Appendix — Williams Natural Gas Co. v. Kansas Pipeline Partnership

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ouproeme VOur, U.S.

FILED

Vv, D6 778 NOV 19 19%

OFFICE OF THE CLERK

Supreme Gut ft nited Stutes

TOBER TE 1996

WILLIAMS NATURAL GAS COMPANY,

Petitioner,

KANSAS PIPELINE PARTNERSHIP,

Respondent

On Petition for Writ of Certiorari

to the Supreme Court of the State of Kansas

APPENDIX TO PETITION FOR

WRIT OF CERTIORARI

GARY W. BOYLE JAY V. ALLEN

COUNSEL OF RECORD THE WILLIAMS COMPANIES,

THE WILLIAMS COMPANIES, INC.

INC. 4100 ONE WILLIAMS CENTER

4100 ONE WILLIAMS CENTER TULSA, OKLAHOMA 74172

TULSA, OKLAHOMA 74172

(918) 588-2359

APPENDIX A

SUPREME COURT ORDER DISTRICT CASE NO.

IN THE SUPREME COURT

OF THE STATE OF KANSAS

DAVID P BATOW

WILLIAMS NATURAL GAS COMPANY

LEGAL DEPT 36TH FL

P O BOX 3288

TULSA OK 74101

KANSAS PIPELINE

PARTNERSHIP, PETITIONER,

Vv No. 96-75918-AS

THE STATE CORPORATION

COMMISSION OF THE STATE

OF KANSAS, RESPONDENT.

YOU ARE HEREBY NOTIFIED OF THE FOLLOWING

ACTION TAKEN BY THE COURT:

PETITION'S FOR REVIEW BY CURB, KCC &

WILLIAMS NATURAL GAS.

CONSIDERED BY THE COURT AND DENIED.

RESPONSES NOTED.

KCC DOCKET NOS. 192,506-U AND 192,507-U

DATE: 09/09/96.

CAROL G. GREEN

CLERK

APPENDIX B

No. 75,918

IN THE COURT OF APPEALS OF THE STATE OF

KANSAS

KANSAS PIPELINE PARTNERSHIP,

Appellant,

Vv.

THE STATE CORPORATION COMMISSION

OF THE STATE OF KANSAS,

Appellee.

SYLLABUS BY THE COURT

1. The Court of Appeals has exclusive jurisdiction to

review any action of the Kansas Corporation Commission

arising from a rate hearing. K.S.A. 1995 Supp. 66-1 18a(b).

2. The order under review in this case constitutes a final

agency action subject to judicial review.

3. K.S.A. 77-607 and K.S.A. 77-608 are construed and

applied.

4. K.S.A. 1995 Supp. 66-117 is construed and applied.

4 The scope of review of an agency action is set forth in

K.S.A. 77-621, which codified principles long recognized by

Kansas courts.

6. The cardinal rule of statutory construction is that the

intent of the legislature governs if that intent can be

ascertained.

intent of the legislature governs if that intent can be |

ascertained. '

7. If a general and a specific statute both apply to a given

situation, they should be read together and harmonized when

possible.

8. The Kansas Corporation Commission's authority is

limited to that conferred by statute.

9. A final order is one which terminates litigation on the

merits and leaves nothing to be done except to enforce the

result. In an agency setting, a final order needs to be more than

a mere procedural ruling.

10. In an administrative setting, finality should be

interpreted in a pragmatic way.

11. An agency's interpretation of a statute should be given

deference, but when reviewing a question of law, an appellate

court may substitute its judgment for that of the agency.

12. The legislature is presumed to understand the meaning

of the words it uses and the procedures it establishes.

13. When a statute is clear and unambiguous, a court must

give effect to the legislature's intent as expressed, rather than

determine what the law should or should not be.

14. An amendment involves a change or modification and

suggests an action by one of the parties to change, correct, or

revise.

15. Ordinarily, a change in statutory language is presumed

Bn ow

neeatiee ATR > ee AR. Me IR

to result from a legislative purpose to change its effect, but the

presumption is of little force if an amendment is adopted as

part of a general, technical revision to a statute.

16. Under the peculiar facts of this case, the relief sought

by Kansas Pipeline Partnership was deemed approved by

operation of law when the Kansas Corporation Commission

failed to finally act within 240 days of the application and

when neither of the exceptions of K.S.A. 1995 Supp. 66-117(b)

applies.

Appeal from the Kansas Corporation Commission.

Opinion filed May 17, 1996. Reversed.

James P. Zakoura, Richard W. Hird, and David J.

Roberts, of Smithyman & Zakoura, Chartered, of Overland

Park, and Fred J. Logan, Jr., of Logan & Logan, L.C., of Prairie

Village, for appellant.

Larry M. Cowger, of Kansas Corporation Commission,

for appellee.

Mark A. Burghart and W. Robert Alderson, of

Alderson, Alderson & Montgomery, L.L.C., of Topeka, for

intervenor Citizens’ Utility Ratepayer Board.

John C. Frieden and Kevin M. Fowler, of Frieden,

Haynes & Forbes, of Topeka, and David P. Batow and Gary W.

Boyle, of Williams Natural Gas Company, of Tulsa, Oklahoma,

for intervenor Williams Natural Gas Company.

Before ELLIOTT, P.J., ROYSE and KNUDSON, JJ.

ELLIOTT, J.: Kansas Pipeline Partnership (KPP) and

Western Resources, Inc., (WRI) entered into natural gas sales

and transportation contracts. KPP submitted the contracts to

the Kansas Corporation Commission (KCC) for approval

pursuant to K.S.A. 1995 Supp. 66-117(a). WRI also requested

KCC approval of the contracts and requested permission to

pass contract costs through to its customers. Complicating

matters, the KCC shifted a $ 5.9 million Linchpin Development

cost item from another rate hearing into this KPP application.

The other rate hearing is currently pending in this court as

appeal No. 75,730.

On judicial review, KPP asserts that because the KCC

failed to make a decision on these contracts and the

development cost item within time limits established by KCC

regulations and K.S.A. 1995 Supp. 66-117(b), the contracts and

other requested relief became "deemed approved" by operation

of law. This is the ultimate question for us to decide on the

merits of this appeal.

We agree with KPP and reverse.

A brief description of the major participants is as follows:

KPP is a natural gas public utility and the applicant before

the KCC.

The KCC is the state regulatory agency with the power

and authority to supervise and control intrastate natural gas

public utilities doing business in Kansas. See K.S.A. 66-101

et seq.

WRI is a class A natural gas public utility, authorized

to deliver natural gas to customers in Kansas, and was the other

signatory to the KPP contracts for which approval was sought.

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WRI also sought approval of the contracts, but has not

appealed the matter to this court.

Williams Natural Gas Company (WNG) is also a

natural gas public utility and is a marketplace competitor of

KPP.

The Citizens’ Utility Ratepayer Board (CURB) is a state

agency created to look out for the interests of individuals and

small businesses in regulating public utilities.

The Federal Energy Regulatory Commission (FERC)

is a federal agency regulating interstate pipelines which are

within its exclusive jurisdiction.

The five contracts may be summarized thus: The

contracts between KPP and WRI call for the sale and

transportation of increased volumes of natural gas for delivery

in Johnson, Wyandotte, Franklin, and Miami Counties in

Kansas. Two of the three gas purchase contracts require KPP

to deliver natural gas to the city gates at Ottawa, Paola, and

Osawatomie for a term of 20 years. The third gas purchase

contract calls for KPP to transport and sell natural gas to

delivery points in Johnson and Wyandotte Counties for a term

of 10 years.

The two transportation contracts call for the

construction of a 24-mile pipeline spur to connect the

Panhandle Eastern Pipeline Company's facilities to those of

WRI (the "Metcalf Contract"), and for KPP to provide natural

gas to WRI for Johnson and Wyandotte Counties commencing

‘n the year 2009 (the "2009 Contract”).

Jurisdiction

Without detailing the various dates on which various

pleadings were filed, we have determined the jurisdictional

filings by KPP are timely.

We have exclusive jurisdiction to review any action of

the KCC arising from a rate hearing. K.S.A. 1995 Supp.

66-118a(b). In KPP's original filing, it did not request a rate

increase, but WRI did. The WRI docket was consolidated with

the KPP filing. Additionally, the joinder of the Linchpin

Project Development costs into this proceeding made it an

action vena a to a prior rate case. See MAPCO

Ape. 24 527, 330-31, 704 P.2d 989 (1985); In re Application

of Southwestern Bell Tel. Co., 9 Kan. App. 2d 525, 529, 685

P.2d 304, rev. denied 236 Kan. 875 (1984).

The parties seem to agree that this case is closely

enough connected to an underlying rate case to give us

jurisdiction.

While we have determined we have jurisdiction under

K.S.A. 1995 Supp. 66-118a(b), a question still remains whether

the KCC order of November 22, 1995, is reviewable.

By applying the relevant considerations of

Southwestern Bell, the KCC order is a final agency action

entitling KPP to judicial review. The KCC's denial of KPP’s

arguments that the contracts were "deemed approved” due to

the expiration of time is a final decision on this issue. It has a

direct effect on KPP and presents a legal question for our

review. Further, ruling on this issue does not disrupt the

orderly process of adjudication in the administrative

proceeding. The November 22, 1995, KCC order is final

agency action subject to review.

In Southwestern Bell, we did not clearly state whether

we were considering a final agency decision or a nonfinal

agency decision ripe for interlocutory review. Either way, we

have jurisdiction to consider KPP's appeal. See K.S.A.

77-607(b), K.S.A. 77-608.

Merits

In orders mailed April 21 and 24, 1995, the KCC

suspended the effective dates of the contracts for 180 days of

their filing on March 31, 1995; the WRI rate request and the

KPP contract dockets were consolidated. After numerous

continuances, hearings were finally conducted between August

21, 1995, and September 6, 1995. At the close of the hearings,

the KCC closed the record, ordered briefs filed by October 6,

1995, and took the dockets under advisement.

After briefs were filed but before the KCC issued a

decision, FERC issued a draft order stating it had jurisdiction

over KPP as an interstate pipeline. When FERC asserts

jurisdiction, any state regulatory agency loses jurisdiction. As

a result, the KCC staff on November 1, 1995, requested a stay

pending a final order from FERC. KPP opposed the stay. The

KCC issued a stay on November 3, 1995, and on November 22,

1995, issued an order superseding the earlier order, in which it

found:

(1) Expiration of the initial 180-day time period set by the

KCC did not cause the contracts to be deemed

approved because that order was subject to further

KCC orders and KPP did not object to the closing of

the record as of October 6, 1995 (beyond the 180-day

period);

(2)

(3)

(4)

(1)

(2)

(3)

(4)

The KCC order of November 3, 1995, which was

within the 240-day limitation of K.S.A. 1995 Supp.

66-117(b) was “probably a sufficient adjudication

within the 240-day period of time”;

The KCC restarted the 240-day clock called for by

K.S.A. 1995 Supp. 66-117(b) because the FERC

finding of jurisdiction over KPP was a "substantial

alteration of the facts" forming the basis for the KPP

request; and

"a continued stay at this juncture serves the public

interest especially in light of the unbundling concerns

raised by staff should FERC ultimately find it has

jurisdiction” over KPP.

On December 8, 1995, several things occurred:

FERC stayed its assertion of jurisdiction over KPP and

clarified that KCC orders regarding KPP will remain in

effect until FERC made its final rulings in the case.

The KCC denied KPP's request to reconsider its

November 3, 1995, order because it was superseded by

the KCC order of November 22, 1995.

KPP requested reconsideration of the November 22

KCC order, which was denied on December 28, 1995.

FERC issued an order clarifying a prior order. In this

order, FERC stayed its assertion of jurisdiction over

KPP until 60 days after an order on the merits of

petitions for rehearing. FERC also ruled that,

meanwhile, KPP could continue to provide services,

collect rates on file with the KCC, and "undertake all

; ivi . I + i t [FERC] j tl : te tly

(Emphasis added.)

On appeal, our scope of review is set forth in K.S.A.

