A federal appeals panel Tuesday vacated orders by the Federal Energy Regulatory Commission authorizing two South Texas LNG export facilities — Texas LNG Brownsville and Rio Grande LNG — citing a series of failures by the agency to adequately investigate their environmental impact on communities in the Brownsville area.
It was the second time that the U.S. Court of Appeals for the District of Columbia Circuit has rejected FERC authorizations for the Cameron County projects.
In 2021, responding to lawsuits brought by local environmental interests, the court remanded their issues back to the agency for further investigation. This time, the court vacated those authorizations since the agency “has yet again come up with insufficient support” for its prior approvals.
“We appreciate the significant disruption the vacatur may cause the projects. But that does not outweigh the seriousness of the commission’s procedural defects,” wrote Judge Bradley Garcia for the three-judge panel, which included Judge Michelle Childs and Chief Judge Sri Srinivasan.
“Given the nature and severity of the flaws in the commission’s second effort to properly assess the projects, we vacate the reauthorization orders and remand to the commission for further consideration.”
The City of Port Isabel and the Sierra Club brought suit against the agency last year in response to the reauthorization for the two Rio Grande facilities, both owned by wholly owned subsidiaries of Houston-headquartered NextDecade.
Specifically, the petitioners alleged that FERC had failed to investigate adequately the environmental justice implications of the proposed mammoth facilities, even after having been ordered to do so by the D.C. Circuit, including an apparent reluctance to reevaluate evidence gathered during the court-ordered reauthorization process.
NextDecade said in a statement that it is “disappointed in the court’s decision and disagrees with its conclusions.”
“At this time, construction continues on the first three liquefaction trains and related infrastructure (Phase 1) at the Rio Grande LNG Facility, and the Company is evaluating the impact of the Court’s decision on the timing of a positive final investment decision (FID) on Train 4.”
“Arbitrary and capricious and prejudicial”
Texas LNG Brownsville originally applied for FERC authorization in March 2016. Rio Grande LNG followed two months later with an application to construct a second facility on a nearby site. A third application was also filed by Rio Bravo Pipeline Company for a 137-mile pipeline to connect the Rio Grande terminal with grid interconnects in Nueces County. The Rio Grande facility and the pipeline are known as the “Rio Grande Project.”
In November 2019, after FERC published final Environmental Impact Statements for each, the commission authorized the projects to proceed. The commission also rejected requests by local environmental groups, residents and the nearby Port of Isabel to reconsider, at which point they filed two lawsuits against the two projects.
When their petition reached the D.C. Circuit, the court agreed, concluding in August 2021 that FERC had unaccountably limited a required examination of the environmental justice impact to a two-mile radius around the projects.
FERC responded with an expanded environmental justice investigation and reauthorized the projects in April 2023 — but without a supplemental EIS, as required by the National Environmental Policy Act.
The environmental groups once again challenged the FERC effort as “arbitrary and capricious,” and the court this week, once again, agreed: that FERC had ignored an important change in the project, had failed to properly expand available evidence of environmental impact and had inadequately explained the agency’s reasoning behind several key decisions in the process.
A critical change in the project was a proposal by Rio Grande to add a carbon capture and sequestration project (CCS) adjacent to the facility. The company asked the commission to consider the CCS project as part of their reauthorization of the LNG facility, according to the court’s opinion. Commission staff agreed to ramp up the authorization process but suspended any fast-tracking when the company “failed to provide ‘completely and timely responses’ to several data requests by the agency,” Garcia wrote.
On remand, FERC had sought from developers a “new and significantly expanded” radius of 31 miles for census block demographics and emissions data. The commission collected the data and wrote a new environmental justice analysis but decided against doing so in the form of a supplemental EIS — a process that would require a 45-day period for public comment and allow parties to intervene.
The commission argued that the public was allowed a 15-day period to comment on the new economic analysis, and that a supplemental EIS was unnecessary, in essence, because the FERC evaluation of the project hadn’t changed.
The court noted that NEPA requires a supplemental Environmental Impact Statement when there are “significant new circumstances or information” relative to the original EIS. The court also noted that the FERC’s new analysis vaulted the environmental discussion for the Rio Grande Project from 6 to 46 pages, with a similar change for Texas LNG — the potential impact on “wetlands, recreational and subsistence fishing, tourism, socioeconomics, road and marine traffic, noise, safety, air quality and visual resources.”
Moreover, the public was never allowed to comment on the air emissions model employed in the final environmental justice report, said the court. The final model, which produced substantially different results from the original EIS, was submitted to the commission on Jan. 6. The 15-day public comment period closed on Nov. 4, 2022.
“We therefore hold that the commission’s failure to issue a supplemental EIS for its environmental justice analysis was arbitrary and capricious and prejudicial.”
Nathan Mattews, who argued the case on behalf of the Sierra Club said, “This decision affirms what South Texas communities have long known and been fighting for: Environmental justice matters and FERC absolutely must consider these issues when deciding on such massively harmful projects.”
Varu Chilakarri of K&L Gates argued for Rio Grande LNG and Rio Bravo Pipeline; Robert M. Kennedy, senior attorney for the Federal Energy Regulatory Commission, argued on behalf of FERC.
The case was City of Isabel, et al. v. Federal Energy Regulatory Commission (Rio Bravo Pipeline Company and Rio Grande LNG, intervenors) No. 23-1174 (consolidated with No. 23-1221)