As Amended by House Committee
Session of 2000
HOUSE BILL No. 2597
By Special Committee on Environment
12-16
10 AN ACT
concerning underground storage of natural gas; amending
11 K.S.A. 55-1201,
55-1204, 55-1205, 55-1208, 55-1209 and 55-1210
12 and repealing the
existing sections.
13
14 Be it enacted by the Legislature of the
State of Kansas:
15 Section
1. K.S.A. 55-1201 is hereby amended to read as follows:
55-
16 1201. As used in this act:
17 (a) "Underground
storage" shall mean means storage in a
subsurface
18 stratum or formation of the
earth;.
19 (b) "Natural gas"
shall mean means gas either while in its
original
20 state or after the same has been processed
by removal therefrom of com-
21 ponent parts not essential to its use for
light and fuel;.
22 (c) "Native gas"
shall mean means gas which has not been
previously
23 withdrawn from the
earth;.
24 (d) "Natural gas
public utility" shall mean means any
person, firm or
25 corporation authorized to do business in
this state and engaged in the
26 business of storing natural gas in this
state or transporting or distributing
27 natural gas by means of pipelines into,
within or through this state for
28 ultimate public
use;.
29 (e) "Commission"
shall mean means the state corporation
30 commission.
31 (f) "Suitable
for the underground storage of natural gas" means a
32 stratum or formation which the
commission reasonably concludes is suit-
33 able for storage of natural gas,
including a determination that stored nat-
34 ural gas should not migrate to another
stratum or formation.
35 (g) "Native
liquid hydrocarbons" means liquid hydrocarbons which
36 have not been previously withdrawn from
the earth.
37 Sec.
2. K.S.A. 55-1204 is hereby amended to read as follows:
55-
38 1204. (a) Any natural gas public utility
desiring to exercise the right of
39 eminent domain as to any property for use
for underground storage of
40 natural gas shall, as a
condition precedent to the filing of its petition in
41 the district court, shall obtain
from the commission a certificate setting
42 out findings of the commission:
43 (1) That the
underground stratum or formation sought to be acquired
2
1 is suitable for the underground
storage of natural gas and that its use for
2 such purposes is in the public
interest; and
3
(2) the amount of recoverable oil and native gas, if
any, remaining
4 therein as to the
amount, if any, of native hydrocarbons and native gas
5 recoverable as a part of the
storage withdrawal and the amount, if any,
6 of injected natural gas or
migrated natural gas that was previously in-
7 jected in an adjacent
field.
8 (b) The
commission shall issue no such certificate
under this section
9 until after public hearing is had on
application and upon reasonable notice
10 to interested parties in accordance with
the provisions of the Kansas ad-
11 ministrative procedure act. Subject to the
provisions of K.S.A. 55-143 and
12 amendments thereto, the applicant shall be
assessed an amount equal to
13 all or any part of the costs of such
proceedings and the applicant shall
14 pay the amount so assessed.
15 (c) All
provisions of K.S.A. 66-106, 66-118a, 66-118b, 66-118c, 66-
16 118d, 66-118e, 66-118j and 66-118k
or any, and amendments thereto,
17 shall be applicable to all proceedings of
the commission under K.S.A. 55-
18 1201 to 55-1206, inclusive, and
acts amendatory thereof or supplemental
19 thereto through
55-1206, and amendments thereto, except as other pro-
20 vided by this act.
21 (d) The
state corporation commission shall remit all
moneys received
22 by or for it for costs assessed under this
section to the state treasurer at
23 least monthly. Upon receipt of each such
remittance, the state treasurer
24 shall deposit the entire amount
thereof in the state treasury and the
same
25 shall be credited
credit it to the conservation fee fund created by K.S.A.
26 55-143 and amendments thereto.
