voirs and predictable flows essential to log driving. Some of the historical accounts in the navigability report support Madison's contention that logging on some reaches of the river was difficult and sporadic. We also note the paucity of the evidence of the routes and ultimate destinations of the logs. Thus, we conclude that the evidence of use of the Sandy River for transportation of logs and wood products as part of a continuous stream of interstate commerce by water is inconclusive. Accordingly, we do not rely on that evidence in affirming the Director's determination.

Madison challenges the navigability report's evidence of trips down the Sandy River by Indians and early settlers. Madison refers to accounts of overland travels by settlers who chose not to endure the extra distance by water and the unpredictable flows of the river.

The navigability report cites an account of the Indian Pierpole who, with his family from the Village of Amascontee near Farmington Falls, came down the Sandy River in 1799, in birch bark canoes from the vicinity of Strong (at river mile 42). However, we agree with Madison that the historical accounts of use of the Sandy River by the Pierpoles and by other Indians using canoes rely heavily on inference with respect to actual routes and destinations vis-a-vis the site of Madison's project and the Kennebec River. Thus, we do not rely on any of these accounts as evidence of navigability.

Two local histories of the City of Farmington include a description of early pioneer settlers in the Sandy River Valley who, while exploring and surveying the area around 1776, traveled down the Sandy River into the Kennebec. The settlers ascended the Kennebec in bateaux to the present site of Gardiner, and portaged through a chain of small lakes and streams into the Sandy River near Farmington Falls (upstream from the site of Madison's project). After exploring the country and chopping down trees on lots they selected, they "descended the Sandy River to the Kennebec, and navigated that river and Merrymeeting Bay to their homes in Topsham."1

10

The early use of the Sandy River for transportation is also described in the historical

9 Francis Butler, A History of Farmington, Franklin County, Maine, from the Earliest Explorations to the Present Time, 1776-1885 (Farmington, Maine, 1885), at p. 20; and Thomas Parker, History of Farmington, Maine from Its First Settlement to 1846, with Sketches of the History of Other Towns in Franklin County (Farmington, Maine, 1875), at p. 12.

10 Parker at p. 12.

11 Id. at p. 8. The Fairbanks bridge was located on the Sandy River several miles above Farmington, about 30 miles upstream from the site of Madison's

accounts of a journey by Stewart Foster and Ephraim Allen. In his history of Farmington,11 Thomas Parker wrote that:

a Mr. Stewart Foster and a Mr. Ephraim Allen of Winthrop made a stand on the Sandy River through the winter of 1780. They encamped near where the Fairbanks Bridge now stands, in a camp belonging to Pierpole he being absent. They killed a large quantity of moose, and at the opening of spring constructed a canoe of their skins, in which they went down the river, with their effects, to Hallowell.

Francis Butler, in his history of Farmington, also described the journey of Foster and Allen:12

But in the autumn of 1779 two hunters from Winthrop, Stewart Foster and Ephraim Allen, came prepared to spend the winter. They encamped near the river some two hundred rods above where Fairbanks bridge now stands, on the farm familiarly known as the John Clayton farm. An abundance of fur, including moose, beaver, otter, mink, and sable, rewarded their labor. In the spring they made a dugout and, putting their furs on board, went down the river to the Kennebec, and thence to their homes.

In order for Foster and Allen to reach the Kennebec, they canoed the lower Sandy past the site of the present project.

Butler and three other historians 13 conclusively document the navigation of the Sandy River from above Madison's project to the Atlantic Ocean, in the Lark, a fore-and-aftrigged schooner with light draft. The Lark was constructed near Farmington by Jacob Eaton, the owner of a sawmill in that region. Farmington is approximately 25 miles upstream from Madison's project. On June 14, 1791, the Lark navigated from Farmington, down the Sandy River, past the site of the project, down the Kennebec to the Maine coast, and then up the coast to Saint John, New Brunswick. The Lark was captained by Eaton, with a crew of four. They arrived at St. John in July of 1791, and began trading and freighting between that port and islands in the Bay of Fundy. Eaton kept a log of the journey, and recorded daily the pro

project. Hallowell is located on the Kennebec, several miles below Augusta.

