[Federal Register Volume 63, Number 69 (Friday, April 10, 1998)]
[Notices]
[Pages 17830-17831]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-9490]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission
[Docket No. GP98-25-000]


Plains Petroleum Company and Plains Petroleum Operating Company; 
Notice of Petition for Procedural Adjustment and Dispute Resolution

April 6, 1998.
    Take notice that on March 9, 1998, Plains Petroleum Company and 
Plains Petroleum Operating Company (Plains), filed a petition for 
procedural adjustment and dispute resolution with the Commission. 
Plains requests Commission authorization to place certain disputed 
Kansas ad valorem tax refund amounts and potential refund amounts 
attributable to royalty interest owners into an interest-bearing escrow 
account, pending resolution of Plains dispute with K N Interstate Gas 
Transmission Company (KNI), over the amount of Kansas ad valorem tax 
refunds that Plains owes KNI. Plains further requests that the 
Commission resolve Plains' dispute with KNI as to whether Plains owes 
KNI Kansas ad valorem tax refunds when Plains was a wholly-owned 
subsidiary of KN Energy, Inc., (KNE). Plains now reiterates, in Docket 
No. GP98-25-000, its request for a summary ruling that KNE is 
responsible for these refunds. Plains' petition is on file with the 
Commission and open to public inspection.
    In Part I of its petition in Docket No. GP98-25-000, Plains 
explains that KNI's original $10,413,154.37 refund claim against Plains 
was too high, and that Plains has been able to demonstrate that, for 
much of the 1986 through mid-1988 time period covered by KNI's 
Statement of Refunds Due, in Docket No. RP98-53-000, the total contract 
price paid by KNE for Plains' gas, including the Kansas ad valorem tax 
reimbursements, was less than the applicable maximum lawful price for 
that gas. Plains further explains that KNI has since issued a revised 
invoice to Plains in the amount of $2,705,260.92. Plains, however, 
continues to dispute portions of this total and requests that the 
Commission authorize Plains to escrow disputed amounts, that the 
Commission permit Plains to defer payment of refunds related to royalty 
interests while Plains determines whether such sums are uncollectible, 
and that the Commission, in the interim, allow Plains to escrow 
potential royalty refund amount. Specifically, Plains contends that the 
Commission should authorize it:
    (1) To defer payment and escrow, for one year, the $476,987.18 in 
principal and interest that Plains owes in refunds with respect to its 
working interests;
    (2) To recalculate its own refund obligation to exclude the refunds 
attributable to other working interest owners, for which Plains is not 
responsible; and
    (3) To place $1,344,824.32, representing the remaining principal 
and interest amounts, into an escrow account, pending the outcome of 
proceedings before the Commission and the courts regarding whether 
Plains is liable for refunds associated with (a) the grossed-up tax, 
(b) interest on the grossed-up tax, (c) interest generally on the 
refund principal.
    In Part II of its pleading in Docket No. GP98-25-000, Plains 
explains that KNE contends that Plains owes $2,848,688.12 in principal 
and interest for Kansas ad valorem tax reimbursements that KNE 
allegedly made to Plains in January and June of 1985, during the period 
that Plains was KNE's wholly-owned subsidiary. Plains disputes that it 
owes any part of this amount, and requests the Commission to summarily 
rule that KNE is responsible for refunding these sums or, in the 
alternative, to require KNE to prove that it did not retain the refund 
monies at issue and enjoy the use of those funds, since 1985. Plains 
previously requested a summary ruling from the Commission on this issue 
in Docket No. GP97-6-000, and incorporates by reference the claims, 
facts, and arguments contained in its pleadings in that docket.
    In the GP97-6-000 pleading, Plains requested that the Commission 
summarily rule that KNE should be required to make any Kansas ad 
valorem tax refunds that Plains might otherwise be required to make for 
the period from October 1, 1984 through September 13, 1985. In support 
of its request, Plains explained:
    (1) That Plains Petroleum Company was a wholly-owned subsidiary of 
KNE until September 30, 1985;
    (2) That Plains Petroleum Company was the lessee with respect to 
certain leases within the State of Kansas, from October 1, 1984 through 
November 30, 1986;
    (3) That the Kansas leases were transferred to Plains Petroleum 
Operating Company, effective December 1, 1986;
    (4) That Plains either did not receive Kansas ad valorem tax 
reimbursements from KNE during the period from October 1, 1984 through 
September 13, 1985, or returned any Kansas ad valorem tax 
reimbursements it did receive to KNE by means of a $1,051,000 dividend 
that was paid to KNE on June 30, 1985; and
    (5) That, by means of the $1,051,000 dividend, KNE withdrew 
virtually all cash from Plains Petroleum Company, leaving Plains 
Petroleum Company with only $18,211 in cash as of June 30, 1985.
    In view of the above, Plains asserted in Docket No. GP97-6-000 that 
KNE was the entity enriched by the reimbursement of Kansas ad valorem 
taxes, that KNE (not Plains) retained the use of those funds. 
Therefore, Plains requested that the Commission summarily rule that any 
Kansas ad valorem tax refunds that Plains might otherwise be required 
to make, for the period from October 1, 1984 through September 13, 
1985, should be made by KNE or, in the alternative, that the Commission 
require KNE to show that KNE did not receive value from Plains (in the 
form of dividends, or otherwise) for any Kansas ad valorem tax

[[Page 17831]]

reimbursement payments that KNE made to Plains and, therefore, that KNE 
should not be required to bear the burden of any refunds to its 
customers.
    Plains' pleading in Docket No. GP98-25-000 is a continuation of 
Plains' claims and arguments in Docket No. GP97-6-000. In Docket No. 
GP98-25-000, Plains states that the aforementioned $1,051,000 dividend 
that went to KNE is considerably greater than the principal and 
interest of $987,399.45 that KNE's invoice shows that Plains owed as of 
July 1985.
    Any person desiring to comment on or make any protest with respect 
to said petition should, on or before April 22, 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. 98-9490 Filed 4-9-98; 8:45 am]
BILLING CODE 6717-01-M