77-621, which codified principles repeatedly recognized by

Kansas courts. See, ¢.g., Kansas Gas & Elec. Co. v. Kansas

Corporation Comm'n, 239 Kan. 483, 497-98, 720 P.2d 1063

(1986); Midwest Gas Users Ass'n v. Kansas Corporation

Commission, 3 Kan. App. 2d 376, 380-81, 595 P.2d 735, rev.

denied 226 Kan. 792 (1979).

Further, we recognize that the cardinal rule of statutory

construction is that the intent of the legislature governs if that

intent can be ascertained. City of Wichita v. 200 South

Broadway, 253 Kan. 434, 436, 855 P.2d 956 (1993).

As indicated earlier, at the close of the technical

hearings, the KCC ordered the filing of briefs by October 6,

1995. KPP did not object to the October 6 date, although it

was beyond the 180 days mentioned in the original suspension

orders which expired on September 27, 1995. Accordingly, we

shall concentrate our evaluation of this appeai on the 240-day

limitation contained in K.S.A. 1995 Supp. 66-117(b).

The KCC has never suggested this case is not controlled

by K.S.A. 1995 Supp. 66-117(b). Although the statute does not

specifically list "gas purchase contracts” or "gas service

agreements," clearly these would fall within "practice

pertaining to the service or rates of such public utility.” See

K.S.A. 1995 Supp. 66-117(a).

CURB argues this case is governed by K.S.A. 1995

Supp. 66-1,203, which specifically applies to natural gas public

utilities. Pursuant to that statute, every natural gas public

utility regulated by the KCC must furnish the KCC with copies

of all contracts between natural gas public utilities and all

jurisdictional services to be rendered by the utility. WNG also

urged this position during oral arguments. This statute applies

specifically to natural gas public utilities regulated by the KCC,

while K.S.A. 1995 Supp. 66-117(b) merely applies to all public

utilities regulated by the KCC.

If a general and a specific statute both apply to a given |

situation, they should be read — and nay nen |

possible. See Kansas Racing . an:

Racing Comm'n, 244 Kan. 343, 353, 710 P.2d 423 (1989) The

provisions of these two statutes can be read consistently.

K.S.A. 1995 Supp. 66-117(b) applies when any public |

utility is requesting a change in its rates or services that will |

have an impact on its customers. On the other hand, 66-1,203

requires a natural gas public utility to file copies of its rates and

contracts, even if no changes are requested. Although the

statutes overlap to some extent, they are not inconsistent and

both are applicable.

At last, we reach the core question for our

determinztion: Is KPP’s request for relief "deemed approved"

by the KCC's failure to issue a final order on the proposed

changes within the 240-day period mandated by K.S.A. 1995 :

Supp. 66-117(b)? We answer in the affirmative.

Preliminarily, at oral argument, the KCC acknowledged

that 66-117 is the only statute permitting suspension of an

effective date, and CURB candidly, but reluctantly, agreed that

66-117 controls this appeal.

No one contests that the KCC's authority is limited to

that conferred by statute. Citi

Cities Service Gas Co. v. State

Corporation Commission, 197 Kan. 338, 342, 416 P.2d 736

(1966); Kansas-Nebraska Natural Gas Co. v. Kansas

Corporation Commission, 4 Kan. App. 2d 674, 675, 610 P.2d

121, rev. denied 228 Kan. 806 (1980). We must determine

what now happens when the KCC fails to exercise the power

conferred on it by statute.

K.S.A. 1995 Supp. 66-117(b) specifically provides that

the KCC shall not delay the effective date of a proposed change

in rate or many practice pertaining to service for more than 240

days beyond the date the utility filed its application with the

KCC.

The statute further provides that if the KCC has not

issued a final order within those 240 days, then "the schedule

shall be deemed approved by the commission and the proposed

change shall be effective immediately, except that (1) ... any

amendment to an application . . . which increases the amount

sought by the public utility . . . or substantially alters the facts

used as a basis for requested change . . . shall, at the option of

the commission, be deemed a new application and the 240-day

period shall begin again from the date of the filing of the

amendment, and (2) if hearings are in process before the

commission . . . on the last day of such 240-day period, such

period shall be extended to the end of such hearings plus 20

days to allow the commission to prepare and issue its final

order." K.S.A. 1995 Supp. 66-117(b) (Emphasis added.)

No one contends the hearing was "in process before the

commission" on the 240th day. The KCC closed the record and

took the matter under advisement prior to expiration of the

240-day period. The question is whether either of the KCC

orders of November 3 and 22, 1995, was a "final order" for

purposes of 66-117(b). If so, both were entered within the

240-day clock. If not, we must decide whether the KCC acted

properly in restarting the 240-day clock. We note that the KCC

closed the record in these consolidated dockets at the

conclusion of hearings on September 6, 1995. So far as we can

determine, the KCC never reopened the record in these

consolidated dockets. See K.A.R. 82-1-230(k), (1).

KPP filed its request for approval of the five contracts

on March 31, 1995; the 240th day thereafter would be

November 29, 1995. On November 2, FERC issued a draft

order asserting jurisdiction over KPP, and on November 3 the

KCC, sua sponte, determined the dockets should be stayed.

Then on November 22, 1995, the KCC issued another

order affirming its order of November 3 and ordering these

dockets be stayed until FERC took final, appealable action.

This order also purported to restart the 240-day clock ("to the

extent, if any, that it applies") as of November 2, 1995. The

KCC also stated its November 22 order superseded its

November 3 order.

"Final order” has been defined as one which terminates

the litigation on the merits and leaves nothing to be done

except to enforce the result. Black's Law Dictionary 630 (6th

ed. 1990). In an administrative setting, a final order needs to be

more than a mere procedural ruling, and “finality” should be

Southwestern Bell Tel. Co. v.

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In the present case, the KCC orders enter a stay pending

a decision by FERC. A "stay" is a suspension of a case.

Black's Law Dictionary 1413 (6th ed. 1990). By entering a

stay, the KCC did not issue a final order in the proceeding.

Accordingly, this case presents a good example of when

a KCC order can be final agency action under 77-607(b)(1), but

not a final order under 66-117(b). The KCC's decision

rejecting KPP’s argument the contracts should be deemed

approved (66-117[b]) is a final ruling on that statutory

interpretation question. Nothing is unresolved, rendering it a

final agency action under 77-607(b)(1). On the other hand,

since the KCC has made no ruling regarding whether KPP’s

contracts should be approved, it has not entered a final order on

the proposed changes under 66-1 17(b).

As WNG argues, both times the "deemed approved"

language appears in the statutes, the phrase refers to a

"schedule." “Schedule” is not defined in any statute or any

KCC regulation which we have been able to discover, and the

parties have not referred us to any such definition. The general

definition of "schedule" would cover almost, any filing, and

pragmatically, we conclude the KPP contracts and other

documents appended to its application meet the requirement of

a schedule. See K.A.R. 82-1-231; Black's Law Dictionary

1344 (6th ed. 1990).

The KPP contracts would change the practices

pertaining to services made available by KPP for WRI's

customers. Accordingly, the changes set forth in the contracts

fall under the provisions of 66-117(b) requiring KPP to request

approval of the changes.

Before leaving this aspect of the case, we need to

discuss the legislative history for 66-117. Dramatic changes

were made to KCC procedures in 1960 by the enactment of

S.B. 881. L. 1980, ch. 200. Minutes of hearings before the

House Ways and Means Committee on the bill make clear the

legislature was aware it was making significant changes.

Minutes to a hearing on April 8, 1980, report that Senator

Frank Gaines supported the bill which would permit a utility to

automatically get the increase sought when the KCC did not act

within a certain time frame. See House Ways and Means

Committee, 1980 Session, Minutes of April 8, 1980, p. 1.

Throughout the debate on S.B. 881, the KCC was given only

180 days to decide a case, but the final bill changed this to 240

days.

Most of the testimony before the Ways and Means

Committee uses the term "utility rate cases” in discussing the

bill, but the term is never defined. Further, "schedule" is not

mentioned, except in a proposed draft of the bill. A main

proponent of the bill was Southwestern Bell Telephone

Company (SWB), which argued time limits were not new and

had been adopted by numerous regulatory agencies across the

country. Testimony of Bill Ewing (SWB), Attached to Minutes

of House Ways & Means Committee, April 8, 1980.

Opposing S.B. 881 was Pete Loux, then chair of the

KCC. He argued the states which had adopted time limits had

much larger staffs or were responsible for regulating fewer

companies. Chairman Loux also presented a staff position

paper authored by Brian Moline, then general counsel of the

KCC. Moline expressed concern that the language of S.B. 881

was very broad and cautioned that the bill "changes long

established public policy of Kansas." KCC Staff Position on

S.B. 881, Attached to Minutes of House Ways & Means

Committee, April 8, 1980, at 4.

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Our review of the legislative history convinces us the

purpose of S.B. 881 was to adopt time limits to remedy delays

utilities had experienced with the KCC. Nothing in the

legislative history suggests the legislature intended to

distinguish between "pure" rate cases and hybrid cases that

could be considered “arising from a rate hearing" and thus

appropriate for exclusive review by this court.

While S.B. 881 does not refer specifically to 66-1 18a,

giving us exclusive jurisdiction over appeals arising from a rate

hearing, the bill did amend 66-1 18g, setting the time limits in

which we must decide such cases.

Nothing we have discovered suggests the time limits

covered by S.B. 881 were intended to be different for rate cases

under 66-117 as opposed to cases arising from a rate hearing

pursuant to 66-118g. If a case arises from a rate hearing for

purposes of 66-118g, legislative history suggests the time

limits of 66-117(b) would also apply.

No one really contests that this case is one arising from

a rate hearing. Under the express language of 66-117(b), the

schedules/contracts are deemed approved and the proposed

changes take effect immediately unless a final order is issued

by the KCC within 240 days of KPP's application, or unless

one of the exceptions applies.

Here, no final order was issued. As a result, our final

question is whether the KCC had the statutory power and

authority to restart the 240-day clock under the peculiar facts

of this case.

K.S.A. 1995 Supp 66-117(b) provides that after 240

days, the schedule is deemed approved except where an

amendment to an application seeks an increase in the amount

sought or substantially changes the facts used as a basis for the

requested change.

The KCC interprets the statute broadly to include any

change of the facts, regardless of whether an amendment to the

application has been filed. We are unable to agree with the

KCC's interpretation.

Here, none of the parties filed any amendment to the

application for proposed change that increased the amount

sought by the KPP. Thus, the only way this proceeding could

be extended is if the KCC were correct in finding (1) that

FERC's preliminary assertion of Jurisdiction substantially

altered the facts used as a basis for the requested change and

(2) that this gave the KCC the option to deem a new

application had been filed.

240-day clock. WNG asserts that 66-1 17(b) simply does not

apply. As previously held, the legislature did not distinguish

KCC regulations provide for specific procedures to

follow when a public utility wants to revise or amend its

application or schedules. See K.A.R. 82-1-231(d). Further,

Chairman Loux, in his letter to Mike Hayden, then chair of the

House Ways and Means Committee, specifically voiced his

concern whether an amendment by an applicant would restart

the time clock. Loux Memo dated April 8, 1980, attached to

House Ways and Means Committee Minutes.

FERC issued its initial order on November 2, 1995.

Yet in its order of November 22, the KCC recognized it had

continuing jurisdiction over KPP. FERC then stayed its earlier

order and clarified that KPP was allowed to undertake all

activities authorized by the KCC. The KCC did not issue its

order denying KPP's petition to reconsider until December 28,

1995.

The KCC argues that the FERC order asserting

jurisdiction over KPP was a substantial alteration of the facts.

An agency's interpretation of a statute should be given

deference, but when reviewing a question of law, we may

substitute our judgment for that of the agency. See Hickey v.

Kansas Corporation Comm'n, 244 Kan. 71, 76, 765 P.2d 1108

(1988).

