[Federal Register Volume 63, Number 68 (Thursday, April 9, 1998)]
[Notices]
[Page 17400]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-9297]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission
[Docket No. GP98-22-000]


Kansas Natural Gas, Inc.; Notice of Report of Refunds and 
Petition for Dispute Resolution and Procedural Adjustment

April 3, 1998.
    Take notice that, on March 9, 1998, Kansas Natural Gas, Inc. (KNG) 
filed:
    (1) A report of (a) the refunds alleged to be owed to Northern 
Natural Gas Company (Northern), under Docket No. RP98-39-000, K N 
Interstate Gas Transmission Company (KNI) under Docket No. RP98-53-000, 
and Colorado Interstate Gas Company (CIG), under Docket No. RP98-54-
000, (b) the refunds conditionally paid by KNG, and (c) the amounts set 
aside by KNG; and
    (2) A petition requesting (a) the Commission to resolve KNG's 
dispute with Northern and CIG over KNG's Kansas ad valorem tax refund 
liability, and (b) an adjustment of the Commission's refund procedures.
    The Commission, by order issued September 10, 1997, in Docket No. 
RP97-369-000 et al,\1\ on remand from the D.C. Circuit Court of 
Appeals,\2\ required first sellers to refund the Kansas ad valorem tax 
reimbursements to the pipelines, with interest, for the period from 
1983 to 1988. KNG's petition is on file with the Commission and open to 
public inspection.
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    \1\ See 80 FERC para. 61,264 (1997); order denying reh'g issued 
January 28, 1998, 82 FERC para. 61,058 (1998).
    \2\ Public Service Company of Colorado v. FERC, 91 F.3d 1478 
(D.C. 1996), cert. denied, Nos. 96-954 and 96-1230 (65 U.S.L.W. 3751 
and 3754, May 12, 1997).
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    KNG states that, following receipt of the Statements of Refunds Due 
from the above-referenced pipelines, it contacted the subject pipelines 
and provided them with information regarding the refund amounts 
(principal and interest) attributable to each working interest owner. 
KNG adds that it also provided the pipelines with the last known 
mailing address of each working interest owner, that it requested 
(consistent with Commission precedent \3\) that Statements of Refunds 
Due be forwarded to the individual working interest owners, and that it 
requested a revised Statement of Refunds Due from each pipeline, 
limited to KNG's own individual working interest. KNG further states 
that KNI agreed and submitted a revised Statement of Refunds Due to 
KNG, on February 9, 1998, limited to KNG's working interest. KNG adds, 
however, that Northern and CIG held that KNG is responsible for the 
refunds attributable to the entire production.
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    \3\ See Robert F. White, 71 para. 61,185 (1995).
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    In review of the above, KNG's pleading includes a petition for 
dispute resolution,\4\ requesting the Commission to:
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    \4\ In its January 28, 1998 Order Clarifying Procedures, the 
Commission stated that producers (i.e., first sellers) could file 
dispute resolution requests with the Commission, asking the 
Commission to resolve the dispute with the pipeline over the amount 
of Kansas ad valorem tax refunds owed, see 82 FERC para. 61,059 
(1998).
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    (1) Direct Northern and CIG to (a) provide a revised Statement of 
Refunds Due to the individual working interest owners, and (b) provide 
KNG with a revised Statement of Refunds Due, limited to KNG's own 
individual working interest;
    (2) Find, based on the Commission's decision in Williams Natural 
Gas Co., 70 FERC para. 61,380 at 62,119 (1995), that certain Kansas ad 
valorem tax reimbursements are not subject to refund, because the 
addition of those amounts to the price paid did not exceed the 
applicable maximum lawful price; and
    (3) Expressly approve the conditional nature of payments that KNG 
has already made to each pipeline.
    KNG's pleading also includes a petition for an adjustment of the 
Commission's refund procedures. Specifically, in lieu of placing 
disputed amounts escrow accounts, KNG requests permission to place such 
amounts into an interest-bearing fund over which it will maintain 
control. KNG states that it agrees, subject to the conditional nature 
of any payments made, to disburse funds in accordance with any 
subsequent order of the Commission in these proceedings. KNG argues 
that this approach:
    (1) Will not harm or disadvantage any party;
    (2) Will not affect the ultimate level of refunds provided; and
    (3) Will relieve KNG of the burden and associated cost of 
establishing formal escrow accounts.
    KNG also states that the Commission's orders in the Kansas ad 
valorem tax refund proceedings permit the affected parties (i.e., 
working interest owners) to establish the uncollectability of amounts 
attributable to royalty owners, on a case-by-case basis, and in 
accordance with the standards in Wylee Petroleum Corporation, 29 FERC 
para. 61,014 (1985). KNG informs the Commission that KNG intends to 
pursue this option, and that KNG has placed all amounts attributable to 
royalty owners in escrow.
    Any person desiring to comment on or make any protest with respect 
to said petition should, on or before April 24, 1998, file with the 
Federal Energy Regulatory Commission, 888 First Street, N.E., 
Washington, D.C. 20426, a motion to intervene or protest in accordance 
with the requirements of the Commission's Rules of Practice and 
Procedure (18 CFR 385.214 or 385.211). All protests filed with the 
Commission will be considered by it in determining the appropriate 
action to be taken, but will not serve to make the protestants parties 
to the proceeding. Any person wishing to become a party to the 
proceeding, or to participate as a party in any hearing therein, must 
file a motion to intervene in accordance with the Commission's Rules.
Linwood A. Watson, Jr.,
Acting Secretary.
[FR Doc. 98-9297 Filed 4-8-98; 8:45 am]
BILLING CODE 6717-01-M