IN THE SUPREME COURT OF THE STATE OF KANSAS
No. 89,494
IN THE MATTER OF THE APPEAL OF
COLORADO INTERSTATE GAS COMPANY
FROM A DECISION OF THE DIRECTOR OF PROPERTY VALUATION
OF THE STATE OF KANSAS.
SYLLABUS BY THE COURT
1. It is the duty of the Board of Tax Appeals (BOTA), in reviewing a valuation by the Department of Revenue Property Valuation Division (PVD), to exercise its judgment anew based on the evidence presented to it at the hearing and without giving deference to the PVD's valuation.
2. BOTA is the paramount taxing authority in this state. BOTA is a specialized agency that exists to decide taxation issues. Its decisions are given great weight and deference when it is acting in its area of expertise. The party challenging BOTA's decisions has the burden to prove that the action taken was erroneous. However, if BOTA's interpretation of law is erroneous as a matter of law, appellate courts will take corrective steps.
3. Orders of BOTA are subject to judicial review under the Act for Judicial Review and Civil Enforcement of Agency Actions. In reviewing BOTA decisions, this court determines whether relief is warranted under the provisions of K.S.A. 77-621(c), which requires the court, in part, to determine whether BOTA has erroneously interpreted the law, has made a determination of fact that is not supported by substantial competent evidence, or has acted in an unreasonable, arbitrary, or capricious manner.
4. K.S.A. 79-5a04 requires the PVD to determine the fair market value of public utility property. In doing so, the PVD may allocate the unit value to Kansas if practicable. While a number of methods are available for allocation of the unit value, including allocation by original cost, the method used must reflect the fair market value of the public utility's property in Kansas.
5. The question of whether the Kansas Constitution violates the United States Constitution is a question of law subject to unlimited review. In reviewing the constitutionality of our state constitution, we deal with familiar rules of construction. The constitutionality is presumed, and all doubts must be resolved in favor of its validity. Before the Kansas Constitution can be struck down as violating the United States Constitution, the infringement must be clear beyond substantial doubt.
Appeal from the Kansas Board of Tax Appeals. Opinion filed November 7, 2003. Affirmed.
Richard D. Greene, of Morris, Laing, Evans, Brock & Kennedy, Chartered, of Wichita, argued the cause, and Karen L. Pauley, of El Paso Corporation, of Houston, Texas, was with him on the briefs for appellant.
William E. Waters, of the Kansas Department of Revenue, argued the cause and was on the brief for appellee.
The opinion of the court was delivered by
DAVIS, J.: This matter comes before this court for the second time following the Board of Tax Appeals' (BOTA) valuation of Colorado Interstate Gas Company's (CIG) property in Kansas for ad valorem taxation purposes. In the first appeal, In re Appeal of Colorado Interstate Gas Co., 270 Kan. 303, 14 P.3d 1099 (2000), this court reversed the BOTA final decision primarily based upon BOTA's application of an erroneous standard of review. Upon remand, the matter was again submitted to BOTA upon the existing record.
CIG appeals, claiming that BOTA ignored this court's decision in Colorado Interstate Gas again by applying an incorrect standard of review. CIG also raises the following three issues: (1) BOTA failed to honor this court's mandate to embrace an allocation methodology that achieves fair market value, (2) BOTA erred when it taxed CIG's intangible property, and (3) the 1992 amendment to article 11, § 1 of the Kansas Constitution, which denies public utilities an exemption from taxation of their inventories, violates CIG's equal protection rights under the United States Constitution
Facts
There is little agreement between the parties as to the material facts of this case. In its decision upon remand, BOTA sets forth a statement of facts consisting of 42 paragraphs. CIG's statement of facts consists of 10 separate paragraphs in its initial brief, with support to the record. The Department of Revenue Property Valuation Division (PVD) lists 34 separate paragraphs of facts, also with support in the record. In its reply brief, CIG, in 10 separate paragraphs, again with support in the record, argues that the PVD's facts distort the record. Both parties use facts favorable to their respective positions to argue the case before this court. A far better approach, perhaps unattainable in light of the voluminous record and the disparate position of the parties, would have been a stipulation as to the material facts. Since we are called upon to review the BOTA decision in this case, we begin with BOTA's statement of facts, leaving the factual arguments of the parties to the analysis portion of this opinion.