We note that the KCC was aware as early as June 2,

1995, that FERC was considering asserting jurisdiction over

KPP. Since the parties were aware of FERC's interest in KPP

for 5 months, we are unable to understand how FERC's order

of November 2, 1995, is a substantial alteration of the facts

used as a basis for the requested approval of contracts. The

facts supporting the proposed changes remained the same

although the status of the parties may well have been altered.

Simply put, the punctuation of the statute in light of the

legislative history precludes the KCC's interpretation of

66-117(b).

The legislature is presumed to understand the meaning

of the words it uses and procedures it establishes. State Bank

Commissioner v. Emery, 19 Kan. App. 2d 1063, 1071, 880

P.2d 783 (1994). And when a statute is clear and

unambiguous, we must give effect to the legislature's intent as

expressed, rather than determine what the law should or should

not be. Martindale v. Tenny, 250 Kan. 621, Syl. P 2, 829 P.2d

561 (1992).

Finally, we must decide whether the statutory phrase

“substantially alters the facts used as a basis for such requested

change of rate" modifies "any amendment” or whether it

applies to any change regardless of origin. Grammatically, we

have no hesitancy in holding “amendment” is the controlling

noun which is the subject of the modifying phrase.

An amendment makes a change or modification.

Black's Law Dictionary 81 (6th ed. 1990). It suggests an action

by one of the parties to change, correct, or revise. No action

was taken by KPP, WRI, or the KCC to change or modify the

application which would trigger the provisions of 66-117(b).

Further review of the legislative history concerning the

evolution of this provision supports our conclusion that an

amendment is required.

The phrase “which amendment” contained in the

original 1980 legislation, was deleted in 1988, as part of

legislation that broadened application of the administrative

procedures act. The legislation changed all time limits from

being written out, to numerals (i.¢., two hundred forty, to 240).

See L. 1988, ch. 356, at 225.

When the phrase under scrutiny is read to include

"which amendment” the original intent of the legislature is

clearer. The 1988 changes were the result of S.B. 334, which

made some substantive changes to the administrative

procedures act, but overall appears to be a technical bill to

"clean up” the statutes by converting to numerals.

Ordinarily, a change in statutory language is

presumed to result from a legislative purpose to change its

effect. Schuhs v. Schuhs, 20 Kan. App. 2d 98, 99, 883 P.2d

1225 (1994). But this presumption is of little force if an

amendment is adopted as part of a general, technical revision

to a statute. Board of Education U.S.D. 512 v. Vic Regnier

Builders, Inc., 231 Kan. 731, 736, 648 P.2d 1143 (1982).

We do not view the deletion of the phrase "which

amendment” by the legislature in 1988 as a substantive change

intended to modify the meaning of 66-117(b). Rather, the

change was merely part of a larger bill seeking to bring

consistency to statutes under the administrative procedures act.

At the time the original provisions imposing time limits

on the KCC were adopted, the House Ways and Means

Committee rejected without discussion a suggestion that would

have given the KCC more flexibility in deciding cases under

the new time limits. House Ways and Means Committee

Minutes, May 2, 1980, p. 2.

Thus, the legislature was intent on forcing the KCC to

act within prescribed time limits; if it does not, the proposed

changes take effect. In 1980, the legislature recognized the

increased burden the time limits would place on KCC staff.

Senator Frank Gaines assured members of the House that

adequate funds would be provided for the KCC "to adequately

and efficiently carry out the provisions of this act” and further

"gave his personal assurance that funds would be provided."

House Ways and Means Committee Meeting, May 2, 1980, p.

CURB asks us not to abandon or ignore the "thousands"

of hours of staff work and the "hundreds of thousands of

dollars” of legal and technical analysis expended on the five

contracts submitted for approval. But legislative history makes

clear that was precisely an anticipated result should the KCC

fail to make a final decision within the time limits provided by

K.S.A. 1995 Supp. 66-117(b).

The contracts and related requests contained in KPP's

consolidated KCC dockets must be deemed approved by

operation of law.

Reversed.

DE YER OR Om

APPENDIX C

PP ee CY Se ET

RATS TMI Ot ay

THE STATE CORPORATION COMMISSION

OF THE STATE OF KANSAS

Before Commissioners: Susan M. Seltsam, Chair

F. S. Jack Alexander

Timothy E. McKee

Docket No.

192,506-U

In the Matter of the Filing

of Kansas Pipeline Partnership for

approval and to make effective

certain firm gas purchase contracts

between Kansas Pipeline

Partnership and Western Resources,

Inc.

Docket No.

192,391-U

In the Matter of the Application of )

Western Resources for an order )

approving certain contracts with )

Kansas Pipeline Partnership, and )

authorizing inclusion of costs related )

to such contract in Western )

Resources’ purchased gas adjustment )

clause for recovery from its customers.)

In the Matter of the Filing of Kansas ) Docket No.

Pipeline for approval andto make ) 192,507-U

effective certain gas transportation )

service agreements between Kansas )

Pipeline Partnership and Western) ENTERED

Resources, Inc. ) NOV 3 1995

ORDER

On October 25, 1995, the Federal Energy Regulatory

Commission (FERC) decided during their administrative

meeting that KansOk Partnership (KansOk), Kansas Pipeline

Partnership (Kansas Pipeline) and Riverside Pipeline

Company, L.P. (Riverside) constituted an interstate pipeline

subject to FERC's jurisdiction. In response to FERC's action

and draft order, the Kansas Corporation Commission Staff

(Staff) filed a Motion for Stay of Proceedings on November,

1995.

Pursuant to K.S.A. 77-526(g), the Kansas Corporation

Commission (Commission) must issue an order within 30

(thirty) days after the conclusion of the hearing or submission

of findings. In this case, parties submitted their findings of

fact and conclusions of law on October 6, 1995. Accordingly,

the Commission has through November 6, 1995, in which to

issue an order or extend the period of time in which to issue a

final order ‘or good cause shown.

The Commission notes that on November 2, 1995,

FERC issued an initial order and Kansas Pipeline et al. was

ordered to file an application for certificate authorization. The

Commission, on its own motion, has determined that a stay of

the above referenced dockets is appropriate until all parties

have had an opportunity to respond to the Motion for Stay of

Proceedings filed by Staff and until such time as the period for

rehearing before FERC has passed and final appealable action

has been taken.

IT IS, THEREFORE, BY THE COMMISSION

ORDERED:

1. The above-referenced dockets are stayed

pending further order of this Commission.

2. All parties may file a response to Staff's Motion

for Stay of Proceedings on or before November 14, 1995.

A party may file a petition for reconsideration of this

order within fifteen (15) days from the date of this order. If

service is by mail, three (3) additional days may be added to

the fifteen (15) day time limit to petition for reconsideration.

The Commission retains jurisdiction over the subject

matter and the parties for the purpose of entering such further

order or orders as it may deem necessary,

BY THE COMMISSION IT IS SO ORDERED.

Seltsam, Chr.; Alexander, Com., McKee, Com

Dated: November 3, 1995

[ORDER MAILED |

[NOV 3 1995

[JUDITH MCCONNELL |

[EXECUTIVE DIRECTOR!

Judith McConnell

Executive Director

APPENDIX D

THE STATE CORPORATION COMMISSION

OF THE STATE OF KANSAS

Before Commissioners: Susan M. Seltsam, Chair

F. S. Jack Alexander

Timothy E. McKee

Docket No.

192,506-U

In the Matter of the Filing

of Kansas Pipeline Partnership for

approval and to make effective

certain firm gas purchase contracts

between Kansas Pipeline

Partnership and Western Resources,

Inc.

Docket No.

192,391-U

In the Matter of the Applicationof )

Western Resources for an order )

approving certain contracts with )

Kansas Pipeline Partnership, and )

authorizing inclusion of costs related )

to such contract in Western )

Resources’ purchased gas adjustment )

clause for recovery from its customers.) ,

Docket No.

192,507-U

In the Matter of the Filing of Kansas

Pipeline for approval and to make

effective certain gas transportation

service agreements between Kansas

Pipeline Partnership and Western

Resources, Inc.

ENTERED

NOV 22 1995

ee ee ee ee eee ee”

ORDER

This matter is before the Kansas Corporation

Commission (Commission) on the Motion of Commission Staff

(Staff) for Stay of Proceedings. On November 1, 1995, Staff

requested a stay of proceedings “pending a final order in

Federal Energy Regulatory Commission (FERC) Docket Nos.

RP95-212-000 and RP95-395-000." (Staffs motion, p. 1).

Staff based its request for stay on FERC's ruling on October 25,

1995, and Draft Order which provides that “the natural gas

transmission systems of KansOk Partnership, KPP and

Riverside Pipeline Company, L.P. (collectively referred to as

Kansas Pipeline) constitute an interstate natural gas pipeline

system subject to FERC jurisdiction under the Natural Gas

Act.” (Staffs motion, p.2). Staff argued that the Commission,

after FERC's ruling and issuance of a Section 7 Certificate to

Kansas Pipeline, would not have jurisdiction. Staff believes

further action would constitute “a wasteful and inefficient use

of the Commission's resources and would be unnecessary under

the present circumstances.” (Staff's motion, p.3).

"On November 2, 1995, FERC issued an official order

memorializing the action taken on October 25, 1995. On

November 3, 1995, the Commission stayed the above-

captioned cases pending an opportunity for all parties to

respond to Staff's Motion for Stay of Proceedings and until

such time as the period for rehearing has passed before FERC

and final appealable action has been taken.

For purposes of Staff's motion and the responses filed

thereto, Staff appeared by Larry Cowger; Kansas Pipeline

Partnership (Kansas Pipeline) appeared by James P. Zakoura

and Richard W. Hird; Western Resources, Inc. (Western

Resources) appeared by J. Michael Peters; Williams Natural

= oe ee ee eee eT

Gas Company (WNG) appeared by John C. Frieden and Kevin

M. Fowler, and the Cities of Ottawa and Paola, Kansas,

appeared by Robert L. Bezek, Jr.

Kansas Pipeline argues the process outlined by FERC

in its November 2, 1995 Order - “an application for certificate,

approval of terms and conditions of service, approval of rates,

and transitioning existing operations to be in compliance with

FERC Order No. 636 — could extend well over a year, and

perhaps more." (Kansas Pipeline's response, p.3). Kansas

Pipeline is seeking a stay of FERC's November 2, 1995 Order

and also intends to seek rehearing of that Order.

Kansas Pipeline argues the Commission is without

power to stay this action. Specifically, Kansas Pipeline

references the Commission's April 21, 1995 Orders in Docket

Nos. 192,506-U and 192,507-U which granted a 180-day

suspension period from the date the applications were filed on

March 31, 1995. Kansas Pipeline argues the suspension period

expired on September 27, 1995. Since there were no further

suspensions issued, Kansas Pipeline contends the contracts in

Docket Nos. 192,506-U and 192,507-U became effective on

September 27, 1995. (Kansas Pipeline's response p. 5).

Moreover, Kansas Pipeline contends even if FERC

arguably assumed jurisdiction on November 2, 1995, the

suspension period expired prior to FERC's order. In the

alternative, Kansas Pipeline argues that the Commission must

issue an order within 240 days, no later than November 29,

1995, or the contracts are deemed approved. K.S.A. 66-117.

(Kansas Pipeline's response, p.6)

Kansas Pipeline believes Staffs request for a stay is

“unusual, extraordinary and inappropriate.“ (Kansas Pipeline's

response, p.6). Only WNG, according to Kansas Pipeline, will

benefit from a stay and "the contracts may become null and

void simply by the passage of time..." (Kansas Pipeline's

response, p.7).

to have jurisdiction. If the Commission were not to regulate

Kansas Pipeline, prior to the issuance of a FERC certificate,

Kansas Pipeline would be in “jurisdictional limbo." (Kansas

Pipeline's response, p.8). Further, Kansas Pipeline intends to

pursue all available avenues of appeal regarding FERC's

November 2, 1995 Order. Staff's motion, according to Kansas

Pipeline, would place it in “regulatory limbo for an

indeterminate amount of time" and would constitute an

unconstitutional taking without compensation if it could not

charge “fair, just and reasonable rates." (Kansas Pipeline's

response, p.10). Kansas Pipeline believes a Commission

decision would be beneficial to the FERC and approval of the

applications would benefit consumers. (Response, pp.10-12).

