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Islander East Eyes Using New-Found Authority in Energy Bill to Challenge Connecticut

Sponsors of the long-stalled Islander East Pipeline project are awaiting President Bush's signing of the omnibus energy bill so that they can challenge in federal court the state of Connecticut's denial of a water permit for the Connecticut-to-Long Island natural gas pipeline.

Islander East is contemplating filing a petition in the U.S. Court of Appeals for the Second Circuit to force the Connecticut Department of Environment Protection (DEP) to issue a water quality certificate that would clear the way for the construction of the 50-mile, 24-inch diameter gas line, said Islander East spokesman John Sheridan. The DEP denied Islander East's request for a water quality permit in February 2004.

"We are leaning towards filing a petition...sometime within the next week or so," he said Friday. In the meantime, "we are hoping we can still work through the issues with Connecticut" to avoid a battle in federal court.

Islander East, which is jointly sponsored by Duke Energy and KeySpan, last summer challenged the DEP decision in state Superior Court in Hartford, CT, where the case has been languishing for more than a year. The energy bill, to be signed into law by President Bush on Monday (Aug. 8), would give 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, Sheridan said. The language in the energy bill that makes this possible will take effect immediately upon the president's signing.

The energy measure, which was approved by Congress in late July, will "accelerate and increase the effectiveness of the federal review process of projects like Islander East," he told NGI.

Islander East and the related Algonquin Gas Transmission facilities were approved by FERC in September 2002, and were supposed to be completed and in service by last September. But due to the inability of Islander East to receive environmental and construction permits from Connecticut, the Federal Energy Regulatory Commission granted Islander East and Algonquin an extension until Sept. 19 of this year, a deadline that it's safe to say won't be met.

This is the latest chapter in an ongoing battle between Islander East and the state of Connecticut over the proposed pipeline that would supply natural gas to the Connecticut, Long Island and New York City areas.

The state of Connecticut initially tried to halt the Islander East project by claiming it was inconsistent with its Coastal Zone Management Act (CZMA) statute, which gives states the right to block projects deemed detrimental to their coastal areas. But former Commerce Department Secretary Donald Evans in May 2004 overruled the state's decision (see Daily GPI, May 7, 2004). The state now is withholding the water quality permit to block construction of the pipeline.

The $180 million pipeline project, if built, initially would deliver 285,000 Dth/d of natural gas from New Haven, CT, across Long Island Sound to Suffolk County (Long Island) near Yaphank, NY, with a lateral to be constructed to Calverton, NY. Additionally, Algonquin, a subsidiary of Duke 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.

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