12 Butler, supra, note 14 at p. 21.

13 Butler at p. 464-65; William Baker, A Maritime History of Bath, Maine and the Kennebec River Region (Bath, Maine, 1973), at p. 180; Natalie S. Butler, "The Man Who Couldn't Forget the Sea," Down East, Vol. 13 (Camden, Maine, 1967), at p. 75; and Louise Helen Coburn, Skowhegan on the Kennebec (Skowhegan, Maine 1941), at p. 434.

gress of the Lark as well as his financial gains through barter and trade. 14

Madison concedes that the voyage of the Lark down the Sandy River, past the site of its project, to the ocean is an historical fact. In an effort to discredit this concrete evidence of actual navigation, Madison characterizes Captain Eaton as a "quirky" "singleminded man" who had "an overwhelming longing to return to the sea"; attributes his success to "luck and determination"; and contends that "the downstream trip was not commercial in nature, but more in the nature of a fish following a biological compulsion to return to the sea." Eaton's activities, however, were clearly commercial in nature, and his motivation is in any event irrelevant.

Madison contends that because the Lark encountered difficulties in getting down the Sandy River, and the trip was never repeated, the river was not navigable. This ignores the fact that the river was, indeed, actually navigated by a cargo schooner with a five-man crew. In The Montello, 87 U.S. (20 Wall.) 430, 441 (1874), the Supreme Court held that "the true test of the navigability of a stream does not depend on the mode by which commerce is, or may be, conducted nor the difficulties attending navigation." "The capability of use by the public for purposes of transportation and commerce affords the true criterion of the navigability of a river, rather than the extent and manner of that use." The navigability of the Sandy River is not negated by the fact that the Lark's journey was not repeated. As the Court stated in United States v. Appalachian Electric Power Co., "[w]hen once found to be ,,15 The voynavigable, a waterway remains so." age of the Lark, by itself as well as in conjunction with the accounts of the voyages of the early settlers, clearly establishes the navigability of the Sandy River at the site of Madison's project for purposes of section 23(b)(1) of the FPA.

Finally, the navigability report stated that no direct accounts of recreational navigation immediately past or at the site of the project had been found, but that canoeing guides demonstrate the suitability of the Sandy for recreational boating. 16 In its request for rehearing, Madison concludes, based on this statement, that recreational navigation has no bearing on the navigability of the Sandy River

at the project site. We disagree with Madison's characterization of the evidence, and believe that the excerpts from the canoeing guides quoted in the navigability report do indeed demonstrate the suitability of the river for navigation in the vicinity of the project and downstream to the Kennebec. Nevertheless, in light of the historical evidence of actual navigation, we see no purpose to be served by pursuing this issue, and do not rely on the evidence of potential use for recreational boating.

Conclusion

We find that since the Sandy River Project is located on Commerce Clause waters, involves post-1935 construction that increased its hydroelectric generating capacity, and affects the interests of interstate commerce, the project is required to be licensed pursuant to section 23(b)(1) of the FPA. We further find that the Director correctly determined that the Sandy River is navigable at the project site.

The Commission orders:

(A) The request for rehearing filed by Madison Electric Works in Docket No. UL89-33 is denied.

(B) Madison Electric Works must, within 45 days of this order, file with the Secretary of the Commission an original and four copies, and file one copy to the appropriate regional office, of an expeditious schedule for submitting a license or exemption application conforming to Part 4 of the Commission's regulations (to qualify for an exemption an applicant must be installing or increasing capacity and must own all real property interests necessary to develop and operate the project) for the Sandy River Project. The license or exemption application must be submitted no later than 18 months after the issuance of this order. An original and four copies of the quarterly status report indicating progress toward the filing of a license application pursuant to 18 C.F.R. Part 4 must be submitted to the Secretary of the Commission. The reports should commence 90 days after the date of this order and thereafter be due at the end of each subsequent 90-day period. Madison Electric Works will be relieved of these filing requirements if any other party files a license application on this site within this time period, as long as that license application remains pending before the Commission.

14 Entrusting the logbook to crew members who decided to return home, Eaton enclosed a note to his wife explaining his intention of making one more profitable trip around the islands before coming home. However, in November of 1791, while attempt

ing to pass St. John's Falls, the Lark capsized and sank with its captain.

15 311 U.S. 377, 408 (1940).
16 Navigability Report at p. 16.

not been previously sold in interstate com

merce. . . .

