Guerilla Litigation Causes Rio Grande LNG’s Permits To Be Vacated
The D.C. Court of Appeals overturned its earlier reauthorization of a FERC permit allowing the construction of the multi-billion-dollar Rio Grande LNG project, the largest new-build energy infrastructure project in U.S. history. Rio Grande LNG's operator, NextDecade Corporation , had begun construction on the 984-acre site along the sparsely developed Brownsville deepwater ship channel near SpaceX and Texas-Mexico border. NextDecade first proposed the development in 2015 following the Obama administration's approval to go forward with the permitting and construction of LNG export facilities across the U.S.
LNG is regular natural gas in the liquid form, which is achievable by refrigerating the gas to minus-260 degrees Fahrenheit . In this liquid state, LNG is transported compactly by specially designed tankers across the oceans to consumers in the European Union and Asia. Even U.S. northeastern states depend on imports of LNG for heating and electricity needs throughout the year.
In the past ten years, U.S. LNG exports have surged ahead of Australia, Qatar, Russia, and Algeria to become the largest supplier to the global market. As far as U.S. allies in Europe are concerned, this dynamic growth in U.S. LNG export capacity eliminated the leverage of Russian President Vladmir Putin's stranglehold on Europe's natural gas supplies following his invasion of Ukraine.
The Rio Grande LNG facility broke ground in October of 2023 to commence construction for the project's first phase. Now, roughly a year after obtaining the approvals that NextDecade spent more than 10 years seeking from their U.S. regulators, Rio Grande LNG finds its construction plans threatened with a potential shovels-down order if the court's ruling stands pending a rehearing, or even a well-warranted elevation to the Supreme Court.
If these efforts to reverse the ruling are unsuccessful, what was once monumental progress for U.S. energy expansion towards new-age infrastructure would be a disappointing setback for all. This initial decision from the D.C. Court of Appeals is odd and unexpected , as the fallout would leave all infrastructure developers to wonder when a final permit truly becomes a final permit.
The reason the D.C. Court of Appeals vacated FERC's permit reauthorizations was because information regarding environmental justice had become available, which apparently should have ordered another lengthy supplemental review rather than dealing with the information administratively, which the court found was "arbitrary and capricious." Essentially, this means the court thinks the already pro-environmental justice FERC acted randomly and unreasonable in their review process.
While the D.C. Court of Appeals is empowered to oversee federal regulatory agencies, it is always a stretch when lawyers and judges jump into topic areas in which they have zero technical competency and expertise.
NextDecade has complained that the petitioners lack standing to bring any actions. They appear to include parties who were bypassed or not to be direct economic beneficiaries of the project, including the City of Port Isabel, Texas, The Sierra Club, the Carrizo Comecrudo group, and Vecinos para el Bienestar de la Comunidad Costera. Public supporters of the project include the larger, federally-recognized Lipan Apache Tribe of Texas, the City of Brownsville, Texas, Cameron County leaders, the Rotary Club of Port Isabel, and other community leaders.
The D.C. Court of Appeals vacated the reauthorizations based on FERC's expansion of an environmental justice assessment from a two-mile radius from the plant to a 31-mile radius. Obviously, expanding from a 984-acre site to an area encompassing populated areas identified "potential impacts on the identified environmental justice communities may relate to wetlands, recreational and subsistence fishing, tourism, socioeconomics, road and marine traffic, noise, safety, air quality, and visual resources."
FERC argued in its defense that not calling for a supplemental environmental review was harmless. The D.C. Court of Appeals disagreed stating "... the Commission's error prejudiced petitioners' and the public's ability to comment on the Commission's environmental justice analysis." At this point, perhaps the D.C. Court of Appeals would prefer to extend the review for environmental justice to all of Texas?
NextDecade and its multinational partners are left with billions of dollars spent, and billions now suspended, as they fight off another guerilla attack on U.S. energy markets and LNG exports. FERC is clearly in favor of the project. The nation is clearly in favor of the project. So, if the court's decisions is not overturned, the question is now what is the necessary payoff for the aggrieved petitioners?
Losing thousands of jobs and billions in community investment will make any "victory" a pyrrhic victory for the petitioners and their neighbors in the community. And, given that it is South Texas, one good plaintiff's lawyer could sue the petitioners on behalf of the residents who lose jobs and business due to their interference. Maybe that is the next step in this saga.
