CHAPTER 191 HOUSE BILL No. 2200 (Amends Chapter 5) An Act concerning hydrocarbons; providing for regulation of underground storage thereof;
prohibiting certain acts and providing penalties for violations; relating to disposition of
certain fees; amending K.S.A. 2000 Supp. 55-150, 55-155, as amended by section 190
of 2001 Senate Bill No. 15, 55-161, 55-179, 55-180, as amended by section 193 of 2001
Senate Bill No. 15, 55-182, 65-171d and 74-623 and repealing the existing sections.
Be it enacted by the Legislature of the State of Kansas:

      New Section  1. (a) There is hereby established in the state treasury
the well plugging assurance fund.

      (b) Moneys in the well plugging assurance fund shall be used only
for the purpose of paying the costs of: (1) Investigation of abandoned
wells, and their well sites, drilling of which began on or after July 1, 1996;
and (2) plugging, replugging or repairing abandoned wells, and remedi-
ation of the well sites, drilling of which began on or after July 1, 1996, in
accordance with a prioritization schedule adopted by the state corporation
commission and based on the degree of threat to public health or the
environment. No moneys credited to the fund shall be used to pay ad-
ministrative expenses of the commission or to pay compensation or other
expenses of employing personnel to carry out the duties of the commis-
sion.

      (c) On or before the 10th day of each month, the director of accounts
and reports shall transfer from the state general fund to the well plugging
assurance fund interest earnings based on: (1) The average daily balance
of moneys in the well plugging assurance fund for the preceding month;
and (2) the net earnings rate for the pooled money investment portfolio
for the preceding month.

      (d) All expenditures from the well plugging assurance fund shall be
made in accordance with appropriation acts upon warrants of the director
of accounts and reports issued pursuant to vouchers approved by the
chairperson of the state corporation commission or a person designated
by the chairperson.

      New Sec.  2. (a) On the effective date of this act, the chairperson of
the state corporation commission shall certify to the director of accounts
and reports the amount of moneys in the conservation fee fund which is
equal to: (1) All amounts credited to such fund pursuant to subsections
(d)(3) and (d)(4) of K.S.A. 55-155, and amendments thereto; plus (2) any
amounts recovered and credited to such fund pursuant to subsection (d)
of K.S.A. 55-180, and amendments thereto, for plugging, replugging or
repairing an abandoned well, drilling of which began on or after July 1,
1996; minus (3) any amounts expended from such fund pursuant to K.S.A.
55-161, and amendments thereto, or subsection (a)(2) of K.S.A. 55-179,
and amendments thereto, for the purpose of: (A) Investigation of aban-
doned wells, and their well sites, drilling of which began on or after July
1, 1996; and (B) plugging, replugging or repairing abandoned wells, and
remediation of the well sites, drilling of which began on or after July 1,
1996. Upon receipt of such certification, the director of accounts and
reports shall transfer the amount certified from the conservation fee fund
to the well plugging assurance fund.

      (b) All liabilities of the conservation fee fund which are attributable
to the following are hereby transferred to and imposed on the well plug-
ging assurance fund: (1) Investigation of abandoned wells, and their well
sites, drilling of which began on or after July 1, 1996; and (2) plugging,
replugging or repairing abandoned wells, and remediation of the well
sites, drilling of which began on or after July 1, 1996.

      New Sec.  3. Whenever there are insufficient moneys in the well
plugging assurance fund or the abandoned oil and gas well fund to pay
the liabilities of such fund, such liabilities shall be and are hereby imposed
on the conservation fee fund, provided such liabilities were incurred in
accordance with the prioritization schedules established pursuant to sub-
section (b)(2) of section 1, and amendments thereto, and subsection (b)(2)
of K.S.A. 2000 Supp. 55-192, and amendments thereto.

      Sec.  4. K.S.A. 2000 Supp. 55-155, as amended by section 190 of 2001
Senate Bill No. 15, is hereby amended to read as follows: 55-155. (a)
Operators and contractors shall be licensed by the commission 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) 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) In order to assure financial responsibility, 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,
or gas gathering system or underground natural gas storage facility for
underground porosity storage of natural gas to another person, the trans-
fer shall be reported to the commission in accordance 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
in accordance with the provisions of K.S.A. 75-4215, and amendments
thereto. Upon receipt of each such remittance, the state treasurer shall
deposit the entire amount in the state treasury. Twenty percent 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.

      (h) The commission shall remit all moneys received pursuant to sub-
sections (d)(3) and (d)(4) to the state treasurer in accordance with the
provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of
each such remittance, the state treasurer shall deposit the entire amount
in the state treasury to the credit of the conservation fee well plugging
assurance fund.

      Sec.  5. K.S.A. 2000 Supp. 55-161 is hereby amended to read as fol-
lows: 55-161. The commission shall investigate abandoned wells, and,
based on actual or potential pollution problems, may select abandoned
wells to be drilled out by the commission in order to test the integrity of
the plugs. The cost of such testing shall be paid from the conservation
fee well plugging assurance fund or the abandoned oil and gas well fund,
as appropriate.

