US Appeals Court Revokes $2.1 Billion GulfLink Project Permit in Texas

en.Wedoany.com Reported - The US Court of Appeals for the Fifth Circuit on August 12 revoked the federal permit for Sentinel Midstream LLC's GulfLink project in Texas, citing "serious procedural errors" by the Maritime Administration in its review. The court found that the US Maritime Administration (MARAD) violated the Deepwater Port Act by drawing improper boundary maps and failing to consider pipeline infrastructure overlapping with the competing "Sea Port Oil Terminal (SPOT)" project in the area, and therefore must reassess its prior approval decision.

The ruling invalidates the GulfLink project permit, halting all construction or advancement work immediately. Sentinel Midstream declined to comment on the ruling and did not respond to questions regarding construction status.

GulfLink is located approximately 30 miles offshore from Freeport, Texas, and is designed to export up to 1 million barrels of crude oil per day via Very Large Crude Carriers (VLCCs) to the Japanese government and Freeport Commodities. The project includes a 44-mile-long, 42-inch outer diameter pipeline, with operations originally planned to commence around 2028, at a total investment of approximately $2.1 billion, with funding partially derived from broader US-Japan trade agreements.

The legal dispute in this case stems from a provision in the Deepwater Port Act of 1974: the federal government may approve only one crude oil deepwater port within a designated "application area," including any associated infrastructure. Because the competing SPOT project's pipeline route physically overlaps and crosses through GulfLink's pipeline, the plaintiffs—Citizens for Clean Air & Clean Water in Brazoria County (Better Brazoria), represented by Earthjustice—successfully argued that MARAD violated the "one-port" rule when it issued the GulfLink permit in February.

A three-judge panel noted that MARAD "improperly drew" the maps defining the project's official boundaries to exclude the aforementioned pipeline, and approved two overlapping projects in the same area rather than permitting only one. The court held that the severity of the errors made permit revocation the appropriate remedy, rather than the lesser option of remand without vacatur. Revocation applies in cases where the court finds "serious procedural errors" that cannot be readily explained or remedied through minor modifications; while remand could return the decision to the agency for correction, it would temporarily preserve the existing permit.

The SPOT project, developed by Enterprise Products Partners in partnership with Enbridge Inc., has an investment scale of $2.5 billion to $3 billion and is also located approximately 30 miles from Freeport. The project is designed to handle VLCCs with a maximum daily export capacity of 2 million barrels, requiring the construction of 140 miles of pipeline, including onshore lines connecting to Enterprise Crude Houston (ECHO) in southeast Houston.

SPOT previously faced legal challenges and prevailed, and is currently under construction. Investors have slowed project progress due to challenges in securing sufficient long-term customer commitments amid shifting global market dynamics. The project was initially aimed at VLCCs bound for Asia, but geopolitical changes have redirected large volumes of US crude to Europe, which relies on smaller vessels that can load at existing near-shore terminals. Originally scheduled to enter service in 2026, the project has now been formally delayed to no earlier than 2027.

Better Brazoria welcomed the ruling, with Executive Director Melanie Oldham calling it "a significant victory for the Brazoria County community and for transparent decision-making under the law."