Western Resources’ response calls attention to the

“commercial transactions for which time is important."

(Western Resources’ response, p.3). Western Resources also

believes the Commission “must reconcile its intended stay of

these proceedings in light of its April 20, 1995 Suspension

Order....". (Western Resources’ response, p.3). And finally,

Western Resources requests the Commission to tule

“expeditiously.” (Western Resources’ response, p.3).

WNG seeks reconsideration of the Commission's June

22, 1995 Order [denial of WNG’s motion for denial of stay] and

July 26, 1995 Order [denial of WNG’s motion to dismiss for

lack of subject matter jurisdiction] based on the “materially

changed circumstances" and requests that all pending

applications be dismissed without prejudice until such time as

FERC determines it "does not have jurisdiction over Kansas

Pipeline Partnership under the Natural Gas Act." (WNG's

response, p.2) WNG concurs with Staffs basis for a stay, but

believes dismissal of the pending applications on jurisdictional

grounds to be more appropriate. (WNG’s response, p.2)

WNG has argued that these proceedings are subject to

K-S.A. 66-117 and KAR. 82-1-231 but contends "it is unclear

whether the 240-day period prescribed in K.S.A. 66-117(b) is

applicable." WNG believes the Commission's Stay granted on

November 3, 1995, “to determine whether the Commission has

any continuing jurisdiction over the contracts and/or whether

the decision by FERC is effectively an amendment or

modification to the applications filed by joint applicants is

likely a sufficient adjudication or otherwise fulfills the

requirements under K.S.A. 66-117." (WNG's response, pp.3-

4). Arguably, the contracts may be “deemed approved"

pursuant to K.S.A. 66-117(b), notwithstanding the stay. WNG

contracts for lack of subject matter jurisdiction. (WNG's

response, p.5)

The Cities of Ottawa and Paola, Kansas (Ottawa and

Paola) believe "no valid reason exists for the Commission to

avoid deciding the above, to deny the approval of the five gas

and transportation contracts filed by Kansas Pipeline and deny

the pass-through of costs, resulting from the contracts to

Western Resources.” (Ottawa and Paola’s response, pp. 1-2).

Ottawa and Paola stated that the two main issues, whether to

approve the five gas contracts and whether to approve the pass-

through, are briefed and ready for decision. In the event FERC

removes jurisdiction from the Commission, Ottawa and Paola

contend the Commission would still have jurisdiction to

consider the pass-through issue. (Ottawa and Paola's response,

p. 2). Ottawa and Paola believe "[tJhe ability to acquire right

of way, utility easements and the utility franchise itself is

clouded by the lack of a decision regarding the gas and

transportation contracts." Moreover, "regarding the approval

and pass-through of these contract costs, there will always be

a question as to whether the franchise can be condemned with

or without the gas contracts." (Ottawa and Paola’s response,

pp. 2-3). Ottawa and Paola believe they will suffer harm if no

decision is made. (Ottawa and Paola's response, p. 3).

In the event the Commission believes the FERC

decision has the impact of removing jurisdiction, Ottawa and

Paola recommend the Commission dismiss this proceeding

without prejudice prior to the expiration of 240 days to avoid

approval of these contracts and impose certain conditions.

Those conditions would include the requirement that the refiled

action be submitted on the record that exists and that a decision

be rendered within a specified period of time, i.e., 60 (sixty)

days. (Ottawa and Paola's response, pp. 3-4). And finally, if

Kansas Pipeline and Western Resources make any

modifications to these contracts, then the prior contracts should

be deemed denied and the new contracts resubmitted with

notice to all parties and “without requiring agreement to

confidentiality contracts." (Ottawa and Paola's response, p. 4).

Staff filed a reply to the responses to Staff's motion for

stay. Staff set forth a brief procedural history of these

consolidated dockets. On April 20, 1995, the Commission

suspended for 180 days from the date of the applications,

approval of these agreements “subject to further order or orders

of the Commission.” (Docket Nos. 192,506-U and 192,507-U).

On April 27, 1995, the commission consolidated the above

three dockets upon Western Resource's motion. The

Commission set a procedural schedule by order dated May 10,

1995. Two subsequent orders modified the procedural

schedule and ultimately an evidentiary hearing commenced on

August 21, 1995. (Staffs reply, pp. 2-3). The evidentiary

hearing ended September 6, 1995, and parties were ordered to

file briefs and/or findings of fact and conclusions of law on or

before October 6, 1995. Staff interprets these orders as

superseding the prior suspension orders. While staff believes

"the Commission's orders modifying the procedural order

obviously extended the proceedings past the originally

scheduled 180 days, it would have apparently been helpful to

some parties had the Commission explicitly spelled out in un

order the fact that by extending its procedural orders past

September 27, 1995, the original suspension order had been

modified." (Staffs reply, p. 3). Accordingly, Staff now

requests the Commission to make this explicit finding at this

time.

Staff contends the only arguable “operation of law" date

to apply to these applications is contained in K.S.A. 66-117(b).

The statute first “provides that if a utility files ‘a schedule

showing the changes to be made,' such proposed schedule shall

be deemed approved if not suspended by the Commission

within thirty (30) days of its filing." (Staffs reply, pp. 3-4).

Moreover, the statute requires that the effective date of the

changes proposed may not be delayed beyond 240 days from

the date of filing. Staff references other statutory authority:

[T]he specific statute requiring the filing of

contracts by natural gas utilities, K.S.A 66-

1,203, makes no mention of the 240-day

requirement, nor does the statute authorizing a

hearing on gas rates, K. S.A. 66-1,204." (Staff's

reply, p. 4). In fact, case law discussing the

Comudalan duty to imvestigate the

reasonableness of contracts filed by a public

utility have indicated that such duty flows from

general grant of power and authority contained

in K.S.A. 66-101 (c.f. K.S.A. 66-1,201) which

likewise does not reference any 240-day

requirement. Central Kansas Power Co. v.

State Corp. Commission, 316 P.2d 277, 181

Kan. 817 (1957).

(Staffs reply, p. 4). Staff stated that the expiration of the 240-

day requirement, for argument purposes, would require a

decision on the contracts by November 27, 1995.

Staff highlights an exception to the 240-day rule and

argues its applicability here. K.S.A. 66-117(b)(1) provides:

(1) for purposes of the foregoing provisions

regarding the period of time within which the

commission shall act on an application, any

amendment to an application for a proposed

change in any rate, which increases the amount

sought by the public utility or common carrier

or substantially alters the facts used as a basis

for such requested change of rate, shall, at the

option of the commission, be deemed a new

application and the 240-day period shall begin

again from the date of the filing of the

amendment.

(Staffs reply, pp. 4-5 citing K.S.A 66-117(b\(1)). Staff

believes the Commission should exercise its discretion under

this provision. Staff concurs witii WNG’s interpretation that

the “Commission order to stay these proceedings to determine

whether it has any continuing jurisdiction over the contracts

and/or whether the decision by the Federal Energy Regulatory

Commission (FERC) is effectively an amendment or

ne ee ee ee 2

requirements under K.S.A. 66-117" (Staffs reply, p. 5). Staff

also interprets FERC's decision which subjects Kansas

Pipeline’s pipe gas transmission systems to federal jurisdiction

"is a matter which ‘substantially alters the facts used as a basis

for such requested change . . .'K.S.A. 66-117(b)" would enable

the Commission to exercise its discretion to restart the 240-day

period. (Staffs reply, p. 5).

There appears to be a consensus among the parties,

according to Staff, that the Commission has jurisdiction until

FERC grants Kansas Pipeline the Section 7 Natural Gas Act

authority. Even though the Commission continues to have

jurisdiction for at least a short period of time "does not mean .

. the Commission should exercise that authority and approve

expansion of the KPP interstate system through the proposed

construction projects envisioned in the current applications.“

(Staff's reply, pp. 5-6). Staff believes approving additional

sales volumes from Kansas Pipeline to Western Resources

would be “unwise” since FERC Order 636 would require

Kansas Pipeline "to cease its merchant function."

reply, p. 6).

(Staff's

Staff has outlined three options available to the

Commission at this time:

First, dissolve the stay and

determine this matter on the merits,

issuing an order no later than November

27, 1995, (in which case Staff would

refer the Commission to its Post-

Hearing Brief and urge that the

applications be denied for lack of

merit).;

Second, issue an order restarting

the 240-day period due to the

November 2, 1995 FERC Order finding

KPP (Kansas Pipeline) to be subject to

federal NGA jurisdiction and maintain

its stay of these proceedings until FERC

resolves any petition for rehearing filed

by KPP; or

Finally, to dissolve the stay and

to reconsider its Orders of June 22,

1995, and June 26, 1995, in light of the

pursuant to the NGA. Such an order

would also have to be issued no later

than November 27, 1995.

(Staff's reply, p. 6). Staff recommends, out of the options

presented, that the Commission reaffirm its order staying this

action pending a final order from FERC on reconsideration and

that the Commission restart the 240-day period based on the

fact that FERC's order substantially altered the basis for the

requested change. Staff believes the legislature contemplated

relief from the 240-day period for circumstances such as these

and neither Kansas Pipeline nor Western Resources should use

this provision to pressure the Commission into a decision.

(Staff's reply, p.8).

Kansas Pipeline takes issue with StafPs suggestion that

the 180-day suspension orders were extended by "implication."

Kansas Pipeline argues that "[p}rior to September 27, 1995, the

Commission could arguably have entered an order extending

the suspension period up to the full 240 days; however, neither

Staff, nor any other party, requested such an extension and the

Commission did not do so on its own motion or of its own

accord." (Kansas Pipeline's reply, pp.3-4). Kansas Pipeline

does not believe the deadline for submission of briefs after the

expiration of the 180-day suspension order to constitute a

written statement pursuant to K.S.A. 66-117. Kansas Pipeline

also does not believe an “order by implication" satisfies the

requirement that orders must be in writing. K.A.R. 2-1-232.

(Kansas Pipeline's reply, p.5). Kansas Pipeline did not suggest

that the Commission lost jurisdiction after expiration of the

suspension orders. Kansas Pipeline also disputes Staff's

reference to K.S.A. 66-1,203 and 66-1,204 for the proposition

that the 240-day period is inapplicable. Kansas Pipeline

believes only K.S.A. 66-117(b) governs time limitations in

Docket Nos. 192,506-U and 192,507-U. (Kansas Pipeline’s

reply, p.6)

Kansas Pipeline disagrees with Staff's recommendation

that FERC'’s November 2, 1995 Order altered the facts used as

the basis for the change in rates. Kansas Pipeline does not

believe the Commission's order staying this proceeding

constitutes an adjudication on the merits or sufficient grounds

to restart the 240-day time period. Kansas Pipeline believes

the three options presented by staff are erroneous and ignore

the statutory deadlines. (Kansas Pipeline’s reply, pp.8-9).

WNG has filed a reply to Kansas Pipeline’s response to

Staffs Motion for Stay. WNG suggests the following

alternatives for Commission action:

(i) entering an order of dismissal for lack

of subject matter jurisdiction (without

prejudice to further consideration on the

merits in the event of a final

determination that FERC lacks

jurisdiction over its operations) no later

than November 27, 1995;

Gi) fismissing KPP's licati

each is amended on or before

November 27, 1995, to address the

materially changed factual

circumstances presented by FERC's

November 2, 1995 Order; or

(iii) denying KPP's applications on the

merits for the factual and legal reasons

set forth in the post-hearing

submissions of the Staff and the

Intervenors.

(WNG's reply, p.2)

WNG recognizes the Commission's problem as to

whether it has jurisdiction after FERC's November 2, 1995

Order in Docket Nos. RP95-212-000 and RP95-395-000.

