Federal court orders regulators to fix process, reconsider gas export projects in South Texas

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McALLEN — A federal court struck down a regulatory agency’s authorization of two controversial, multi-billion-dollar gas export projects in far South Texas, one of which is already under construction.

The ruling orders federal regulators to correct procedural deficiencies before reconsidering authorization of the projects for a third time. It is the latest ruling since a coalition of South Texas cities and groups sued to block the projects in 2021.

In an Aug. 6 opinion, the U.S. Court of Appeals in Washington cited “the nature and severity of the flaws” in reviews by the Federal Energy Regulatory Commission, or FERC, of the two proposed gas liquefaction and export complexes, Rio Grande LNG and Texas LNG.

“Although we do not take this step lightly, the circumstances here require it,” the ruling said. “We appreciate the significant disruption vacatur may cause the projects. But that does not outweigh the seriousness of the Commission’s procedural defects.”

The court wrote that FERC failed in its analyses of environmental justice and climate impacts, air pollution modeling and procedural obligations. FERC and the developers now have 45 days to seek a re-hearing.

The two complexes in question plan to pipe in Texas shale gas, condense it and load millions of tons per year onto tanker ships for sale overseas as liquified natural gas, or LNG. Each complex costs billions of dollars, spans hundreds of acres and makes up part of an ongoing boom in gas export projects along the Gulf Coast of Texas and Louisiana.

Rio Grande LNG parent company NextDecade said in a statement it was “disappointed in the Court’s decision and disagrees with its conclusions.”

The company added that construction continues on the first three liquefaction trains and related infrastructure at Rio Grande LNG near Brownsville and it will examine what impact the court’s order will have on future plans for added infrastructure.

The company announced last July it had secured investor funding to begin construction on its 750-acre, $18 billion facility.

A spokesperson for Texas LNG, a smaller, adjacent project on the Brownsville Ship Channel that is yet to secure sufficient funding, said the ruling was a procedural decision to correct a technical deficiency, which they were still studying.

“We have full confidence FERC will address this matter judiciously and efficiently and look forward to working with them on this important issue,” the spokesperson said in a statement.

Three small surrounding cities and the local water district have passed resolutions opposing the projects, situated between national wildlife refuges and atop wetlands.

“Port Isabel and the other communities of the Laguna Madre area are located in one of the most unique, pristine and scenic ecosystems in the world,” said a 2023 resolution by the City of Port Isabel, a party in the lawsuit against FERC. “The proposed project area is located in a delicate and partially undisturbed salt flat.”

The Carrizo/Comecrudo Tribe of Texas, also a party in the lawsuit, has led a yearslong campaign against the destruction of archaeological sites on land that it considers sacred.

“The issue is what they’re doing to continually try to decimate who we are as a people,” said Juan Mancias, chairman of the tribe.

Mancias said Tuesday’s ruling made him proud to be Carrizo/Comecrudo and felt it gave the tribe a say in what happened to the land.

“I’m glad they made the decision that they made, because that decision says a lot about what is lacking in this process of permitting,” he said.

But the projects have unanimous support from the Cameron County commissioners, based in nearby Brownsville, and from most local politicians. Neither Cameron County Judge Eddie Treviño Jr. nor any of the four county commissioners responded to requests for comment.

A FERC spokesperson said the agency does not comment on court issues.

“FERC is a regulator that historically has relied upon industry assurances when making its decisions,” said Tyson Slocum, energy program director at Public Citizen in Washington. “Unfortunately, industry often is wrong, and frequently minimizes potential hazards and risks posed to the community.”

Todd Staples, president of the Texas Oil and Gas Association, said, “Delaying approvals and treating natural gas as a liability rather than an asset squanders our nation’s global energy leadership and forces our allies to look to other nations—some of which are hostile to America—to meet their energy needs.”

Years of Litigation

Tuesday’s ruling was the second time the court struck down FERC’s authorization of these projects in response to petitions from local groups supported by nonprofit environmental lawyers at the Sierra Club.

The first time, in August 2021, the court ruled FERC failed to assess impacts of the projects’ enormous greenhouse gas emissions and had picked an arbitrary two-mile radius within which to conduct its environmental justice analysis. The court also said the projects modeled their air pollution using data from a faraway air monitor in Brownsville instead of the closer Isla Blanca monitor, and asked the commission to reconsider its finding that the projects were in the public interest.

In subsequent analysis, FERC calculated the “social cost of carbon,” a measure of the estimated future financial impacts created by releasing greenhouse gases today, from Rio Grande LNG and the Rio Bravo Pipeline at $20 billion. The two projects would create 3.6 million tons of carbon dioxide equivalent during construction and 7.3 million tons every year thereafter.

After the court’s 2021 order, Rio Grande LNG opted to add a carbon capture system to its design that would inject greenhouse gases underground instead of releasing them into the air.

FERC also increased its environmental justice review area from two to 31 miles, then re-authorized both projects in April 2023.

“It was clear FERC was just rushing through this to give these LNG companies what they wanted at the expense of our community,” said Bekah Hinojosa, founder of the South Texas Environmental Justice Network, who has been fighting the projects since 2015. “It’s a broken process.”

The groups sued again, alleging FERC sloppily rushed through the requirements in the court’s original order without following proper procedure. In its latest ruling, the federal appeals court in Washington agreed.

It wrote that FERC failed to issue written statements of its updated environmental justice analysis, to conduct a review of Rio Grande LNG’s carbon capture project or to make those documents available for a public comment period as required by law. It did, however, submit them for comment to the LNG companies.

“Because the comment period was limited to the developers’ responses, the public was not able to comment on the Commission’s analysis of those responses,” the ruling said. “We do not see how the Commission could justify its decision to skip those fundamental procedural steps.”

According to Nathan Matthews, senior attorney for the Sierra Club, FERC and the developers have 45 days to seek a re-hearing. Seven days after that, the court mandate takes effect and construction at the facilities must stop.

“But FERC doesn’t need to wait for the court,” Matthews said, citing the Mountain Valley Pipeline in 2018, when FERC stopped work without waiting for a court mandate. “FERC should do the same here.”

Reporting in the Rio Grande Valley is supported in part by the Methodist Healthcare Ministries of South Texas, Inc.

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