      Sec.  6. K.S.A. 2000 Supp. 55-179 is hereby amended to read as fol-
lows: 55-179. (a) Upon receipt of any complaint filed pursuant to K.S.A.
55-178 and amendments thereto, the commission shall make an investi-
gation for the purpose of determining whether such abandoned well is
polluting or is likely to pollute any usable water strata or supply or causing
the loss of usable water, or the commission may initiate such investigation
on its own motion. If the commission determines:

      (1) That such abandoned well is causing or likely to cause such pol-
lution or loss; and

      (2)  (A) that no person is legally responsible for the proper care and
control of such well; or (B) that the person legally responsible for the
care and control of such well is dead, is no longer in existence, is insolvent
or cannot be found, then, after completing its investigation, and as funds
are available, the commission shall plug, replug or repair such well, or
cause it to be plugged, replugged or repaired, in such a manner as to
prevent any further pollution or danger of pollution of any usable water
strata or supply or loss of usable water, and shall remediate pollution from
the well, whenever practicable and reasonable. The cost of the investi-
gation; the plugging, replugging or repair; and the remediation shall be
paid by the commission from the conservation fee well plugging assurance
fund or the abandoned oil and gas well fund, as appropriate.

      (b) For the purposes of this section, a person who is legally respon-
sible for the proper care and control of an abandoned well shall include,
but is not limited to, one or more of the following: Any operator of a
waterflood or other pressure maintenance program deemed to be causing
pollution or loss of usable water; the current or last operator of the lease
upon which such well is located, irrespective of whether such operator
plugged or abandoned such well; the original operator who plugged or
abandoned such well; and any person who without authorization tampers
with or removes surface equipment or downhole equipment from an
abandoned well.

      (c) Whenever the commission determines that a well has been aban-
doned and is causing or is likely to cause pollution of any usable water
strata or supply or loss of usable water, and whenever the commission
has reason to believe that a particular person is legally responsible for the
proper care and control of such well, the commission shall cause such
person to come before it at a hearing held in accordance with the pro-
visions of the Kansas administrative procedure act to show cause why the
requisite care and control has not been exercised with respect to such
well. After such hearing, if the commission finds that the person is legally
responsible for the proper care and control of such well and that such
well is abandoned, in fact, and is causing or is likely to cause pollution of
any usable water strata or supply or loss of usable water, the commission
may make any order or orders prescribed in K.S.A. 55-162, and amend-
ments thereto. Proceedings for reconsideration and judicial review of any
of the commission's orders may be held pursuant to K.S.A. 55-606, and
amendments thereto.

      (d) For the purpose of this section, any well which has been aban-
doned, in fact, and has not been plugged pursuant to the rules and reg-
ulations in effect at the time of plugging such well shall be and is hereby
deemed likely to cause pollution of any usable water strata or supply.

      (e) For the purpose of this section, the person legally responsible for
the proper care and control of an abandoned well shall not include the
landowner or surface owner unless the landowner or surface owner has
operated or produced the well, has deliberately altered or tampered with
such well thereby causing the pollution or has assumed by written con-
tract such responsibility.

      Sec.  7. K.S.A. 2000 Supp. 55-180, as amended by section 193 of 2001
Senate Bill No. 15, is hereby amended to read as follows: 55-180. (a) The
fact that any person has initiated or supported a proceeding before the
commission, or has remedied or attempted to remedy the condition of
any well under the authority of this act, shall not be construed as an
admission of liability or received in evidence against such person in any
action or proceeding wherein responsibility for or damages from surface
or subsurface pollution, or injury to any usable water or oil-bearing or
gas-bearing formation, is or may become an issue; nor shall such fact be
construed as releasing or discharging any action, cause of action or claim
against such person existing in favor of any third person for damages to
property resulting from surface or subsurface pollution, or injury to any
usable water or oil-bearing or gas-bearing formation.

      (b) The commission, on its own motion, may initiate an investigation
into any pollution problem related to oil and gas activity. In taking such
action the commission may require or perform the testing, sampling,
monitoring or disposal of any source of groundwater pollution related to
oil and gas activities.

      (c) The commission or any other person authorized by the commis-
sion who has no obligation to plug, replug or repair any abandoned well,
but who does so in accordance with the provisions of this act, shall have
a cause of action for the reasonable cost and expense incurred in plugging,
replugging or repairing the well against any person who is legally respon-
sible for the proper care and control of such well pursuant to the provi-
sions of K.S.A. 55-179, and amendments thereto, and the commission or
other person shall have a lien upon the interest of such obligated person
in and to the oil and gas rights in the land and equipment located thereon.

      (d) Any moneys recovered by the commission in an action pursuant
to subsection (c) shall be remitted to the state treasurer in accordance
with the provisions of K.S.A. 75-4215, and amendments thereto. Upon
receipt of each such remittance, the state treasurer shall deposit the entire
amount in the state treasury to the credit of the conservation fee fund,
well plugging assurance fund or the abandoned oil and gas well fund, as
appropriate based on the fund from which the costs incurred by the com-
mission were paid.

      Sec.  8. K.S.A. 2000 Supp. 55-182 is hereby amended to read as fol-
lows: 55-182. (a) Agents of the commission shall have the right of ingress
and egress upon any lands where any well or underground porosity stor-
age of natural gas is located and the lands adjacent thereto and to occupy
such lands as are necessary in making any investigation or in the permit-
ting, monitoring, inspecting, investigating, supervising, plugging, replug-
ging or repairing of any such well or in the supervision thereof under-
ground porosity storage. Any agent when entering upon any land to
permit, monitor, inspect, investigate, supervise, plug, replug or repair a
well, or to supervise or inspect the same underground porosity storage
of natural gas, shall not be liable for any damages necessarily resulting
therefrom, except damages to growing crops, livestock or improvements
on the land. Upon completion of activities on such land, such agent shall
restore the premises to the original contour and condition as nearly as
practicable.