WNG is concerned that Commission inaction would result in

the “unpalatable possibility that the proposed contracts may

become effective by operation of law after November 27,

1995.". (WNG’s reply, p.2)

WNG also outlines the procedural history of these

dockets. WNG references the fact that Kansas Pipeline never

argued the contracts were effective by operation of law on

27, 1995, when the hearing was extended to

accommodate Dr. Stalon's testimony, one of Kansas Pipeline’s

witnesses. (WNG's reply, p.7). Nor did Kansas Pipeline,

according to WNG, make this representation when the

Commission announced the briefing schedule on September 6,

1995.

WNG believes that "[i}f the time limits of K.S.A. 66-

117(b) are applicable to these proceedings, this statute further

provides that ‘any amendment to an application for a proposed

change’ which ‘substantially alters the facts used as a basis for

such requested change’ may, in the Commission's discretion,

'be deemed a new application and the 240-day period shall

begin again from the date of the filing of the amendment.”

(WNG's reply, p.8). Although Kansas Pipeline has not filed an

amendment, WNG interprets the FERC's November 2, 1995

Order as changing the "factual bases for these applications.“

(WNG's reply, p.8). For instance, WNG referenced the fact

that the proposed contracts bundle both sales and transportation

while as interstate pipeline, those services would need to be

unbundled. (WNG’s reply, p.8).

WNG contends Kansas Pipeline's position before the

K te ete item. dhe

Commi we ang “eres _ ene ung aiaty tos

position before FERC. Kansas Pipeline has sought a stay from

FERC's November 2, 1995 Order on the grounds that FERC is

depriving the Commission of its “regulatory jurisdiction."

(WNG's reply, pp.8-9)

WNG also cites page 18 of FERC's November 2, 1995

Order “which sought . . . to prohibit KPP from ‘constructing

new pipelines or any expansions or extensions of existing

pipelines without [Federal Energy Regulatory] Commission

approval to the extent such construction requires Commission

approval. See FERC Docket No. RP95-395-000 (Complaint

of Williams Natural Gas Company, dated July 21, 1995, p. 63

at J (e))." (WNG's reply, p.10). Moreover, before any

construction for facilities or extension are put in force, the

interstate pipeline must have a FERC certificate. (WNG’s

reply, p.10). _WNG cites authority which support the

proposition that a state utilities Commission cannot exercise

concurrent jurisdiction with FERC. 15 USC § 717f{c(1A),

Cascade Natural Gas Corp. v. FE.R..C., 955 F.2d 1412 (10th

Cir. 1992); National Fuel Gas Supply Corp. v. Public Service

Comm'n of State of New York, 894 F.2d 571 (2d Cir. 1990).

WNG suggests that Kansas Pipeline could seek an

interim certificate from FERC to avoid any detrimental impact

on its proposals. (WNG’s reply, p.11). Moreover, WNG states

that “none of the proposed contracts involve sales or

transportation of natural gas during the 1995-96 winter heating

season.” In summary, WNG seeks dismissal “of the pending

applications for lack of subject matter jurisdiction (without

prejudice to further consideration on the merits in the event of

a final determination that FERC lacks jurisdiction over its

operations) no later than November 27, 1995, or to

immediately dismiss KPP’s pending applications unless it

amends each no later than November 27, 1995, to address the

materially changed factual circumstances presented by FERC's

November 2, 1995 Order and, in such event, to restart the 240-

day period for a final order hearing if deemed necessary."

(WNG's reply, p. 12). In the alternative, WNG seeks to have

the Commission deny Kansas Pipeline's applications or “issue

an order disapproving any new services and related pipeline

construction on or before November 27, 1995." (WNG’s reply,

p. 12).

Find + Conctusi

The Commission does not give any credence to the

argument raised by Kansas Pipeline that the subject contracts

(Docket Nos. 192,506-U and 192,507-U) became effective by

operation of law on September 27, 1995, the expiration of the

180-day suspension orders. The suspension orders entered

April 20, 1995, clearly provided they were subject to any

further order(s) of the Commission. Subsequent procedural

orders setting this matter for hearing superseded the earlier

suspension orders and the Commission so finds. Moreover, on

September 6, 1995, the Commission specifically directed the

parties to file briefs and/or findings of fact and conclusions of

law by October 6, 1995. No objection was raised by Kansas

Pipeline or any other party to the October 6, 1995 date for

purposes of closing the record. Had the parties felt the

contracts became effective September 27, 1995, there would

have been no need for briefs, etc. . The Commission deems

Kansas Pipeline’s failure to timely object to the Commission's

September 6, 1995 bench ruling as a waiver of their objection.

The Commission concurs with WNG’s contention that

the Commission's Order of November 3, 1995, is probably a

sufficient adjudication within the 240-day period of time. The

Commission's Order granting the stay was based on FERC's

official Order of November 2, 1995, which memorialized

FERC’'s decision from its October 25, 1995 agenda.

The Commission adopts Staff's recommendation and,

to the extent (if any) K.S.A. 66-117(b) applies, shall restart the

240-day clock. K.S.A. 66-117(b) specifically grants the

Commission discretion to restart the 240-day time period when

a substantial alteration of the facts occurs which formed the

basis for Kansas Pipeline's requested change, ic., FERC's

finding that Kansas Pipeline is an interstate pipeline subject to

the NGA. The Commission shall restart the 240-day clock as

of November 2, 1995, the date of FERC's order finding Kansas

Pipeline to be an interstate pipeline.

The Commission recognizes the concerns raised by

FERC grants Kansas Pipeline certificates or otherwise resolves

the pending dockets (Docket Nos. RP95-212-000 and RP95-

395-000). The Commission does not, however, believe this

requires the Commission to decide whether to approve

contracts, which may not be appropriate under FERC Order

636, as a prudent exercise of the Commission's discretion at

IT IS, THEREFORE, BY THE COMMISSION

ORDERED THAT:

1. The Commission's procedural orders setting

these consolidated dockets for hearing superseded any prior

suspension orders.

2. The Commission affirms its November 3, 1995

Order and stays consideration of these dockets until FERC has

taken final appealable action.

3. The Commission shall restart the 240-day time

period (to the extent, if any, that it applies) as of November 2,

1995.

A party may file a petition for reconsideration of this

order within fifteen (15) days from the date of this order. If

service is by mail, three (3) additional days may be added to

the fifteen (15) day time limit to petition for reconsideration.

matter and the parties for the purpose of entering such further

order or orders as it may deem necessary.

BY THE COMMISSION IT IS SO ORDERED.

Seltsam, Chr.; Alexander, Com.; McKee, Com.

Dated: November 22, 1995.

[ORDER MAILED ]

[NOV 22 1995 ]

[JUDITH MCCONNELL ]

[EXECUTIVE DIRECTOR]

Judith McConnell

APPENDIX E

THE STATE CORPORATION COMMISSION

OF THE STATE OF KANSAS

Before Commissioners: Susan M. Seltsam, Chair

F. S. Jack Alexander

Timothy E. McKee

In the Matter of the Filing

of Kansas Pipeline Partnership for

approval and to make effective

) Docket No.

certain firm gas purchase contracts)

)

192,506-U

between Kansas Pipeline

Partnership and Western Resources,

Inc.

In the Matter of the Application of ) Docket No.

Western Resources for an order ) 192,391-U

approving certain contracts with )

Kansas Pipeline Partnership, and )

authorizing inclusion of costs related )

to such contract in Western )

Resources’ purchased gas adjustment)

clause for recover from its customers.)

In the Matter of the Filing of Kansas ) Docket No.

Pipeline for approval and to make _—i+?) 192,507-U

effective certain gas transportation )

service agreements between Kansas _ )

Pipeline Partnership and Western _+) ENTERED

Resources, Inc. ) DEC 8 1995

ORDER

This matter is before the State Corporation Commission

of the State of Kansas (Commission) on Kansas Pipeline

Partnership's (KPP's) Petition for Reconsideration or, in the

Alternative, Petition for Hearing. KPP appeared by James P.

Zakoura, Richard W. Hird and Fred J. Logan, Jr. KPP seeks

reconsideration of the Commission's November 3, 1995 Order

which preliminarily stayed the above-captioned actions due to

FERC's Order issued on November 2, 1995, and in order to

give parties an opportunity to respond to Staffs Motion for

Stay. After the par’.es were given an opportunity to file

responses to Staff's Motion for Stay, the Commission issued a

subsequent order on November 22, 1995, which supersedes the

Commission's November 3 Order.

Accordingly, KPP's petition for reconsideration and

request for a hearing on the November 3, 1995 Order is denied

since the November 22, 1995 Order supersedes the November

3, 1995 Order and continues the stay of these proceedings.

IT IS, THEREFORE, BY THE COMMISSION

ORDERED THAT:

Kansas Pipeline Partnership's Petition for

Reconsideration or, in the Alternative, Petition for Hearing is

denied.

Kansas Pipeline Partnership has exhausted its

administrative remedies as to the November 3, 1995 Order.

The Commission retains jurisdiction over the subject

matter and the parties for the purpose of entering such further

order or orders as it may deem necessary.

BY THE COMMISSION IT IS SO ORDERED.

Seltsam, Chr.; Alexander, Com.; McKee, Com.

Dated: December 8, 1995

[ORDER MAILED ]

[DEC 8 1995 ]

[JUDITH MCCONNELL |]

[EXECUTIVE DIRECTOR]

Judith McConnell

Executive Director

APPENDIX F

THE STATE CORPORATION COMMISSION

OF THE STATE OF KANSAS

Before Commissioners: Susan M. Seltsam, Chair

F. S. Jack Alexander

Timothy E. McKee

In the Matter of the Filing

of Kansas Pipeline Partnership for

approval and to make effective

certain firm gas purchase contracts

between Kansas Pipeline

Partnership and Western Resources,

Inc.

In the Matter of the Application of

Western Resources for an order

Kansas Pipeline Partnership, and

authorizing inclusion of costs related )

to such contract in Western )

Resources’ purchased gas adjustment )

clause for recovery from its customers.)

i ol ee ee a a

In the Matter of the Filing of Kansas

Pipeline for approval and to make

effective certain gas transportation

service agreements between Kansas

Pipeline Partnership and Western

Resources, Inc.

ORDER

Docket No.

192,506-U

Docket No.

192,391-U

Docket No.

192,507-U

ENTERED

DEC 28 1995

This matter is before the Kansas Corporation

Commission (KCC) on Kansas Pipeline Partnership's (KPP)

"Petition for Reconsideration of November 22, 1995 Order."

KPP appeared by James P. Zakoura, Richard W. Hird and Fred

J. Logan, Jr. The KCC notes that it has filed a petition for

rehearing before the Federal Energy Regulatory Commission

(FERC) in Docket Nos. RP95-212-000 and RP95-395-000

which is still pending. The resolution of these FERC dockets

will determine the jurisdictional issues regarding KPP. The

KCC recognizes that Western Resources, Inc., one of the Joint

Applicants, will remain Kansas jurisdictional notwithstanding

FERC's ruling. Western Resources, Inc. has not sought

reconsideration of the November 22, 1995 Order or responded

to KPP's petition for reconsideration. Accordingly, the

Commission finds no reason to alter its prior decision at this

time. The Order of November 22, 1995 is affirmed for the

reasons stated in that Order and the stay of the above-captioned

dockets will remain in place subject to further order or orders

of the KCC.

IT IS, THEREFORE, BY THE COMMISSION

ORDERED THAT: KPP's "Petition for Reconsideration of

November 22, 1995 Order" is denied. KPP has exhausted its

administrative remedies as to the November 22, 1995 Order.

The KCC retains jurisdiction over the subject matter

and the parties for the purpose of entering such further order or

orders as it may deem necessary.

BY THE COMMISSION IT IS SO ORDERED.

Seltsam, Chr.; Alexander, Com.; McKee, Com.