27 Sec.
3. K.S.A. 55-1205 is hereby amended to read as follows:
55-
28 1205. Any (a) After
obtaining a certificate from the commission as pro-
29 vided in K.S.A. 55-1204, and amendments
thereto, a natural gas public
30 utility, having first obtained a
certificate from the commission as here-
31 inbefore provided, desiring
to may exercise the right of eminent domain
32 for the purpose of acquiring
property an easement for the
underground
33 storage of natural gas shall do
so in the manner provided in K.S.A. 26-
34 501 to 26-516, inclusive
through 26-516, and amendments thereto. The
35 petitioner shall file the certificate of
the commission as a part of its the
36 petition and no order by the court granting
said the petition shall be
37 entered without such certificate being
filed therewith. The appraisers in
38 awarding damages hereunder shall also take
into consideration the
39 amounts of recoverable oil and
native gas remaining in the property
40 sought to be
appropriated: (1) The amounts, if any, of native liquid
hy-
41 drocarbons and native gas recoverable as
a part of the storage withdrawal,
42 as determined by the commission, and
for such purposes shall receive as
43 prima facie evidence of such amounts the
findings of the commission
3
1 with reference thereto; and (2)
surface use for roadway, fresh water to
2 be taken, pipeline and utility
easements and surface easements for well
3 sites in the property sought to be
appropriated. Damages awarded under
4 this subsection shall not include
compensation for the prior use of the
5 stratum or affected portion
thereof where injected natural gas has
6 migrated.
7 (b) If
eminent domain proceedings are brought pursuant to this
sec-
8 tion to condemn property located
in two or more counties, the proceedings
9 shall be brought in the county
where the greatest portion of the property
10 is located but the appraisers shall be
appointed from among the disinter-
11 ested residents of all the counties
where the property is located.
12 (c) The amount
awarded for the rights appropriated, at the option of
13 the owner of the property being
condemned, exercised in writing, shall be
14 either a lump sum or in the form of
annual payments which shall not
15 exceed the highest
existing. If annual payments are elected, such
pay-
16 ments shall be based on current
rates payable under negotiated leases
17 of other granting instruments in the
subject storage field for surface util-
18 ization and substratum storage rights,
as applicable. If data on such rates
19 do not exist or are unavailable, the
rates payable in comparable storage
20 fields in the state shall be utilized in
making such award.
21 (d) If the
option to receive annual payments is exercised pursuant to
22 subsection (c), the appraisers shall
establish a due date for such payments.
23 If the gas utility does not make the
payment on or before the due date,
24 the lease shall not lapse unless the
utility has received written notice of
25 its failure to tender the payment and
has not cured the default within 60
26 days after receipt of such
notice.
27 Sec. 4. K.S.A. 55-1208
is hereby amended to read as follows:
28 55-1208. (a) When the owner
of an underground natural gas storage
29 facility a natural gas
public utility has permanently abandoned
the
30 storage facility and that facility
was an underground natural gas storage
31 facility certificated by the
state corporation commission pursuant
32 to K.S.A. 55-1201 et seq.,
the owner and amendments thereto, the
utility
33 shall file with the commission a notice
of abandonment. If any such
34 storage facility was certificated
pursuant to federal authority, the
35 owner utility
shall file a copy of any federal abandonment authority
36 with the commission. Unless such notice
of abandonment authority
37 has been filed with the commission,
there shall be a presumption
38 that the storage facility and all rights
associated with it remain as
39 certificated. In either case the
owner utility shall file an
instrument
40 with the register of deeds office in the
appropriate county or coun-
41 ties, stating that such storage has
ceased and, except in cases in
42 which the owner of the
storage facility utility has purchased the
fee,
43 that the ownership of all property
acquired by the owner
utility,
4
1 both mineral and surface, has
reverted to those who owned the
2 property at the time of the
acquisition or their heirs, successors or
3 assigns.
4 (b) The
state corporation commission may conduct an admin-
5 istrative hearing pursuant to the
Kansas administrative procedures
6 act upon application for
abandonment of an underground natural
7 gas storage facility if such
facility was certificated by the
8 commission.
9 Sec.
5. K.S.A. 55-1209 is hereby amended to read as
follows:
10 55-1209. The owner
of A natural gas public utility owning an
under-
11 ground natural gas storage facility
shall provide to the state cor-
12 poration commission and shall
file with the register of deeds of each
13 county within which the facility is
located a plat map identifying the
14 location of such facility and a
description of the geological for-
15 mation or formations to be used for
storage.
16 Sec.
4. 6. K.S.A. 55-1210 is hereby amended
to read as follows: 55-
17 1210. (a) All natural gas which has
previously been reduced to possession,
18 and which is subsequently injected into
underground storage fields, sands,
19 reservoirs and facilities, whether such
storage rights were acquired by
20 eminent domain or otherwise, shall at all
times be the property of the
21 injector, or such injector's heirs,
successors or assigns, whether owned by
22 the injector or stored under contract.
