* This order and judgment is not binding precedent, e xcept under the

doctrines of law of the case, res judicata, and col lateral estoppel. The court generally disfavors the citation of orders and judg ments; nevertheless, an order and judgment may be cited under the terms and condi tions of 10th Cir. R. 36.3.

** The Honorable Richard D. Rogers, Senior United St ates District Judge for the District of Kansas, sitting by designation. 

## F I L E D United States Court of Appeals Tenth Circuit 

### FEB 4 2000 

### PATRICK FISHER Clerk UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

CRAIG FIELD LANDOWNERS’ ASSOCIATION, Petitioner-Appellant,

v. No. 99-9510 FEDERAL ENERGY REGULATORY COMMISSION, Respondent-Appellee.

__________________ WILLIAMS GAS PIPELINES CENTRAL, INC., Intervenor. No. CP98-280-000

ORDER AND JUDGMENT *

Before TACHA and BRISCOE , Circuit Judges, and ROGERS, Senior District Judge. ** Craig Field Landowners’ Association (the Associatio n) appeals the Federal2

Energy Regulatory Commission’s (FERC) denial of its motion for rehearing on FERC’s order authorizing Williams Gas Pipelines Cen tral, Inc. (Williams Gas) to abandon Craig Field, a natural gas storage field. We exercise jurisdiction pursuant to 15 U.S.C. § 717r(b) and affirm. I. Williams Gas owned and operated the Craig Field natural gas storage field in Johnson County, Kansas. Storage leases required Williams Gas to furnish gas free or at reduced prices to domestic customers wit hin the storage field boundaries. Williams Gas filed an Abbreviated Appl ication for Authorization to Abandon Storage Facility with FERC, asserting that abandonment of Craig Field was necessary because of safety concerns, namely we ll deterioration and encroaching residential development. The Association, comprised of residents who lived w ithin the storage field boundaries, filed a Motion to Intervene and Protest , asserting Williams Gas failed to show that the affected properties would be satis factorily restored after abandonment (an issue not raised on appeal), that C raig Field could not continue to serve customers, that there was any basis for th e asserted safety concerns, or that Craig Field was in a state of disrepair. Will iams Gas responded to the Association’s protest by filing an answer emphasizi ng that Craig Field was Williams Gas’ oldest currently operating storage fi eld, that casings in many of the3

wells were not cemented properly to their full depth, and that a significant maintenance investment would be required to preventgas leaks between the casing and the well bore. After a public hearing, FERC issued an order granting abandonment. The Association filed a request for r ehearing and for a stay pending appeal, both of which FERC denied. II. FERC’s compliance with 15 U.S.C. § 717f(b) The Association first contends FERC failed to compl y with the hearing requirement of 15 U.S.C. § 717f(b). That provision states: No natural-gas company shall abandon all or any portion of its facilities subject to the jurisdiction of the Commi ssion, or any service rendered by means of such facilities, witho ut the permission and approval of the Commission first had and obtained, after due hearing , and a finding by the Commission that the availabl e supply of natural gas is depleted to the extent that the c ontinuance of service is unwarranted, or that the present or futu re public convenience or necessity permit such abandonment. 15 U.S.C. § 717f(b) (emphasis added). FERC conside red the request for abandonment, and the Association’s objections to it , after a public hearing. The Association asserts it was entitled to an evide ntiary hearing. We review FERC’s decision to deny an evidentiary heari ng for abuse of discretion. Louisiana Pub. Serv. Comm’n v. FERC , 184 F.3d 892, 895 (D.C. Cir. 1999). The purpose of the § 717f(b) hearing requirement is to “‘permit[] all interested parties to be heard and therefore facilitate[] full presentation of the facts4

necessary’ to the Commission’s determination.” Cascade Natural Gas Corp. v. FERC , 955 F.2d 1412, 1425 (10th Cir. 1992) (quoting United Gas Pipe Line Co. v. McCombs , 442 U.S. 529, 538 (1979)). FERC is not always re quired to conduct a trial-type evidentiary hearing to achieve this purpose. The Association must meet at least three conditions before FERC wil l consider conducting a formal evidentiary hearing. First, it must make allegations of fact material t o FERC’s determination. Second, it must make an adequate proffer of eviden ce to support those allegations of fact. Third, the material facts alleged by the Association must be in dispute. Id. at 1425-26. Even if these conditions are met, there is no guarantee that the Association will be allowed to present evidence orally or to cross-examine witnesses. “Depending o n the nature of the inquiry and the evidence, the ‘full presentation of facts’ necessary for the Commission’s determination may be achieved by the written submission of evidence.” Id. at 1426. We conclude that the Association has establi shed the first two conditions, but has failed to establish the third. As a result , we cannot conclude that FERC abused its discretion in denying the Association’s request for an evidentiary hearing. The Association made allegations of fact material t o FERC’s determination of the abandonment issue by raising the factual issues of whether abandonment was required for safety reasons and whether Craig F ield was necessary to5