Dated: December 28, 1995

{ORDER MAILED ]

[DEC 28 1995 ]

[JUDITH MCCONNELL ]

[EXECUTIVE DIRECTOR]

Ls/

Judith McConnell

Executive Director

APPENDIX G

AMENDMENT XIV - CITIZENSHIP; PRIVILEGES AND

IMMUNITIES; DUE PROCESS; EQUAL PROTECTION;

APPORTIONMENT OF REPRESENTATION;

DISQUALIFICATION OF OFFICERS; PUBLIC DEBT;

ENFORCEMENT

Section 1. All persons born or naturalized in the United

States, and subject to the jurisdiction thereof, are citizens »f the

United States and of the state wherein they reside. No state

shall make or enforce any law which shall abridge the

privileges or immunities of citizens of the United States; nor

shall any state deprive any person of life, liberty, or property,

without due process of law; nor deny to any person within its

jurisdiction the equal protection of the laws.

Section 2. Representatives shall be apportioned among

the several states according to their respective numbers,

counting the whole number of persons in each state, excluding

Indians not taxed. But when the nght to vote at any election for

the choice of electors for President and Vice President of the

United States, Representatives in Congress, the executive and

judicial officers of a state, or the members of the legislature

thereof, is denied to any of the male inhabitants of such state,

being twenty-one years of age, and citizens of the United

States, or in any way abridged, except for participation in

rebellion, or other crime, the basis of representation therein

shall be reduced in the proportion which the number of such

male citizens shall bear to the whole number of male citizens

twenty-one years of age in such state.

Section 3. No person shall be a Senator or

Represeniative in Congress, or elector of President and Vice

President, or hold any office, civil or military, under the United

States, or under any state, who, having previously taken an

oath, as a member of Congress, or as an officer of the United

States, or as a member of any state legislature, or as aa

executive or judicial officer of any state, to support the

Constitution of the United States, shall have engaged in

insurrection or rebellion against the same, or given aid or

comfort to the enemies thereof. But Congress may by a vote of

two-thirds of each House, remove such disability.

Section 4. The validity of the public debt of the United

States, authorized by law, including debts incurred for payment

of pensions and bounties for services in suppressing

insurrection or rebellion, shall not be questioned. But neither

the United States nor any state shall assume or pay any debt or

obligation incurred in aid of insurrection or rebellion against

the United States, or any claim for the loss or emancipation of

any slave; but all such debts, obligations and claims shall be

held illegal and void.

Section 5. The Congress shall have power to enforce,

by appropriate legislation, the provisions of this article.

APPENDIX H

66-117. Change of rates or schedules; procedure;

effective date; higher rates of return in certain cases;

hearing; property tax surcharge authorized. (a) Unless the

state corporation commission otherwise orders, no common

carrier or public utility over which the commission has control

shall make effective any changed rate, joint rate, toll, charge or

classification or schedule of charges, or any rule or regulation

or practice pertaining to the service or rates of such public

utility or common carrier except by filing the same with the

commission at least 30 days prior to the proposed effective

date. The commission, for good cause, may allow such

changed rate, joint rate, toll, charge, charge or classification or

schedule of charges, or rule or regulation or practice pertaining

to the service or rates of any such public utility or common

carrier to become effective on less than 30 days’ notice. If the

commission allows a change to become effective on less than

30 days’ notice, the effective date of the allowed change shall

be the date established in the commission order approving such

change, or the date of the order if no effective date is otherwise

established. Any such proposed change shall be shown by

filing with the state corporation commission a schedule

showing the changes, and such changes shall be plainly

indicated by proper reference marks in amendments or

supplements to existing tariffs, schedules or classifications, or

in new issues thereof.

(b) | Whenever any common carrier or public utility

governed by the provisions of this act files with the state

corporation commission a schedule showing the changes

desired to be made and put in force by such public utility or

common carrier, the commission either upon complaint or upon

its own motion, may give notice and hold a hearing upon such

proposed changes, Pending such hearing, the commission may

suspend the operation of such schedule and defer the effective

date of such change in rate, joint rate, toll, charge or

classification or schedule of charges, or any rule or regulation

or practice pertaining to the service or rates of any such public

utility or common carrier by delivering to such public utility or

common carrier a statement in writing of its reasons for such

suspension. The commission shall not delay the effective date

of the proposed change in rate, joint rate, toll, charge or

classification or schedule of charges, or in any rule or

regulation or practice pertaining to the service or rates of any

such public utility or common carrier, more than 240 days

beyond the date the public utility or common carrier filed its

application requesting the proposed change. If the commission

does not suspend the proposed schedule within 30 days of the

date the same is filed by the public utility or common carner,

such proposed schedule shall be deemed approved by the

commission and shall take effect on the proposed effective

date. If the commission has not issued a final order on the

proposed change in any rate, joint rate, toll, che ge >

classification or schedule of charges, or any rule or regulon

or practice pertaining to the service or rates of any such public

utility or common carrier, within 240 days after the carrier or

utility files its application requesting the proposed change, then

the schedule shall be deemed approved by the commission and

the proposed change shall be effective immediately, except that

(1) for purposes of the foregoing provisions regarding the

period of time within which the commission shall act on an

application, any amendment to an application for a proposed

change in any rate, which increases the amount sought by the

public utility or common carrier or substantially alters the facts

used as a basis for such requested change of rate, shall, at the

option of the commission, be deemed a new application and the

240-day period shall begin again from the date of the filing of

the amendment, and (2) if hearings are in process before the

commission on a proposed change requested by the public

utility or common carrier on the last day of such 240-day

period, such period shall be extended to the end of such

inca

hearings plus 20 days to allow the commission to prepare and

issue its final order.

shall be made in any rate, toll, charge, classification or

schedule of charges or joint rates, or in any rule or regulation

Or practice pertaining to the service or rates of any such public

utility or common carrier, without the consent of the

commission. Within 30 days after such changes have been

authorized by the state corporation commission or become

effective as provided in- subsection (b), copies of all tariffs,

schedules and classifications, and all rules and regulations,

except those determined to be confidential under rules and

regulations adopted by the commission, shall be filed in every

station, office or depot of every such public utility and every

common carrier in this state, for public inspection.

(d) Upon a showing by a public utility before the

state corporation commission at a public hearing and a finding

by the commission that such utility has invested in projects or

systems that can be reasonably expected (1) to produce energy

from a renewable resource other than nuclear for the use of its

customers, (2) to cause the conservation of energy used by its

customers, or (3) to bring about the more efficient use of

energy by its customers, the commission may allow a return on

such investment equal to an increment of from 1/2% to 2% plus

an amount equal to the rate of return fixed for the utility's other

investment in property found by the commission to be used or

required to be used in its services to the public. The

commission may also allow such higher rate of return on

investments by a public utility in experimental projects, such

as load management devices, which it determines after public

hearing to be reasonable designed to cause more efficient

utilization of energy and in energy conservation programs or

measures which it determines after public hearing provides a

reduction in energy usage by its customers in a cost-effective

manner.

(e) | Whenever, after the effective date of this act, an

electric public utility, a natural gas public utility or a

combination thereof, files tariffs reflecting a surcharge on the

utility's bills for utility service designed to collect the annual

increase in expense charged on its books and records for ad

valorem taxes, such utility shall report annually to the state

corporation commission the changes in expense charged ad

valorem taxes. For purposes of this section, such amounts

charged to expense on the books and records of the utility may

be estimated once the total property tax payment is known. If

found necessary by the commission or the utility, the utility

shall file tariffs which reflect the change as a revision to the

surcharge. Upon a showing that the surcharge is applied to

bills in a reasonable manner and is calculated to substantially

collect the increase in ad valorem tax expense charged on the

books and records of the utility, or reduce any existing

surcharge based upon a decrease in ad valorem tax expense

incurred on the books and records of the utility, the

commission shall approve such tariffs within 30 days of the

filing. Any over or under collection of the actual ad valorem

tax increase charged to expense on the books of the utility shall

be either credited or collected through the surcharge in

subsequent periods. The establishment of a surcharge under

this section shall not be deemed to be a rate increase for

purposes of this act. The net effect of any surcharges

established under this section shall be included by the

commission in the establishment of base rates in any

subsequent rate case filed by the utility.

(f) Except as to the time limits prescribed in

subsection (b), proceedings under this section shall be

conducted in accordance with the provisions of the Kansas

administrative procedure act.

APPENDIX I

IN THE SUPREME COURT OF THE STATE OF KANSAS

KANSAS PIPELINE PARTNERSHIP,

Appellant,

vs.

THE STATE CORPORATION COMMISSION

OF THE STATE OF KANSAS,

Appellee.

PETITION FOR REVIEW

APPEAL OF INTERVENOR WILLIAMS NATURAL GAS

COMPANY FROM THE KANSAS COURT OF APPEALS

Kevin M. Fowler #11227

Frieden, Haynes & Forbes

400 SW 8th Street, P. O. Box 639

Topeka, Kansas 66601

(913) 232-7266

Counsel for Intervenor

Williams Natural Gas Company

PRAYER FOR REVIEW

Williams Natural Gas Company ("WNG") respectfully

prays that the Kansas Supreme Court review the decision of the

Kansas Court of Appeals in the case of Kansas Pipeline

Partnership v. State Corporation Commission, No. 96-75,918,

on the grounds that this case presents an important question of

constitutional law and there is a need for this Court to exercise

its supervisory authority pursuant to Kansas Supreme Court

Rule 8.03(e)(1). Additionally, the importance of the impact of

the Court of Appeals’ ruling on Kansas ratepayers clearly

merits this Court's review of the case. K.S.A. 20-3018(b)(1).

DATE OF COURT OF APPEALS’ DECISION

The Court of Appeals rendered its decision in this case

on May 17, 1996.

STATEMENT OF ISSUES FOR REVIEW

1. Whether a statute that allows gas transportation

and construction contracts to be "deemed approved” without a

consideration on the merits violates the United States

Constitution's Fourteenth Amendment.

2. Whether the Court of Appeals erred by ignoring

arguments raised by the parties in this proceeding, including

invited error, procedural estoppel, and the Court's failure to

properly apply K.AR. 82-1-214.

STATEMENT OF FACTS

This is an appeal from a decision by the Corporation

Commission of the State of Kansas ("KCC") in a docket filed

by Kansas Pipeline Partnership (“KPP") seeking approval of

five contracts (the "Contracts") with Western Resources, Inc.

a i ata nt alii P

("WRI"). The KCC held extensive hearings after exhaustive

discovery in which KPP, WNG, KCC Staff, CURB, and

various other parties were active participants. All parties

submitted briefs. Before the KCC could issue a final decision,

the Federal Energy Regulatory Commission ("FERC") ruled

that KPP is actually part of a single interstate pipeline system

subject to =— exclusive re under the Natural Gas

Riverside Pipeline Co. 73 FERC 1 61, 160 (1995), Upon

learning of FERC's jurisdiction, the KCC determined the new

jurisdictional status was, in effect, an amendment of the

application to approve the Contracts and, on that basis,

restarted the 240-day statutory decision period, if that period

even applied. The KCC stayed further action in the

consolidated dockets. KPP brought this appeal seeking a

determination that the Contracts are deemed approved because

the KCC failed to issue a final order within 240 days.

The Court of Appeals determined the 240-day time

limit on a final decision by the KCC contained in K.S.A. 66-

117(b) (the "Statute") applies to this matter. This Court should

review that determination because the Court of Appeals

interpreted the Statute incorrectly when it held that the Statute

applies to this application to approve contracts. Brief of WNG

at 6-9. The Court of Appeals’ Opinion ("Opinion") also

ignored several arguments raised by the parties. If those

arguments had been fully considered by the court, it should

have affirmed the KCC's action staying this matter pending a

final decision by FERC concerning its jurisdiction.

Furthermore, the Opinion ignores the provisions of K.A.R. 82-

1-214. Most important, K.S.A. 66-117(b), as applied by the

court, violates the Constitution's guarantee of due process of

law by effectively removing WNG's right to notice and an

opportunity to be heard on the merits. WNG filed a Motion for

Rehearing En Banc with the Court of Appeals on June 4, 1996.

WNG urges this Court to grant its Petition for Review and find

that the Contracts are not deemed approved by operation of

law.