      (b) Agents of the commission shall have the right of ingress and egress
upon any lands to clean up pollution resulting from oil and gas activities.
Such agents shall have the power to occupy such land if necessary to
investigate and clean up such pollution. Any agent entering upon any land
to conduct cleanup activities shall not be liable for any damages neces-
sarily resulting therefrom except damages to growing crops, livestock or
improvements on the land.

      New Sec.  9. (a) As used in this section, K.S.A. 65-171d and sections
10 through 14, and amendments thereto:

      (1) ``Secretary'' means the secretary of health and environment.

      (2) ``Underground porosity storage'' means the storage of hydrocar-
bons in underground, porous and permeable geological strata which have
been converted to hydrocarbon storage.

      (b) For the purposes of protecting the health, safety and property of
the people of the state, and preventing surface and subsurface water
pollution and soil pollution detrimental to public health or to the plant,
animal and aquatic life of the state, the secretary of health and environ-
ment shall adopt separate and specific rules and regulations establishing
requirements, procedures and standards for the following:

      (1) Salt solution mining;

      (2) the safe and secure underground storage of liquid petroleum gas
and hydrocarbons, other than natural gas in underground porosity stor-
age; and

      (3) the safe and secure underground storage of natural gas in bedded
salt.

      (c) Such rules and regulations shall include, but not be limited to:

      (1) Site selection criteria;

      (2) design and development criteria;

      (3) operation criteria;

      (4) casing requirements;

      (5) monitoring and measurement requirements;

      (6) safety requirements, including public notification;

      (7) closure and abandonment requirements, including the financial
requirements of subsection (f); and

      (8) long term monitoring.

      (d)  (1) The secretary may adopt rules and regulations establishing
fees for the following services:

      (A) Permitting, monitoring and inspecting salt solution mining op-
erators;

      (B) permitting, monitoring and inspecting underground storage of
liquid petroleum gas and hydrocarbons, other than natural gas in under-
ground porosity storage; and

      (C) permitting, monitoring and inspecting underground storage of
natural gas in bedded salt.

      (2) The fees collected under this section by the secretary shall be
remitted by the secretary to the state treasurer in accordance with the
provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of
each such remittance, the state treasurer shall deposit the entire amount
in the state treasury to the credit of the subsurface hydrocarbon storage
fund.

      (e) The secretary or the secretary's duly authorized representative
may impose on any holder of a permit issued pursuant to this section such
requirements relating to inspecting, monitoring, investigating, recording
and reporting as the secretary or representative deems necessary to ad-
minister the provisions of this section and rules and regulations adopted
hereunder.

      (f) Any company or operator receiving a permit under the provisions
of this act shall demonstrate annually to the department of health and
environment evidence, satisfactory to the department, that such permit
holders have financial ability to cover the cost of closure of such permitted
facility as required by the department.

      (g) The secretary may enter into contracts for services from consult-
ants and other experts for the purposes of assisting in the drafting of rules
and regulations pursuant to this section.

      (h)  (1) For a period of two years from July 1, 2001, or until the rules
and regulations provided for in paragraph (3) of subsection (a) are
adopted, the injection of working natural gas into underground storage
in bedded salt is prohibited, except that cushion gas may be injected into
existing underground storage in bedded salt. Natural gas currently stored
in such underground storage may be extracted.

      (2) Any existing underground storage of natural gas in bedded salt
shall comply with the rules and regulations adopted under this section
prior to the commencement of injection of working natural gas into such
underground storage.

      (3) Rules and regulations adopted under paragraph (3) of subsection
(a) shall be adopted on or before July 1, 2003.

      (i) No hydrocarbon storage shall be allowed in any underground for-
mation if water within the formation contains less than 5,000 milligrams
per liter chlorides.

      New Sec.  10. (a) (1) There is hereby established in the state treasury
the subsurface hydrocarbon storage fund to administer the provisions of
sections 9 through 11, and amendments thereto. Such fund shall be ad-
ministered by the secretary in accordance with the provisions of this sec-
tion.

      (2) All moneys received by the secretary as grants, gifts, bequests or
state or federal appropriations for the purposes of sections 9 through 11,
and amendments thereto, shall be remitted by the secretary to the state
treasurer in accordance with the provisions of K.S.A. 75-4215, and
amendments thereto. Upon receipt of each such remittance the state
treasurer shall deposit the entire amount in the state treasury to the credit
of such fund. The secretary is authorized to receive from the federal
government or any of its agencies or from any private or governmental
source any funds made available for the purposes of sections 9 through
11, and amendments thereto.

      (3) All expenditures from this fund shall be made in accordance with
appropriation acts and upon warrants of the director of accounts and
reports issued pursuant to vouchers approved by the secretary.

      (b) The secretary is authorized to use moneys from the subsurface
hydrocarbon storage fund to pay the cost of:

      (1) All activities related to permitting activities including but not lim-
ited to development and issuance of permits, compliance monitoring,
inspections, well and well system closures, long term monitoring and en-
forcement actions;

      (2) review and witnessing of test procedures;

      (3) review and witnessing of routine workover or repair procedures;

      (4) investigation of violations, complaints, pollution and events ef-
fecting public health;

      (5) design and review of remedial action plans;

      (6) contracting for services needed to supplement the department's
staff expertise in facility investigations;

      (7) consultation needed concerning remedial action at a permitted
facility;

      (8) mitigation of adverse environmental impacts;

      (9) emergency or long-term remedial activities;

      (10) legal costs, including expert witnesses, incurred in administration
of the provisions of sections 9 through 11, and amendments thereto; and

      (11) costs of program administration.

