Rio Grande LNG investors face risks highlighted by community opposition and environmental justice concerns

In addition to facing significant financial and legal headwinds, the Rio Grande liquefied natural gas (LNG) terminal has met with opposition from community groups and local governments. Investors in Global Infrastructure Partners, a wholly-owned subsidiary of BlackRock, are exposed to risks surrounding ongoing litigation and public opposition. Investors should consider these human, environmental, and community health factors.

Impacted community members from the region have voiced their opposition to investing in Rio Grande LNG. During public meetings of the Washington State Investment Board (WSIB) over the last two years, community members have expressed concerns about Rio Grande LNG, and the board’s involvement as GIP investors. In a written statement submitted to the WSIB on September 19, 2024, Josette Cruz of the South Texas Environmental Justice Network said, “We continue to oppose the Rio Grande LNG project because of the harms to our communities and environment. For you as investors, the financial and legal risks are also growing. Now is the time for Global Infrastructure Partners to put a halt to the project. We ask the WSIB–as a key GIP investor–to take the financial, environmental and community concerns about the project seriously.” Pension fund beneficiaries and Rio Grande Valley community representatives have echoed this message at other pension fund meetings. The video clips below highlight several comments.

Public comment on November 16, 2023 at the Washington State Investment Board. Speakers are Bekah Hinojosa of South Texas Environmental Justice Network and Dr. Christopher Basaldú of the Carrizo Comecrudo Nation.

Opposition from Indigenous groups, local governments, and business communities

Despite citing “human rights as an investment issue” and claims that “Community harm or displacement, particularly using contested land or infringing on Indigenous Peoples’ rights, can damage community support and jeopardize access to resources vital to operations,” BlackRock acquired GIP and its ownership of the Rio Grande LNG project in 2024, a project which has consistently failed to meet basic standards for ensuring human and Indigenous rights. 

The Rio Grande LNG project is being built very near the Garcia Pasture, a sacred and ancestral site for the Carrizo Comecrudo Tribe of Texas (Esto’k Gna), and “one of America’s premier archaeological sites,” according to the World Monuments Funds. Yet, NextDecade, the project developer, has proceeded without giving free prior and informed consent to the Carrizo Comecrudo Tribe of Texas. As noted in a Louisiana Illuminator article, “Supplied by gas from the Rio Bravo pipeline, the Rio Grande LNG export terminal would be built 1,000 feet from Garcia Pasture.” In the article, Juan Mancias, chairman of the Carrizo Comecrudo Tribe said of the Rio Bravo pipeline, “Anywhere they go, they’re going to find some kind of a village or sacred site of ours.” 

In addition to organized opposition from the Carrizo Comecrudo Tribe of Texas, several local governments, school districts, and business associations have passed resolutions opposing the development. The Laguna Vista Town Council, South Padre Island City, and Long Island Village passed resolutions opposing the Rio Grande LNG terminal. The Laguna Madre Water District passed a resolution opposing multiple LNG terminals around Brownsville, including the Rio Grande project. The South Padre Island Business Owners Association passed a resolution opposing LNG terminals in the area due to their effects on tourism.

While some local elected officials from Brownsville and Cameron County have publicly supported the project, according to reporting in the Texas Observer, they are doing so in close collaboration with NextDecade. Journalist Gaige Davila obtained emails between the company and local officials showing how NextDecade has encouraged and supported officials to write op-eds, prepare statements, file amicus briefs, and in some cases, written media statements for the officials. Davila also found that there were email exchanges between the company and elected officials, setting up calls, arranging shared meals, and inviting them to concerts. One especially notable email shows “Cameron County Commissioner Sofia Benavides sending NextDecade an unnamed person’s résumé with hopes of the company finding a job for the person. ‘Appreciate anything you can do for him,’” said the commissioner, according to Davila’s reporting. 

