VatradeCoin Monitor

Texas regulators last month approved water rights for a new, 2,500-acre reservoir to meet the growing needs of chemical plants, refineries and other industries on the Gulf Coast. 

A draft permit issued Feb. 23 by the Texas Commission on Environmental Quality authorizes the Lavaca-Navidad River Authority (LNRA) to divert up to 31 billion gallons per year from the Lavaca River. It would go into a reservoir proposed on property Formosa Plastics owns, about two miles east of its massive Point Comfort chemical complex, where the company has quietly pursued permits to expand in recent years since its Louisiana megaproject has been stalled by legal complaints. 

The draft will undergo a 30-day period of public comment before being adopted. 

It’s the first time in 50 years the small river authority has sought additional water rights, according to general manager Patrick Brzozowski. 

“There is interest in our area to develop industrial plants,” he said. “That’s where the demand is going to come from.”

The 20-year-old fracking boom in Texas continues to fuel a downstream buildout on the coast, where pipelines deliver oil and gas to enormous facilities that refine it into chemical products or prepare it for export by sea.

Around Lavaca Bay, this mostly rural middle section of the Texas Gulf Coast still lacks the great conglomerations of chemical manufacturers that ring the water at Houston and Port Arthur to the north and Corpus Christi to the south. Here, a single actor reins supreme: Formosa Plastics, a $460 billion Taiwanese company, and its 2,500-acre complex on Lavaca Bay, which turns Texas shale gas into the materials for common single-use plastics. 

The company has incurred hefty fines and complaints for years over unpermitted discharges into air and water. It currently faces steep opposition over its proposed new chemical complex in Louisiana, which has mired the project in challenges over environmental justice, climate impacts and wetlands destruction. 

Now, its prospects for expansion in Texas trouble environmental advocates. 

“Formosa got such hell from people in Louisiana stopping them that they keep it very quiet when they are trying to expand,” said Diane Wilson, a retired Gulf Coast fisherwoman who won a $50 million settlement in 2019 from Formosa over its routine dumping of plastics into Lavaca Bay over decades. “They want water for expansion.”

Formosa declined to answer questions about expansion plans or the proposed reservoir. 

“Since the Lavaca-Navidad River Authority (LNRA) applied for the water permit, we feel you should contact LNRA,” a Formosa spokesperson wrote in an email. 

Industrial Water Demand

According to Brzozowski, two customers account for 98 percent of water demand in the Lacava-Navidad basin, the smallest major river basin in Texas. 

One is the City of Corpus Christi, 100 miles to the southwest, where a single new plastics plant owned by ExxonMobil and the Saudi Basic Industries Corporation accounts for up to 25 percent of regional water demand (and where a 2018 city ordinance exempts industrial water users from restrictions during drought).

The other is Formosa Plastics. The two customers consume roughly equal amounts, according to the region’s latest water plan. 

The LNRA currently supplies about 28 billion gallons of water each year from its only reservoir, Lake Texana on the Navidad River, with none left to spare. Its pending water rights permits would add to its portfolio an additional 31 billion gallons per year from the neighboring Lavaca River, to be stored at the 16-billion-gallon reservoir (medium-sized by Texas standards) planned on Formosa property in Jackson County. 

Formosa would get first rights to a portion of the water, Brzozowski said, but the details haven’t been negotiated. 

Expansion Plans

For Formosa, the opportunity for growth in Texas comes after legal challenges have stalled its plans for a new, $9.4 billion chemical complex in St. James Parish, Louisiana. The U.S. Army Corps of Engineers revoked that project’s permit to build on wetlands in 2020, and in 2022, a state judge struck down its air pollution permits, citing concerns over environmental justice and climate. 

Seventeen days later, Formosa applied with Texas regulators for permits to build a new hexene plant at Point Comfort and expand its adjacent polyethylene plant. The two projects together were approved in September 2023 to emit about 170 tons of regulated pollutants per year. 

The company has also applied for amendments to nine of its air permits to authorize four new ground flares—large facilities used for burning off unwanted chemicals—and to sharply increase emissions limits at its existing flares. 

“Formosa has not explained why it is seeking to increase flaring limits,” said official comments filed with the TCEQ by the Environmental Integrity Project in February 2023.    

“They could definitely be laying the groundwork for expansion,” said Collin Cox, the attorney who wrote the comments

According to a report this month by the business intelligence website Offshore Technology, upcoming projects at Formosa Point Comfort include expansions at its caustic soda plant, chlorine plant, propylene plant #2, PVC plant and its vinyl chloride monomer plant. 

That follows 40 years of steady growth for Formosa at Point Comfort. According to the company’s website, it began operations at the 2,500-acre complex in 1983, then underwent major expansions in 1994, 1998, 2002 and 2012. In 2016 it applied to add a new polyethylene plant, then in 2020 retroactively doubled the plant’s authorized emissions of volatile organic compounds after it was built. 

Formosa’s first contract with the Lavaca Navidad River Authority, in 1980, secured 1.6 billion gallons of water per year. Today Formosa holds contracts for 13.4 billion gallons of water per year. 

A Notorious Polluter

The facility also has a history of illegal pollution. Wilson, the fisherwoman, previously sued Formosa over its large-scale dumping of plastic chemicals into Lavaca Bay. In 2019, she won the largest settlement ever awarded in a case brought by a citizen under the Clean Water Act, $50 million. 

In the settlement, Formosa agreed not to dump any more plastic into the bay. However, it has reported 584 violations of that agreement to the TCEQ, most recently on Feb. 26, incurring $15.5 million in additional penalties. 

Formosa also regularly reports violations of its air pollution permits, most recently on Jan.  22, when an emergency shutdown caused the release of 27 chemicals, including benzene (a known human carcinogen) at 33 times Formosa’s permitted rate, butadiene (a probable human carcinogen and a known neurotoxin) at 70 times the permitted rate, and gaseous ethylene (which can be used as a commercial pesticide) at 758 times the permitted rate, according to the company’s report to TCEQ. 

On Jan. 17, freezing weather prompted Formosa to release almost 250 tons of air pollution, including gaseous ethylene at 500 times its permitted rate. 

“They are still polluting, and now they are trying to expand,” Wilson said. 

The draft water rights permit will undergo a period of public comment in which affected citizens may request a hearing before an administrative law judge. If that happens, it could be several years before the project breaks ground, said Brzozowski, the river authority manager.

“We don’t have a timeline right now, we’re trying to get a permit and we don’t know how long it will take,” he said. “We do know there is future demand. They are interested in how long it’s going to take.”

Trouble in Louisiana 

In Louisiana, Formosa continues to slowly advance plans for its huge new complex. After the state judge struck down its permits in 2022, Formosa and the state of Louisiana appealed. In January, an appeals court reversed the 2022 decision, re-validating the permits. Opponents of the project have until March to raise the question to the state’s supreme court. 

Regardless of air permits, the project in Louisiana still lacks the authorization to build on wetlands that was revoked by the U.S. Army Corps of Engineers in 2020. Since then, the Corps has ordered an environmental impact study of the project, a meticulous, yearslong process. 

“It will likely be years before the Corps makes a decision whether to grant approval,” said Corinne Van Dalen, a senior attorney with Earthjustice in New Orleans, who has represented opponents of the project.