adequately serve the public. The Association then made an adequate proffer of evidence to support the alleged material facts. Itasserted the clean safety record on Craig Field belied any current safety concerns. The Association also alleged an inconsistency between Williams Gas’ assertion of unsafe wells and its reports filed with the Kansas Corporation Commission statin g the wells were in good condition. Although the Association proffered evidence of mate rial facts, it failed to show those facts were in dispute. “There is simplyno justification for ‘an evidentiary hearing when the opposing presentations reveal that no dispute of fact is involved.’” Cascade , 955 F.2d at 1426 (quoting Consolidated Oil & Gas, Inc. v. FERC , 806 F.2d 275, 279 (D.C. Cir. 1986)). The Association does not dispute the material facts stated in Williams Gas’ application for abandonment, but rather it disputes whether these facts amount t o a safety risk which would justify abandonment. The parties here had an adequ ate opportunity to present their views and FERC had an adequate record upon wh ich to base its decision.

FERC’s approval of William Gas’ request for abandon ment Next, the Association asserts that FERC’s decision to allow Williams Gas to abandon Craig Field was not based on substantial evidence. In reviewing FERC’s decision we do not review its factual conclu sions if they are supported6

by substantial evidence. Cascade , 955 F.2d at 1421-22 (citing 15 U.S.C. § 717r(b)). Our task is only to determine whether FE RC’s action was “‘arbitrary, capricious, . . . or otherwise not in accordance with law.’” Id. at 1422. We must uphold FERC’s determination if it is “based on cons ideration of the relevant facts and articulates a rational connection between the f acts found and the choice made.” Id. The Association contends there was not substantial evidence to support FERC’s finding that continued operation of Craig Fi eld presented safety concerns, arguing that photographs of a deteriorate d casing or casings were the only evidence of safety problems. The Association claimed the reports filed by Williams Gas with the Kansas Corporation Commission showed the wells were in good condition. Williams Gas responded that the we lls were deteriorating and presented a future safety risk. FERC found that so me of the storage facilities had significant deterioration. The age of Craig Field, which had been in operation since 1931, combined with the evidence of deteriorating wells, provided substantial evidence for FERC’s finding that safetyhazards supported abandonment. This conclusion is further bolstered by the fact admitted by the Association that “substantial portions of land nearthe Craig Field have been planned and/or zoned for commercial and industrial development.” Aplt. App. at 103.7

The Association argues FERC’s finding that continue d operation of the storage field would not be cost beneficial was not supported by the evidence. FERC found that Williams Gas would need to perform significant maintenance and repair to continue operating Craig Field. With the limited capacity of the field, FERC found this was not cost beneficial or i n the public interest. Craig Field began as a natural gas storage field in 1931. There was evidence that the storage wells were “placed in service beginning in the 1930’s and the age of the casing corresponds with the wells in service dates. ” Aplt. App. at 115. There was also undisputed evidence that Craig Field has t he smallest capacity for working gas of any Williams storage fields. Id. at 113. There was evidence that well casings had begun to deteriorate and that repl acement efforts would not be sufficient to maintain the integrity of the wells. Given the limited storage capacity of Craig Field and the evidence that Willi ams could continue its same level of deliverability and working storage capacity to meet its customers’ needs without Craig Field, id. at 114, there was substantial evidence to support FERC’s finding that continued operation of Craig Field wou ld not be cost beneficial. Finally, the Association asserts FERC acted arbitrarily and capriciously in approving the order granting abandonment, contendin g that FERC failed to address serious and material issues. The only clai m which has not yet been addressed is “[w]hether abandonment of the Craig St orage field is necessary or, if8

not necessary, will it nevertheless promote public convenience through efficient service.” Aplt. Br. at 26. FERC concluded that Cr aig Field was unnecessary, finding the abandonment would not adversely affect Williams Gas’ ability to satisfy demand. There was evidence that Craig Fiel d contained a relatively small amount of gas and that Williams Gas’ “remaining eig ht storage fields [could] provide the same level of deliverability and workin g storage capacity without the Craig Storage Field.” Aplt. App. at 114. There wa s substantial evidence to support FERC’s conclusion that Craig Field was not necessary and that its continued operation would not promote public conven ience through efficient service. III. FERC’s orders allowing Williams Gas to abandon Crai g Field and denying the Association’s motion for rehearing are AFFIRMED

. Entered for the Court Mary Beck Briscoe Circuit Judge