HB 2332--Am. by SCW
[As Amended by Senate Committee of the
As Amended by Senate Committee
[As Amended by House Committee of the
As Amended by House Committee
Session of 1997
HOUSE BILL No. 2332
By Committee on Utilities
16 AN ACT concerning oil and gas; relating to natural gas gathering systems;
17 providing for regulation of certain entities; concerning certain natural
18 gas public utilities and common carriers; amending K.S.A. 1996 Supp.
19 55-150 and repealing the existing section.
21 Be it enacted by the Legislature of the State of Kansas:
22 Section 1. K.S.A. 1996 Supp. 55-150 is hereby amended to read as
23 follows: 55-150. As used in this act unless the context requires a different
25 (a) ``Commission'' means the state corporation commission.
26 (b) ``Contractor'' means any person who acts as agent for an operator
27 as a drilling, plugging, service rig or seismograph contractor in such op-
28 erator's oil and gas, cathodic protection, gas gathering or underground
29 natural gas storage operations.
30 (c) ``Fresh water'' means water containing not more than 1,000 mil-
31 ligrams per liter, total dissolved solids.
32 (d) ``Gas gathering system'' means a natural gas pipeline system used
33 primarily for transporting natural gas from a wellhead, or a metering point
34 for natural gas produced by one or more wells, to a point of entry into a
35 main transmission line, but shall not mean or include: (1)
36 of natural gas produced from wells owned and operated by the gatherer
37 and where the gathering system is used exclusively for its own private
38 purposes; (2) Lead lines from the wellhead to the connection with the
39 gathering system which are owned by the producing entity person; and
40 (3) (2) gathering systems used exclusively for injection and withdrawal
41 from natural gas storage fields under the jurisdiction of the federal energy
42 regulatory commission.
43 (e) ``Operator'' means a person who is responsible for the physical
HB 2332--Am. by SCW
1 operation and control of a well, gas gathering system or underground
2 natural gas storage facility.
3 (f) ``Person'' means any natural person, partnership, governmental or
4 political subdivision, firm, association, corporation or other legal entity.
5 (g) ``Rig'' means any crane machine used for drilling or plugging
7 (h) ``Usable water'' means water containing not more than 10,000
8 milligrams per liter, total dissolved solids.
9 (i) ``Well'' means a hole drilled or recompleted for the purpose of:
10 (1) Producing oil or gas;
11 (2) injecting fluid, air or gas in the ground in connection with the
12 exploration for or production of oil or gas;
13 (3) obtaining geological information in connection with the explora-
14 tion for or production of oil or gas by taking cores or through seismic
16 (4) disposing of fluids produced in connection with the exploration
17 for or production of oil or gas;
18 (5) providing cathodic protection to prevent corrosion to lines; or
19 (6) injecting or withdrawing natural gas.
20 New Sec. 2. The term ``public utility'' as used in K.S.A. 66-104, and
21 amendments thereto, and the term ``common carriers'' as used in K.S.A.
22 66-105, and amendments thereto, shall not include a gas gathering sys-
23 tem, as defined in K.S.A. 55-150, and amendments thereto
, unless the
24 commission, upon application or complaint, and after notice and hearing,
25 determines that:
26 (a) Within the area of service or proposed service of such gas gath-
27 ering system, competitive market conditions do not exist; and
28 (b) gas gathering services are not likely to be effectively and effi-
29 ciently furnished unless a certificate of necessity and convenience and
30 exclusive market territory is granted, with rates and practices established
31 by the commission as in the case of other public utilities or common
32 carriers, unless the commission, upon application or complaint, and
33 after notice and hearing, determines that:
34 (a) Within the area of such [the] services or proposed services
35 [of such gas gathering system], competitive market conditions do
36 not exist; and
37 (b) persons seeking gas gathering services [of such gas gathering
38 system] have been subjected to fees, terms or practices that are
39 unjust, unreasonable, [unjustly] discriminatory or unduly prefer-
40 ential [and remedies provided by sections 3 through 9 have been
42 New Sec. 3. [(a)] As used in sections 3 through 9:
43 (a) ``Commission'' means the state corporation commission.
HB 2332--Am. by SCW
(b) [(1)] ``Gas gathering services'' means the gathering or preparation
2 of natural gas for transportation, whether such services are performed for
3 hire or in connection with the purchase of natural gas by the gatherer or
4 a marketer affiliated with the gatherer. ``Gas gathering services''
5 does not include the: (1) The gathering of natural gas by an owner
6 or operator of a well or wells connected to the owner's or opera-
7 tor's own gathering facilities, if the owner or operator does not
8 hold such facilities out for hire on or after the effective date of this
9 act; or (2) services provided on systems not subject to federal reg-
10 ulation on January 1, 1993.
11 (c) ``Person'' means any natural person, partnership, governmental or
12 political subdivision, firm, association, corporation or other legal entity.
