Appendix — Citizens' Utility Ratepayer Board v. Kansas Pipeline Partnership

Supreme Court brief1997

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TEE TEE EEE

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1996

CITIZENS’ UTILITY RATEPAYER BOARD,

Petitioner,

Vv.

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

Walker Hendrix Mark A. Burghart

Counsel of Record Alderson, Alderson &

Citizens’ Utility Montgomery, L.L.C.

; Ratepayer Board 2101 S.W. 21st Street

1500 S.W. Arrowhead Road Topeka, Kansas 66604

Topeka, Kansas 66614 (913) 232-0753

(913) 271-3200

SP RS OES UII: AN, oe AE

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,

V 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,

THE STATE CORPORATION COMMISSION

OF THE STATE OF KANSAS,

Appellee.

SYLLABUS BY THE COURT

l. 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. 66-118a(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.

a 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.

te 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.

i 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 to result from a legislative purpose to change its

a en i A a

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. 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 in 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 intimately related to a prior

rate case. See MAPCO Intrastate Pipeline Co. v. Kansas

Corporation Comm’n, 10 Kan. App. 2d 527, 530-31, 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

(2)

(3)

(4)

(1)

(2)

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);

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.

(3) KPP requested reconsideration of the November 22

KCC order, which was denied on December 28,

1995.

(4) | 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

other activities authorized by [FERC] and the KCC."

(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, e.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

appeal 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 together and harmonized

when possible. See Kansas Racing Management, Inc. v.

Kansas Racing Comm’n, 244 Kan. 343, 353, 770 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

determination: 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. 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) ... amy 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. lack’ Ww

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 interpreted in a pragmatic

way. Southwestern Bell Tel. Co. v. Kansas Corporation

Commission, 6 Kan. App. 2d 444, 452-53, 629 P.2d 1174,

rev. denied 230 Kan. 819 (1981). See Oilfield Fluid Motor

Carriers v. Kansas Corporation Comm’n, 234 Kan. 983,

988, 677 P.2d 982 (1984).

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

66-117(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 1980 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.

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

66-118a, giving us exclusive jurisdiction over appeals arising

from a rate hearing, the bill did amend 66-118g, 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.

eyre xe eS

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.

The KCC does not directly address the problem

created by the failure of anyone to file an amendment to the

application. CURB does not address the need for an

amendment either; rather, it argues the KCC was in

substantial compliance with the statutory mandate when it

restarted the 240-day clock. WNG asserts that 66-117(b)

simply does not apply. As previously held, the legislature

did not distinguish between types of rate hearings in enacting

S.B. 881. The legislature intended the time limits to apply to

all hearings requesting a change, including those arising

from a rate hearing.

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 Commitiee 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.e., 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 Educati .D. 512 v. Vi

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. 1.

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.

: APPENDIX C

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. )

Docket No.

192,507-U

In the Matter of the Filing of Kansas )

Pipeline for approval and to make _—s+)

effective certain gas transportation )

service agreements between Kansas_ )

) ENTERED

) NOV3 1995

Pipeline Partnership and Western

Resources, Inc.

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 for 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:

i 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 |]

/s/

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

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

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

Pipeline for approval and to make

effective certain gas transportation

service agreements between Kansas

Pipeline Partnership and Western

Resources, Inc.

)

Docket No.

192,506-U

Docket No.

192,391-U

Docket No.

192,507-U

ENTERED

NOV 22 1995

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." (Staff's

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." (Staff's 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.

a aa aia ea

AIO oa taba Steel, 22 Kure Aecnaen st are A Lael one

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

(Western Resources) appeared by J. Michael Peters;

Williams Natural 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 nust

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 Staff’s 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).

Kansas Pipeline maintains the Commission continues

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).

eee ee a

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 rule

"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 Staff’s

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 K.A.R. 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 previously sought a stay from the Commission,

pending final outcome at FERC, and also sought dismissal

of these proceedings for lack of subject matter jurisdiction.

WNG believes FERC’s action on October 25, 1995,

constitutes a material change in circumstances to warrant

reconsideration of WNG’s previous motion to dismiss.

Dismissing the action without prejudice would avoid

any "possibility that the proposed contracts may be deemed

approved’ without Commission action after November 26,

1995." (WNG’s response, p.5). While WNG "endorses...

Staff's rationale for a stay" WNG seeks dismissal of the

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 "[t]he 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.

(Staff's 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

an order the fact that by extending its procedural orders past

September 27, 1995, the original suspension order had been

modified." (Staff's 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." (Staff's

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 Commission’s duty to

investigate 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 Covp.

