Baker Botts Secures Fifth Circuit and Texas Supreme Court Wins for Port Arthur LNG
Release
On August 12, 2025, the U.S. Court of Appeals for the Fifth Circuit issued a decision denying the petition of Port Arthur Community Action Network (PACAN) challenging the Texas Commission on Environmental Quality’s (TCEQ) approval of an air permit for Port Arthur LNG, a new liquefied natural gas (LNG) facility in Port Arthur, Texas. The case addressed the scope of the “best available control technology” (BACT) requirement under Texas law, specifically whether BACT requires emissions control methods that have been permitted for other facilities but are not yet operational. Baker Botts partner Aaron Streett, chair of Baker Botts’s Supreme Court and Constitutional Law practice, led the defense of the air permit for Port Arthur LNG in the Fifth Circuit and Texas Supreme Court, joined by partner Derek McDonald (Austin) and appellate associate Beau Carter (Houston). Akin Gump attorneys Julius Chen and Michael Weisbuch rounded out the appellate team. Derek McDonald was joined by environmental senior associate Shannon Glen (Austin) on the permitting team before TCEQ.
Background
Port Arthur LNG, L.L.C. (a joint venture between Sempra Infrastructure, ConocoPhillips, and an affiliate of Kohlberg Kravis Roberts & Co. L.P.) is building an LNG facility in Port Arthur, Texas. The Port Arthur LNG Phase 1 project, currently under construction, represents a $13 billion investment and includes two natural gas liquefaction trains, two LNG storage tanks and associated facilities with a nameplate capacity of approximately 13 million tonnes per annum (Mtpa). The Port Arthur LNG Phase 2 project, currently under development, is expected to include two liquefaction trains capable of producing approximately 13 Mtpa of LNG, which could increase the total liquefaction capacity of the Port Arthur LNG facility from approximately 13 Mtpa for Phase 1 to up to approximately 26 Mtpa.
Port Arthur LNG, L.L.C. sought a Prevention of Significant Deterioration (PSD) permit from TCEQ for a proposed LNG plant. TCEQ administers the EPA-approved PSD permitting program pursuant to the Clean Air Act. The company proposed specific emissions limits for nitrogen oxides (NOx) and carbon monoxide (CO) from its refrigeration compression turbines. PACAN, a local environmental organization, contested the permit, arguing that stricter emissions limits approved for another, not-yet-operational facility should be imposed on Port Arthur LNG as BACT. TCEQ ultimately granted the permit without PACAN’s proposed amendments, reasoning that BACT requires proven, operational technology, and that the Rio Grande LNG limits had not been demonstrated in practice.
Fifth Circuit Certifies Question to Supreme Court of Texas
PACAN petitioned the Fifth Circuit for review, contending that the Commission erred by not imposing the stricter, but unproven, emissions limits. The Fifth Circuit certified to the Supreme Court of Texas the question of whether BACT under Texas law requires that a control method be operational, or if it may include methods merely permitted for future use.
Supreme Court of Texas Adopts Port Arthur LNG’s Position
The Texas Supreme Court clarified that BACT, as defined in Texas Administrative Code § 116.10(1), refers to technology that “has already proven, through experience and research, to be operational, obtainable, and capable of reducing emissions.” The Court emphasized that theoretical or future operability is insufficient; real-world operational data is required. The Court further held that the existence of a prior permit for an unbuilt facility does not establish BACT for other facilities.
Fifth Circuit Denies PACAN’s Petition for Review
Relying on this clarification, the Fifth Circuit concluded that PACAN’s reliance on a different facility’s unproven emissions limits was improper. The court found that neither vendor guarantees nor prior permit approvals constituted sufficient operational evidence under Texas law. The court also rejected PACAN’s arguments regarding the interplay between Texas and federal BACT definitions, noting that both may apply concurrently unless a difference in stringency arises.
Conclusion
The Fifth Circuit denied PACAN’s petition, upholding TCEQ’s decision to approve the Port Arthur LNG permit without imposing emissions limits based on unproven, non-operational technology. The decision affirms that, under Texas law, BACT requires demonstrated, operational emissions control methods, and that prior permits for unbuilt facilities do not automatically set BACT standards for subsequent projects.
The decisions of the Fifth Circuit and the Supreme Court of Texas will have precedential effect in a wide variety of permitting proceedings, as the concept of BACT applies to all air permits issued by TCEQ.
Background
Port Arthur LNG, L.L.C. (a joint venture between Sempra Infrastructure, ConocoPhillips, and an affiliate of Kohlberg Kravis Roberts & Co. L.P.) is building an LNG facility in Port Arthur, Texas. The Port Arthur LNG Phase 1 project, currently under construction, represents a $13 billion investment and includes two natural gas liquefaction trains, two LNG storage tanks and associated facilities with a nameplate capacity of approximately 13 million tonnes per annum (Mtpa). The Port Arthur LNG Phase 2 project, currently under development, is expected to include two liquefaction trains capable of producing approximately 13 Mtpa of LNG, which could increase the total liquefaction capacity of the Port Arthur LNG facility from approximately 13 Mtpa for Phase 1 to up to approximately 26 Mtpa.
Port Arthur LNG, L.L.C. sought a Prevention of Significant Deterioration (PSD) permit from TCEQ for a proposed LNG plant. TCEQ administers the EPA-approved PSD permitting program pursuant to the Clean Air Act. The company proposed specific emissions limits for nitrogen oxides (NOx) and carbon monoxide (CO) from its refrigeration compression turbines. PACAN, a local environmental organization, contested the permit, arguing that stricter emissions limits approved for another, not-yet-operational facility should be imposed on Port Arthur LNG as BACT. TCEQ ultimately granted the permit without PACAN’s proposed amendments, reasoning that BACT requires proven, operational technology, and that the Rio Grande LNG limits had not been demonstrated in practice.
Fifth Circuit Certifies Question to Supreme Court of Texas
PACAN petitioned the Fifth Circuit for review, contending that the Commission erred by not imposing the stricter, but unproven, emissions limits. The Fifth Circuit certified to the Supreme Court of Texas the question of whether BACT under Texas law requires that a control method be operational, or if it may include methods merely permitted for future use.
Supreme Court of Texas Adopts Port Arthur LNG’s Position
The Texas Supreme Court clarified that BACT, as defined in Texas Administrative Code § 116.10(1), refers to technology that “has already proven, through experience and research, to be operational, obtainable, and capable of reducing emissions.” The Court emphasized that theoretical or future operability is insufficient; real-world operational data is required. The Court further held that the existence of a prior permit for an unbuilt facility does not establish BACT for other facilities.
Fifth Circuit Denies PACAN’s Petition for Review
Relying on this clarification, the Fifth Circuit concluded that PACAN’s reliance on a different facility’s unproven emissions limits was improper. The court found that neither vendor guarantees nor prior permit approvals constituted sufficient operational evidence under Texas law. The court also rejected PACAN’s arguments regarding the interplay between Texas and federal BACT definitions, noting that both may apply concurrently unless a difference in stringency arises.
Conclusion
The Fifth Circuit denied PACAN’s petition, upholding TCEQ’s decision to approve the Port Arthur LNG permit without imposing emissions limits based on unproven, non-operational technology. The decision affirms that, under Texas law, BACT requires demonstrated, operational emissions control methods, and that prior permits for unbuilt facilities do not automatically set BACT standards for subsequent projects.
The decisions of the Fifth Circuit and the Supreme Court of Texas will have precedential effect in a wide variety of permitting proceedings, as the concept of BACT applies to all air permits issued by TCEQ.
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