Another major roadblock from the federal government threatens the flourishing American LNG industry. On August 6, 2024, the U.S. Court of Appeals for the D.C. Circuit issued an order vacating the Federal Energy Regulatory Commission’s (FERC) authorization of NextDecade Corporation’s Rio Grande LNG (RGLNG) facility at the Port of Brownsville. The court’s ruling against FERC claims it failed to consider new environmental data that could affect the area surrounding the RGLNG site, though it did not identify any flaws in the facility’s design. If left unchallenged, the DC court’s decision could cast a shadow over the future of U.S. energy infrastructure projects, while jeopardizing thousands of local jobs, economic growth and billions of dollars in investment for the Rio Grande Valley region.
NextDecade’s RGLNG project has become a catalyst for economic growth and development for the Rio Grande Valley, as well as for the next generation of the U.S. energy sector and for meeting the needs of global demand in Europe and beyond. The $18.4 billion first phase of the project is already under construction, and upon completion would have a capacity of 17.61 million tons per annum of liquefied natural gas (LNG). This project is set to revitalize the Rio Grande Valley region, creating more than 6,000 jobs and supporting local businesses while funding crucial improvements to the Port of Brownsville and the deepening of its ship channel for increased commercial capabilities beyond LNG. The economic benefits would extend throughout the community, providing local families and businesses with new opportunities for growth and prosperity for years to come.
The RGLNG project will also play a critical role in global energy security, as U.S. LNG exports have become essential in meeting the world’s growing energy demand. If the project is unable to move forward, it would reduce the global supply of LNG by nearly six percent, affecting energy markets and end-use consumers worldwide. At a time of political instability, when U.S. allies heavily rely on American LNG exports, projects like RGLNG are crucial for ensuring energy security and supplying cleaner-burning natural gas to the world.
Contrary to environmental activists’ claims, the court ruling did not identify any substantial issues with the project itself. The RGLNG project has undergone a rigorous regulatory process, beginning in 2016, and has secured approvals from numerous federal and state agencies, including the Department of Energy and the U.S. Environmental Protection Agency. This level of scrutiny ensures that the project is aligned with strict environmental and safety standards.
In addition to NextDecade’s RGLNG, two other LNG projects in the Port of Brownsville were negatively impacted by the appeals court ruling including the Rio Bravo Pipeline and Texas LNG projects. In addition to threating the life of these projects along with the significant benefits they bring to the region, the DC court’s decision creates market uncertainty that could scare off investors from future federally regulated infrastructure projects.
The DC court decision against RGLNG is another major setback viciously targeting the American LNG industry. Earlier this year, in a purely political move, the Biden administration imposed an export pause on LNG under unsubstantiated environmental allegations against the industry. The LNG pause, which has been widely criticized, was based on a now-debunked study pushed by a biased researcher. Together, the court’s ruling and the administration’s export pause are efforts that create unnecessary instability in American energy, threatening the U.S. economy, national security and environmental goals.
Bottomline: The ripple effects of jeopardizing these LNG projects would be profound and long-lasting. Establishing this precedent could endanger future energy infrastructure projects across the United States, while also putting at risk communities like the Rio Grande Valley, which are in dire need of investment and jobs. Adding a strain to global energy security by reducing significant American LNG output at a time of political turmoil and rising energy demand is not the answer to regulatory procedure matters.
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