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 9  AN ACT concerning underground storage of natural gas; amending
10    K.S.A. 55-1201, 55-1204, 55-1205 and 55-1210 and repealing the ex-
11    isting sections.
12
13  Be it enacted by the Legislature of the State of Kansas:
14    Section 1.  K.S.A. 55-1201 is hereby amended to read as follows: 55-
15  1201. As used in this act:
16    (a)  ``Underground storage'' shall mean means storage in a subsurface
17  stratum or formation of the earth;.
18    (b)  ``Natural gas'' shall mean means gas either while in its original
19  state or after the same has been processed by removal therefrom of com-
20  ponent parts not essential to its use for light and fuel;.
21    (c)  ``Native gas'' shall mean gas which has not been previously with-
22  drawn from the earth;
23    (d)  ``Natural gas public utility'' shall mean means any person, firm or
24  corporation authorized to do business in this state and engaged in the
25  business of transporting or distributing natural gas by means of pipelines
26  into, within or through this state for ultimate public use;.
27    (e) (d)  ``Commission'' shall mean means the state corporation com-
28  mission.
29    (e)  ``Suitable for the underground storage of natural gas'' means a
30  separate and distinct stratum or formation from which natural gas cannot
31  migrate to another stratum or formation.
32    Sec. 2.  K.S.A. 55-1204 is hereby amended to read as follows: 55-
33  1204. (a) Any natural gas public utility desiring to exercise the right of
34  eminent domain as to any property for use for underground storage of
35  natural gas shall, as a condition precedent to the filing of its petition in
36  the district court, shall obtain from the commission a certificate setting
37  out findings of the commission:
38    (1)  That the underground stratum or formation sought to be acquired
39  is suitable for the underground storage of natural gas and that its use for
40  such purposes is in the public interest; and
41    (2)  regarding the amount of recoverable oil and native natural gas, if
42  any, remaining therein in place in the stratum or formation.
43    (b)  The commission shall issue no such certificate under this section
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 1  until after public hearing is had on application and upon reasonable notice
 2  to interested parties: (1) The commission causes an independent study to
 3  be made to assist the commission in making the findings required by
 4  subsection (a); and (2) notice as provided by law is given to all interested
 5  parties and a public hearing on the application is held in accordance with
 6  the provisions of the Kansas administrative procedure act.
 7    (c)  Subject to the provisions of K.S.A. 55-143 and amendments
 8  thereto, the applicant shall be assessed an amount equal to all or any part
 9  of the costs of such any study and any proceedings conducted pursuant
10  to this section and the applicant shall pay the amount so assessed before
11  the commission issues a certificate under this section.
12    (c) (d)  All provisions of K.S.A. 66-106, 66-118a, 66-118b, 66-118c,
13  66-118d, 66-118e, 66-118j and 66-118k or any, and amendments thereto,
14  shall be applicable to all proceedings of the commission under K.S.A. 55-
15  1201 to 55-1206, inclusive, and acts amendatory thereof or supplemental
16  through 55-1206, and amendments thereto.
17    (d) (e)  The state corporation commission shall remit all moneys re-
18  ceived by or for it for costs assessed under this section to the state treas-
19  urer at least monthly. Upon receipt of each such remittance, the state
20  treasurer shall deposit the entire amount thereof in the state treasury and
21  the same shall be credited credit it to the conservation fee fund created
22  by K.S.A. 55-143 and amendments thereto.
23    Sec. 3.  K.S.A. 55-1205 is hereby amended to read as follows: 55-
24  1205. Any (a) After obtaining a certificate from the commission as pro-
25  vided by K.S.A. 55-1204, and amendments thereto, a natural gas public
26  utility, having first obtained a certificate from the commission as here-
27  inbefore provided, desiring to exercise the right of eminent domain for
28  the purpose of acquiring property for the underground storage of natural
29  gas shall do so in the manner provided in K.S.A. 26-501 to 26-516, inclu-
30  sive. The petitioner shall file the certificate of the commission as a part
31  of its petition and no order by the court granting said petition shall be
32  entered without such certificate being filed therewith. The appraisers in
33  awarding damages hereunder shall also take into consideration the emi-
34  nent domain procedure act (K.S.A. 26-501 et seq. and amendments
35  thereto), except as otherwise provided by this section.
36    (b)  If eminent domain proceedings are brought pursuant to this sec-
37  tion to condemn property located in two or more counties, the proceedings
38  shall be brought in the county where the greatest portion of the property
39  is located and the appraisers shall be appointed from among the disinter-
40  ested householders of all counties where the property is located.
