(E) The petitioner to intervene is permitted to intervene subject to the Rules and Regulations of the Commission; Provided, however, that participation of such intervener shall be limited to matters affecting asserted rights and interests as specifically set forth in the petition to intervene; and Provided, further, that the admission of such intervener shall not be construed as recognition by the Commission

that it might be aggrieved because of any order of the Commission entered in this proceeding.

-Footnote

'The Agreement is on file as Arkla's Rate Schedule No. XE-44 in its FERC Gas Tariff, First Revised Volume No. 2, and as Michigan Wisconsin's Rate Schedule No. X-45 in its FERC Gas Tariff, First Revised Volume No. 2.

On December 12, 1978, Brown-New Hampshire, Inc. (Licensee) filed a document entitled "Appeal and Petition for Reconsideration/Rehearing and Modification of Order for Project No. 2422." On December 21, 1978, the Licensee filed a related document entitled "Rejection of September 12, 1978 Commission License Amendment, Petition for Stay and Supplement to December 11, 1978 Appeal and Petition for Reconsideration/Rehearing and Modification of Order for Project No. 2422" ("December filings"). Both documents seek further review and action with respect to our order of September 12, 1978, 4 FERC ¶ 61,300 which required the Licensee to install generating capacity at its Sawmill Project, FERC No. 2422,' and our order of November 13, 1978, denying rehearing, 5 FERC 61,107. We will consider both of the December filings in this order.

Request for Clarification

In our order of September 12 we approved revised Exhibits J, L and M, to the extent that they show the existing condition of the project and its works; deleted the superseded Exhibits J, L and M; and ordered the Licensee to file revised Exhibits J, L and M within six months showing plans for approximately 2,500 kW of generating capacity at the project. The Licensee's December filings purport to reject the entire September 12 order. The Licensee maintains that all parts of the September 12 order are merely a "proposed amendment" that has no force and effect in light of the Licensee's rejection and Section 6 of the Federal Power Act ("Act"), which provides that a license may be altered only upon "mutual agreement" between the Licensee and the Commission. The Licensee asks for clarification of whether the Commission agrees with that position or whether the Commission intended that the portion of the September 12 order related to the installation of generating capacity

have binding effect as a final order apart from any license amendment.

Ordering Paragraphs (A) and (B) of the order do amend the project license.' These two paragraphs are the only ones subject to Section 6 of the Act and the Licensee's purported rejection could have affected only paragraphs (A) and (B), at most. The Licensee, however, proposed these amendments. Our approval of them on September 12— without modification-established the mutual agreement required by Section 6 of the Act.' The Licensee's purported rejection of these amendments is therefore too late and a nullity."

Ordering Paragraph (C) of our September 12 order, directing the Licensee to file revised Exhibits J, L and M, is the vehicle by which we have required installation of generating equipment, pursuant to Article 13 of the license. This paragraph stands entirely independent of Ordering Paragraphs (A) and (B), with independent force and effect. Ordering Paragraph (C) does not amend the license, but merely initiates action based upon existing Article 13. The Licensee's agreement to this order under Article 13 is not necessary, and its rejection has no force or effect. By accepting the license for Project No. 2422, which included Article 13, the Licensee agreed to install additional capacity or make other changes in the project that might be economically sound and in the public interest, as directed by the Commission. Both the courts and Congress have recognized the Commission's authority to impose "open-ended" license conditions like Article 13, which reserve the Commission's right to impose changes in project works or operations despite Section 6 of the Act. For these reasons, the Licensee here may be sure that Ordering Paragraph (C) is a final and binding Commission order, completely independent of any license amendment."

Reconsideration of Earlier Orders

The Licensee also seems to request reconsideration of the substantive merits of our earlier orders. The Licensee's December filings, however, offer essentially no new arguments of law or fact, and we need not address them in detail. In denying the request for reconsideration, though, we wish to emphasize two points.

