Court Opinion

ID: 159163
Source: CourtListenerOpinion
Date Created: 2010-08-14 06:19:03+00
Date Added: 2024-06-11T09:34:42.570546
License: Public Domain

F I L E D
                                                                 United States Court of Appeals
                                                                         Tenth Circuit
                        UNITED STATES COURT OF APPEALS
                                                                         FEB 4 2000
                                  TENTH CIRCUIT
                                                                      PATRICK FISHER
                                                                             Clerk

 CRAIG FIELD LANDOWNERS’
 ASSOCIATION,

          Petitioner-Appellant,

 v.                                                     No. 99-9510
 FEDERAL ENERGY REGULATORY                           No. CP98-280-000
 COMMISSION,

          Respondent-Appellee.

 __________________

 WILLIAMS GAS PIPELINES
 CENTRAL, INC.,

          Intervenor.

                            ORDER AND JUDGMENT          *

Before TACHA and BRISCOE , Circuit Judges, and ROGERS, Senior District
Judge. **

      Craig Field Landowners’ Association (the Association) appeals the Federal

      *
        This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
      **
         The Honorable Richard D. Rogers, Senior United States District Judge
for the District of Kansas, sitting by designation.
Energy Regulatory Commission’s (FERC) denial of its motion for rehearing on

FERC’s order authorizing Williams Gas Pipelines Central, 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 within the storage field

boundaries. Williams Gas filed an Abbreviated Application for Authorization to

Abandon Storage Facility with FERC, asserting that abandonment of Craig Field

was necessary because of safety concerns, namely well deterioration and

encroaching residential development.

      The Association, comprised of residents who lived within the storage field

boundaries, filed a Motion to Intervene and Protest, asserting Williams Gas failed

to show that the affected properties would be satisfactorily restored after

abandonment (an issue not raised on appeal), that Craig Field could not continue

to serve customers, that there was any basis for the asserted safety concerns, or

that Craig Field was in a state of disrepair. Williams Gas responded to the

Association’s protest by filing an answer emphasizing that Craig Field was

Williams Gas’ oldest currently operating storage field, that casings in many of the

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wells were not cemented properly to their full depth, and that a significant

maintenance investment would be required to prevent gas leaks between the

casing and the well bore. After a public hearing, FERC issued an order granting

abandonment. The Association filed a request for rehearing 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 comply 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 Commission, or any
      service rendered by means of such facilities, without the permission
      and approval of the Commission first had and obtained,     after due
      hearing , and a finding by the Commission that the available supply
      of natural gas is depleted to the extent that the continuance of
      service is unwarranted, or that the present or future public
      convenience or necessity permit such abandonment.

15 U.S.C. § 717f(b) (emphasis added). FERC considered the request for

abandonment, and the Association’s objections to it, after a public hearing.

      The Association asserts it was entitled to an evidentiary hearing. We

review FERC’s decision to deny an evidentiary hearing 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 facts

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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 required to

conduct a trial-type evidentiary hearing to achieve this purpose.     The Association

must meet at least three conditions before FERC will consider conducting a

formal evidentiary hearing.     First, it must make allegations of fact material to

FERC’s determination.      Second, it must make an adequate proffer of evidence 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 on 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 established 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 to FERC’s determination

of the abandonment issue by raising      the factual issues of whether abandonment

was required for safety reasons and whether Craig Field was necessary to

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adequately serve the public. The Association then made an adequate proffer of

evidence to support the alleged material facts. It asserted 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 stating the wells were in good

condition.

       Although the Association proffered evidence of material facts, it failed to

show those facts were in dispute. “There is simply no 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 to a safety risk which would

justify abandonment. The parties here had an adequate opportunity to present

their views and FERC had an adequate record upon which to base its decision.

FERC’s approval of William Gas’ request for abandonment

       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 conclusions if they are supported

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by substantial evidence.    Cascade , 955 F.2d at 1421-22 (citing 15 U.S.C. §

717r(b)). Our task is only to determine whether FERC’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 consideration of the relevant facts

and articulates a rational connection between the facts found and the choice

made.” Id.

       The Association contends there was not substantial evidence to support

FERC’s finding that continued operation of Craig Field presented safety

concerns, arguing that photographs of a deteriorated 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 wells were deteriorating and

presented a future safety risk. FERC found that some 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 safety hazards supported

abandonment. This conclusion is further bolstered by the fact admitted by the

Association that “substantial portions of land near the Craig Field have been

planned and/or zoned for commercial and industrial development.” Aplt. App. at

103.

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       The Association argues FERC’s finding that continued 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 in 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 the 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 replacement efforts would not be

sufficient to maintain the integrity of the wells.      Given the limited storage

capacity of Craig Field and the evidence that Williams 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 would not be cost beneficial.

       Finally, the Association asserts FERC acted arbitrarily and capriciously in

approving the order granting abandonment, contending that FERC failed to

address serious and material issues. The only claim which has not yet been

addressed is “[w]hether abandonment of the Craig Storage field is necessary or, if

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not necessary, will it nevertheless promote public convenience through efficient

service.” Aplt. Br. at 26. FERC concluded that Craig Field was unnecessary,

finding the abandonment would not adversely affect Williams Gas’ ability to

satisfy demand. There was evidence that Craig Field contained a relatively small

amount of gas and that Williams Gas’ “remaining eight storage fields [could]

provide the same level of deliverability and working storage capacity without the

Craig Storage Field.” Aplt. App. at 114. There was substantial evidence to

support FERC’s conclusion that Craig Field was not necessary and that its

continued operation would not promote public convenience through efficient

service.

                                       III.

      FERC’s orders allowing Williams Gas to abandon Craig Field and denying

the Association’s motion for rehearing are AFFIRMED.

                                              Entered for the Court

                                              Mary Beck Briscoe
                                              Circuit Judge

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