[Federal Register Volume 63, Number 108 (Friday, June 5, 1998)]
[Pages 30736-30737]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-14968]



Federal Energy Regulatory Commission
[Docket No. RP97-369-003, RP98-39-006, RP98-40-005, RP98-42-004, RP98-
43-004, RP98-52-005, RP98-53-005 and RP98-54-006]

Public Service Company of Colorado, et al., Northern Natural Gas 
Company, Panhandle Eastern Pipe Line Company, ANR Pipeline Company, 
Anadarko Gathering Company, Williams Natural Gas Company, KN Interstate 
Gas Transmission Company, and Colorado Interstate Gas Company; Notice 
of Motion for Waiver

June 1, 1998
    Take notice that on May 19, 1998, Graham-Michaelis Corporation; 
Kansas Petroleum, Inc.; John W. LeBosquet; The Trees Oil Company; 
Pickrell Drilling Company; R.J. Patrick d/b/a/ R.J. Patrick Operating 
Company; Quinque Operating Company; Quinque Oil & Gas Producing 
Company; Lester Wilkonson; Kaiser-Francis Oil Company, CLX Energy, 
Inc.; Banks Oil Co.; Hummon Corporation; Osborn Heirs Company; Cabot 
Oil & Gas Corporation; Dorchester Hugoton, Ltd.; Ensign Oil & Gas Inc.; 
Helmerich & Payne, Inc.; Midgard Energy Company; and Pioneer Natural 
Resources USA, Inc. [jointly referred to herein as Producers], filed a 
motion pursuant to Rule 212 of the Commission's Rules of Practice and 
Procedure [18 CFR 385.212], where each request that the Commission 
grant a waiver of the refund liability in these proceedings which is 
attributable to their respective royalties based on the enactment of 
Section 7 of Kansas House Bill No. 2419. In the alternative, the 
Producers request that the Commission grant generic relief of the same. 
In either case, the Producers request that the Commission direct the 
pipelines to return any refunds paid previously by the Producers 
pursuant to the Commission's prior orders which are attributable to 
such royalties, with interest at the Commission's prescribed rates.
    The Producers state that the captioned proceedings involve the 
Commission's directives that first sellers refund Kansas ad valorem 
taxes paid over the period 1983 to 1988, based on the decision of the 
United States Court of Appeals for the District of Columbia Circuit in 
Public Service Company of Colorado v. FERC.\1\ In addition, the 
Commission's general refund orders were issued in Public Service 
Company of Colorado, et al., Docket No. RP97-369 (Commission 
Orders).\2\ It is stated that the individual cases captioned above were 
commenced upon the filing by the individual pipelines of a Statement of 
Refund Due.

    \1\ 91 F.3rd 1478 (1996), cert denied, 65 USLW 3751 and 3754 
(May 12, 1997) (PSC of Colorado).
    \2\ 80 FERC para. 61,624 (1997) and 82 FERC para. 61,058 (1998).

    In June 1997 producers (including many submitting the motion) filed 
a request that the Commission waiver royalties that were unrecoverable. 
The Producers state that in PSC of Colorado, the Commission recognized 
that there may be situations where producers are unable to collect 
refunds attributable to royalty interest owners.\3\ However, the 
Producers note that the Commission determined that it would not grant a 
generic waiver of uncollectible royalties, but rather would consider 
waiver of a refund on grounds of uncollectibility from royalty owners 
on a case-by-case basis, if a person seeking such relief can 
demonstrate that it attempted to collect the refund from the royalty 
owner and that the refund is uncollectible.\4\ The Producers contend 
that the Commission ruled that the standard for uncollectibility would 
be that set forth in Wylee Petroleum Corporation.\5\

    \3\ 80 FERC para. 61,264 at 61,953 (1997).
    \4\ Id.
    \5\ 33 FERC para. 61,014 (1985).

    The Producers state that on April 20, 1998, the Governor of Kansas 
signed into law House Bill No. 2419, which went into effect on April 
30, 1998. They contend that the enactment of the House Bill makes 
refunds under the

[[Page 30737]]

Commission Orders attributable to royalty payments in the 1983 to 1988 
period unrecoverable. The Producers state that any attempts by first 
sellers to seek such recovery now violates Kansas law. The Producers 
argue that the standard for uncollectibility under Wylee has now been 
met, and the Commission has the authority to grant adjustment relief in 
the form of a waiver of uncollectible refunds.
    Using procedures described by the Commission in its order, the 
Producers claim they implemented efforts over the past six months to 
recover Kansas ad valorem tax refunds from the royalty owners during 
the 1983-88 period. However, Kansas House Bill No. 2419 now legally 
bars such efforts by the Producers to recover refunds attributable to 
royalties. The Producers state that under Section 7(b) of the law:

    No first seller of natural gas shall maintain any action against 
royalty interest owners to obtain refund of reimbursements for ad 
valorem taxes attributable to royalty interests, ordered by the 
Federal Energy Regulatory Commission.

    Further, the Producers state that Sections 7(c)(1) and (c)(2) 

    It is hereby declared under Kansas law:
    (1) The period of limitation of time for commencing civil 
actions to recover such refunds attributable to reimbursements of ad 
valorem taxes on royalty interests during the years 1983 through 
1988 has expired and such refunds claimed to be owed by royalty 
interest owners are uncollectible;
    (2) first sellers of natural gas are prohibited from utilizing 
billing adjustments or other set-offs as a means of recovering from 
royalty owners any such claimed refunds . . .

    The Producers contend that the language of Section 7 of the Kansas 
House Bill No. 2419 provides that the statute of limitations prevents 
any recover of ad valorem tax refunds for the 1983-88 period which are 
attributable to royalties. In addition, the Producers state that the 
Bill prohibits producers from taking any action (through set-offs or 
deductions from future royalties) to recover such refunds.
    Each of the Producers requests that the Commission recognize that 
passage of Kansas House Bill No. 2419 prohibits any ability of 
producers to recover ad valorem tax reimbursements refunds from royalty 
owners. It is stated that the Kansas Bill meets the test under Wylee 
and a waiver is appropriate and necessary. In addition, the Producers 
contend that they should not be required to expend further resources 
and monies in seeking to recover payments which are not recoverable 
under the Kansas law. The Producers argue that none of them should 
continue to be at risk for such refunds.
    Accordingly, they ask that the Commission expeditiously grant to 
each named Producer a waiver of refunds as to royalties finding that, 
based upon the Kansas House Bill No. 2419, such refunds are 
    In the alternative, the Producers request that the Commission grant 
a generic waiver of refunds attributable to royalties. It is stated 
that such a generic ruling would avoid the duplication of expense and 
administrative burdens of having the same issue considered on a case-
by-case basis.
    If a waiver of royalty refunds is granted as requested, the 
Producers request that any producer which has paid royalty refunds to 
the pipeline is entitled to recovery of such amounts plus interest for 
the period the pipeline (or its customers) held such monies.
    Any person desiring to be heard or to make any protest with 
reference to said motion should on or before June 22, 1998, file with 
the Federal Energy Regulatory Commission, 888 First Street, N.W. 
Washington, D.C. 20436, a motion to intervene or a protest in 
accordance with the requirements of the Commission's Rules of Practice 
and Procedure (18 CFR 385.214 or 385.211) and the Regulations under the 
Natural Gas Act (18 CFR 157.10). 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 a proceeding or to 
participate as a party in any hearing therein must file a motion to 
intervene in accordance with the Commission's Rules.
David P. Boergers,
Acting Secretary.
[FR Doc. 98-14968 Filed 6-4-98; 8:45 am]