In a case that once again belies the need for a statewide court of appeals to decide administrative law matters, the Austin Court of Appeals has dismissed a lawsuit challenging the Texas Commission on Environmental Quality’s decision to issue a permit to the operator of a new liquefied natural gas terminal on the Brownsville Ship Channel.
Texas Commission on Environmental Quality and Texas LNG Brownsville, LLC v. Vecinos Para El Bienestar De La Comunida Costera, and City of Port Isabel, Texas (No. 03-21-00395-CV) arose from a 2020 TCEQ order following a contested-case hearing that granted Texas LNG a permit to construct an LNG terminal. Vecinos and Port Isabel filed suit in Travis County district court. TCEQ and Texas LNG filed a plea to the jurisdiction, asserting that the federal Natural Gas Act vests exclusive jurisdiction in federal appeals courts to hear challenges to state agency permits required by federal law for natural gas terminals. The trial court denied the plea.
The court of appeals reversed and dismissed the case. The operative federal statute, 15 U.S.C. § 717, gives FERC the “exclusive authority to approve or deny an application for siting, construction, expansion, or operation” of an LNG terminal. It further grants exclusive jurisdiction to federal appellate courts to review challenges to § 717 permits for facilities within their territorial jurisdiction. In order to be approved, LNG projects must obtain a new-source review permit to assure that they meet the applicable National Ambient Air Quality Standards (NAAQS) and other requirements of the Federal Clean Air Act. As the federal government’s delegate, TCEQ administers federal air quality standards applicable to stationary sources through the State Implementation Plan (SIP). According to the court of appeals, therefore, TCEQ’s order clearly fell within the forum pre-emption provision of § 717.
Vecinos and Port Isabel contended that § 717 did not apply because their lawsuit made only state-law claims based on the Texas Clean Air Act. The court rejected this argument, reasoning that § 717 by its express terms vest exclusive authority over the approval of LNG projects to FERC (with federal appellate court review) and that TCEQ “was carrying out its responsibility under the [Federal Clean Air Act] to implement the NAAQS—federally created standards” [citing 30 TAC § 101.21]. Plaintiffs argued further that granting TCEQ’s plea to the jurisdiction in this case would mean that “the Fifth Circuit would have original and exclusive jurisdiction to hear every single TCEQ air-permit challenge.” The court didn’t go for this either because § 717 is specific to LNG projects. Finally, plaintiffs asserted that going straight to the Fifth Circuit would create a “particularly awkward posture.” Maybe so, the court responded, but that’s the way Congress set up the process, and other federal circuits have so held. [The Fifth Circuit has yet to conduct a § 717 review, though in another case, Shrimpers and Fisherman of the RGV v. Texas Comm’n on Envtl. Quality, 968 F.3d 419 (5th Cir. 2020), the court sidestepped the jurisdiction issue by holding that the shrimpers did not have standing to challenge another LNG facility’s permit.]