      (c) On or before the 10th of each month, the director of accounts
and reports shall transfer from the state general fund to the subsurface
hydrocarbon storage fund interest earnings based on:

      (1) The average daily balance of moneys in the subsurface hydrocar-
bon storage fund for the preceding month; and

      (2) the net earnings rate of the pooled money investment portfolio
for the preceding months.

      New Sec.  11. (a) The secretary or the director of the division of en-
vironment, if designated by the secretary, upon a finding that a person
has violated any provision of section 9, and amendments thereto, or rules
and regulations adopted thereunder, may impose a penalty not to exceed
$10,000 per violation which shall constitute an economic deterrent to the
violation for which it is assessed and, in the case of a continuing violation,
every day such violation continues shall be deemed a separate violation.

      (b) No penalty shall be imposed pursuant to this section except after
an opportunity for hearing upon the written order of the secretary or the
director of the division of environment, if designated by the secretary, to
the person who committed the violation. The order shall state the viola-
tion, the penalty to be imposed and, in the case of an order of the director
of the division of environment, the right to appeal to the secretary for a
hearing thereon. Any person may appeal an order of the director of the
division of environment by making a written request to the secretary for
a hearing within 15 days of service of such order. Hearings under this
subsection shall be conducted in accordance with the provisions of the
Kansas administrative procedure act.

      (c) Whenever the secretary or the secretary's duly authorized agents
find that the soil or waters of the state are not being protected from
pollution resulting from underground storage of liquid petroleum gas and
hydrocarbons, other than natural gas in underground porosity storage,
the secretary or the secretary's duly authorized agents shall issue an order
prohibiting such underground storage. Any person aggrieved by such or-
der may request in writing, within 15 days after service of the order, a
hearing on the order. Upon receipt of a timely request, a hearing shall
be conducted in accordance with the provisions of the Kansas adminis-
trative procedure act.

      (d) Any action of the secretary pursuant to this section is subject to
review in accordance with the act for judicial review and civil enforcement
of agency actions.

      New Sec.  12. (a) For the purposes of this section:

      (1) ``Person legally responsible'' includes, but is not limited to: (A)
Any current or former operator of the well, or successor, who has: (i)
Knowingly abandoned the well; (ii) caused the pollution or hazard, or
threat of pollution or hazard, by intentionally altering or tampering with
the well; or (iii) assumed legal responsibility by written agreement or
contract; and (B) any current or former owner of the well who is or was
in the business of producing salt.

      (2) ``Salt solution mining well'' means a well which has been drilled
into subsurface saline or salt bearing deposits for the recovery of either
existing brines or brines which are formed by the injection of water to
dissolve such deposits.

      (3) A salt solution mining well shall be deemed abandoned if no per-
son is legally responsible for causing the pollution or hazard, or threat of
pollution or hazard, or if the person legally responsible is dead, is no
longer in existence, is adjudicated to be insolvent or cannot be found.

      (b) If the secretary finds that the location or construction, or both, of
an abandoned salt solution mining well causes or threatens to cause pol-
lution of the land, air or waters of the state or is or threatens to become
a hazard to persons, property or public health or safety, the secretary
may, in addition to any other remedy provided by law:

      (1) After completion of an investigation: (A) Order any person who
is legally responsible for causing the pollution or hazard, or threat of
pollution or hazard, to take such remedial action as will remove the pol-
lution or hazard, or threat of pollution or hazard, including, but not lim-
ited to, plugging such well; or (B) as funds are available, provide for the
plugging of the well and order assessment of the costs to the legally re-
sponsible person; or

      (2) after completion of an investigation and as funds are available,
provide for the plugging of the well, if abandoned, in a manner that
remediates the pollution or hazard, whether threatened or actual.

      New Sec.  13. (a) There is hereby created in the state treasury the
salt solution mining well plugging fund. Such fund shall be administered
by the secretary in accordance with the provisions of this section and
section 12, and amendments thereto.

      (b) All moneys received by the secretary as grants, gifts, bequests or
state or federal appropriations for the purposes of section 12, and amend-
ments thereto, shall be remitted by the secretary to the state treasurer in
accordance with the provisions of K.S.A. 75-4215, and amendments
thereto. Upon receipt of each such remittence the state treasurer shall
deposit the entire amount in the state treasury to the credit of the salt
solution mining well plugging fund. The secretary is authorized to receive
from the federal government or any of its agencies or from any private
or governmental source any funds made available for the purposes of
section 12, and amendments thereto.

      (c) Moneys in the salt solution mining well plugging fund shall be
expended only for the purpose of investigating and plugging wells, iden-
tifying responsible parties and otherwise administering the provisions of
section 12, and amendments thereto.

      (d) On or before the 10th of each month, the director of accounts
and reports shall transfer from the state general fund to the salt solution
mining well plugging fund interest earnings based on:

      (1) The average daily balance of moneys in the salt solution mining
well plugging fund for the preceding month; and

      (2) the net earnings rate for the pooled money investment portfolio
for the preceding month.

      (e) All expenditures from the salt solution mining well plugging fund
shall be made in accordance with appropriation acts upon warrants of the
director of accounts and reports issued pursuant to vouchers approved
by the secretary or a person designated by the secretary for the purposes
set forth in this section.