Commission, 316 P.2d 277, 181 Kan. 817

(1957).

(Staff’s 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.

(Staff's 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 with 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 modification to the application ~— by joint applicants, ,

ikel ient_adjudicati therwi Ils

requisements under K.S.A. 66-117. " (Staff's 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. (Staff's 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." (Staff's reply, p. 6).

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

materially changed

circumstances, and dismiss all

pending applications without

prejudice to further

consideration of the merits in

the unlikely event FERC

reverses its Order and

determines that it does not

have jurisdiction over KPP

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 Staff's 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 Staff's 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;

(ii) | dismissing KPP’s applications unless

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 September 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

Kansas Corporation Commission, maintaining that the

Commission has ongoing jurisdiction, is inconsistent with its

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 { (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)(1)(A); Cascade Natural Gas

Corp. v. F.E.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 mew services and related pipeline

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

reply, p. 12).

Findings and Conclusions

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

| Se oe

SDS RT es © 6TR a TRE EE Re RS ee ee, MN SN RI Os ee!

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,

i.e., 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

Ottawa and Paola as to the need to have a decision in order

to determine outstanding franchise and easement questions.

However, the Commission believes that 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 Kansas Pipeline. The

Commission believes the benefits to a short stay pending

FERC’s issuance of a final appealable order outweighs any

potential harm caused by the delay. The Commission shall

continue to exercise jurisdiction over Kansas Pipeline until

such time as 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 this time.

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.

a 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.

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 22, 1995.

[ORDER MAILED ]

[NOV 22 1995 ]

[JUDITH MCCONNELL }

[EXECUTIVE DIRECTOR ]

/s/

Judith McConnell

Executive Director

APPENDIX E

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 cf 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.

Nee eee eee we

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 ) 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 Staff’s Motion for Stay. After the

parties 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 ]

_/s/

Judith McConnell

Executive Director

APPENDIX F

Da Pe

7 fai ds)

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 )

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 )

Pipeline for approval and to make

effective certain gas transportation

service agreements between Kansas

Pipeline Partnership and Western

Resources, Inc.

Nee ee Ne

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 "Petitior: for Reconsideration of

November 22, 1995 Order" is deniec!. 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

feed heeeend feemosd teswmed

/s/

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. Ali persons born or naturalized in the

United States, and subject to the jurisdiction thereof, are

citizens of 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 right 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 shal] 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

Representative 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 an 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

scheduic 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 carrier, 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, 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, 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 om 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

hearings plus 20 days to allow the commission to prepare

and issue its final order.

change 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

66-1223. Consumer counsel, powers. The consumer

counsel may do the following:

(a) Represent residential and small commercial

ratepayers before the state corporation commission;

(b) function as an official intervenor in cases filed

with the state corporation commission, including rate increase

requests;

commission;

(d) represent residential and commercial ratepayers

who file formal utility complaints with the state corporation

commission;

(€) intervene in formal complaint cases which

would affect ratepayers; and

(f) make application for a rehearing or seek judicial

review of any order or decision of the State corporation

commission.

APPENDIX J

No. 96-75918-A

IN THE SUPREME COURT

OF THE STATE OF KANSAS

KANSAS PIPELINE PARTNERSHIP

Petitioner,

THE STATE CORPORATION COMMISSION

OF THE STATE OF KANSAS, -

Respondent.

CITIZENS’ UTILITY RATEPAYER BOARD’S

PETITION TO SUPREME COURT FOR REVIEW OF

COURT OF APPEALS’ DECISION

Mark A. Burghart, No. 10251

ALDERSON, ALDERSON &

MONTGOMERY, L.L.C.

2101 S.W. 21st Street

Topeka, Kansas 66604-3174

(913) 232-0753

Attorney for Intervenor

Citizens’ Utility Ratepayer Board

I, PRAYER FOR REVIEW

COMES NOW the Intervenor, Citizens’ Utility

Ratepayer Board ( "CURB"), and requests the Supreme Court

to review the Court of Appeals’ decision in this matter.

CURB is aggrieved by the decision which deprives ratepayers

of the State of Kansas the Opportunity for a hearing on the

merits to determine the Propriety of five gas purchase and

transportation contracts entered into between Kansas Pipeline

Partnership ("KPP") and Western Resources, Inc. ("WRI").

As hereinafter noted, the decision of the Court of Appeais

extinguishes ratepayers’ fundamental due process rights to a

hearing on the merits of the subject agreements. The Court’s

ruling that the contracts are deemed approved by operation of

law without consideration of the merits of the contracts is

contrary to fundamental Fourteenth Amendment due process

principles. CURB respectfully requests that the Supreme

Court review the decision of the Court of Appeals, reverse

that decision, and remand the cause to the State Corporation

Commission ( "Commission") for appropriate action.