El Paso asserts that two of the wells at issue, the Greer Estate Well Nos. 1 and 2, were commenced prior to January 1, 1973, and the third well, Greer Estate Well No. 3, was commenced in 1985, after that date, and thus qualified under section 103 of the Natural Gas Policy Act of 1978 (NGPA).6 El Paso states that starting in September 1980, Kaneb erroneously priced gas from the two pre-1973 wells at the NGPA section 1087 stripper well price even though there was no contractual authorization to charge that price because the area rate clause was not applicable to these wells. El Paso also contends that although the two wells qualified for section 108 status in 1980, subsequently they became disqualified because production exceeded the maximum permissible amount. El Paso notes that the qualification is irrelevant because production from the wells was never contractually entitled to the 108 price. See Complaint, p.2 n.1. As to the third well, El Paso asserts that from the time production started in April 1985, Kaneb charged the section 108 price even though the well never qualified for section 108 status. Thus, Kaneb was never entitled to collect more than the section 103 price.

Kaneb's protest requested that the Commission dismiss the "Complaint" because El Paso previously filed for similar relief in a state court action which is currently pending. Kaneb states that El Paso commenced suit against Kaneb in Texas state court in April 1990,10

615 U.S.C. § 3313 (1988).

715 U.S.C. § 3318 (1985). A party must file with a jurisdictional agency to obtain the determination as to a well's status, and the Commission then has jurisdiction to review the determination that is made.

8 To qualify under NGPA section 108, a well must produce no more than an average of 60 Mcf per day in a 90-day period.

9 Kaneb also argues that the "complaint" should be dismissed because El Paso failed to comply with various Commission filing requirements and did not satisfy the specificity required when a complaint is filed. Since El Paso's filing, which was served upon Kaneb, apprised Kaneb of the nature of El Paso's complaint, we find no merit in this argument.

10 El Paso Natural Gas Co. v. Kaneb Energy Co., Docket No. 89-3404 (District Court of El Paso County, 346th Judicial District, Texas).

11 Exhibit A to El Paso's state court complaint lists that contract with Kaneb with an execution date of May 15, 1965, clearly the one in this proceeding. 12 Court Complaint ¶ 38.

13 Court Complaint ¶ 41.

14 That case involved numerous producers who sought to increase their rates to the NGPA incentive prices under several thousand contracts with El Paso.

seeking certain relief with respect to certain gas contracts. Kaneb asserts that although El Paso's state action seeks relief from take-or-pay obligations as to certain contracts, the third cause of action alleges that El Paso has overpaid on certain contracts, and makes specific reference to the casinghead gas contract in this proceeding, GPA No. 4794.11 With respect to that contract the state court complaint alleges that El Paso "has overpaid under said GPA, specifically including GPA No. 4794, in an amount which exceeds the minimum jurisdictional limit of this court."12 The prayer for relief requests that the court issue an order that inter alia, states that El Paso "has overpaid on certain of the GPA, specifically including GPA No. 4794, and for said amount of overpayment, El Paso shall have judgment . . . ."13

El Paso's answer contends that the Commission is the proper forum to resolve whether there has been an overcharge because resolution of the issue depends upon what was the appropriate NGPA price for the gas. El Paso also contends that in 1981, the Commission determined the "contract eligibility question in El Paso's favor," and cites to El Paso Natural Gas Co., 15 FERC ¶ 63,001 (1981).14

Kaneb's supplemental answer15 asserts that it did have contractual authorization to charge the section 108 price for the Greer Estate Well Nos. 1 and 2. Kaneb contends that there was an understanding that the increased prices would apply to all Greer Estate wells, notwithstanding the wording of the contract. Further,

The gas contract in the instant proceeding, GPA No. 4794 was referred to in Appendix C, but the seller listed was not Kaneb. Thus it is not clear whether Kaneb was a party to that proceeding.

15 Kaneb's answer also raised the following arguments in opposition to El Paso's requested relief: (1) El Paso's filing was made in conscious disregard of Commission procedures, and should be summarily rejected;

(2) El Paso's complaint should be summarily rejected on the grounds that it constitutes blatant forum-shopping, since El Paso's overcharge allegations and refund claims were already pending before a Texas state court, raised in the context of El Paso's attempt to have the take-or-pay provisions of its contracts with Kaneb declared enforceable;

(3) El Paso's filing did not contain sufficient information to warrant the requested relief;

(4) El Paso's complaint was an improper collateral attack on final well determinations; and

(5) El Paso's complaint should be dismissed as an improper attempt to embroil the Commission in litigation of take-or-pay and other state court issues.

the course of performance under the contractspecifically El Paso's knowing consent to the section 108 price for a period of eight yearsconstituted a modification of the contract if that was necessary to permit escalation to the higher price. With respect to the Greer Estate No. 3 well, Kaneb concedes that it never qualified under section 108. However, it asserts that El Paso is not entitled to the refund because there are other questions which must be resolved. In addition, Kaneb filed material relating to the qualification status of the Nos. 1 and 2 wells.