      New Sec.  14. (a) In performing investigations or administrative func-
tions relating to surface and subsurface water pollution, soil pollution and
public health or safety, the secretary or the secretary's duly authorized
representatives may enter any property or facility which is subject to the
provisions of section 9 or 12, and amendments thereto, for the purpose
of observing, monitoring, collecting samples, examining records and fa-
cilities to determine compliance or noncompliance with state laws and
rules and regulations relating to water pollution, soil pollution or public
health or safety.

      (b) The representatives of the secretary shall have the right of ingress
and egress upon any lands to cleanup pollution, over which the secretary
has jurisdiction pursuant to sections 9 through 11, and amendments
thereto, or to plug any well as authorized by section 12, and amendments
thereto. Such representatives shall have the power to occupy such land
if necessary to investigate and cleanup such pollution or to investigate
and plug such well. Any representative entering upon any land to conduct
such clean-up or well-plugging shall not be liable for any damages nec-
essarily resulting therefrom, except damages to growing crops, livestock
or improvements on the land. Upon completion of activities on such land,
such representative shall restore the premises to the original contour and
condition as nearly as practicable.

      Sec.  15. K.S.A. 2000 Supp. 65-171d is hereby amended to read as
follows: 65-171d. (a) For the purpose of preventing surface and subsur-
face water pollution and soil pollution detrimental to public health or to
the plant, animal and aquatic life of the state, and to protect beneficial
uses of the waters of the state and to require the treatment of sewage
predicated upon technologically based effluent limitations, the secretary
of health and environment shall make such rules and regulations, includ-
ing registration of potential sources of pollution, as may in the secretary's
judgment be necessary to: (1) Protect the soil and waters of the state from
pollution resulting from underground storage reservoirs of hydrocarbons
and liquid petroleum gas; (2) Control Protect the soil and waters of the
state from pollution resulting from underground storage of liquid petro-
leum gas and hydrocarbons, other than underground porosity storage of
natural gas; (2) control the disposal, discharge or escape of sewage as
defined in K.S.A. 65-164 and amendments thereto, by or from munici-
palities, corporations, companies, institutions, state agencies, federal
agencies or individuals and any plants, works or facilities owned or op-
erated, or both, by them; and (3) establish water quality standards for the
waters of the state to protect their beneficial uses.

      (b) The secretary of health and environment may adopt by reference
any regulation relating to water quality and effluent standards promul-
gated by the federal government pursuant to the provisions of the federal
clean water act and amendments thereto, as in effect on January 1, 1989,
which the secretary is otherwise authorized by law to adopt.

      (c) For the purposes of this act, including K.S.A. 65-161 through 65-
171h and K.S.A. 2000 Supp. 65-1,178 through 65-1,198, and amendments
thereto, and rules and regulations adopted pursuant thereto:

      (1) ``Pollution'' means: (A) Such contamination or other alteration of
the physical, chemical or biological properties of any waters of the state
as will or is likely to create a nuisance or render such waters harmful,
detrimental or injurious to public health, safety or welfare, or to the plant,
animal or aquatic life of the state or to other designated beneficial uses;
or (B) such discharge as will or is likely to exceed state effluent standards
predicated upon technologically based effluent limitations.

      (2) ``Confined feeding facility'' means any lot, pen, pool or pond: (A)
Which is used for the confined feeding of animals or fowl for food, fur
or pleasure purposes; (B) which is not normally used for raising crops;
and (C) in which no vegetation intended for animal food is growing.

      (3) ``Animal unit'' means a unit of measurement calculated by adding
the following numbers: The number of beef cattle weighing more than
700 pounds multiplied by 1.0; plus the number of cattle weighing less
than 700 pounds multiplied by 0.5; plus the number of mature dairy cattle
multiplied by 1.4; plus the number of swine weighing more than 55
pounds multiplied by 0.4; plus the number of swine weighing 55 pounds
or less multiplied by 0.1; plus the number of sheep or lambs multiplied
by 0.1; plus the number of horses multiplied by 2.0; plus the number of
turkeys multiplied by 0.018; plus the number of laying hens or broilers,
if the facility has continuous overflow watering, multiplied by 0.01; plus
the number of laying hens or broilers, if the facility has a liquid manure
system, multiplied by 0.033; plus the number of ducks multiplied by 0.2.
However, each head of cattle will be counted as one full animal unit for
the purpose of determining the need for a federal permit. ``Animal unit''
also includes the number of swine weighing 55 pounds or less multiplied
by 0.1 for the purpose of determining applicable requirements for new
construction of a confined feeding facility for which a permit or registra-
tion has not been issued before January 1, 1998, and for which an appli-
cation for a permit or registration and plans have not been filed with the
secretary of health and environment before January 1, 1998, or for the
purpose of determining applicable requirements for expansion of such
facility. However, each head of swine weighing 55 pounds or less shall be
counted as 0.0 animal unit for the purpose of determining the need for
a federal permit.

      (4) ``Animal unit capacity'' means the maximum number of animal
units which a confined feeding facility is designed to accommodate at any
one time.

      (5) ``Habitable structure'' means any of the following structures which
is occupied or maintained in a condition which may be occupied and
which, in the case of a confined feeding facility for swine, is owned by a
person other than the operator of such facility: A dwelling, church, school,
adult care home, medical care facility, child care facility, library, com-
munity center, public building, office building or licensed food service or
lodging establishment.

