By Nichola Groom and Valerie Volcovici

PORTLAND, Texas – Cheniere, the largest U.S. exporter of liquefied natural gas, boasts that it’s helping to “improve local air quality in communities globally” because the cleaner burning fuel it ships displaces coal in power plants.

But in the Corpus Christi, Texas region, where the fuel is prepared for shipment, the company is making air quality worse -with the consent of state regulators.

Cheniere’s massive LNG plant, on the outskirts of the Gulf Coast city, has exceeded its permitted limits for emissions of pollutants such as soot, carbon monoxide and volatile organic compounds (VOCs) hundreds of times since it started up in 2018, according to a Reuters review of regulatory documents.

Instead of levying penalties for such violations, the Texas Commission on Environmental Quality (TCEQ) has responded by granting Cheniere big increases in the plant’s pollution limits, the documents show. The facility is now allowed to chuff out some 353 tons per year of VOCs, double the limit set out in its original permit eight years ago. The state raised limits on four other pollutants by more than more than 40%.

The issue has infuriated nearby residents who cite the frequency of large flares, used to burn off excess gas to relieve pressure, and evidence that local air quality has deteriorated significantly since the facility’s start-up. They have petitioned the state to crack down on the plant’s pollution rather than allowing it to emit more.

Texas regulators have acknowledged the plant’s impact on the local air quality: In its annual enforcement report for fiscal year 2019, the agency blamed the Corpus Christi region’s 83% increase in emissions from the prior year in part on the startup of the Cheniere facility.

Cheniere said in a statement to Reuters that it had initially underestimated emissions from the plant because it was required to apply for the original permit before its engineering work was completed. The company said its design and equipment adhere to federal standards requiring the “best available control technology” to limit pollution.

When actual emissions exceeded those estimates, Cheniere sought amendments from regulators to “reconcile” the higher pollution with its early assumptions, the company said.

The plant could not run consistently and efficiently under the lower pollution limits, which would require frequent shutdowns, plant general manager Ari Aziz said in an interview.

The emissions from Cheniere’s Corpus Christi LNG facility highlights a broader danger of surging air pollution as the United States and other nations seek to expand U.S. gas exports. LNG facilities are substantial polluters, and regulation will be key to ensuring their emissions don’t pose big health problems for residents near the plants.

The administration of U.S. President Joe Biden views expanding the LNG industry as a key tool for helping Europe reduce its energy dependence on Russia, which has been aggressively sanctioned by Western nations since invading Ukraine in February. The LNG expansion policy, however, could undermine the administration’s promises to combat climate change and provide cleaner air to communities living near industrial sites.

Biden’s Energy Department said in a statement to Reuters that expanding LNG to address global energy shortages “must be balanced” with the fossil fuel’s environmental impacts. The administration said it supports research into technologies that will mitigate such impacts “in a just and sustainable way,” without specifying any particular technology.

U.S. LNG export capacity is on track to soar by 40% in the next two years, according to the Department of Energy, with companies including Cheniere, Freeport LNG, and Sempra LNG eyeing new projects and big expansions.

“They tell us we need to export more, we need to help our friends in Europe. But what about us?” said Elida Castillo, director of Chispa Texas, an organization representing the low-income, mostly Hispanic communities of Gregory and Taft, near the terminal. “We’re the ones who are left to suffer with all the pollution.”

VIOLATIONS, BUT NO PENALTIES

In July of last year, the TCEQ opened an enforcement probe into the Corpus Christi facility following 293 instances in 2020 when plant emissions exceeded permitted limits. The excess pollution resulted in 19 violations that the agency investigated for potential enforcement. All were resolved without penalties on the company.

The probe found, for instance, that the facility’s condensate tank, where compounds removed from natural gas are stored, emitted more than two and a half times its allowable level of VOCs for a period of 13 months. The chemicals, which can include compounds like benzene, ethylene, toluene and formaldehyde, are removed from natural gas during the liquefaction process and can cause a range of health effects from eye irritation to cancer.

According to state records, the violation began in October 2019 and ended in November of 2020 when TCEQ officials granted Cheniere’s request to be able to emit more pollution. That permit amendment also resolved two other violations, for exceeding, on several occasions, the hourly limits of VOCs and carbon monoxide emitted from gas flares, an enforcement document showed.

A TCEQ spokesperson said changing the plant’s permitted pollution limits was “an acceptable resolution” because Cheniere could demonstrate that those increases in emissions have not put the Corpus Christi area’s air quality in violation of federal standards.

The U.S. Clean Air Act’s National Ambient Air Quality Standards impose limits on the amount of pollution in a given area and restrict further industrial development only when pollution levels exceed those limits.

The amendment stands out as an extraordinary accommodation of an industrial polluter at the expense of air quality for local residents, said Wilma Subra, a Louisiana-based environmental scientist and president of the environmental consulting firm Subra Company, who reviewed the Reuters reporting. Subra said Texas regulators are essentially telling Cheniere: If you can’t meet clean0air standards, “we would be glad to help.”

The TCEQ has granted the Cheniere plant two additional amendments that raised pollution limits and is considering a third.

The Cheniere plant is regulated as a major pollution source under federal law because it emits more than 250 tons of pollution. The designation requires the plant to demonstrate that it uses state-of-the-art pollution controls, but specific limits are left up to state regulators.

Kelly Haragan, an environmental law professor at the University of Texas law school, said that the pattern of adjusting emissions limits higher to resolve pollution violations at Cheniere raised questions about whether the facility was indeed using the most reliable emissions control technology.

Cheniere said it was complying with the regulation.

Residents near the Cheniere plant worry about the health effects of the area’s expanding industrial sector.

“They shouldn’t be granted permits that just allow the emissions to keep going up,” said Jennifer Hillard, an architect whose home in the waterfront town of Ingleside on the Bay faces the LNG tankers coming in and out of the Cheniere plant. “What is the impact of these types of deviations? … Does anyone know? Is anyone watching?”

Encarnacion Serna, a retired chemical engineer whose home in Portland’s East Cliff neighborhood is less than 3,000 feet from the Cheniere terminal, said a massive flaring event there last month created “unbearable heat and glare” that forced him to send his visiting grandkids to another relative’s house further away.

Serna, 70, has already filed three complaints with concerned neighbors against Cheniere this year in response to large flaring events. “We are defending our communities from being obliterated,” he said.

Serna and other residents of Portland, Gregory and Ingleside will challenge the latest Cheniere air permit application at a contested case hearing on June 30.

Cheniere is currently seeking even higher limits on its carbon monoxide and VOC emissions at the Corpus Christi facility, according to regulatory documents, citing the presence of more impurities in its natural gas stream than it initially expected.

Longer-term, Cheniere has launched a major expansion of the plant. The TCEQ has already approved the necessary air permits.

(Reporting by Nichola Groom and Valerie Volcovici; editing by Richard Valdmanis and Brian Thevenot)