John O. Farmer, Inc.; Notice of Petition for Adjustment

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Federal Energy Regulatory Commission
[Docket No. SA98-73-000]

John O. Farmer, Inc.; Notice of Petition for Adjustment

March 24, 1998.
    Take notice that on March 11, 1998, John O. Farmer, Inc. (Farmer) 
filed a petition for adjustment under section 502(c) of the Natural Gas 
Policy Act of 1978 (NGNP) [15 U.S.C. 3142(c) (1982)], requesting relief 
from the Commission's refund procedures, with respect to Farmer's 
Kansas ad valorem tax refund liability, required by the Commission's 
September 10, 1997 order (in Docket No. RP97-369-000 et al).\1\ 
Farmer's petition is on file with the Commission and open to public 

    \1\ See 80 FERC para. 61,264 (1997); order denying reh'g issued 
Janauary 28, 1998, 82 FERC para. 61,058 (1998).

    The Commission's September 10 order on remand from the D.C. Circuit 
Court of Appeals \2\ directed first sellers under the NGPA to make 
Kansas ad valorem tax refunds, with interest, for the period from 1983 to 1988. The Commission's September 10 order also 
provided that first sellers could, with the Commission's prior 
approval, amortize their Kansas ad valorem tax refunds over a 5-year 
period, although interest would continue to accrue on any outstanding 

    \2\ Public Service Company of Colorado v. FERC, 91 F.3d 1478 
(D.C. 1996), cert. denied, Nos. 96-954 and 96-1230 (65 U.S.L.W. 3751 
and 3754, May 12, 1997) (Public Service).

    Farmer states that it is an operator of natural gas production in 
Kansas which was subject to that state's ad valorem tax during the 
period 1983 through 1988. Farmer states that it also owns working 
interests in said wells along with numerous other working interest 
owners. With respect to this filing, Farmer states that Williams 
Natural Gas Company (Williams) has alleged that Farmer is obligated to 
refund certain amounts in accordance with Commission orders in these 
proceedings. Farmer states that on November 10, 1997, Williams tendered 
a schedule or statement of refunds to Farmer which provide the amount 
which Farmer is allegedly required to pay.
    Farmer asserts that Williams has taken the position that Farmer as 
operator is responsible for the refunds attributable to all working 
interest owners. Farmer states that this position is contrary to the 
Commission's 1995 decision [71 FERC para. 61,185 (1995)], and 
therefore, Farmer requests that the pipeline purchaser be directed to 
tender a revised statement of refunds to Farmer and separate statements 
to the other individual working interest owners.
    In addition, Farmer states that checks tendered by Farmer to the 
pipeline company for its working interest share contained certain 
language addressing the refunding to payer with interest any amounts 
ultimately not required to be paid by payor pursuant to court or 
Federal Energy Regulatory Commission order. Accordingly, Farmer 
requests that the conditional nature of the payments be expressly 
approved and that the Commission issue an order notifying the pipeline 
recipient that they will be required to refund to Farmer any amounts 
received, with interest, which are ultimately not required to be paid 
by Farmer.
    Furthermore, Farmer states the Commission's January 28, 1998 
``Order Clarifying Procedures'', permits Farmer to pay any amounts in 
dispute into an escrow account ``consistent with the types of escrow 
accounts that the Commission has approved in other proceedings.'' 
Farmer states that it has placed the outside working interest amounts, 
the disputed amounts and all interest in a separate interest bearing 
account. Farmer also states that because of the substantial expense 
involved and the complexities in determining the specific amounts in 
dispute, Farmer requests modification of the escrow requirement to 
permit it to place the disputed amounts in an interest bearing fund 
over which it will maintain control. Farmer states that it agrees to 
disburse the funds solely in accordance with subsequent orders of the 
Commission in these proceedings. Farmer further states that no party 
will be harmed or disadvantaged by this approach, and at the same time, 
Farmer will be relieved of the burden and associated cost of 
establishing formal escrow accounts.
    Lastly, Farmer states that the dispute arises as to the tax 
reimbursement payments from Williams of $9,278.68 (Wheat Lease) and 
$3,793.64 (Schiff Lease) made October 26, 1987 with respect to 1986 
taxes, and payments of $4,237.06 (Wheat Lease) and $6,337.78 (Schiff 
Lease) made January 30, 1989 with respect to 1987 taxes and the 
interest thereon. Farmer states that it is its position that the 
revenue received for these leases during these years did not exceed the 
applicable maximum lawful price established by the NGPA. Farmer states 
that it has enclosed in its filing a worksheet prepared by Williams 
showing the amounts paid as well as the Orders from the State 
Corporation Commission of Kansas determining these wells qualify for 
classification under Section 108 of the NGPA.
    Any person desiring to be heard or to make any protest with 
reference to said petition should on or before 15 days after the date 
of publication in the Federal Register of this notice, file with the 
Federal Energy Regulatory Commission, 888 First Street, N.E., 
Washington, D.C. 20426, a motion to intervene or a protest in 
accordance with the requirements of the Commission's Rules of Practice 
and Procedure (18 CFR 385.214, 385.211, 385.1105, and 385.1106). All 
protests filed with the Commission will be considered by it in 
determining the appropriate action to be taken but will not serve to 
make the protestants parties to the proceeding. Any person wishing to 
become a party to a proceeding or to participate as a party in any 
hearing therein must file a motion to intervene in accordance with the 
Commission's Rules.
David P. Boergers,
Acting Secretary.
[FR Doc. 98-8173 Filed 3-27-98; 8:45 am]
BILLING CODE 6717-01-M  

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