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Appeals Court Sidesteps Islander East Pipeline Case

Islander East Pipeline Co.'s proposed 45-mile Connecticut-to-Long Island project took yet another hit when the U.S. Court of Appeals for the Second Circuit in New York said it will not review a Connecticut Department of Environmental Protection (DEP) decision to deny the project a water-quality permit.

The $180 million Islander East project, which is jointly sponsored by Spectra Energy and KeySpan, initially would deliver 285,000 Dth/d of gas from New Haven, CT, across Long Island Sound to Suffolk County near Yaphank, NY, with a lateral to be constructed to Calverton, NY.

Additionally, Algonquin Gas Transmission, a subsidiary of Spectra Energy, would loop about 13.7 miles of existing pipeline in Connecticut and add a new compressor station in Cheshire, CT. As a result of these upgrades in Connecticut, Algonquin would interconnect with Islander East. Approximately 22 miles of the pipeline would be built on the floor of Long Island Sound.

The required water permit has been denied twice by the Connecticut DEP. Islander East previously challenged the DEP decision in state Superior Court in Hartford, CT, where the case had languished. The Energy Policy Act of 2005 (EPAct), however, gave interstate pipelines the power for the first time to seek recourse in the federal courts when states oppose Federal Energy Regulatory Commission (FERC)-approved projects and refuse to issue permits. Islander East was the first energy-related company to file a court challenge based on language contained in EPAct.

The Islander East proposal has been at the center of a lengthy and labyrinthine legal dispute since it was first approved by FERC in September 2002 (see NGI, Sept. 23, 2002). Connecticut initially interrupted the Islander East project by claiming that it was inconsistent with the state's Coastal Zone Management Act statute, which gives states the right to block projects that they view as detrimental to their coastal areas. But former Commerce Secretary Donald Evans in May 2004 overturned the state's decision (see NGI, May 10, 2004).

In March 2007 Islander East seemed to have won a key victory when the U.S. District Court of New Haven rejected arguments by Connecticut's attorney general, the state DEP and the Town of Branford, CT, ruling that the proposed pipeline did not require a state permit (see NGI, April 2, 2007). Since the project had already been approved by FERC, the court said the Commission certificate superseded the state permitting requirement.

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