Court orders new NEPA review for Texas LNG plants

By Niina H. Farah | 08/04/2021 06:26 AM EST

An aerial view of the Port of Brownsville, Texas, where energy developers plan to build two liquefied natural gas terminals. Coast Guard News/Flickr

The Federal Energy Regulatory Commission must reconsider the climate and environmental justice impacts of a pair of proposed liquefied natural gas terminals in Texas, a federal court ruled yesterday.

The decision by the U.S. Court of Appeals for the District of Columbia Circuit is a notable win for environmental groups and local advocates that had argued that FERC had failed to fully address the greenhouse gas and public health effects of the Texas LNG facility, as well as the Rio Grande LNG terminal and its associated Rio Bravo pipeline (Energywire, Aug. 3).

In a unanimous opinion, Judge Robert Wilkins ordered FERC to go back to work on its certificates authorizing the construction and operation of the facilities but stopped short of scrapping the approvals.

"Because the Commission failed to respond to significant opposing viewpoints concerning the adequacy of its analyses of the projects’ greenhouse gas emissions, we find its analyses deficient under [the National Environmental Policy Act] and [the Administrative Procedure Act]," Wilkins wrote.

At issue in the lawsuit were projects by Texas LNG Brownsville LLC, Rio Grande LNG LLC and Rio Bravo Pipeline Co. that are slated to be built in the Port of Brownsville in an area surrounded by mostly low-income and minority communities. A third proposed facility, Annova LNG, was initially included in the lawsuit but was canceled right before oral arguments in the case.

"As I said in my dissents when FERC approved these projects nearly two years ago, neither the Natural Gas Act nor the National Environmental Policy Act permit FERC to assume away the impacts of building and operating any natural gas facilities," Democratic FERC Chairman Richard Glick said in a statement posted to the agency’s website yesterday. "This decision clearly demonstrates that the Commission has the authority and obligation to meaningfully analyze and consider the impacts from GHG emissions and impacts to Environmental Justice communities. Moreover, failure to do so puts the Commission’s decisions – and the investments made in reliance on those decisions – in legal peril."

Yesterday’s ruling puts additional pressure on FERC and its Democratic leadership to follow through on recent commitments to more thoroughly consider the potential harms of greenlighting fossil fuel infrastructure, observers said.

“We are glad to see the court hold FERC accountable for this failure," said Rebekah Hinojosa, senior Gulf Coast campaign representative at the Sierra Club, one of the groups in the lawsuit.

"We hope that Chairman Glick’s commitment to better addressing environmental justice concerns will result in real change in FERC’s decision making," she added in a statement.

A local group, Vecinos Para el Bienestar de la Comunidad Costera, and the city of Port Isabel had joined the Sierra Club in suing FERC for allegedly failing to consider the cumulative risks of ozone pollution from the facilities. The groups said FERC had arbitrarily limited the scope of its analysis to a 2-mile radius around the facilities.

FERC had argued that the facilities did not pose an outsize risk to more vulnerable communities because all the surrounding residents were part of environmental justice communities. FERC also said that since there was not a universal standard for measuring climate risks, the agency could not measure the climate impacts of the LNG terminals.

The D.C. Circuit agreed with the challengers that FERC had an obligation under NEPA compliance rules for federal agencies to either attempt to address their concerns about failing to use the social cost of carbon, which is used to put a price tag on carbon pollution, or offer an explanation for why it could not apply the metric.

But Wilkins, an Obama appointee, stopped short of saying that FERC was obligated to use the social cost of carbon in its analysis.

The court’s citation of an implementing rule requiring agencies to put in their best effort in their NEPA analysis was significant, said John Moore, FERC project director for the Natural Resources Defense Council.

"Whether or not a particular administration decides to use the social cost of carbon or not in its own policies, there is a regulation out there, a requirement for FERC to do its best," said Moore. "So it does put more pressure on FERC to tackle the issue of measuring the climate impacts of gas infrastructure head-on."

Bolstering climate reviews

Yesterday’s D.C. Circuit ruling is the latest decision to rebuke FERC for inadequate climate analysis.

Judicial rebukes are likely to continue until FERC fully considers the social cost of greenhouse gases in its analyses, said Richard Revesz, a law professor at the New York University School of Law, who wrote a friend of the court brief on behalf of the challengers in the case.

"This decision underscores that federal agencies, including FERC, need to take a hard look at climate impacts in their decision making," said Revesz in an email.

"The court also found FERC’s environmental justice analysis to be inadequate," Revesz added. "It is unacceptable for FERC to continue to rubber-stamp pipeline projects that have adverse impacts on disadvantaged communities."

The court called FERC’s decision to analyze environmental justice communities within a 2-mile radius "arbitrary," since the commission’s environmental impact statement for each project found that the environmental effects extended beyond that area.

FERC had found in one example, Wilkins pointed out, that air quality impacts could occur within 31 miles of the LNG facilities.

"The Commission has offered no explanation as to why, in light of that finding, it chose to delineate the area potentially affected by the projects to include only those census blocks within two miles of the project sites for the purposes of its environmental justice analyses," he wrote.

The ruling underscores that FERC will not be able to use a "one-size-fits-all" approach to measuring environmental justice impacts, said Moore of NRDC.

"I think this is something where the Office of Public Participation would perhaps draw out more information on such impacts in future pipeline and LNG proceedings," he said.

The D.C. Circuit ruling calls on FERC to more carefully study the environmental impacts on residents in Laguna Heights, who do not have adequate access to health care and are reliant on local fishing and tourism for their livelihood, said Jennifer Richards, an attorney with Texas RioGrande Legal Aid, which represented Laguna Heights residents in the case.

"The Court’s decision today will hopefully prompt FERC to do just that," Richards said in a statement.

Next steps

Yesterday’s order does not stop developers of the LNG plants from continuing work on the terminals.

NextDecade Corp., the parent company of Rio Grande LNG LLC, a wholly owned subsidiary, praised the court ruling for not axing its certificate.

“We are pleased the Court affirmed the validity of the FERC authorization of our Rio Grande LNG project and we look forward to the FERC’s response to the Court’s requests,” said NextDecade Chairman and CEO Matt Schatzman in a statement.

The developer of the Texas LNG terminal said in a statement that project development would continue following the court’s decision.

"The DC Circuit unanimously finds that it is not necessary to stop the project from moving forward by vacating FERC’s order because doing so would ‘needlessly disrupt completion of the projects,’" a spokesperson for Texas LNG said in an email.

The company pointed to the court’s statement that FERC seemed "likely to remedy any deficiencies in its orders on remand."

The spokesperson said: "We look forward to assisting FERC to complete the necessary analysis while we continue to bring the project to a final investment decision."

Still, the projects could see setbacks as a result of the D.C. Circuit ruling, said NRDC’s Moore.

"Simply identifying the deficiencies in the order or creating a question does add more risks to these projects," he said. "Even by just remanding, it adds a certain subjective element of risk to the projects."

Chief Judge Sri Srinivasan, an Obama appointee, and Senior Judge Douglas Ginsburg, a Reagan pick, also joined yesterday’s ruling.