ARGUMENT AND AUTHORITIES

The Court of Appeals made several errors that merit

this Court granting WNG’s Petition for Review and reversing

the Court of Appeals’ decision. In particular, the court's

application of the Statute deprived WNG’s nght to due process

under the Constitution. Additionally, the Court ignored

important arguments raised by WNG and other parties. Kansas

ratepayers will suffer substantial financial harm if this Court

does not review and reverse the Court of Appeals’ decision.

L THE COURT OF APPEALS’ APPLICATION OF THE

STATUTE VIOLATES CONSTITUTIONAL DUE

PROCESS.

Kansas Supreme Court Rule 8.03(e)(1) grants a party

Supreme Court review as a matter of right whenever a case

involves a constitutional issue. The Court of Appeals’

application of K.S.A. 66-117(b) violates the constitutional

rights of the parties to this proceeding. The court's

determination that the 240-day time period for rate cases

applies to the approval of these Contracts seriously negated

WNG's right to notice. Because the KCC did not require that

KPP give the notice and make the filings required for rate

cases, no party received the notice prong of procedural due

process to which they were entitled. Moreover, by determining

the Statute operates to remove WNG’s and other parties’ right

to a determination on the merits and by effectively cutting off

WNG's right to appeal the KCC's interim rulings, the court also

ROE NR PS ey

removed the parties’ opportunity to be heard. Because the

essence of procedural due process is notice and an opportunity

to be heard, the court's interpretation of K.S.A. 66-117(b)

rendered the Statute unconstitutional as applied. WNG is

entitled to a review of the Court of Appeals' Opinion because

that decision violates WNG’s constitutional rights. On review,

WNG urges this Court to find that the Contracts are not

deemed approved by operation of law.

a D p Reaui Noti

Opportunity to Be Heard.

The United States Constitution provides that the State

shall not "deprive any person of life, liberty, or property,

without due process of law... ." U.S. Const. amend. XIV.

The protection provided by the Due Process Clause requires, at

a minimum, "that deprivation of life, liberty, or property by

adjudication be preceded by notice and opportunity for hearing

appropriate to the nature of the case." Mullane v. Central

Hanover Bank & Trust Co,, 339 U.S. 306, 313 (1949). The

court's application of K.S.A. 66-117(b) prevented WNG from

receiving those protections.

B. WNG Was Entitled to Due Process.

1. WNG Had a Protectible Interest.

A complete Due Process Clause analysis presents two

inquiries for the Court: (1) was WNG deprived of a protected

interest and (2) if so, what process was due? Logan v.

Zimmerman Brush Co., 455 U.S. 422, 428 (1981). Asa

competitor of KPP, WNG had a protectible interest in

participating in this proceeding.

Kansas law provides WNG with the mght, as an

interested competitor of KPP, to intervene and participate in

KCC proceedings that affect WNG. K.AR. §§ 82-1-225, 82-1-

228 (1994). Because it is grounded in state law, this right is a

form of "property" right, to which due process protection must

be given. Logan, 455 U.S. at 430. WNG’s ownership of

substantial pipeline assets in Kansas, its employment of 300

Kansas citizens (R. Vol. 12, 1685-4 through 1685-5), and its

provision of gas transportation services vital to the citizens of

Kansas confirm that WNG has valuable property rights that

deserve the protection of the Due Process Clause.

The court's application of K.S.A. 66-117(b) denied

WNG the constitutional protection to which it is entitled. The

Contracts, if deemed approved, will take significant contract

demand from WNG and transfer it to KPP. R. Vol. 14, 2410-

14. Contract demand is the service WNG sells and the vehicle

by which it recovers its operating expenses and a reasonable

rate of return established by FERC. It is the only source of

earnings its significant pipeline assets generate. The approval

of the Contracts will give KPP control of more than 50% of the

gas transportation service market for Kansas City. Without

these unwise contracts, WNG will serve about 73% of that

market. R. Vol. 14, 2410-6 through 2410-7. WNG is entitled

to the due process protection provided for by the United States

Constitution in this case, which threatens WNG with a loss of

its valuable property rights.

3. WNG Should Have Been Provided

Notice and an Opportunity to Be Heard.

Because WNG had an established property right in the

proceedings, the Court must next determine what process was

required to protect that right. Generally, the Due Process

SPE OO a SS SN ES

Mies a

NA he TT IRE IRE IE) 26S i EDI a INE Peak he em She RS

idee Ri bed ore

Clause has been held to protect litigants who seek to protect

property or redress grievances in an adjudicative setting.

Logan, 455 U.S. at 429. Several United States Supreme Court

opinions provide due process analyses of cases analogous to

the one presented to this Court.

In Societe Internationale v. Rogers, 357 U.S. 197

(1958), the Court determined that a party's case should not be

dismissed based upon non-compliance with procedural rules.

In particular, the Court noted the Due Process Clause limits the

power of courts "to dismiss an action without affording a party

the opportunity for a hearing on the merits of his cause." Id.

at 209. In Rogers, the Court found a due process violation

when the plaintiffs case was dismissed because of the

plaintiff's good-faith failure to comply with a court order. In

this case WNG did not take any action that led to its loss of

protection. Instead, the action that led to the deprivation of

WNG's rights was taken by a third party — the KCC.

Nonetheless, the Court of Appeals’ interpretation of K.S.A.

66-117(b) resulted in a complete loss of WNG’s right to a

decision on the merits based entirely on the inaction of the

KCC. The loss of WNG’s due process protection thus resulted

from no fault of WNG whatsoever. Compared to the plaintiff

in Rogers, WNG has an even stronger argument that it is

entitled to a hearing to protect its interests.

Logan v. Zimmerman Bmush Co., 455 U.S. 422 (1981)

presents an even more compelling in*»rpretation of the Due

Process Clause. There the Court determined the dismissal of

an employment claim because an agency neglected to act

within a statutory time requirement violated the Due Process

Clause. The statute in Logan was similar to K.S.A. 66-117(b).

It required an agency to hold a hearing within 120 days of the

filing of a complaint. Jd, at 424. When the agency

inadvertently set the hearing date for five days after the

statutory period, the claim was challenged by the employer and

eventually dismissed. Id, at 426-27. In reversing that

determination, the Supreme Court noted that once a state

confers a property right like the right to a hearing, any statutory

limitation on the right will be subjected to constitutional

scrutiny. Id, at 432. "[T]he State may not finally destroy a

property interest without first giving the putative owner an

opportunity to present his claim of entitlement.” Id, at 434.

WNG's situation is clearly analogous. The Court of

Appeals’ application of the Statute operated to bar WNG's

participation in a determination on the merits in the same

manner that Logan's rights were barred. Like the agency in

Logan, the KCC failed to follow the State's procedural

guidelines. As in Logan, WNG was not at fault. In fact, WNG

was powerless to stop the Statute's application. To deny

WNG's rights under such circumstances is patently unfair and

clearly violates the Due Process Clause.

A property owner's rights “are not diminished by the

fact that the State may have specified its own procedures that

it may deem adequate for determining the preconditions to

adverse official action." Vitek v. Jones, 445 U.S. 480, 491

(1980). Unfortunately, WNG’s rights were diminished by the

court's application of K.S.A. 66-117(b). Because such

application removed WNG's due process protection, this Court

should grant this Petition and reverse the Court of Appeals.

The court's decision also had the effect of removing

hpi as omar 2.08 AS See

Kan. App. 2d 93, 819 P.2d 138 (1992). WNG filed a motion

with the KCC seeking dismissal of the applications for failure

EBT Te NI BP te SOR IS EIU MS TORTS IRS TER AERC

to give the notice required by a rate case and make the filings

required in a rate case. R. Vol. 1, 304. At KPP's insistence,

the KCC denied WNG’s motion and declined to force KPP to

give notice and make filings required in a rate case. That

decision necessarily included a determination that this

proceeding was not a rate case. The requirements for filings

and proper notice apply in a rate case because the KCC must

make a prompt decision. In other cases there is no artificial

time limit and therefor no similar need for heightened

procedural notice. The court's determination that the Contracts

are deemed approved by operation of law turned this case on its

head by applying the strict, punitive time limits of the Statute

in a case where none of the notice and procedural safeguards

applied to rate cases have been enforced. The combination of

the KCC's failure to require the notice and filings associated

with a rate case and the court's application of the 240-day time

limit had the effect of denying WNG and other parties the

notice to which they are entitled by the most fundamental

concepts of due process.

The KCC's ruling on WNG's motion seeking dismissal

of the Applications leads to another important consideration in

this case. WNG's exception to the KCC's ruling on WNG's

motion remains preserved for consideration on appeal of the

KCC's final ruling in this docket. The court's ruling that the

Contracts are deemed approved by operation of law removed

WNG's right to appeal the KCC's ruling on WNG's motion

because it eliminated a final order and the right of WNG to

appeal from such an order. If WNG had been permitted a right

to appeal the KCC's denial of its motion, WNG would have had

an opportunity to reverse an approval of the Contracts even if

that decision were based on the merits of the Contracts. The

court's elimination of WNG’s right to an appeal on this critical

issue amounted to a further denial of WNG's due process

protection.

Tl. THIS APPEAL PRESENTS IMPORTANT ISSUES

THAT MERIT SUPREME COURT REVIEW.

Even if WNG is not entitled to a review as a matter of

right, this Court should grant WNG's Petition because of the

important issues involved. The Court of Appeals’ decision in

this case will have an impact that affects a significant portion

of the Kansas population. If the Contracts remain "deemed

approved," Kansas ratepayers could eventually pay for the

Contracts’ costs through WRI's gas rates. Additionally, this is

a case of first impression. As the Court of Appeals’ Opinion

recognized, no published decision has ever determined the time

limits in K.S.A. 66-117 apply to utility contracts. These two

factors clearly merit this Court's review. K.S.A. 20-3018(b){1).

On June 10, 1996, WRI filed a response to KCC's

Motion for Rehearing in the Court of Appeals. In that

response, WRI attempts to “piggyback” the Court of Appeals’

approval of the Contracts into a method by which WRI can

pass the Contracts’ costs along to Kansas ratepayers. As WNG,

CURB, KCC Staff, and others set forth at length at the hearing

in this matter, the Contracts are unwise and significantly over-

priced. Based on the compelling showing on the merits, the

KCC would not have approved the Contracts or WRI's

application for pass-through of the costs. Had the KCC

approved the Contracts on the merits, its decision would have

been reversed on appeal. Thus, in this appeal, WRI and KPP

are attempting to accomplish by the KCC's omission an end

which they could not accomplish by the KCC's volition. This

Court should not permit such a result in a matter of such great

public importance. Clearly, based upon the magnitude of the

costs to be paid by Kansas ratepayers, this appeal presents

issues of great importance to the Kansas public. ;

Quite apart from the threat of millions of dollars of

unnecessary utility bills, this appeal raises issues of first

impression for this Court. The Court of Appeals applied

K.S.A. 66-117 to the Contracts. As the Court's Opinion noted,

no previous decision has held contracts to fall within the scope

of the statute. Because this appeal presents matters of first

impression that will likely arise again, the Court should grant

WNG’s Petition and review and reverse the Court of Appeals’

decision.

IV. CONCLUSION.

This Court should grant WNG’s Petition for Review and

find that the Contracts are not deemed approved by operation

of law. This is a case of first impression which considers

issues of significant importance to the citizens of Kansas.

Moreover, the Court of Appeals’ decision renders K.S.A. 66-

117 unconstitutional as applied. The court's ruling effectively

deprived WNG of its constitutional night to notice and an

opportunity to be heard and must therefor be reversed. The

Court of Appeals’ Opinion in this case also ignored important

arguments and the facts supporting the conclusion that KPP is

estopped from arguing the 240-day time limit included in

K.S.A. 66-117(b) should apply in this case. The Court of

Appeals incorrectly interpreted K.S.A. 66-17(b) and that

interpretation should be reversed on review.

