- The US court vacated the Rio Grande and Texas LNG permits, citing insufficient environmental justice and air quality assessments.
- FERC plans to complete new environmental studies by July 2025, affecting project timelines and viability.
- Despite starting construction, NextDecade must adjust its plans, including withdrawing a carbon capture proposal, due to legal challenges.
Regulation of liquefied natural gas (LNG) projects in the US is rapidly evolving, with the Rio Grande LNG and Texas LNG projects under heightened scrutiny. Recent court rulings amplify tensions between economic development and environmental concerns, complicating efforts to expand US LNG exports.
On August 6, 2024, the US Court of Appeals for the DC Circuit vacated permits for both projects, citing FERC’s failure to assess environmental justice and air quality impacts fully. In response, FERC initiated new environmental reviews, which it expects to complete by July 2025.
These regulatory delays increase risks for LNG developers, especially NextDecade, the company developing Rio Grande LNG. Despite starting construction on the first phase of its project, NextDecade now faces setbacks. Environmental groups argued that FERC overlooked the project’s effects on local communities. Following the court’s decision, NextDecade asked FERC to withdraw its carbon capture and storage (CCS) proposal, which may impact the project’s viability.
FERC aims to base its new environmental studies on prior analyses, including those from 2019. These updated reports will determine whether the Rio Grande and Texas LNG projects can proceed with construction and operations.
NextDecade had already reached a final investment decision (FID) for the first phase of its Rio Grande LNG project in July 2022. This phase includes three liquefaction trains designed to produce 17.6 million metric tons of LNG annually. The company plans to decide on a fourth train by the end of 2024, and five trains could eventually increase capacity to 27 million tons annually.
Meanwhile, Texas LNG, a smaller project with a capacity of 4 million tons per year, signed several commercial agreements in 2024. The company seeks to secure a final investment decision by the year’s end. Both projects are vital in the US plan to boost LNG exports and maintain a leading position in the global energy market.
However, the legal and regulatory landscape remains challenging. The court ruling highlighted FERC’s failure to conduct further environmental studies on air quality and environmental justice issues. Although FERC approved both projects in 2019, the court’s decision questions their future.
Developers must now navigate a complex regulatory environment. The outcome of the new environmental studies will heavily influence the future of these projects. Companies also face pressure from environmental groups and local communities concerned about the project’s impact.
The US LNG sector stands at a critical juncture. The results of FERC’s reviews will determine whether the country can continue expanding LNG exports and maintaining a competitive position in the global market.