HOUSE BILL No. 2418

      An Act concerning oil and gas; relating to operators of wells, gas gathering systems and
      underground natural gas storage facilities; concerning certain exemptions from regula-
      tion of gas gathering services; amending K.S.A. 1997 Supp. 55-155 and 55-1,101 and
      repealing the existing sections.

Be it enacted by the Legislature of the State of Kansas:

    Section 1. K.S.A. 1997 Supp. 55-1,101 is hereby amended to read as
follows: 55-1,101. (a) As used in K.S.A. 1997 Supp. 55-1,101 through
55-1,109, and amendments thereto:

    (1) ``Gas gathering services'' means the gathering or preparation of
natural gas for transportation, whether such services are performed for
hire or in connection with the purchase of natural gas by the person
gathering or preparing the gas or a marketer affiliated with the person
gathering or preparing the gas. ``Gas gathering services'' does not include
the gathering of natural gas by an owner or operator of gathering facilities
who: (A) Does not hold such facilities out for hire on or after the effective
date of this act; or and (B) does not purchase the gas for resale.

    (2) Other terms have the meanings provided by K.S.A. 55-150, and
amendments thereto.

    (b) The provisions of K.S.A. 1997 Supp. 55-1,101 through 55-1,109,
and amendments thereto, shall be part of and supplemental to chapter 55
of the Kansas Statutes Annotated.

    (c) This section shall take effect and be in force on and after July 1,
1997.

    Sec. 2. K.S.A. 1997 Supp. 55-155 is hereby amended to read as fol-
lows: 55-155. (a) Operators and contractors shall be licensed by the com-
mission pursuant to this section.

    (b) Every operator and contractor shall file an application or a re-
newal application with the commission. Application and renewal appli-
cation forms shall be prescribed, prepared and furnished by the commis-
sion.

    (c) No application or renewal application shall be approved until the
applicant has:

    (1) Provided sufficient information, as required by the commission,
for purposes of identification;

    (2) submitted evidence that all current and prior years' taxes for prop-
erty associated with the drilling or servicing of wells have been paid;

    (3) demonstrated to the commission's satisfaction that the applicant
complies with all requirements of chapter 55 of the Kansas Statutes An-
notated, all rules and regulations adopted thereunder and all commission
orders and enforcement agreements, if the applicant is registered with
the federal securities and exchange commission;

    (4) demonstrated to the commission's satisfaction that the following
comply with all requirements of chapter 55 of the Kansas Statutes An-
notated, all rules and regulations adopted thereunder and all commission
orders and enforcement agreements, if the applicant is not registered with
the federal securities and exchange commission: (A) The applicant; (B)
any officer, director, partner or member of the applicant; (C) any stock-
holder owning in the aggregate more than 5% of the stock of the appli-
cant; and (D) any spouse, parent, brother, sister, child, parent-in-law,
brother-in-law or sister-in-law of the foregoing;

    (5) paid an annual license fee of $100, except that an applicant for a
license who is operating one gas well used strictly for the purpose of
heating a residential dwelling shall pay an annual license fee of $25;

    (6) on and after January 1, 1998, complied with subsection (d); and

    (7) paid an annual license fee of $25 for each rig operated by the
applicant. The commission shall issue an identification tag for each such
rig which shall be displayed on such rig at all times.

    (d) On and after January 1, 1998, In order to assure financial respon-
sibility, each operator shall demonstrate annually compliance with one of
the following provisions:

    (1) The operator has obtained an individual performance bond or
letter of credit, in an amount equal to $.75 times the total aggregate depth
of all wells (including active, inactive, injection or disposal) of the oper-
ator.

    (2) The operator has obtained a blanket performance bond or letter
of credit in an amount equal to the following, according to the number
of wells (including active, inactive, injection or disposal) of the operator:

    (A) Wells less than 2,000 feet in depth: 1 through 5 wells, $5,000; 6
through 25 wells, $10,000; and over 25 wells, $20,000.

    (B) Wells 2,000 or more feet in depth: 1 through 5 wells, $10,000; 6
through 25 wells, $20,000; and over 25 wells, $30,000.

    (3) The operator: (A) Has an acceptable record of compliance, as
demonstrated during the preceding 36 months, with commission rules
and regulations regarding safety and pollution or with commission orders
issued pursuant to such rules and regulations; (B) has no outstanding
undisputed orders issued by the commission or unpaid fines, penalties or
costs assessed by the commission and has no officer or director that has
been or is associated substantially with another operator that has any such
outstanding orders or unpaid fines, penalties or costs; and (C) pays a
nonrefundable fee of $50 per year.

    (4) The operator pays a nonrefundable fee equal to 3% of the amount
of the bond or letter of credit that would be required by subsection (d)(1)
or by subsection (d)(2).

    (5) The state has a first lien on tangible personal property associated
with oil and gas production of the operator that has a salvage value equal
to not less than the amount of the bond or letter of credit that would be
required by subsection (d)(1) or by subsection (d)(2).

    (6) The operator has provided other financial assurance approved by
the commission.

    (e) Upon the approval of the application or renewal application, the
commission shall issue to such applicant a license which shall be in full
force and effect until one year from the date of issuance or until surren-
dered, suspended or revoked as provided in K.S.A. 55-162, and amend-
ments thereto. No new license shall be issued to any applicant who has
had a license revoked until the expiration of one year from the date of
such revocation.

    (f) If an operator transfers responsibility for the operation of a well,
gas gathering system or underground natural gas storage facility to an-
other person, the transfer shall be reported to the commission in accord-
ance with rules and regulations of the commission.

    (g) The commission shall remit all moneys received from fees as-
sessed pursuant to subsection (c)(7) of this section to the state treasurer
at least monthly. Upon receipt of each such remittance, the state treasurer
shall deposit the entire amount thereof in the state treasury. Twenty per-
cent of each such deposit shall be credited to the state general fund and
the balance shall be credited to the conservation fee fund created by
K.S.A. 55-143, and amendments thereto.

    (g) (h) The commission shall deposit all moneys received pursuant to
subsections (c)(3) and (c)(4) (d)(3) and (d)(4) into the conservation fee
fund.

    Sec. 3. K.S.A. 1997 Supp. 55-155 and 55-1,101 are hereby repealed.

    Sec. 4. This act shall take effect and be in force from and after its
publication in the statute book.

I hereby certify that the above Bill originated in the House,
and passed that body

__________________________________

House concurred in
Senate amendments __________________________

__________________________________

Speaker of the House.

__________________________________

Chief Clerk of the House.

Passed the Senate
as amended __________________________

__________________________________

President of the Senate

__________________________________

Secretary of the Senate.

Aproved __________________________

__________________________________

Governor.