Respectfully submitted,

ls/_

John C. Frieden #06592

Kevin M. Fowler #11227

Frieden, Haynes & Forbes

400 SW 8th Street, P. O. Box 639

Topeka, Kansas 66601

(913) 232-7266

David P. Batow, General Counsel

Gary W. Boyle, Senior Attorney

Jay V. Allen, Attorney

Williams Natural Gas Company

4100 One Williams Center

Tulsa, Oklahoma 74172

(918) 588-2359

Counsel for Intervenor

Williams Natural Gas Company

APPENDIX J

beta eerlliatintn et

IN THE COURT OF APPEALS OF THE STATE OF

KANSAS

KANSAS PIPELINE PARTNERSHIP, )

)

Petitioner/Appellee, )

)

v. )

) Case No.

) 96-75918-A

)

THE STATE CORPORATION )

COMMISSION OF THE STATE )

OF KANSAS, )

)

MOTION FOR REHEARING EN BANC

COMES NOW Intervenor, Williams Natural Gas

Company ("WNG"), and pursuant to Supreme Court Rules

7.02(b) and 7.05, files this motion seeking rehearing en banc of

the ruling of the Court of Appeals determining that Appellees’

contracts were approved as a matter of law. The Opinion of the

Court, dated May 17, 1996, is attached hereto. WNG

respectfully requests the Court reconsider this decision.

ARGUMENT

L BACKGROUND.

This is an appeal from a decision by the Corporation

Commission of the State of Kansas ("KCC") in a docket filed

by Kansas Pipeline Partnership ("“KPP") seeking approval of

five contracts (the "Contracts”) with Western Resources, Inc.

("WRI"). The KCC held extensive hearings after exhaustive

discovery in which KPP, WNG, KCC Staff, CURB, and

submitted briefs. Before the KCC could issue a final decision,

the Federal Energy Regulatory Commission ("FERC") ruled

that KPP is actually part of a single interstate pipeline system

Ee ae ee ee ee

Riverside Pipeline Co. 73 FERC { 61, 160 (1995), Upon

learning of FERC's jurisdiction, the KCC determined the new

jurisdictional status was, in effect, an amendment of the

application to approve the Contracts and, on that basis,

restarted the 240-day statutory decision period, if that period

even applied to this matter. The KCC stayed further action in

the consolidated dockets. KPP brought this appeal seeking a

determination that the Contracts are deemed approved because

the KCC failed to issue a final order within 240 days.

This Court determined the 240-day time limit contained

in K.S.A. 66-117(b) (the "Statute") applies to this matter and

the change in KPP’s jurisdictional status was not an amendment

of the application. WNG seeks rehearing in this Court because

the Court's Opinion ignores several arguments raised by the

parties. If those arguments had been fully considered by the

Court, it should have affirmed the KCC's action staying this

matter until the conclusion of the restarted 240-day decision

period or a final decision by FERC concerning its jurisdiction.

Furthermore, the Court's Opinion ignores the provisions of

K.AR. 82-1-214. Most important, K.S.A 66-117(b), as

applied by this Court, violates the Constitution's guarantee of

due process of law by effectively removing WNG’s and other

parties’ notice and opportunity to be heard on the merits. WNG

urges the Court to grant its Motion for Rehearing and find that

the Contracts are not deemed approved by operation of law.

IV. THECOURT'S APPLICATION OF THE STATUTE

VIOLATES CONSTITUTIONAL DUE PROCESS.

The Court's application of K.S.A. 66-117(b) violates the

constitutional rights of the parties to this proceeding. This

Court's determination that the 240-day time period for rate

cases applies to the approval of these Contracts seriously

negates WNG’s right to notice. Because the KCC did not

require that KPP give the notice and make the filings required

for rate cases, no party has received the notice prong of

procedural due process to which they were entitled. Moreover,

by determining that the Statute operates to remove WNG’s and

other parties’ right to a determination on the merits of the

reasonableness and public interest invoked by the proposed

Contracts and by effectively cutting off WNG’s right to appeal

the KCC's interim rulings, the Court has also removed the

parties’ opportunity to be heard. Because the essence of

procedural due process is notice and an opportunity to be

heard, this Court's interpretation of K.S.A. 66-117(b) renders

the Statute unconstitutional as applied. WNG urges the Court

to reconsider its decision in light of the constitutional rights of

the parties and to find that the Contracts are not deemed

approved by operation of law.

A b p Reaui Noti

Opportunity to Be Heard.

The United States Constitution provides that the State

shall not “deprive any person of life, liberty, or property,

without due process of law... ." U.S. Const. amend. XIV.

The protection provided by the Due Process Clause requires, at

2 minimum, “that deprivation of life, liberty, or property by

adjudication be preceded by notice and opportunity for hearing

appropriate to the nature of the case." Mullane v, Central

Hanover Bank & Trust Co., 339 U.S. 306, 313 (1949). This

Court's application of K.S.A. 66-117(b) prevents WNG from

receiving those protections.

B. WNG Was Entitled to Due Process.

l. WNG Had a Protectible Interest.

A complete Due Process Clause analysis presents two

inquiries for the Court: (1) was WNG deprived of a protected

interest and (2) if so, what process was due? Logan v.

Zimmerman Brush Co,, 455 U.S. 422, 428 (1981). Asa

competitor of KPP, WNG had a protectible interest in

participating in thie fing

Kansas law provides WNG with the right, as an

interested competitor of KPP, to intervene and participate in

KCC proceedings that affect WNG. K._AR. §§ 82-1-225, 82-1-

228 (1994). Because it is grounded in state law, this right is a

form of “property” right, to which due process protection must

be given. Logan, 455 U.S. at 430. WNG's ownership of

substantial pipeline assets in Kansas, its employment of 300

Kansas citizens (R. Vol. 12, 1685-4 through 1685-5) and its

provision of gas transportation services vital to the citizens of

Kansas confirm that WNG has valuable property rights that

deserve the protection of the Due Process Clause.

This Court's application of K.S.A. 66-117(b) has denied

WNG the constitutional protection to which it is entitled. The

Contracts that are the subject of this proceeding, if deemed

approved, will take significant contract demand from WNG

and transfer it to KPP. R. Vol. 14, 2410-14. Contract demand

is the service WNG sells and the vehicle by which it recovers

its operating expenses and a reasonable rate of return

established by FERC. It is the only source of earnings that the

significant pipeline assets it owns can generate. The approval

of the Contracts will give KPP control of more than 50% of the

gas transportation service market for Kansas City. Without

these unwise contracts, WNG will serve about 73% of that

market. R. Vol. 14, 2410-6 through 2410-7. WNG is entitled

to the due process protection provided for by the United States

Constitution in this case, which threatens WNG with a loss of

its valuable property rights.

2. WNG Should Have Been Provided

Notice and an Opportunity to Be Heard.

Because WNG had an established property right in the

proceedings, the Court must next determine what process was

required to protect WNG's rights. Generally, the Due Process

Clause has been held to protect litigants who seek to protect

property or redress grievances in an adjudicative setting.

Logan, 455 U.S. at 429. Several United States Supreme Court

opinions provide due process analyses of cases analogous to

the one presented to this Court.

In Societe Internationale v. Rogers, 357 U.S. 197

(1958), the Court determined that a party's case should not be

dismissed based upon non-compliance with procedural rules.

In particular, the Court noted that the Due Process Clause

limits the power of courts "to dismiss an action without

affording a party the opportunity for a hearing on the merits of

his cause." Jd. at 209. In Rogers, the Court found a due

process violation when the plaintiffs case was dismissed

because of the plaintiffs good-faith failure to comply with a

court order. In this case WNG did not take any action that led

deprivation of WNG's rights was taken by a third party -- the

KCC. Nonetheless, this Court's interpretation of K.S.A. 66-

117(b) results in a complete loss of WNG's right to a decision

on the merits based entirely on the inaction of the KCC. The

loss of WNG's due process protection thus resulted from no

fault of WNG whatsoever. Compared to the plaintiff in

Rogers, WNG has an even stronger argument that it is entitled

to a hearing to protect its interests.

Logan v. Zimmerman Brush Co., 455 U.S. 422 (1981)

presents an even more compelling interpretation of the Due

of an employment claim because an agency neglected to act

inadvertently set the hearing date for five days after the

statutory period, claim was challenged by the employer and

eventually dismissed. Id. at 426-27. In reversing that

determination, the Supreme Court noted that once a state

confers a property right like the right to a hearing, any statutory

limitation on the right will be subjected to constitutional

scrutiny. Id, at 432. "(T]he State may not finally destroy a

property interest without first giving the putative owner an

opportunity to present his claim of entitlement." Id. at 434.

WNG's situation is clearly analogous. The Statute

operated to bar WNG's participation in a determination on the

merits in the same manner that Logan's rights were barred.

Like the agency in Logan, the KCC failed to follow the State's

procedural guidelines. As in Logan, WNG was not at fault. In

fact, WNG was powerless to stop the Statute's application. To

LO ON eT RE et

deny WNG’s rights under such circumstances is patently unfair

and clearly violates the Due Process Clause.

A property owner's rights "are not diminished by the

fact that the State may have specified its own procedures that

it may deem adequate for determining the preconditions to

adverse official action." Vitek v. Jones, 445 U.S. 480, 491

(1980). Unfortunately, WNG's rights were diminished by this

Court's application of K.S.A. 66-117(b). Because such

application removed WNG's due process protection, the Court

should grant WNG's Motion for Rehearing.

This Court's decision also has the effect of removing

wore right to notice inherent i in its due process <4 See

Kan. App.2d 93, 819 P-2d 138 (1992) The Court will recall

that WNG filed a Motion with the KCC seeking dismissal of

the applications for failure to give the notice required by a rate

case and make the filings required in a rate case. R. Vol. 1,

304. At KPP's insistence, the KCC denied WNG's motion and

declined to force KPP to give notice and make filings required

in a rate case. That decision necessarily included a

determination that this proceeding was not a rate case. The

requirements for filings and proper notice apply in a rate case

because the KCC must make a prompt decision. In other cases

there is no artificial time limit and therefor no similar need for

heightened procedural notice. This Court's determination that

the Contracts are deemed approved by operation of law has

turned this case on its head by applying the strict, punitive time

limits of the Statute in a case where none of the notice and

procedural safeguards applied to rate cases have been enforced.

The combination of the KCC's failure to require the notice and

filings associated with a rate case and this Court's application

of the 240-day time limit have the effect of denying WNG and

other parties the notice to which they are entitled by the most

fundamental concepts of due process.

The KCC's ruling on WNG's motion seeking dismissal

of the Applications leads to another important consideration on

rehearing in this case. WNG's exception to the KCC's ruling

on WNG's motion remains preserved for consideration on

appeal of the KCC's final ruling in this docket. This Court's

ruling that the Contracts are deemed approved by operation of

law removes WNG's right to appeal the KCC's ruling on

WNG's motion because it eliminates a final order and the right

of WNG to appeal from such an order. If WNG had been

permitted a right to appeal the KCC's denial of its motion,

WNG would have had an opportunity to reverse an approval of

the Contracts even if that decision was based on the merits of

the Contracts. This Court's elimination of WNG's right to an

appeal on this critical issue amounts to a further denial of

WNG's due process protection.

V. CONCLUSION.

This Court should grant WNG's Motion for Rehearing

En Banc and, after rehearing, find that the Contracts are not

deemed approved by operation of law. The Court's Opinion in

this case ignored important arguments and the facts that

support the conclusion that KPP is estopped from arguing the

240-day time limit included in K.S.A. 66-117(b) should apply

in this case. Most important, this Court has applied the Statute

in a manner that violates the Due Process Clause of the United

States Constitution. This Court's ruling effectively deprives

WNG of its constitutional right to notice and an opportunity to

be heard and must therefor be reversed.

Respectfully submitted,

ls/

John C. Frieden #06592

Kevin M. Fowler #11227

Frieden, Haynes & Forbes

400 SW 8th Street, P.O. Box 639

Topeka, Kansas 66601

(913) 232-7266

David P. Batow, General Counsel

Gary W. Boyle, Senior Attorney

Jay V. Allen, Attorney

Williams Natural Gas Company

4100 One Williams Center

Tulsa, Oklahoma 74172

(918) 588-2359

Counsel for Intervenor

Williams Natural Gas Company

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.