First, the Licensee is disingenuous when it suggests that the Commission license did not contemplate the installation of “new” generating capacity, but only rehabilitation of the d-c generating capacity already installed. This suggestion ignores the language of Article 13 of the license, which explicitly demands that the Licensee "install additional capacity or make other changes in the project," as the Commission directs. Moreover, the Licensee conveniently overlooks the fact that the feasibility studies the Licensee was planning, and that the Commission ordered under Article 35, involved potential conversion of the plant to a-c operation. Conversion to a-c clearly would necessitate some "new" generating equipment, physically and electrically different from the d-c facilities then installed. Brown-New Hampshire, Inc., 34 FPC 151, 152, 154 (1965). The feasibility studies that the Licensee has submitted (albeit late) in response to Article 35-after the d-c equipment had already been removed-have, in fact, all involved installation of a-c generating capacity. Thus, the Licensee itself has demonstrated its understanding that “rehabilitation of the Sawmill power plant" contemplated redevelopment of generating capacity, not simply repairing or replacing in kind the thenexisting d-c generating equipment.

Second, the Licensee's argument that we have not provided notice and opportunity for hearing adequate to afford due process is not well taken. Correspondence between Commission representatives and the Licensee has provided ample actual notice to the Licensee of the Commission's continuing determination to redevelop the project's generating capacity when economically feasible. With respect to the Licensee's request to present evidence on financing, no evidentiary hearings are necessary. The Licensee's own economic feasibility studywhich the Licensee has not disavowed- establishes the economic feasibility of the installation of the generating capacity and provides the necessary basis for our order under Article 13 of the license. This analysis, as we noted in our November order, was not predicated on the availability of any particular form of financing. In these circumstances, there is no material issue of fact outstanding. An evidentiary hearing would thus serve no useful purpose, but only cause delay and squander public resources. Extension of Time

The Licensee's December filings do indicate that it is actively seeking sources of financing for the required project rehabilitation. Among several

alternatives, the Licensee has a pending application for certain Federal funding, and does not expect a decision until sometime in March. In these circumstances, we believe an extension of time for filing the plans for generating capacity is desirable, and we will grant an additional six months."1 Motion for Stay

Finally, the Licensee filed a motion to stay our September order pending the outcome of its request for clarification. Since we have provided the requested clarification, the motion for stay is moot. The Commission orders:

(A) Ordering Paragraph (C) of the Order Approving Exhibits J, L and M and Ordering Rehabilitation (issued September 12, 1978) for Project No. 2422 is amended to read:

The Licensee shall file for Commission approval, no later than September 12, 1979, revised Exhibits J, L and M, showing plans for the installation of approximately 2,500 kW of generating capacity at the project.

(B) The request for reconsideration in BrownNew Hampshire, Inc.'s filings of December 12 and 21, 1978 is denied.

-Footnotes

'The Sawmill Project is located on the Androscoggin River in the City of Berlin, Coos County, New Hampshire.

2 The Licensee had previously removed the old generating facilities from the project without Commission approval, in violation of its license and the Federal Power Act. The exhibits we approved show the current state of the project, with no generation.

'Paragraph (A) approved Exhibits J and L drawings and Exhibit M to the extent that the exhibits show the existing condition of the project. Paragraph (B) eliminated from the license those exhibits superseded by the newlyapproved exhibits. The Licensee filed these exhibits for approval on April 18, 1976.

Our language restricting our approval to the extent the revised exhibits showed the existing condition of the project in no way modified the Licensee's proposed license amendments. It was intended solely to avoid any inference that we might be endorsing either the prior unauthorized removal of generating equipment or the continued operation of the project without generating.

' For this reason, the Licensee's citation to Alabama Power Co. v. F.P.C., 291 F. 2d 558 (5th Cir. 1961), is inapposite. In that case, the Commission-not the Licensee-proposed amendments to the licenses for Projects No. 82 and 618 that the Licensee had not proposed and an amendment to the license for Project No. 2146 fundamentally different from the amendment the Licensee proposed for that project. See Project No. 82, 24 FPC 115 (1960); Project No. 618, 24 FPC 119 (1960); Project No. 2146, 24 FPC 123 (1960).