Rio Grande LNG poses risks to human health and environmental damage

A study by Greenpeace and the Sierra Club in August 2024 found that LNG export facilities such as Rio Grande emit pollution that causes significant health risks to people living nearby. Air pollution from LNG facilities can lead to premature deaths, increased health care costs, increased rates of asthma, and missed school and work days for those who live near the facilities, the study found. A study by the Bullard Center for Environmental and Climate Justice released in May 2024 found that emissions from LNG facilities contribute to birth defects, cancer, and other serious health issues for people near the projects. 

The Rio Grande LNG facility also poses significant risks for environmental damage as well as the resulting litigation, reputational risks, and associated costs and delays to the project’s company and its investors. The “Central Park-sized” facility is being built on wetlands next to the Bahía Grande unit of the Laguna Atascosa National Wildlife Refuge, the largest estuary restoration in North America. Construction is already contributing to habitat loss in an area critical for threatened and endangered species such as ocelot, jaguarundi, aplomado falcon, Texas tortoise, piping plover, and Kemps Ridley sea turtle. According to the Environmental Impact Statement (EIS) for the project, “Operation of the LNG Terminal would result in increased human activity, lighting, and noise that could disturb nearby wildlife.” (Federal Energy Regulatory Commission, Office of Energy Projects. (2019). Environmental Impact Statement, Volume I: Rio Grande LNG Project. Section 4.13.2.5, page 4-88.) 

The EIS further describes possible impact to wildlife, specifically ocelots and jaguarundis: “While a travel corridor would be maintained to allow ocelots and jaguarundis to move between Mexico and the United States, the addition of three large industrial facilities in proximity to that corridor (i.e., Annova LNG, Rio Grande LNG, and Texas LNG), would create additional noise, light, and traffic, all of which could deter ocelots or jaguarundis from utilizing the corridor.” (Federal Energy Regulatory Commission, Office of Energy Projects. (2019). Environmental Impact Statement, Volume I: Rio Grande LNG Project. Section 4.6.1.2, page 4-449.). Noise levels from construction and operation may cause changes in ocelot behaviors and may cause animals to change their home ranges. FERC Commissioner Allison Clements wrote about the potential effects of construction and operation on wildlife and people in a January 2024 dissent to the commission’s decision to allow construction to continue, despite serious environmental justice impacts. Commissioner Clements named ocelots as a species of particular concern, given that the animals affected by the Rio Grande LNG project and associated vehicle traffic are likely to be part of the “Laguna Atascosa NWR population, which is estimated to include 17 cats, [and] each direct mortality would result in a 6 percent reduction in the local population.”

Ship traffic’s effect on the fishing and shrimping industry and aquatic wildlife 

If BlackRock and GIP continue the Rio Grande project as planned, not only will car and truck traffic increase, so will tanker traffic along LNG transit routes. Dramatically increased shipping traffic from this project, despite being mostly contained to shipping channels, increases the likelihood of dolphin and whale strikes, according to the EIS (Federal Energy Regulatory Commission, Office of Energy Projects. (2019). Environmental Impact Statement, Volume I: Rio Grande LNG Project. Section 4.7.3, pages 4-174-175.). This ship traffic may also affect shrimping, a significant part of the region’s economy, according to a 2019 Rainforest Action Network report.

According to a Texas Observerarticle, “LNG exporters are also estimated to bring on 10 natural gas tankers a week through the ship channel, with each blocking the channel for about three hours.” This traffic could slow shrimpers bringing their catch in, which could affect the quality of the shrimp. Blocking the channel could also result in greater risk to shrimpers if they are prevented from receiving prompt medical care if injured on the job, the Observer article notes.