13 [(2) Other terms have the meanings provided by K.S.A. 55-150,
14 and amendments thereto.
15 [(b) The provisions of sections 3 through 9 shall be part of and
16 supplemental to chapter 55 of the Kansas Statutes Annotated.]
17 New Sec. 4. (a) Each person offering gas gathering services in this
18 state shall file with the commission copies of the following with regard
19 to contracts entered into or renewed on or after July 1, 1997: (1)
20 Rates paid for natural gas purchased by the person at the wellhead, if
21 the person purchases natural gas at the wellhead; (2) all rates
22 charged for transportation, processing [necessary for transportation
23 and sale of natural gas] , manufacturing or other gas gathering services
24 offered by the person before natural gas enters a pipeline under the
25 jurisdiction of the federal energy regulatory commission; and (3) such
26 data related to the characteristics of the gas purchased or handled by the
27 person as the commission determines reasonably necessary. The com-
28 mission may adopt reasonable rules and regulations prescribing the form
29 and filing of such rates, schedules and data. The commission shall not
30 be required to analyze, publish or disseminate such rates, sched-
31 ules and data except to the extent otherwise required by law.
32 (b) Upon notice and an opportunity to be heard in accordance with
33 the provisions of the Kansas administrative procedure act, the commission
34 may impose an administrative fine on any person for failure to file any
35 rate, schedule or data as required by this section and rules and regulations
36 of the commission. Such fine shall not exceed $100 $10,000 for each day
37 the rate, schedule or data remains unfiled as required or an aggregate
38 amount of $10,000 $500,000, whichever is less.
39 (c) Rates, schedules and data filed pursuant to this section shall not
40 be used by the commission to order a change in any rate except in a
41 proceeding pursuant to section 6.
42 [(d) Rates, schedules and data filed pursuant to this section
43 shall not be subject to the provisions of K.S.A. 66-1220a and amend-
HB 2332--Am. by SCW
1 ments thereto.]
2 New Sec. 5. (a)
No person Persons offering gas gathering services
3 in this state, or facilities essential to provision of such services, shall deny
4 provide, in a manner that is just, reasonable, nondiscriminatory
5 [not unjustly discriminatory] and not unduly preferential, access to
6 any person seeking such services or facilities , in a manner that is unjust,
7 unreasonable, unjustly discriminatory or unduly preferential.
8 (b) No person Persons performing gas gathering services shall charge
9 a fee for such services, or engage in any practice in connection with such
10 services, which is unjust, unreasonable, unjustly discriminatory or unduly
11 preferential engage in practices in connection with such services, and
12 charge fees for such services, that are just, reasonable, nondiscrim-
13 inatory [not unjustly discriminatory] and not unduly preferential.
14 New Sec. 6. (a) The commission, in its discretion, may at any time
15 review a fee, term or practice being used by a gas gathering system op-
16 erator to ascertain whether a violation of section 5 has occurred. Upon
17 such review, the commission shall have authority to order the re-
18 mediation of any violation of section 5 [that the commission finds
19 has occurred].
20 (b) Any consumer of gas gathering system services , or any other per-
21 son impacted by the terms imposed by a gas gathering system operator,
22 may request the commission to investigate and initiate proceedings to
23 review a fee, term or practice being used by a gas gathering system op-
24 erator. As a condition to formal commission action, the person requesting
25 commission action must first file an application a complaint that in-
27 (1) A statement that the complainant has presented the complaint, in
28 writing, to the gas gathering system operator and included a request for
29 a meeting with the system operator to discuss the matter;
30 (2) a copy of the document described in subsection (b)(1);
31 (3) a statement that the requested meeting took place or the system
32 operator refused to meet with the complainant;
33 (4) detailed factual statement indicating how the fee, term or practice
34 violates section 5; and
35 (5) a statement of the precise remedy being requested that will make
36 the fee, term or practice consistent with the provisions of section 5; and
37 (6) if the complainant is a producer of natural gas, a copy of the
38 analysis of the complainant's natural gas, including the nitrogen,
39 carbon dioxide, hydrogen sulfide, water and other contaminant
40 content; the amount of volume; and the amount of pressure at the
41 wellhead; and
42 (7) if available, a map showing the location of the affected wells
43 and all gas gathering systems in the area.
HB 2332--Am. by SCW
1 (c) The commission may resolve the complaint by use of an informal
2 procedure established by the commission pursuant to rules and regula-
3 tions adopted by the commission or the commission may conduct a formal
4 hearing and take evidence as necessary to determine the merits of the
5 complaint. If the commission uses an informal procedure and the com-
6 plaint is not resolved within 60 days after the complaint is filed, the com-
7 mission shall conduct a formal hearing on the complaint. The hearing
8 shall be conducted and notice given in accordance with the Kansas ad-
9 ministrative procedure act. Upon such hearing, the commission shall have
10 authority to order the remediation of any violations of section 5, to the
11 extent necessary for remediation as to the aggrieved person with respect
12 to the particular violation.
