Court changes its mind: Construction of American LNG project emerging out of legal woods

Houston-headquartered energy player NextDecade Corporation has cheered the revised court judgment regarding its liquefied natural gas (LNG) export projects at the Port of Brownsville, Texas. The decision is perceived to remove the question mark hanging over the construction of this LNG project, which the previous court ruling put there.

NextDecade’s Rio Grande LNG project in Texas is among the energy developments poised to reap the benefits of the Trump administration’s zest to unlock America’s so-called energy dominance primarily with LNG as the crown jewel of the fossil fuel trinity encompassing coal, oil, and gas.

This project did not have smooth sailing as it ran into opposition from environmentalists and climate activists, which led the proposed LNG terminal into stormy legal waters, causing brushes with the law that impacted its construction progress.

The U.S. Court of Appeals for the D.C. Circuit issued an order in August 2024, vacating the reauthorization of the Rio Grande LNG facility on the grounds that the Federal Energy Regulatory Commission (FERC) should have issued a supplemental environmental impact statement (EIS) during its reauthorization process.

FERC issued a notice of its intent to prepare a supplemental EIS on September 13, 2024, in response to the court’s decision, setting forth a schedule providing for the issuance of a draft of the supplemental EIS in March 2025, the final supplemental EIS by the end of July 2025, and issuance of a final order by November 20, 2025.

Come October 21, 2024, the Houston-based player filed a petition for rehearing and rehearing en banc with the court and followed it up with another filing in November 2024. The petitioners in the case and FERC filed responses on December 9, 2024, to the company’s petition.

On January 23, 2025, NextDecade submitted another filing with the court referencing executive orders issued by President Donald Trump, who revoked Executive Order 12898, to point out that all claimed errors on which the court based its decision were without force.

FERC followed suit on February 6, 2025, and filed a letter with the court stating that “regulatory processes ‘adhere to only the relevant legislated requirements for environmental considerations’{…} and the Executive Order giving rise to those (CEQ) regulations has been revoked.” 

The U.S. Court of Appeals for the D.C. Circuit issued a revision on March 18 to its August 2024 judgment, remanding without vacatur the Federal Energy Regulatory Commission’s order for the first five liquefaction trains at the Rio Grande LNG facility.

Matt Schatzman, NextDecade’s Chairman and Chief Executive Officer, highlighted: “We are pleased with today’s revised court judgment, which ensures construction at the Rio Grande LNG Facility will not be impacted by the Court.

“This is an excellent outcome for NextDecade’s shareholders, our partners in the project, the local community, and our customers. We look forward to continuing our work with FERC through the reauthorization process for our project.”

The construction of Phase 1 is ongoing. Even though an engineering, procurement, and construction (EPC) contract was signed with Bechtel for Train 4, the firm expects to refresh pricing in 2025.

There is strong commercial progress for Train 4, including 20-year LNG sale and purchase agreement (SPA) with ADNOC for 1.9 mtpa, heads of agreement for 20-year SPA with Aramco for 1.2 mtpa, and TotalEnergies’ LNG purchase option for 1.5 mtpa that NextDecade expects to be exercised.

Commercialization is also underway for Train 5, which is anticipated to see the finalization of an EPC contract with Bechtel in 2025. NextDecade recently revealed extension plans for the Rio Grande LNG facility, as it believes that the project has the potential to be one of the world’s largest LNG production and export facilities.

Wheels are up for the beginning of the development and permitting process for trains 6-8. According to NextDecade, Train 6 with around 6 mtpa is being developed inside the existing levee adjacent to trains 1-5. The company expects Train 6 pre-filing with FERC in 2025 and full application filing in early 2026.

On the other hand, trains 7-8 with approximately 12 mtpa are being developed on-site outside of the existing levee and further details on the permitting process are anticipated to come later this year. Located on a 984-acre site near Brownsville, Rio Grande LNG is seen as the first U.S. LNG project offering an expected emissions reduction of over 90%.

This is anticipated to be achieved through the firm’s proposed carbon capture and storage (CCS) undertaking to capture and permanently store more than 5 million metric tons of CO2 per annum. In the aftermath of the previous ruling, NextDecade decided to retract an application made to FERC for its proposed CCS project, designed to slash the carbon footprint of its LNG export terminal.

NextDecade sees sufficient space in Texas for the development of up to ten total liquefaction trains at the Rio Grande project, with the site location benefitting from the proximity to abundant natural gas resources in the Permian Basin and Eagle Ford shale, access to an uncongested waterway, and fewer and less severe weather events than other U.S. Gulf Coast areas.