Subscribe to The Y’all – a weekly report on the people, places and policies shaping Texas, produced by Texas Tribune journalists living in communities across the state.

---

McALLEN — A federal court has overturned a regulator’s approval of two controversial, multi-billion-dollar gas export projects in far South Texas, one of which is already under construction.

The ruling requires federal regulators to fix procedural deficiencies before reconsidering approval of the projects for a third time. It is the latest ruling since a coalition of South Texas cities and groups filed suit in 2021 to block the projects.

In an opinion dated August 6, the US Court of Appeals in Washington referred to “the nature and severity of the deficiencies” in the Federal Energy Regulatory Commission (FERC)’s review of the two planned 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 states. “We are aware of the significant harm that the revocation of the approval for the projects may cause. But that does not outweigh the seriousness of the Commission’s procedural deficiencies.”

The court wrote that FERC failed in its environmental justice and climate impact analyses, air pollution modeling, and procedural obligations. FERC and the project developers now have 45 days to request a rehearing.

The two complexes in question are designed to pipe Texas shale gas, condense it and load it onto tankers by the millions of tons per year for sale overseas as liquefied natural gas (LNG). Each complex costs billions of dollars, covers hundreds of acres and is part of an ongoing boom in gas export projects along the Texas and Louisiana Gulf Coast.

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

The company added that construction is ongoing on the first three liquefaction plants and related infrastructure at Rio Grande LNG near Brownsville and that it will assess the impact the court’s order will have on future plans for additional infrastructure.

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

A spokesman for Texas LNG, a smaller, neighboring project on the Brownsville Ship Channel that still has sufficient financing, said the decision was a procedural decision to correct a technical deficiency that was still under investigation.

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

Three surrounding towns and the local water district have passed resolutions opposing the projects, which are being built between national wildlife refuges and on 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,” says a 2023 resolution from the Town of Port Isabel, a party in the lawsuit against FERC. “The proposed project area is located in a sensitive and partially undisturbed salt flat.”

The Texas Carrizo/Comecrudo tribe, also a party to the litigation, has been campaigning for years against the destruction of archaeological sites on land it considers sacred.

“The problem is that their efforts are continually trying to destroy our identity as a people,” said Juan Mancias, chairman of the tribe.

Mancias said Tuesday’s ruling makes him proud to be a Carrizo/Comecrudo and he feels it gives the tribe a say in what happens to the land.

“I’m glad they made this decision because it says a lot about what’s missing in this permitting process,” he said.

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

A FERC spokesman said the agency does not comment on litigation matters.

“FERC is a regulator that has historically relied on industry assurances to make its decisions,” said Tyson Slocum, energy program director at Public Citizen in Washington. “Unfortunately, industry is often wrong and frequently downplays potential dangers and risks to the public.”

Todd Staples, president of the Texas Oil and Gas Association, said: “Delaying permits and treating natural gas as a liability rather than an asset undermines our country’s global energy leadership and forces our allies to turn to other countries – some of which are hostile to America – for their energy needs.”

Years of legal disputes

Tuesday’s decision marked the second time the court has overturned FERC’s approval of those projects, following petitions from local groups supported by nonprofit environmental lawyers at the Sierra Club.

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

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

Following the court’s 2021 order, Rio Grande LNG chose to upgrade its design to include a carbon capture system that captures greenhouse gases underground rather than releasing them into the air.

FERC also expanded its environmental justice review area from three to 50 kilometers and re-approved both projects in April 2023.

“It was clear that FERC was just rushing this through 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, which has been fighting the projects since 2015. “It’s a flawed process.”

The groups filed suit again, claiming that FERC sloppily rushed through the requirements of the original court order without following due process. In its most recent ruling, the federal appeals court in Washington agreed.

It says FERC failed to issue written comments on its updated environmental justice analysis, conduct a review of Rio Grande LNG’s carbon capture project, or make those documents available for a public comment period as required by law, but it did provide them to the LNG companies for comment.

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

According to Nathan Matthews, lead attorney for the Sierra Club, FERC and the project developers have 45 days to request a rehearing. Seven days after that, the court order will take effect and construction on the plants must stop.

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

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

---

The full program is now LIVE for the Texas Tribune Festival 2024September 5-7 in downtown Austin. Discover a lineup of more than 100 unforgettable conversations on topics such as education, business, Texas and national politics, criminal justice, the border, the 2024 election, and more. Check out the full program.