Sponsors of the beleaguered Islander East pipeline project apparently have not given up on the proposed Connecticut-to-Long Island pipeline. In a letter to FERC last Monday, Islander East said it plans to appeal within 40 days a recent federal court decision that many thought was a potentially fatal blow to the project.

Islander East said it intends to ask the U.S. Court of Appeals for the Second Circuit in New York to review a decision by the U.S. District Court in Connecticut, which in late August set aside a U.S. secretary of commerce decision in 2004 that had overruled Connecticut's objections to the pipeline project (see NGI, Sept. 3).

The district court called the commerce secretary's decision on the proposed pipeline, which would carry natural gas 45 miles from Connecticut to Long Island, NY, "arbitrary and capricious." Federal Judge Stefan R. Underhill said the commerce secretary "failed to address an important aspect of [Connecticut's] problem" and "effectively ignored the adverse effects on oysters" when ruling that shellfish damage would be temporary. He remanded the case to the Department of Commerce for further proceedings.

Connecticut had said the proposed Islander East pipeline failed to comply with the state's coastal zone management plan. The court said the secretary failed to adequately explain or support his decision with data or evidence.

Islander East is jointly sponsored by Spectra Energy and KeySpan. The $180 million pipeline project, if built, 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.

"There remains a real need for the gas that this project could transport, and Islander East and Algonquin remain committed to the project and are confident that they will in due course obtain all needed permits," they said in their letter to FERC.

The proposed Islander East pipeline has been at the center of a lengthy legal dispute since it was first approved by the Federal Energy Regulatory Commission (FERC) in September 2002 (see NGI, Sept. 23, 2002). The state of Connecticut initially interrupted the Islander East project by claiming that it was inconsistent with its 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 Department Secretary Donald Evans in May 2004 overturned the state's decision (see NGI, May 10, 2004).

In March of this year, 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 Department of Environmental Protection (DEP) and the Town of Branford, CT, ruling that the proposed natural gas pipeline did not require a state permit under Connecticut's Structures, Dredging and Fill Act (see NGI, April 2). Since the project had already been approved by the FERC, the court said the FERC certificate superseded the state permitting requirement.

A required water permit has been denied twice by the Connecticut DEP. Islander East's appeal of the second denial is pending in the Second Circuit court. "That case has been fully briefed and argued, and a decision is expected imminently," Islander East told FERC Monday.

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 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.

As a result of the problems with Connecticut, Islander East has asked FERC -- for the third time -- to grant a two-year extension of the deadline to complete the proposed pipeline and related Algonquin facilities. FERC granted the request last week, putting the deadline for completion of the project now at Sept. 19, 2009.

Islander East noted it has "obtained the needed Section 401 water quality certification from New York and is continuing to take all necessary steps to obtain Section 401 certification from Connecticut and the Section 404 permit" from the Army Corps of Engineers. It said it expects the Army Corps' permit to be issued "in due course."

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