Il. DATE OF THE DECISION OF THE

COURT OF APPEALS

The date of the Court of Appeals’ decision is May 17,

1996. A complete copy of the Court of Appeals’ decision is

appended hereto as Appendix A.

Itl. STATEMENT OF THE ISSUE IN THE APPEAL

UPON WHICH REVIEW IS SOUGHT

WAS THE CITIZENS’ UTILITY RATEPAYER

BOARD AND THE RATEPAYERS WHOM THE

BOARD REPRESENTS DEPRIVED OF THEIR

DUE PROCESS RIGHTS TO A HEARING AFTER

THE COURT OF APPEALS RULED THAT THE

GAS PURCHASE AND TRANSPORTATION

CONTRACTS WERE DEEMED APPROVED BY

OPERATION OF LAW PURSUANT TO K:S.A. 66-

117(b)?

IV. STATEMENT OF FACTS

This case involves an appeal from a decision of the

Commission in which KPP sought approval of certain gas

purchase and transportation contracts entered into with WRI.

On March 15, 1995, WRI filed an application with the

Commission for approval of the contracts and for authority

to recover related charges through its purchase gas adjustment

clause ("PGA"). (R. Vol. 1, p. 1.) On March 31, 1995, KPP

filed an application with the Commission seeking approval of

certain gas transportation service agreements ("ISAs")

between KPP and WRI. (R. Vol. 1, p. 5.) On that same

date, KPP filed an application for approval and to make

effective certain firm gas purchase contracts ("GPCs")

between KPP and WRI. (R. Vol. 1, p. 63.)

Extensive hearings were conducted on the subject

contracts over a period of several weeks. Prior to the

hearing, extensive prehearing discovery was served by the

applicants and intervenors. Twenty-four witnesses offered

testimony the eleven days of the technical hearing.

The Commission had initially on April 20 and 21,

1995, entered several suspension orders suspending the TSAs

and GPCs for not more than 180 days from the date of

application. (R. Vol. 1, p. 143a and 143c.)

At the conclusion of the technical hearing, the parties

were ordered to file post-hearing briefs. Subsequently, on

November 1, 1995, Commission Staff filed a motion for stay

of proceedings. (R. Vol. 26, p. 185.) That motion was based

on a determination that had been made by the Federal Energy

Regulatory Commission (FERC) that it had jurisdiction over

the subject contracts because KPP constituted an interstate

pipeline. On November 3, 1995, the Commission entered an

order staying the proceedings. (R. Vol. 26, p. 208.) The

Commission followed the November 3, 1995 order with a

November 22, 1995 order wherein it ruled: (1) Subsequent

procedural orders issued by the Commission superseded the

original suspension orders issued in the case; (2) the

November 3, 1995 order issued by the Commission was

affirmed staying the consideration of these dockets until

FERC had taken final appealable action; and (3) the 240-day

time period (to the extent, if any, that it applies) was

restarted as of November 2, 1995. (R. Vol. 27, p. 146.)

KPP petitioned for reconsideration of the November

22, 1995 order. That petition for reconsideration was denied

on December 28, 1995. (R. Vol. 27, p. 184.)

KPP requested review of the December 28, 1995

order to the Court of Appeals. In a decision issued May 17,

1996, the Court of Appeals held that the Commission had not

acted on the applications within the time period prescribed by

K.S.A. 66-117(b) and, therefore, the contracts were deemed

approved by operation of law. The Commission, CURB and

Williams Natural Gas ("WNG") have petitioned the Court of

Appeals for rehearing. CURB now petitions this Court to

review the decision of the Court of Appeals. Although

captioned as a petition for review, this pleading may also be

deemed a notice of appeal to the Supreme Court as a matter

of right. Since a question under the Fourteenth Amendment

arises from the Court of Appeals’ decision, the appeal to this

Court may be made as a matter of right. (See K.S.A. 60-

2101(b).)

Vv. ARGUMENT AND AUTHORITIES

A. CURB And The Ratepayers It Represents Are

Entitled To Due Process of Law.

The decision of the Court of Appeals has effectively

denied CURB and the ratepayers which it represents their

statutory right to inquire into the propriety of the gas

purchase and transportation contracts that directly affect

Kansas ratepayers. CURB has argued at various times during

this appeal that the administrative process before the

Commission, wherein the contracts were subject to extensive

review, must be allowed to work, and that ratepayers are

statutorily entitled to have the contracts considered in light of

the wealth of testimony offered during the technical hearing

which was conducted by the Commission. (CURB Brief at

15-16.) CURB further argued that the Court should not

allow default to be taken against the ratepayers of the state

by a strict reading of K.S.A. 66-117(b). That statute

provides generally that the Commission must act on

applications filed with the Commission within 240 days,

unless certain conditions are satisfied.