The EIS offers further insight into some of the impacts on shrimp habitat and lifecycle (Federal Energy Regulatory Commission, Office of Energy Projects. (2019). Environmental Impact Statement, Volume I: Rio Grande LNG Project. Section 4.6.2.1, page 4-104.). Taken together, the Port of Brownsville and Port Isabel had the second largest commercial value of ports in the Gulf of Mexico, according to a 2008 National Oceanic and Atmospheric Administration (NOAA) report (National Oceanic and Atmospheric Administration, Department of Commerce. (2008). The Gulf of Mexico at a Glance. Page 11.). Shrimp are the most important commercial product in the region, and they rely on essential habitat near the Rio Grande LNG facility as identified by NOAA data. The EIS also notes that vessel traffic and construction could result in increased sediment in the water around the site, which could reduce the amount of light that enters the water, reducing oxygen produced by the photosynthesis of aquatic plants. (Environmental Impact Statement, Volume I: Rio Grande LNG Project. Section 4.6.2.2, page 4-111.).  

Local opposition to and controversy around tax abatements 

Several LNG facilities in the region applied for tax abatements, seeking to reduce the companies’ property tax obligations. According to a report by Rainforest Action Network, the Carrizo Comecrudo Tribe of Texas, and the South Texas Environmental Justice Network, “Rio Grande LNG received a $373 million tax abatement in 2017,” thereby reducing the amount of money going to the county to address community needs and account for increased infrastructure use by the project. Local governments and school districts have publicly opposed tax abatements for LNG facilities. In early 2024 the City Commission of the City of Port Isabel passed a resolution opposing tax abatements for LNG, stating “the City of Port Isabel expresses deep concern about the further transfer of tax burden to residential homeowners by the abatement of taxes at industrial facilities, including facilities that have already made public declarations of intent to construct in the absence of tax abatements.”

Risks associated with proximity to SpaceX 

When a SpaceX rocket launch failed in 2023, pulverized concrete from the explosion was launched as far as 6.5 miles from the launch site. The Institute for Energy Economics and Financial Analysis (IEEFA) described the explosion as causing “far more environmental damage than expected.” The IEEFA report goes on to describe the accident: “The rocket engines’ thrust was so powerful that it obliterated the SpaceX launch pad, hurling chunks of concrete and rebar up to a mile away, while dispersing a plume of pulverized concrete as much as 6.5 miles from the launch site.” The Rio Grande LNG facility is being built less than six miles from the SpaceX launch site.

LNG facilities have a track record of dangerous accidents. As described by the IEEFA, “LNG plants can also explode—as demonstrated by the eruption of an LNG terminal in June 2022 that sent a fireball 450 feet into the sky near Freeport, Texas.” The Freeport LNG incident was caused by human error with mismanagement of valves and safety procedures that resulted in a pipe explosion, though accidents that involve other structures such as storage tanks or liquefaction trains could be even more dangerous. An IEEFA report found that a FERC-requested report on risks to siting an LNG facility so close to a rocket launch pad was done by ACTA Inc., hired by Rio Grande LNG. The IEEFA report found that the ACTA assessment was done using data from smaller rockets rather than the Starship, which SpaceX is currently testing. The IEEFA report states, “The size of the proposed Rio Grande LNG terminal, coupled with the likelihood that NextDecade’s failure to include Starship data in its submission to FERC severely understates the hazards posed by Starship launches and spells potentially troubling risks for the local community.”  

Public comment on September 19, 2024 at the Washington State Investment Board. Speakers are Donna Albert and Alex Bacon, both pension fund beneficiaries.

Investors should ask BlackRock and GIP to address ongoing community concerns

The public opposition to the Rio Grande LNG facility is widespread and highlights a variety of issues with investment in this project. Violations of Indigenous rights, local government concern, emissions, wildlife habitat disruption, economic impacts, and concern regarding proximity to SpaceX have caused significant roadblocks to the project which will continue into the future. Community members, organizations, and local governments have sued FERC over inadequate climate and environmental justice impacts and spoken at pension fund meetings of involved state boards of investment. Local governments have passed resolutions in opposition to the project. While construction on Rio Grande LNG continues despite pending legal cases, investors should ask BlackRock and GIP to adequately address community concern and the reputational and financial risks associated with continued investment in Rio Grande LNG.