The U.S. Supreme Court 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, sought to overturn the U.S. Court of Appeals for the Second Circuit in New York’s ruling in May that upheld the Connecticut Department of Environmental Protection’s (DEP) denial of a permit under the Clean Water Act for the project.

In late 2007 Islander East asked the Second Circuit court to review a decision by the U.S. District Court in Bridgeport, CT, which in August of that year set aside a 2004 decision by former Commerce Secretary Donald Evans overturning Connecticut’s efforts to block the pipeline (see Daily GPI, Aug. 21, 2007; May 7, 2004). 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.

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 Daily GPI, Sept. 19, 2002). The proposed pipeline and the state of Connecticut have been in the courts since June 2004 (see Daily GPI, June 22, 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 serves 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 in 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 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 these upgrades in Connecticut, Algonquin would have interconnected with Islander East. Approximately 22 miles of the pipeline were to be built on the floor of Long Island Sound.

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