The Court of Appeals’ decision which upheld the

application of K.S.A. 66-117(b) has denied Kansas ratepayers

their fundamental due process rights. The Fourteenth

Amendment to the U.S. Constitution provides in part:

"[N]or shall any state

deprive any person of

life, liberty, or

property, without due

process of law... ."

Due process requires, when liberty or property rights

protected by the Fourteenth Amendment are involved, the

right to a hearing prior to the taking. Stoldt v. City of

Toronto, 234 Kan. 957, 964, 678 P.2d 153 (1984). CURB

and the ratepayers it represents have been precluded by the

Court of Appeals’ application of K.S.A. 66-117(b) from

pursuing a meaningful hearing and have been deprived of a

protected property interest.

B. CURB And _ Kansas Ratepayers Have A

Protected Property Interest.

CURB is a creature of statute having been formed in

1989. (See K.S.A. 66-1222, et seg.) Operating through its

Consumer Counsel, CURB is statutorily empowered to:

1. Represent residential and small commercial

ratepayers before the State Corporation Commission;

2. Function as an official intervenor in cases

filed with the State Corporation Commission,

including rate increase requests;

3. Initiate actions before the State Corporation

Commission;

4. Represent residential and commercial

ratepayers who file formal utility complaints with the

State Corporation Commission;

5. Intervene in formal complaint cases which

would affect ratepayers; and

6. Make application for a rehearing or seek

judicial review of any order or decision of the State

Corporation Commission.

(See K.S.A. 66-1223.)

The thrust of the legislation was to create an advocate

for residential and small commercial ratepayers in utility

proceedings before the Commission. CURB has been

empowered statutorily to pursue matters on behalf of

ratepayers whenever ratepayers could be adversely affected

by the decision of the Commission. The statutory foundation

for CURB to protect the interests of ratepayers is solid. That

statutory empowerment rises to the level of a protected

property interest for Kansas ratepayers.

The ability of CURB to represent ratepayers is a

constitutionally protected one in light of the decisions from

the U.S. Supreme Court which establish the parameters for

protected property interests. The hallmark of property is an

individual entitlement grounded in state law, which cannot be

removed except "for cause." A cause of action is a species

of property protected by the Fourteenth Amendment’s due

process clause. Mullane v. Central Hanover Bank & Trust

Co., 339 U.S. 306 (1950). Here the Legislature has

specifically created the authority for CURB to file causes of

action on behalf of ratepayers before the Commission.

K.S.A. 66-1222, et seq. creates a protected property interest

in ratepayers. That property interest is protected by the

Fourteenth Amendment’s due process clause. The Court of

Appeals’ decision compromises CURB’s right to intervene in

and participate in matters pertinent to Kansas ratepayers.

Ratepayers have had their right io participate guaranteed

under K.S.A. 66-1223 extinguished without due process of

law.

This deprivation is particularly egregious when one

considers that CURB’s right to pursue causes of action on

behalf of ratepayers is taken away through no fault of CURB.

The Court of Appeals failed to recognize that it is the

ratepayers and not the Commission who ultimately would

suffer the consequences of the subject contracts. Yet, the

Court of Appeals would take away the statutory right of

CURB to pursue such matters simply for the reason that the

Commission did not purportedly issue a decision within the

required timeframe. The application of K.S.A. 66-117(b) to

the facts in this case results in constitutional harm being

inflicted on unsuspecting ratepayers of the state. This

deprivation requires reversal of the Court of Appeals’

decision.

C. Due Process Dictates That CURB Be Allowed

A Hearing And A Decision On The Merits Of

The Disputed Contracts.

Property rights once conferred by the Legislature

cannot be withdrawn without due process of law. The

Fourteenth Amendment requires as a matter of due process an

opportunity to be heard granted at a meaningful time and in

a meaningful manner. Armstrong v. Manzo, 380 U.S. 545,

552 (1965). Where the state has conferred a property

interest, that interest cannot be taken without constitutional,

procedural due process. Kosik v. Cloud County Community

College, 250 Kan. 507, 512, 827 P.2d 59, cert. denied 113

S.Ct. 195, 121 L.Ed.2d 138 (1992).