If the Licensee's rejection were effective, the actual condition of the project works would not conform to the approved project description and continue to be in violation of the license and the Act, and we would consider the imposition of statutory sanctions for those violations. See State of California v. F.P.C., 345 F. 2d 917, 924-25 (9th Cir. 1965); H.R. Rep. No. 1643, 90th Cong. 2d

Sess. 2 (1968). Congress has explicitly noted that such "open-ended" conditions may include the power to require installation of generating capacity. 114 Cong. Rec. 21440-41 (1968). If the Licensee could avoid the imposition of changes ordered under “open-ended" license conditions simply by refusing to agree to them, the Commission's recognized reservation of rights would be vitiated.

Again, the Licensee's appeal to Alabama Power Co. v. F.P.C. is inapposite. There, the Commission had not ordered changes in any of the projects pursuant to "openended" license conditions, but merely offered proposed amendments for the Licensee's acceptance. See 291 F.2d at 558-59 and citations in n. 5, supra.

• Upon our review and approval of revised exhibits

reflecting installation of generating equipment at the project, the license will require technical amendments to reflect the approved capacity to be installed pursuant to the terms of the existing license.

10 The purported distinction is apparently between installing generation physically or electrically different from the original equipment and merely rebuilding, refurbishing, or repairing that original equipment itself or replacing it in kind.

"Should the Licensee be able to show, after demonstrable good faith efforts, that it has been unable to arrange financing for the required generating capacity, it may petition for suitable relief from our September 12 order as modified here.

On October 2, 1978, Cities Service Gas Company (Cities Service)' filed in Docket No. CP79–1 an application pursuant to Section 7(b) of the Natural Gas Act requesting permission for and approval of the abandonment of direct sale service to 96 mainline domestic natural gas customers in the State of Kansas and the transfer of gas supplied to these customers to existing distribution companies so that said customers may be abandoned by Cities Service without loss of gas service, all as more fully set forth in the application.

There will be no change in the flow of gas on its system, no termination of deliveries and no construction or abandonment of facilities.

The direct sales generally were initiated as a convenience to customers located adjacent to Cities Service's pipeline system pursuant to right-of-way easements and agreements. At the time the sales commenced, such customers were not within the local franchise area of its distribution customers. Service will be continued by local distributors now holding franchises to serve these areas.

Gas for the domestic customers will continue to be supplied by Cities Service. Annual deliveries are estimated at 30,041 Mcf of gas. The distribution companies will pay Cities Service for such gas on the basis of its Rate Schedules F-1 and F-2 and will bill the customers at their resale rates. The number of customer sales transferred to each distributor is as follows:

Distributor

The service proposed to be abandoned involves the transportation of natural gas in interstate commerce subject to the jurisdiction of the Commission, and the abandonment thereof is subject to the requirements of Subsection (b) of Section 7 of the Natural Gas Act.

After due notice by publication in the Federal Register on October 26, 1978 (43 F.R. 50027), no notice of intervention, protest to the granting of the application, or petition to intervene has been filed.

At hearing held on January 4, 1979, the Commission on its own motion received and made a part of the record in this proceeding all evidence. including the application and exhibits thereto, submitted in support of the authorization sought herein, and upon consideration of the record, The Commission finds:

The abandonment proposed by Cities Service is permitted by the public convenience and necessity and should be approved as hereinafter ordered. The Commission orders:

Upon the terms and conditions of this order, permission for and approval of the abandonment by Cities Service of the transportation hereinbefore described, all as more fully described in the application in this proceeding, are granted.

-Footnote

Kansas Power and Light Co. Kansas Public Service Co.

1

2

1 Cities Service, a Delaware corporation, having its

tion, during the calendar year 1979, and operation of "gas-purchase facilities" to enable El Paso to take into its system, or the systems of other companies with whom El Paso has transportation and exchange agreements, natural gas from production attributable to its own leaseholdings as well as gas purchased from independant producers or other similar sellers, all as more fully set forth in the application.