23 (b) In no event
shall such gas be subject to the right of the owner of
24 the surface of such lands or of any mineral
interest therein, under which
25 such gas storage fields, sands, reservoirs
and facilities lie, or of any person,
26 other than the injector, and such
injector's heirs, successors and assigns,
27 to produce, take, reduce to possession,
either by means of the law of
28 capture or otherwise, waste, or otherwise
interfere with or exercise any
29 control over such gas. Nothing in this
subsection shall be deemed to affect
30 the right of the owner of the surface of
such lands or of any mineral
31 interest therein to drill or bore through
the underground storage fields,
32 sands, reservoirs and facilities in such a
manner as will protect such fields,
33 sand, reservoirs and facilities against
pollution and the escape of the nat-
34 ural gas being stored.
35 (c) With regard
to natural gas that has migrated to adjoining
property
36 or to a stratum, or portion
thereof, which has not been condemned as
37 allowed by law or otherwise
purchased outside of the underground storage
38 that has been condemned as allowed by
law, or otherwise acquired:
39 (1) The injector,
and such injector's heirs, successors and
assigns,
40 shall not lose title to or possession of
such gas if such injector, or such
41 injector's heirs, successors or
assigns, can prove by a preponderance of
42 the evidence that such gas was originally
injected into the underground
43 storage.
5
1 (2) The
injector, and such injector's heirs, successors and
assigns,
2 shall have the right to conduct such
tests on any existing wells on adjoining
3 property, at such injector's sole
risk and expense, including, but not lim-
4 ited to, the value of any lost
production of other than the injector's gas,
5 as may be reasonable to determine
ownership of such gas.
6
(3) The owner of the stratum and the owner of the
surface shall be
7 entitled to such
compensation, including compensation for use of or
dam-
8 age to the surface or
substratum, as is provided by law, and shall be
9 entitled to recovery of all
costs and expenses, including reasonable attor-
10 ney fees, if litigation is
necessary to enforce any rights under this subsec-
11 tion (c) and the injector does not
prevail.
12 (3) The
injector shall pay compensation for the prior use of the
stra-
13 tum or affected portion thereof where
injected natural gas has migrated.
14 The compensation shall
not exceed the highest be based on
current per
15 acre rental being paid to other property
owners for gas storage in the
16 field from which the gas migrated.
Compensation for such prior use shall
17 be limited to the time when the gas
migrated to the other stratum of
18 portion thereof, but not to exceed a
period of seven years prior to the time
19 that the person claiming the
compensation made written demand on the
20 injector for compensation. No action for
the recovery of compensation
21 under this subsection (c)(3) shall be
brought more than two years after
22 the time when the person claiming such
compensation had knowledge or
23 ought reasonably to have had knowledge
of the migration of injected nat-
24 ural gas from underground storage to
another stratum or portion thereof.
25 If the person claiming such compensation
is the prevailing party in the
26 action, the injector shall pay such
person's attorney fees and costs if the
27 compensation granted such person is an
award greater than 15% above
28 the last offer made by the injector
within 75 days before the filing of the
29 action.
30 (4) The compensation provided
in subsection (c)(3) shall be ex-
31 clusive of all other remedies provided
by law for the recovery of
32 damages or compensation for the prior
use of a stratum, or af-
33 fected portion thereof, and no other
remedy under case law, com-
34 mon law or statutes shall apply.
35 (d) The injector,
and such injector's heirs, successors and
assigns,
36 shall have the right to compel compliance
with this section by injunction
37 or other appropriate relief by application
to a court of competent
38 jurisdiction.
39 (e) If any
subsection of this section or any part thereof is found to
be
40 unconstitutional or otherwise
unenforceable, such subsection or part shall
41 be considered stricken and the remainder
of this section shall continue in
42 full force and effect.
43 Sec. 5.
7. K.S.A. 55-1201, 55-1204, 55-1205, 55-1208,
55-1209 and
6
1 55-1210 are hereby repealed.
2 Sec. 6.
8. This act shall take effect and be in force from and
after its
3 publication in the statute
book Kansas register.