While the Legislature may elect not to confer a

property interest, it may not constitutionally authorize the

deprivation of such an interest, once conferred, without

appropriate procedural safeguards. The adequacy of statutory

procedures for deprivation of a statutorily created property

interest must be analyzed in constitutional terms. Vitek v.

Jones, 445 U.S. 480, 490-491 (1980). Here ratepayers are

granted a statutory right to participate in rate proceedings

through CURB. CURB and its constituency were deprived

of their statutory right to intervene and participate in an

administrative proceeding conducted solely for the purpose of

determining the prudency of certain contracts the burden of

which would fall ultimately on ratepayers. The Court of

Appeals’ endorsement of KPP’s suggested application of

K.S.A. 66-117(b) deprives Kansas ratepayers of their

statutorily granted property interest without due process of

law. Some form of hearing is required before the owner of

the property interest is finally deprived of such interest.

Board of Regents v. Roth, 408 U.S. 564, 570-571 (1972).

It is the statutory scheme embodied in K.S.A. 66-

117(b) that destroys ratepayers’ property interest, by

operation of law, v"henever the Commission fails to act on an

application in a timely manner. K.S.A. 66-117(b) is

defective for constitutional reasons. The Kansas Legislature

created CURB to serve as a watch dog for ratepayer interests.

The specific authority of CURB to maintain causes of action

on behalf of ratepayers cannot be taken by the application of

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

There is no public policy which would support the

conclusion that ratepayers should have their right to challenge

the subject contracts terminated by a technical application of

K.S.A. 66-117(b) and through no fault of the ratepayers.

CURB is entitled to have the Commission consider the merits

of the contracts based upon the substantiality of the evidence.

In Logan v. Zimmerman Brush Co., et al., 455 U.S.

422 (1982), the U.S. Supreme Court held that a state may not

terminate a complaining party’s cause of action because a

state official, for reasons beyond the complaining party’s

control, failed to comply with a statutorily mandated

procedure. In that case, the complaining party brought an

employment-related claim under the Illinois Fair Employment

Practices Act. That Act provided that the Illinois Fair

Employment Practices Commission had 120 days within

which to convene a fact finding conference designed to

obtain evidence, ascertain the positions of the parties, and

explore the possibility of negotiated settlement. It was

discovered that the hearing inadvertently had been scheduled

after the expiration of the 120-day period. Through a strict

application of the statutory language regarding the 120-day

limitation, the complaining party’s cause of action was

dismissed by the lower court. The 120-day period was

deemed to be jurisdictional.

Citing Mullane, supra, the U.S. Supreme Court held

that the complaining party’s cause of action was, in fact, a

property interest protected by the Fourteenth Amendment.

The Court held that the complaining party was entitled to an

opportunity granted at a meaningful time and in a meaningful

manner for a hearing appropriate to the nature of the case.

Since the complaining party was denied that opportunity, the

Supreme Court reversed.

The factual setting in the instant case is analogous to

that in Logan. Here, the Legislature has created a statutory

cause of action through CURB to protect and advance the

interests of residential and small commercial ratepayers in the

state. The decision of the Court of Appeals that the contracts

between KPP and WRI have gone into effect by operation of

law effectively deprives ratepayers of the state their cause of

action without due process of law. K.S.A. 66-117(b) as

applied by the Court to the facts of this case is

unconstitutional. CURB is entitled to have its day in Court.

The decision of the Court of Appeals should be reversed and

the case remanded to the Commission for further

proceedings. The ratepayers of the state should not be

saddled with the consequences of these contracts, which have

not been approved based upon their merits, by a technical

application of K.S.A. 66-117(b). To do so would result in a

deprivation of ratepayer rights simply for the cause of

expediency.

CURB had previously asked the Court of Appeals not

to abandon or ignore thousands of hours of staff work and

hundreds of thousands of dollars of legal and technical

analysis expended on the five contracts submitted for

approval. The Court of Appeals rejected that plea. CURB

now renews that request to this Court. The failure to allow

the contracts to be considered based on the evidence

introduced at the administrative hearing would run afoul of

the constitutional due process principles enunciated in Logan.

VI. CONCLUSION

In light of the arguments advanced above, CURB

respectfully requests that the Supreme Court review the

decision of the Court of Appeals, reverse that decision and

remand the cause to the Commission for further proceedings.

Respectfully submitted,

/S/

Mark A. Burghart, No. 10251

W. Robert Alderson, No. 6629

ALDERSON, ALDERSON &

MONTGOMERY, L.L.C.

2101 S.W. 21st Street

Topeka, Kansas 66604-3174

(913) 232-0753

Attorney for Intervenor,

Citizens’ Utility Ratepayer Board

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.