An Act relating to oil and gas; concerning natural gas gathering systems; establishing a task force; defining certain terms; amending K.S.A. 55-150 and repealing the existing section.

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

Section 1. K.S.A. 55-150 is hereby amended to read as follows: 55- 150. As used in this act unless the context requires a different meaning:

(a) ``Commission'' means the state corporation commission;.

(b) ``Contractor'' means any person who acts as agent for an operator as a drilling, plugging, service rig or seismograph contractor in such op- erator's oil and gas, cathodic protection, gas gathering or underground natural gas storage operations;.

(c) ``Fresh water'' means water containing not more than 1,000 mil- ligrams per liter, total dissolved solids;.

(d) ``Gas gathering system'' means a natural gas pipeline system used primarily for transporting natural gas from a wellhead, or a metering point for natural gas produced by one or more wells, to a point of entry into a main transmission line, but shall not mean or include: (1) the gath- ering of natural gas produced from wells owned and operated by the gatherer and where the gathering system is used exclusively for its own private purposes; (2) lead lines from the wellhead to the connection with the gathering system which are owned by the producing entity; and (3) gathering systems used exclusively for injection and withdrawal from nat- ural gas storage fields.

(e) ``Operator'' means a person who is responsible for the physical operation and control of a well;, gas gathering system or underground natural gas storage facility.

(e) (f) ``Person'' means any natural person, partnership, governmental or political subdivision, firm, association, corporation or any other legal entity;.

(f) (g) ``Rig'' means any crane machine used for drilling or plugging wells;.

(g) (h) ``Usable water'' means water containing not more than 10,000 milligrams per liter, total dissolved solids;.

(h) (i) ``Well'' means a hole drilled or recompleted for the purpose of:

(1) Producing oil or gas;

(2) injecting fluid, air or gas in the ground in connection with the exploration for or production of oil or gas;

(3) obtaining geological information in connection with the explora- tion for or production of oil or gas by taking cores or through seismic operations;

(4) disposing of fluids produced in connection with the exploration for or production of oil or gas; or

(5) providing cathodic protection to prevent corrosion to lines; or

(6) injecting or withdrawing natural gas.

New Sec. 2. (a) There is hereby established a task force on gas gath- ering. The task force shall be composed of the following members:

(1) The chairperson of the committee on energy and natural re- sources of the senate or the designee of the chairperson;

(2) the chairperson of the committee on energy and natural resources of the house of representatives or the designee of the chairperson;

(3) the ranking minority member of the committee on energy and natural resources of the senate or the designee of the ranking minority member;

(4) the ranking minority member of the committee on energy and natural resources of the house of representatives or the designee of the ranking minority member;

(5) a person representing independent gas producers appointed by the governor;

(6) a person representing royalty owners appointed by the governor;

(7) a person representing irrigators appointed by the governor;

(8) a person who is an expert in oil and gas law appointed by the governor who shall be an ex officio member of the task force;

(9) a person representing gas gathering companies affiliated with ma- jor pipeline companies appointed by the governor;

(10) a person representing major gas producers appointed by the gov- ernor;

(11) a person representing intermediate gas gatherers appointed by the governor;

(12) a county appraiser appointed by the governor;

(13) an independent gas gatherer or gatherer-producer appointed by the governor; and

(14) the chairperson of the state corporation commission or the des- ignee of the chairperson who shall be an ex officio member of the task force.

(b) The chairperson and vice-chairperson of the task force shall be appointed by the legislative coordinating council on or before June 1, 1996. The governor shall make appointments under this section on or before June 1, 1996. The chairperson of the task force shall call a meeting of the task force as soon as practicable after all members of the task force have been appointed. The task force shall meet on call of the chairperson as may be necessary but not more than 15 days total prior to January 13, 1997.

(c) The task force shall study the implications of deregulation on the natural gas gathering system in Kansas including, but not limited to:

(1) Implications for the major pipeline companies operating in the affected areas;

(2) implications for independent gas producers;

(3) implications for royalty owners;

(4) implications for irrigators in the region;

(5) implications for the state department of revenue's collection of the severance tax;

(6) implications for county-property tax base and associated concerns;

(7) the effect on first purchaser contracts relating to severance gas tax (particularly out-of-state purchasers);

(8) concerns about the adequacy of the information reported on roy- alty check stubs including other nonprice issues;

(9) the impact of the spin-down process of the major pipeline com- panies on the gas gathering system and on the financing of the capital investment structure;

(10) the effect on franchise agreements regulated by the state cor- poration commission;

(11) public disclosure of contracts and their contents relating to gas gathering rates;

(12) actions of the Federal Energy Regulatory Commission and the consequences of those actions;

(13) the obligation of gas gatherers to serve customers including sub- sidiaries;

(14) the economic impact on each class of gas customers;

(15) the effect on brokerage; and

(16) a review of existing Kansas statutes and applicable rules and reg- ulations.

(d) Members of the task force appointed under (a) (1) through (a) (8) attending meetings of the task force or subcommittee meetings authorized by the task force shall be paid amounts provided in subsection (e) of K.S.A. 75-3223 and amendments thereto. Other members of the task force shall not receive any compensation or travel expenses for at- tending meetings of the task force or subcommittee meetings authorized by the task force.

(e) The staff of the legislative research department, the office of the revisor of statutes and the division of legislative administrative services shall provide such assistance as may be requested by the task force and authorized by the legislative coordinating council. The legislative division of post audit shall provide such assistance as may be requested by the task force and authorized by the legislative post audit committee. The state corporation commission shall provide assistance to the task force as may be requested by the task force.

(f) In accordance with K.S.A. 46-1204 and amendments thereto, the legislative coordinating council may provide for such professional services as may be requested by the task force.

(g) The task force shall submit its report and recommendations to the chairpersons and ranking minority members of the committees on energy and natural resources of the senate and the house of representatives and to the secretary of the senate and the chief clerk of the house of repre- sentatives on or before January 13, 1997.

(h) The provisions of this section shall expire on July 1, 1997.

Sec. 3. K.S.A. 55-150 is hereby repealed.

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

Approved April 10, 1996.

Published in the Kansas Register: April 18, 1996.