Within hours of the omnibus energy bill being enacted into law Monday, sponsors of the stalled Islander East Pipeline project took advantage of language in the measure and challenged in federal court the state of Connecticut’s refusal to issue a water quality permit for the Connecticut-to-Long Island natural gas pipeline.

Islander East filed the petition in the U.S. Court of Appeals for the Second Circuit in New York to force the Connecticut Department of Environmental Protection (DEP) to award a water quality certificate that would pave the way for the construction of the 50-mile, 24-inch diameter gas pipeline. The DEP denied Islander East’s request for a water quality permit in February 2004.

“We are confident our arguments will get a fair hearing” in federal court, Islander East spokesman John Sheridan told NGI.

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 languished. The energy bill gives 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.

He believes that Islander East is the first energy-related company to file a court challenge based on language contained in the newly-enacted energy bill.

Islander East and the related Algonquin Gas Transmission facilities were approved by the Federal Energy Regulatory Commission in September 2002, and were scheduled to be completed and in service last September. FERC granted a one-year extension, with the project to be completed by Sept. 19 of this year, but that deadline also will not be met.

The state of Connecticut initially interrupted the Islander East project by claiming 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 Daily GPI, May 7, 2004). Connecticut now is withholding the water quality permit to prevent the 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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