13 (d) In evaluating a fee or term, or in establishing a reasonable fee or
14 term, the commission is not required to engage in cost-of-service rate-
15 making or any other form of ratemaking. Instead, the commission can
16 employ any form of analysis and remedy that is designed to accomplish
17 the goals of this act while respecting the legitimate property interests of
18 the gas gathering system operator.
19 (e) The commission shall maintain a publicized telephone number to
20 facilitate the filing of informal complaints pursuant to subsection (b).
21 (f) The commission shall adopt such rules and regulations as the com-
22 mission determines reasonably necessary to prevent abuse of the com-
23 plaint procedure provided for by this section. Such rules and regulations
24 shall include provisions to prevent delay of the proceedings that may
25 damage a party's ability to pursue or defend the complaint.
(g) The commission may order any party to a proceeding pur-
27 suant to this section to reimburse all or any part of the reasonable
28 expenses, including reasonable attorney fees, incurred by any
29 other party or parties to the proceeding.
30 (g) The commission shall investigate and [may] order remedi-
31 ation of fees, terms and practices of a person offering services de-
32 scribed in subsection (b)(2) of section 3 if there is filed with the
33 commission a petition requesting such investigation and signed by
34 at least 10% of the total number of producers and retail purchasers
35 using such person's services.
36 [(g) The commission shall investigate the fees, terms and prac-
37 tices of a person offering services described in subsection (b)(2) of
38 section 3 if there is filed with the commission a petition requesting
39 such investigation and signed by at least 10% of the total number
40 of producers and retail purchasers using the person's services. If the
41 commission determines that the person has violated section 5, the
42 commission may order remediation of the violation or may require
43 the person to comply with all requirements of sections 3 through 9
HB 2332--Am. by SCW
1 in the same manner as a person offering gas gathering services, or
3 New Sec. 7. The commission may adopt such rules and regulations
4 as the commission determines necessary to improve
5 in, improve access to or protect the public interest in gas gathering [ac-
6 cess to gas gathering services or to improve market competition or
7 protect the public interest in such] services.
8 New Sec. 8. (a) Each person selling natural gas directly to a con-
9 sumer from the wellhead before the gas enters a gathering system shall
10 file with the commission all prices for such sales. The commission may
11 adopt reasonable rules and regulations prescribing the form and filing of
13 (b) (a) Upon a determination by the commission annually on or
14 before November 1 that a utility or third party distributor cannot
15 serve any person or persons who wish to utilize gas gathering or
16 mainline transmission services, such person or persons shall not be
17 denied access to such services or be required to utilize facilities or
18 services of a third party distributor if such distributor provides no
19 pipelines utilized for such gas gathering or mainline transmission
20 services and provides no distribution pipelines to serve the needs of
21 such person or persons.
22 [(a) Any utility may apply to the commission for a determination
23 of whether the utility lacks sufficient services or facilities to serve
24 the needs of any person wishing to utilize gas gathering and main-
25 line transmission services or facilities within an area for which the
26 utility holds a certificate of convenience and necessity. Upon a de-
27 termination by the commission that the utility lacks sufficient serv-
28 ices or facilities to serve such person, the commission shall author-
29 ize such person to utilize gas gathering and mainline transmission
30 services or facilities of another utility or entity. The commission
31 shall adopt rules and regulations establishing procedures for mak-
32 ing the determination required by this subsection. Such rules and
33 regulations shall include a deadline for filing applications pursuant
34 to this subsection in order that the commission can render its de-
35 termination not later than November 1 of the year when the appli-
36 cation is filed.]
37 (b) The commission may exempt natural gas sold directly to a con-
38 sumer from the wellhead before the gas enters a gathering system from
39 rate averaging or pricing systems that apply to gas sold from a gas gath-
40 ering system.
41 New Sec. 9. In any retail natural gas service area where the com-
42 mission has granted a certificate of convenience and necessity to sell nat-
43 ural gas at retail from a gas gathering system, the commission may issue
HB 2332--Am. by SCW
1 other certificates of convenience and necessity to make such sales in such
2 area. A person purchasing natural gas or gas gathering services from a gas
3 gathering system operator in a retail natural gas service area where the
4 commission has issued more than one certificate of convenience and ne-
5 cessity shall not be assessed an exit fee for electing to purchase natural
6 gas or gas gathering services from another gas gathering system operator.
7 New Sec. 10. Nothing in this act shall be construed, or author-
8 ize the commission, to amend
or otherwise affect any contractual
9 obligations between the gatherer and the complainant or rights
10 which may otherwise exist.
11 Sec. 10. 11. K.S.A. 1996 Supp. 55-150 is hereby repealed.
12 Sec. 11. 12. This act shall take effect and be in force from and after
13 its publication in the statute book Kansas register.