Session of 1999
         
HOUSE BILL No. 2542
         
By Committee on Federal and State Affairs
         
3-3
         
  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
28       commission.
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

HB 2542

2

  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 trea-
19       surer 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

HB 2542

3

  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

HB 2542

4

  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
35       jurisdiction. 
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.