting decisions grounded in clear regulatory text and substantial evidence, clarifying the limited scope of review for NSR construction-deadline extensions and reinforcing regulatory predictability for large-scale energy infrastructure projects.