Rio Grande LNG, Texas LNG say Trump executive orders bolster court appeal

Developers of the Rio Grande LNG and Texas LNG export facilities said a US federal appeals court should reverse a ruling that tossed key approvals for the projects after executive orders from President Donald Trump undercut the basis of the original decision.

The project sponsors, in separate filings at the US Court of Appeals for the District of Columbia Circuit, focused on a pair of directives issued by Trump in his first week, which were part of a wave of orders that supported industry expectations of a shift toward a more favorable regulatory environment under the new administration.

One of the orders the filings cited revoked a Clinton-era executive action that directed federal agencies to consider impacts on environmental justice communities -- a directive the appellate panel had cited in its decision vacating the project authorizations.

The other, which broadly supported oil and natural gas development, contained provisions that instructed agencies to limit environmental considerations to those required by legislation, revoking an action from the Carter administration that directed the White House Council on Environmental Quality to issue National Environmental Policy Act rules.

The developers are appealing an August decision by the DC Circuit that sided with environmental groups challenging the approvals from the US Federal Energy Regulatory Commission, finding that FERC fell short in its analysis of environmental justice and its consideration of a carbon capture and sequestration project at Rio Grande that developer NextDecade has since withdrawn (City of Port Isabel, et al., v. FERC, et al., 23-1174).

The court also found FERC failed to explain why it chose not to consider air quality data from a nearby monitor.

The developers sought rehearing in October 2024 by the three-judge panel that decided the case or by the full court. FERC backed that request in December. NextDecade has said it expects a response to its rehearing request by early 2025.

"Since the DC Circuit Court decision and our request for rehearing several events have occurred which we believe make clear that all of the claimed errors cited by the DC Circuit Court as the basis for vacatur are based on authorities that are now without force and therefore the Court's decision to vacate should be withdrawn and the original petition for review denied," NextDecade said in an email Jan. 28.

Texas LNG made a similar argument in its Jan. 24 filing, saying, "there no longer appears to be authority for FERC to conduct the environmental justice analysis as directed by the panel."

The broader LNG industry is watching the case, with supporters of increased US exports having described the ruling as creating new regulatory uncertainty that could undermine investor confidence in federal permits, in addition to threatening both of the projects planned in Brownsville, Texas.

Both developers also pointed to a split DC Circuit decision in November that concluded the Council on Environmental Quality lacks statutory authority to issue binding regulations implementing NEPA (Marin Audubon Society, et al., v. Federal Aviation Administration, et al., 23-1067).

The panel that decided the case involving the Brownsville projects "incorrectly relied" on Council on Environmental Quality regulations as the basis for requiring FERC to prepare a supplemental environmental impact statement, Texas LNG said.

NextDecade, which is trying to avoid a construction halt on Rio Grande that the developer has warned could be devastating, has said it is prepared to take the case to the Supreme Court. The developer commercially sanctioned the first 17.6 million mt/year phase of the project in 2023.

Texas LNG, which is smaller at 4 million mt/year, is working to reach a final investment decision. Developer Glenfarne declined to comment on Jan. 28.

Tyson Slocum, director of Public Citizen's energy program, told reporters during a Jan. 28 event that it would be unlikely for the executive orders to directly impact a legal fight involving an independent agency such as FERC. The consumer advocacy group has opposed further LNG export approvals.

"These executive orders are not changing underlying law," Slocum said. "They are setting out a blueprint of future action for agency deliberations on these issues."