41    (c)  The interest condemned in a proceeding pursuant to this section
42  shall be a leasehold interest for which the award shall be: (1) Damages in
43  an amount equal to the value of  the amounts of recoverable oil and native
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 1  gas remaining natural gas in place in the property sought to be appro-
 2  priated and for such purposes, for which purpose the appraisers shall
 3  receive as prima facie evidence of such amounts evidence the findings of
 4  the commission with reference thereto to those amounts and evidence
 5  based on professional engineering studies and presented by any interested
 6  party; (2) royalties for any oil produced or other minerals recovered from
 7  the premises, to be paid to the owners of the mineral rights; (3) annual
 8  payments based on the annual leased value of the property for under-
 9  ground storage of natural gas (the leased value of the storage formation);
10    (4) the value of pipeline and utility easements; (5) the value of surface
11  easements for pads or well site areas to be used for extraction, injection
12  and monitoring wells and other purposes; (6) the value of any surface
13  area used for roadways; (7) if fresh water is taken, the value of the water
14  rights taken; and (8) any damages incurred by the property owners from
15  the use of their property. The appraisers shall assign the fair market value
16  of all rights taken.
17    (d)  If there has been an uncompensated and unauthorized prior use
18  of the property by the petitioner for underground storage of natural gas,
19  the appraisers shall assign a value to such prior use based on the fair
20  rental value of the storage space.
21    (e)  The court, in its order granting a petition for the purposes of this
22  act, shall specify the amount of surface area covered by any dominant
23  easement being taken and shall describe the location of such easement. If
24  the proposal of the petitioner is to wash out a salt cavern for storage, the
25  order of the court shall include those measures that the petitioner must
26  take to protect fresh water.
27    (f)  The court shall not grant a petition to exercise the right of eminent
28  domain for the purposes provided by this act unless: (1) The certificate
29  of the commission issued under K.S.A. 26-1204 and amendments thereto
30  is filed with the petition; and (2) the court determines that the petitioner
31  has compensated the property owner for the value assigned by the ap-
32  praisers to the petitioner's prior uncompensated and unauthorized use of
33  the property for underground storage of natural gas or that the award
34  will include such compensation.
35    Sec. 4.  K.S.A. 55-1210 is hereby amended to read as follows: 55-
36  1210. (a) All natural gas which has previously been reduced to possession,
37  and which is subsequently injected into underground storage fields, sands,
38  reservoirs and facilities, whether such storage rights were acquired by
39  eminent domain or otherwise, shall at all times be the property of the
40  injector, such injector's heirs, successors or assigns, whether owned by
41  the injector or stored under contract.
42    (b)  In no event shall such gas be subject to the right of the owner of
43  the surface of such lands or of any mineral interest therein, under which
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 1  such gas storage fields, sands, reservoirs and facilities lie, or of any person,
 2  other than the injector, such injector's heirs, successors and assigns, to
 3  produce, take, reduce to possession, either by means of the law of capture
 4  or otherwise, waste, or otherwise interfere with or exercise any control
 5  over such gas.  Nothing in this subsection shall be deemed to affect the
 6  right of the owner of the surface of such lands or of any mineral interest
 7  therein to drill or bore through the underground storage fields, sands,
 8  reservoirs and facilities in such a manner as will protect such fields, sand,
 9  reservoirs and facilities against pollution and the escape of the natural gas
10  being stored.
11    (c)  With regard to natural gas that has migrated to adjoining property
12  or to a stratum, or portion thereof, which has not been condemned as
13  allowed by law or otherwise purchased:
14    (1)  The injector, such injector's heirs, successors and assigns shall not
15  lose title to or possession of such gas if such injector, such injector's heirs,
16  successors or assigns can prove by a preponderance of the evidence that
17  such gas was originally injected into the underground storage.
18    (2)  The injector, such injector's heirs, successors and assigns, shall
19  have the right to conduct such tests on any existing wells on adjoining
20  property, at such injector's sole risk and expense including, but not limited
21  to, the value of any lost production of other than the injector's gas, as
22  may be reasonable to determine ownership of such gas owner of the
23  adjoining property or stratum or portion thereof, shall have title and
24  possession of such gas in place at the time of condemnation or purchase.
25    (3) (2)  The owner of the stratum and the owner of the surface shall
26  be entitled to such compensation, including compensation for use of or
27  damage to the surface or substratum, as is provided by law, compensation
28  for the use of and damages to the surface and substratum and shall be
29  entitled to recovery of all costs and expenses, including reasonable attor-
30  ney fees, if litigation is necessary to enforce any rights under this subsec-
31  tion (c) and the injector does not prevail.
32    (d)  The injector, such injector's heirs, successors and assigns shall
33  have the right to compel compliance with this section by injunction or
34  other appropriate relief by application to a court of competent jurisdic-
35  tion.
36    Sec. 5.  K.S.A. 55-1201, 55-1204, 55-1205 and 55-1210 are hereby
37  repealed.
38    Sec. 6.  This act shall take effect and be in force from and after its
39  publication in the statute book.