      (6) ``Wildlife refuge'' means Cheyenne Bottoms wildlife management
area, Cheyenne Bottoms preserve and Flint Hills, Quivera, Marais des
Cygnes and Kirwin national wildlife refuges.

      (d) In adopting rules and regulations, the secretary of health and en-
vironment, taking into account the varying conditions that are probable
for each source of sewage and its possible place of disposal, discharge or
escape, may provide for varying the control measures required in each
case to those the secretary finds to be necessary to prevent pollution. If
a freshwater reservoir or farm pond is privately owned and where com-
plete ownership of land bordering the reservoir or pond is under common
private ownership, such freshwater reservoir or farm pond shall be ex-
empt from water quality standards except as it relates to water discharge
or seepage from the reservoir or pond to waters of the state, either surface
or groundwater, or as it relates to the public health of persons using the
reservoir or pond or waters therefrom.

      (e)  (1) Whenever the secretary of health and environment or the
secretary's duly authorized agents find that the soil or waters of the state
are not being protected from pollution resulting from underground stor-
age reservoirs of hydrocarbons and liquid petroleum gas or that storage
or disposal of salt water not regulated by the state corporation commission
or refuse in any surface pond not regulated by the state corporation com-
mission is causing or is likely to cause pollution of soil or waters of the
state, the secretary or the secretary's duly authorized agents shall issue
an order prohibiting such underground storage reservoir or surface pond
storage or disposal of salt water or refuse. Any person aggrieved by such
order may within 15 days of service of the order request in writing a
hearing on the order.

      (2) Upon receipt of a timely request, a hearing shall be conducted in
accordance with the provisions of the Kansas administrative procedure
act.

      (3) Any action of the secretary pursuant to this subsection is subject
to review in accordance with the act for judicial review and civil enforce-
ment of agency actions.

      (f) The secretary may adopt rules and regulations establishing fees
for the following services:

      (1) plan approval, monitoring and inspecting underground or buried
petroleum products storage tanks, for which the annual fee shall not ex-
ceed $5 for each tank in place;

      (2) permitting, monitoring and inspecting salt solution mining oper-
ators, for which the annual fee shall not exceed $1,950 per company; and

      (3) permitting, monitoring and inspecting hydrocarbon storage wells
and well systems, for which the annual fee shall not exceed $1,875 per
company.

      (g) Prior to any new construction of a confined feeding facility with
an animal unit capacity of 300 to 999, such facility shall register with the
secretary of health and environment. Facilities with a capacity of less than
300 animal units may register with the secretary. Any such registration
shall be accompanied by a $25 fee. Within 30 days of receipt of such
registration, the department of health and environment shall identify any
significant water pollution potential or separation distance violations pur-
suant to subsection (h). If there is identified a significant water pollution
potential, such facility shall be required to obtain a permit from the sec-
retary. If there is no water pollution potential posed by a facility with an
animal unit capacity of less than 300, the secretary may certify that no
permit is required. If there is no water pollution potential nor any viola-
tion of separation distances posed by a facility with an animal unit capacity
of 300 to 999, the secretary shall certify that no permit is required and
that there are no certification conditions pertaining to separation dis-
tances. If a separation distance violation is identified, the secretary may
reduce the separation distance in accordance with subsection (i) and shall
certify any such reduction of separation distances.

      (h)  (1) Any new construction or new expansion of a confined feeding
facility, other than a confined feeding facility for swine, shall meet or
exceed the following requirements in separation distances from any hab-
itable structure in existence when the application for a permit is submit-
ted:

      (A) 1,320 feet for facilities with an animal unit capacity of 300 to 999;
and

      (B) 4,000 feet for facilities with an animal unit capacity of 1,000 or
more.

      (2) A confined feeding facility for swine shall meet or exceed the
following requirements in separation distances from any habitable struc-
ture or city, county, state or federal park in existence when the application
for a permit is submitted:

      (A) 1,320 feet for facilities with an animal unit capacity of 300 to 999;

      (B) 4,000 feet for facilities with an animal unit capacity of 1,000 to
3,724;

      (C) 4,000 feet for expansion of existing facilities to an animal unit
capacity of 3,725 or more if such expansion is within the perimeter from
which separation distances are determined pursuant to subsection (k) for
the existing facility; and

      (D) 5,000 feet for: (i) Construction of new facilities with an animal
unit capacity of 3,725 or more; or (ii) expansion of existing facilities to an
animal unit capacity of 3,725 or more if such expansion extends outside
the perimeter from which separation distances are determined pursuant
to subsection (k) for the existing facility.

      (3) Any construction of new confined feeding facilities for swine shall
meet or exceed the following requirements in separation distances from
any wildlife refuge:

      (A) 10,000 feet for facilities with an animal unit capacity of 1,000 to
3,724; and

      (B) 16,000 feet for facilities with an animal unit capacity of 3,725 or
more.

      (i)  (1) The separation distance requirements of subsections (h)(1)
and (2) shall not apply if the applicant for a permit obtains a written
agreement from all owners of habitable structures which are within the
separation distance stating such owners are aware of the construction or
expansion and have no objections to such construction or expansion. The
written agreement shall be filed in the register of deeds office of the
county in which the habitable structure is located.

      (2)  (A) The secretary may reduce the separation distance require-
ments of subsection (h)(1) if: (i) No substantial objection from owners of
habitable structures within the separation distance is received in response
to public notice; or (ii) the board of county commissioners of the county
where the confined feeding facility is located submits a written request
seeking a reduction of separation distances.