Discussion

In order for a producer to collect the section 108 price, the seller must be contractually authorized to do so. Indefinite price escalation clauses, generally termed area rate clauses, may provide such authorization.1 16 In the instant case El Paso asserts that there was no such contractual authorization as to two wells, and as to the third, El Paso claims that the well never qualified under NGPA section 108. Kaneb argues contrary to El Paso's position, that "the contractual effect and interpretation of the 1975 Amendment as applying to certain wells, is in dispute."17 Kaneb maintains "that the 1975 Amendment did not exempt the Greer Estate wells from operation of the area rate clause contained in the 1975 Amendment."18

A review of the pleadings filed in this docket and the complaint filed by El Paso in the state court indicates that the Commission has concurrent jurisdiction over the issues raised. 19 If no state court action were pending, the Commission would proceed to determine whether Kaneb has collected more than the MLP for the gas sold to El Paso. However, in this case El Paso has commenced a state court action raising the overcharge issue and requested judgment against Kaneb for that amount.

Whether the Commission will assert jurisdiction over contractual issues that are also raised in pending judicial proceedings, depends upon

19 The Commission has jurisdiction to determine the contractual basis for the price charged for gas subject to the Natural Gas Act. United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956); Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956). However, where there is a threshold contractual issue, the courts have concurrent jurisdiction to determine that question. Arkansas Louisiana Gas Co. v. Hall, 55 FPC 1018 (1976).

20 See Arkansas Louisiana Gas Company v. Hall, 7 FERC ¶ 61,175, at p. 61,322 (1979). These three factors are also considered by a court in deciding

consideration of three factors. Those factors are: (1) whether the Commission possesses special expertise which makes the case particularly appropriate for Commission decision; (2) whether there is a need for uniformity of interpretation of the type of question raised by the dispute; and (3) whether the case is important in relation to the regulatory responsibilities of the Commission.20 Where these factors or other special circumstances are not present in a particular case, the Commission will usually defer to the court.2

In this case, at least with respect to the two pre-1973 wells, the issue appears to be an issue of contract interpretation. Kaneb asserts that the 1975 amendment was intended to cover all the wells, and that the parties' conduct supports this interpretation, regardless of the specific contract language. Kaneb points out that El Paso monitored the production from the wells, and when production exceeded the permissible amount, it sought to disqualify the well. 22 However, until the instant action it never challenged the contractual right of Kaneb to collect the higher price. Moreover, Kaneb argues the course of conduct demonstrates contract modification, if that is necessary to establish Kaneb's contractual right to collect the stripper well price. Resolution of that issue by the court would not impair the Commission's regulatory function, and none of the factors noted above impels the Commission to resolve the issue. Accordingly, we shall dismiss the complaint with respect to the claims relating to the issue of contract authorization because of the pending state court action, particularly since that is where El Paso first filed for the relief it seeks.23

If the court held that there was no contractual authorization to pay the higher price on the production from the Nos. 1 and 2 wells, El Paso would be entitled to a refund for the entire period of the overpayment. Moreover, even if the court found that there was contractual authorization, there still might be a refund

whether to defer to the primary jurisdiction of the Commission. Wagner & Brown v. ANR Pipeline Co., 837 F.2d 199 (5th Cir. 1988).

21 Amoco Production Co., 43 FERC 161,229 (1988).

22 Kaneb cites to El Paso's filings with the Commission of Notices of Disqualification on April 29, 1982.

23 We note that El Paso stated that "assuming Kaneb concurs that the Commission is the appropriate forum for this matter, El Paso will abate those parts of the state court complaint which pertain to the refund claim." El Paso Answer at 6. However, Kaneb stated in its supplemental answer that it opposed El Paso's motion to hold the court proceedings in abeyance pending Commission action.