Session Law

Identifying Information:L. 2001 ch. 191
Other Identifying Information:2001 House Bill 2200
Tax Type:Mineral Severance Tax
Brief Description: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.
Keywords:


Body:

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, 2000.


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Date Composed: 09/25/2001 Date Modified: 09/25/2001