The facilities proposed by El Paso will have a total cost not to exceed $12 million, with the single project costs for onshore and offshore facilities not to exceed $2 million and $3 million, respectively. These facilities are to be utilized to attach new or expanded supplies of natural gas in various producing areas as they become available to El Paso.

Since the proposed facilities exceed the onshore and offshore single project cost limitations of $1.5 million and $2.5 million set in Section 157.7(b)(1)(ii) of the Commission's Regulations, El Paso seeks a waiver of the limitations. The request is predicated upon a 36 per cent rate of inflation in the years since the limitations were promulgated in January 1975. Applying this factor, the onshore and offshore limitations would increase to $2.04 million and $3.4 million, respectively. Accordingly, adequate justification exists to waive the single project cost limitations as requested by El Paso.

El Paso also requests waiver of Section 157.7(b)(4) of the Commission's Regulations, in order to receive budget-type authorization to construct "gas-purchase facilities" to connect to its system (or to the system of others with whom it has gas transportation or exchange agreements) both its own leasehold wells and the wells of independent producers or other sellers. Although the definition of “gas-purchase facilities” does not include facilities required to attach company-owned leaseholds, El Paso's waiver request will be granted.'

Since the proposed facilities will be used for the transportation of natural gas in interstate commerce, subject to the jurisdiction of the Commission, the construction and operation thereof is subject to the requirements of Subsections (c) and (e) of Section 7 of the Natural Gas Act.

After due notice by publication in the Federal Register on October 2, 1978 (43 F.R. 45443), a timely joint petition to intervene was filed by the City of Wilcox, Arizona, and Arizona Electric Power Cooperative, Inc., but no formal hearing was requested. No further petitions to intervene, notices of intervention, or protests to the granting of the application have been filed.

At a hearing held on January 4, 1979, the Commission on its own motion received and made a part of the record in this proceeding all evidence, including the application and exhibits thereto, submitted in support of the authorization sought herein, and upon consideration of the record,

The Commission finds:

(1) El Paso is able and willing properly to do the acts and to perform the service proposed and to conform to the provisions of the Natural Gas Act and the requirements, Rules and Regulations of the Commission thereunder.

(2) The proposed construction and operation of facilities are required by the public convenience and necessity and a certificate therefor should be issued as hereinafter ordered and conditioned.

(3) Participation by the petitioners to intervene may be in the public interest.

(4) Good cause exists for waiver of Sections 157.7(b)(4) and 157.7(b)(1)(ii) of the Commission's Regulations as requested herein.

The Commission orders:

(A) Upon the terms and conditions of this order, a certificate of public convenience and necessity is issued in Docket No. CP78-520, authorizing El Paso to construct during the calendar year 1979 the proposed facilities hereinbefore described, as more fully described in the application, and to operate such facilities to take natural gas from producers or other similar sellers thereof and from El Paso's own leaseholds and to permit the delivery of natural gas to implement authorized exchange and transportation arrangements with other pipeline companies.

(B) The certificate issued by paragraph (A) above and the rights granted thereunder are conditioned upon El Paso's compliance with all applicable Commission Regulations under the Natural Gas Act and particulary the general terms and conditions set forth in paragraph (b) of Section 157.7 and in paragraphs (a), (e) and (f), of Section 157.20 of such Regulations.

(C) The total expenditures for facilities to be constructed under the authorization granted by paragraph (A) above are limited to $12,000,000, with no single onshore project to exceed $2,000,000 and no single offshore project to exceed $3,000,000. (D) Within 60 days of completion of all facilities authorized herein, El Paso shall certify to the Commission that it has fully complied with the provisions of Section 2.69 of the Commission's General Policy and Interpretations.

(E) The City of Wilcox, Arizona, and Arizona Electric Power Cooperative, Inc., are permitted to intervene subject to the Rules and Regulations of the Commission; Provided, however, that participation of such interveners shall be limited to matters affecting asserted rights and interests as specifically set forth in the petition to intervene; and, Provided, further, that the admission of such interveners will not be construed as recognition by the Commission that they might be aggrieved because of any order of the Commission entered in this proceeding.

-Footnotes

'El Paso, a Delaware corporation having its principal