      (B) The secretary may reduce the separation distance requirements
of subsection (h)(2)(A) or (B) if: (i) No substantial objection from owners
of habitable structures within the separation distance is received in re-
sponse to notice given in accordance with subsection (l); (ii) the board of
county commissioners of the county where the confined feeding facility
is located submits a written request seeking a reduction of separation
distances; or (iii) the secretary determines that technology exists that
meets or exceeds the effect of the required separation distance and the
facility will be using such technology.

      (C) The secretary may reduce the separation distance requirements
of subsection (h)(2)(C) or (D) if: (i) No substantial objection from owners
of habitable structures within the separation distance is received in re-
sponse to notice given in accordance with subsection (l); or (ii) the sec-
retary determines that technology exists that meets or exceeds the effect
of the required separation distance and the facility will be using such
technology.

      (j)  (1) The separation distances required pursuant to subsection
(h)(1) shall not apply to:

      (A) Confined feeding facilities which were permitted or certified by
the secretary on July 1, 1994;

      (B) confined feeding facilities which existed on July 1, 1994, and reg-
istered with the secretary before July 1, 1996; or

      (C) expansion of a confined feeding facility, including any expansion
for which an application was pending on July 1, 1994, if: (i) In the case
of a facility with an animal unit capacity of 1,000 or more prior to July 1,
1994, the expansion is located at a distance not less than the distance
between the facility and the nearest habitable structure prior to the ex-
pansion; or (ii) in the case of a facility with an animal unit capacity of less
than 1,000 prior to July 1, 1994, the expansion is located at a distance not
less than the distance between the facility and the nearest habitable struc-
ture prior to the expansion and the animal unit capacity of the facility
after expansion does not exceed 2,000.

      (2) The separation distances required pursuant to subsections
(h)(2)(A) and (B) shall not apply to:

      (A) Confined feeding facilities for swine which were permitted or
certified by the secretary on July 1, 1994;

      (B) confined feeding facilities for swine which existed on July 1, 1994,
and registered with the secretary before July 1, 1996; or

      (C) expansion of a confined feeding facility which existed on July 1,
1994, if: (i) In the case of a facility with an animal unit capacity of 1,000
or more prior to July 1, 1994, the expansion is located at a distance not
less than the distance between the facility and the nearest habitable struc-
ture prior to the expansion; or (ii) in the case of a facility with an animal
unit capacity of less than 1,000 prior to July 1, 1994, the expansion is
located at a distance not less than the distance between the facility and
the nearest habitable structure prior to the expansion and the animal unit
capacity of the facility after expansion does not exceed 2,000.

      (3) The separation distances required pursuant to subsections
(h)(2)(C) and (D) and (h)(3) shall not apply to the following, as deter-
mined in accordance with subsections (a), (e) and (f) of K.S.A. 2000 Supp.
65-1,178 and amendments thereto:

      (A) Expansion of an existing confined feeding facility for swine if an
application for such expansion has been received by the department be-
fore March 1, 1998; and

      (B) construction of a new confined feeding facility for swine if an
application for such facility has been received by the department before
March 1, 1998.

      (k) The separation distances required by this section for confined
feeding facilities for swine shall be determined from the exterior perim-
eter of any buildings utilized for housing swine, any lots containing swine,
any swine waste retention lagoons or ponds or other manure or waste-
water storage structures and any additional areas designated by the ap-
plicant for future expansion. Such separation distances shall not apply to
offices, dwellings and feed production facilities of a confined feeding fa-
cility for swine.

      (l) The applicant shall give the notice required by subsections
(i)(2)(B) and (C) by certified mail, return receipt requested, to all owners
of habitable structures within the separation distance. The applicant shall
submit to the department evidence, satisfactory to the department, that
such notice has been given.

      (m) All plans and specifications submitted to the department for new
construction or new expansion of confined feeding facilities may be, but
are not required to be, prepared by a professional engineer or a consult-
ant, as approved by the department. Before approval by the department,
any consultant preparing such plans and specifications shall submit to the
department evidence, satisfactory to the department, of adequate general
commercial liability insurance coverage.

      Sec.  16. K.S.A. 2000 Supp. 74-623 is hereby amended to read as
follows: 74-623. (a) The state corporation commission shall have the ex-
clusive jurisdiction and authority to regulate oil and gas activities. The
state corporation commission's jurisdiction shall include: (1) All practices
involved in the exploration for and gathering of oil and gas and the drilling,
production, lease storage, treatment, abandonment and postabandon-
ment of oil and gas wells, except refining, treating or storing of oil or gas
after transportation of the same; (2) underground porosity storage of nat-
ural gas, as defined in section 17, and amendments thereto; and (2) (3)
prevention and cleanup of pollution of the soils and waters of the state
from oil and gas activities described in (1) or (2).

      The state corporation commission shall not have jurisdiction over the
refining, treating or storing of oil or gas after transporting of such oil or
gas, except for the storing of natural gas described in (2).

      (b) All jurisdiction and authority of the Kansas department of health
and environment relating to the cleanup of pollution of the soils and
waters of the state from oil and gas activities described in subsection (a)(1)
is hereby transferred to the state corporation commission.

