As Amended by House Committee
Session of 2000
By Special Committee on Environment

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.
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23       withdrawn from the earth;.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36       have not been previously withdrawn from the earth.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


  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


  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,


  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.


  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


  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.