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Islander East Pipe Strikes Out at Supreme Court

The U.S. Supreme Court last Monday refused to hear an appeal of a lower court's decision that let stand Connecticut's denial of a water quality permit for the proposed Connecticut-to-Long Island Islander East Pipeline. While the "legal route for this project has ended," the sponsors plan to look at possible alternatives, a Spectra Energy Corp. spokeswoman said.

Islander East, which is sponsored by both Spectra Energy and National Grid, had petitioned the high court to overturn the ruling of the U.S. Court of Appeals for the Second Circuit in New York in May that upheld the Connecticut Department of Environmental Protection's (DEP) denial of a permit under the Clean Water Act for the project (see NGI, May 12).

In October 2006, the Second Circuit initially had ruled that Connecticut DEP's denial of a water permit to Islander East was both "arbitrary and capricious," and it remanded the case to the state agency to conduct a "complete and reasoned" review that complies with federal law (see NGI, Oct. 9, 2006). The Connecticut agency conducted the review, but denied Islander East's request for the permit again (see NGI, Dec. 25, 2006). The Second Circuit declined to review the second denial.

With the water permit having been denied twice by the Connecticut DEP, the Islander East project has been at the center of a lengthy and labyrinthine legal dispute since it was first approved by FERC in 2002 (see NGI, Sept. 23, 2003). The proposed pipeline and the state of Connecticut have been in the courts since June 2004.

"We're going to look at what other options there might be," said Spectra spokeswoman Toni Beck. Because the need for natural gas is still strong in the region, the sponsors will examine the possibility of "some kind of revised project."

She conceded that going back to the drawing board to make the necessary changes could take a while. "It deserves a good scrub and a good look."

The case has been closely watched by the gas industry. "It was the first gas case in which the provisions added by Congress in the Energy Policy Act of 2005 [EPAct] were subject to judicial review," said Donald Santa, president of the Interstate Natural Gas Association of America, which filed an amicus brief in the case supporting Island East. He conceded, however, that the industry was disappointed by the outcome in the Second Circuit.

EPAct gave interstate pipelines the power for the first time to seek recourse in the federal courts when states or other federal agencies 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.

The $180 million Islander East project, as originally proposed, was designed to deliver 285,000 Dth/d of gas 45 miles 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, was to loop about 13.7 miles of existing pipeline in Connecticut and add a new compressor station in Cheshire, CT. As a result of the proposed upgrades in Connecticut, Algonquin would have interconnected with Islander East. Approximately 22 miles of pipeline were to be built on the floor of Long Island Sound.

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