FERC plans additional EIS for Rio Grande, Texas LNG following court ruling

The US Federal Energy Regulatory Commission plans to conduct an additional environmental review for the Rio Grande LNG and Texas LNG projects that will conclude by the end of July 2025, staff of the commission said in public notices Sept. 13.

The timeline for the review highlighted the increased regulatory risks for developers of projects in Brownsville, Texas, after the US Court of Appeals for the District of Columbia Circuit's decision on Aug. 6 to vacate and remand the certificate authorizations for the LNG export facilities.

Both project sponsors have sought to commercially sanction new export capacity this year, but the risks are particularly acute for Rio Grande developer NextDecade, which has begun building the first phase of its project and could be forced to halt construction.

The DC Circuit recently sided with environmental groups challenging the LNG project approvals, saying that FERC fell short in its analysis of environmental justice impacts associated with the facilities and its assessment of the proposed carbon capture and sequestration system at Rio Grande. In response, Rio Grande has requested that FERC withdraw its proposal for the CCS system.

In its notice Sept. 13, FERC staff said the supplemental environmental impact statements will address the issues the court identified as needing further study.

For Rio Grande LNG and the associated Rio Bravo Pipeline, that will include an updated look at environmental justice impacts and a revised analysis of air quality impacts. The EIS will also reevaluate project alternatives, including CCS, according to the notice informing the public on how to participate (CP16-454; CP16-455, and CP20-481).

The additional EIS for Texas LNG will also examine environmental justice and air quality impacts (CP16-116).

FERC said that the final environmental reports for both projects are due on July 31, 2025, and will build upon the agency's prior analyses in its 2019 final EISs.

The new studies will factor into FERC's decisions on remand on whether to grant authorizations for the facilities, according to the commission.

Rio Grande, which has said it plans to challenge the DC Circuit decision, won more time to appeal in a court order that also delayed a potential halt of construction activities. NextDecade reached a final investment decision in July 2022 to build the first phase of the project, which would include three liquefaction trains and be able to produce 17.6 million metric tons per year.

The company had been targeting FID on a fourth train by the end of 2024 after signing an engineering, procurement and construction contract with Bechtel for the unit in early August and announcing deals supporting the project. A total of five trains have been proposed, which would bring the terminal's production capacity to about 27 MMt/y.

The developer of the smaller Texas LNG project, with a capacity of about 4 MMt/y, has also announced a series of commercial deals in 2024 to support its target of commercially sanctioning that project by the end of the year, including a heads of agreement on Sept. 11.

The companies were not immediately available to comment Sept. 13.

Court faulted lack of supplemental study

The new environmental reports are meant to address the DC Circuit's ruling that FERC erroneously declined to issue supplemental EIS's addressing environmental justice for each project, and its consideration of CCS for Rio Grande LNG. The commission also failed to explain why it declined to consider air quality data from a nearby monitor, the court said.

FERC originally approved the Texas LNG and Rio Grande LNG projects, along with the related Rio Bravo natural gas pipeline, in November 2019. But the DC Circuit in 2021 found fault with FERC's climate considerations and environmental justice analysis. The court remanded the approvals to FERC without vacating them, finding the commission could fix the deficiencies and reach the same result.

FERC reauthorized the projects in April 2023 and rejected challenges to the approvals in October 2023.