      (c) The state corporation commission shall be the successor in every
way to the powers, duties and functions of the Kansas department of
health and environment relating to the cleanup of pollution of the soils
and waters of the state from oil and gas activities described in subsection
(a)(1). Every act performed in the exercise of such powers, duties and
functions by or under authority of the state corporation commission shall
be deemed to have the same force and effect as if performed by the
department of health and environment.

      (d) Whenever the Kansas department of health and environment, or
words of like effect, is referred to or designated by a statute, contract or
other document relating to the cleanup of pollution of the soils and waters
of the state from oil and gas activities described in subsection (a)(1), such
reference shall be deemed to apply to the state corporation commission.

      (e) All rules and regulations of the secretary of health and environ-
ment which are in existence on July 1, 1995, and relate to the cleanup of
pollution of the soils and waters of the state from oil and gas activities
described in subsection (a)(1) shall continue to be effective and shall be
deemed to be the duly adopted rules and regulations of the state corpo-
ration commission until revised, amended, revoked or nullified pursuant
to law.

      (f) All orders and directives of the Kansas department of health and
environment which are in existence on July 1, 1995, and relate to the
cleanup of pollution of the soils and waters of the state from oil and gas
activities described in subsection (a)(1) shall continue to be effective and
shall be deemed to be orders and directives of the state corporation com-
mission until revised, amended, revoked or nullified pursuant to law.

      New Sec.  17. (a) On or before July 1, 2002, the state corporation
commission shall adopt rules and regulations governing underground po-
rosity storage of natural gas. Such rules and regulations shall include the
permitting, monitoring and inspecting of underground porosity storage
of natural gas and the closure and abandonment of such underground
porosity storage of natural gas. Such rules and regulations may establish
fees for permitting, monitoring, inspecting and closing or abandoning
underground porosity storage of natural gas.

      (b) No hydrocarbon storage shall be allowed in any underground for-
mation if water within the formation contains less than 5,000 milligrams
per liter chlorides.

      (c) The provisions of K.S.A. 55-162 and 55-164, and amendments
thereto, shall apply to violations of the rules and regulations adopted
pursuant to this section.

      (d) As used in this section and K.S.A. 55-150, 55-155, 55-182 and 74-
623, and amendments thereto, ``underground porosity storage'' means the
storage of hydrocarbons in underground, porous and permeable geolog-
ical strata which have been converted to hydrocarbon storage.

      New Sec.  18. (a) There is hereby created in the state treasury the
natural gas underground storage fee fund.

 (b) All moneys received by the state corporation commission as
grants, gifts, bequests or state or federal appropriations for the purposes
of section 17, and amendments thereto, shall be remitted by the com-
mission to the state treasurer in accordance with the provisions of K.S.A.
75-4215, and amendments thereto. Upon receipt of each such remittence
the state treasurer shall deposit the entire amount in the state treasury
to the credit of the natural gas underground storage fee fund. The com-
mission is authorized to receive from the federal government or any of
its agencies or from any private or governmental source any funds made
available for the purposes of section 17, and amendments thereto.

      (c) All moneys credited to the natural gas underground storage fee
fund shall be for the use of the state corporation commission in admin-
istering the provisions of section 17, and amendments thereto. All ex-
penditures from the natural gas underground storage fee fund shall be
made in accordance with appropriation acts upon warrants of the director
of accounts and reports issued pursuant to vouchers approved by the
chairperson of the state corporation commission or by a person or persons
designated by the chairperson. The corporation commission, with the
approval of the director of accounts and reports, shall formulate a system
of accounting procedures to account for the money credited to the natural
gas underground storage fee fund pursuant to this section.

      (d) On or before the 10th of each month, the director of accounts
and reports shall transfer from the state general fund to the natural gas
underground storage fee fund interest earnings based on:

      (1) The average daily balance of moneys in the natural gas under-
ground storage fee fund for the preceding month; and

      (2) the net earnings rate of the pooled money investment portfolio
for the preceding months.

      (e) Whenever the state corporation commission determines that the
unencumbered balance of moneys credited to the natural gas under-
ground storage fee fund at the end of a fiscal year is more than necessary,
when considered in relation to the amount of revenues and expenditures
estimated for the ensuing fiscal year and an appropriate unencumbered
balance in the fund at the end of the ensuing fiscal year, the commission
shall proportionally reduce all fees and assessments which are charged,
taxed or assessed by the commission as authorized or required by law,
other than fees or assessments in amounts prescribed by statute or any
penalties authorized by statute, and which are collected and deposited to
the credit of the natural gas underground storage fee fund, in order to
reduce such unencumbered ending balance in the fund to an appropriate
amount.

      Sec.  19. K.S.A. 2000 Supp. 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) Lead lines from
the wellhead to the connection with the gathering system which are
owned by the producing person; and (2) gathering systems under the
jurisdiction of the federal energy regulatory commission.

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

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

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

      (h) ``Underground porosity storage'' has the meaning provided by sec-
tion 17, and amendments thereto.

      (i) ``Usable water'' means water containing not more than 10,000 mil-
ligrams per liter, total dissolved solids.

      (i) (j) ``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;

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

      (6) injecting or withdrawing natural gas.

 Sec.  20. K.S.A. 2000 Supp. 55-150, 55-155, as amended by section
190 of 2001 Senate Bill No. 15, 55-161, 55-179, 55-180, as amended by
section 193 of 2001 Senate Bill No. 15, 55-182, 65-171d and 74-623 are
hereby repealed.
 Sec.  21. This act shall take effect and be in force from and after its
publication in the statute book.

Approved May 21, 2001.
__________