The BOTA order on remand sets forth the following factual findings:
"3. On remand, the parties have agreed that additional evidence is not necessary and that the Board should review the evidence previously presented and issue a decision utilizing the standards set forth by the Supreme Court. The following issues are before the Board:
"A. The appropriate unit valuation of the Taxpayer's property for 1993, 1994 and 1995 tax years, including
"a. The Appropriate Capitalization Rate.
"i. Appropriate Cost of Equity.
"b. Inclusion of Non-taxable Intangibles in the Unit Valuation.
"B. The allocation of that unit valuation to Kansas, including which of the following allocation methodologies should be used:
"a. Original cost.
"b. Rate base.
"c. Net book cost.
"d. Blend of rate base and net book cost.
"4. At the January 1997 hearing of these matters the following individuals testified:
"Called as witnesses by the Taxpayer:
"Richard G. Smead Senior Vice-President, Colorado Interstate Gas Co.
"Dan A. Homec Ass't. Vice-President and Controller, Colorado Interstate Gas Co.
"Kenneth Williams Vice-Chairman, Brown, Williams, Scarbrough & Quinn, Inc., Consulting
"Prof. J. Peter Williamson The Laurence F. Whittemor Professor of Finance, Amos Tuck School of Business, Dartmouth College
"Dr. John H. Davis, III PhD, MAI, SRPA, ASA, Business Valuation Services, Inc.
"Robert M. Badenoch Bureau Chief, State Appraised Properties, Division of Property Valuation, Kansas Dept. of Revenue
"John Hughes Tax Examiner 4, Division of Property Valuation, Kansas Dept of Revenue
"Floyd Rumsey Supervisor, Utility Section, State Appraised Properties, Division of Property Valuation, Kansas Dept. of Revenue
"Called as witnesses by the Division of Property Valuation:
"Michael W. Goodwin CAE, ASA, Michael W. Goodwin & Associates
"Dr. A. James Ifflander PhD, CFA, Private Consultant
"Robert M. Badenoch Bureau Chief, State Appraised Properties, Division of Property Valuation, Kansas Dept. of Revenue
"John Hughes Tax Examiner 4, Division of Property Valuation, Kansas Dept. of Revenue
"Floyd Rumsey Supervisor, Utility Section, State Appraised Properties, Division of Property Valuation, Kansas Dept of Revenue
"5. The Taxpayer has also raised a number of constitutional issues. The Board does not have the authority to determine whether these arguments have merit. The Board is to presume that the Kansas Constitution does not violate the federal constitution and that the Kansas statutes do not violate the U.S. Constitution or Kansas Constitution. The Board has no authority to determine constitutional questions. Zarda v. State, 250 Kan. 364, 826 P.2d 1365, cert. denied, 504 U.S. 973, 119 L. Ed 2d 566, 112 S. Ct. 2941 (1992). Therefore, the Taxpayer's constitutional arguments will not be addressed.
"6. The allocation of unit valuation to Kansas is the primary issue before the Board. The Taxpayer does not take issue with the method used by PVD to apportion the allocated unit value to the respective taxing jurisdictions within the State of Kansas.
"FINDINGS OF FACT
"General Findings
"7. The Taxpayer is a natural gas company providing production, gathering, processing, storage, transportation, and sales of natural gas from the Montana-Wyoming border through Utah, Colorado, Kansas, Oklahoma, and into Texas. The Taxpayer has tangible property located in seven different states in the Rocky Mountain region and its vicinity.
"8. The Taxpayer is regulated by the Federal Energy Regulatory Commission ('FERC') which exercises preemptive jurisdiction over nearly all of Taxpayer's interstate natural gas transmission, storage and gathering business activities. However, production, merchant, processing, and gathering functions are essentially unregulated.
"9. FERC regulates the Taxpayer's rates by establishing through adversary proceedings (rate cases) the amount Taxpayer is allowed to charge for each unit of service.
"10. As defined by FERC, 'rate base' is the original cost of assets minus depreciation and deferred federal income taxes (DFIT).
"11. Effective October 1, 1993, FERC Order 636 changed the business environment for the Taxpayer by unbundling the several functional operations of the Taxpayer and providing for increased competition.
. . . .
"Intangibles
"26. Intangible property was included in the Taxpayer's unit value only to the extent that it enhanced the unit value of the Taxpayer's property. No specific amount of the unit valuation can be directly attributed to intangible components of the unit. As required by K.S.A. 79-3109c, money, mortgages, and other evidence of debt were not included in the unit valuation of the Taxpayer's property.
"27. Interest and overhead are not intangible assets, but are a capitalized part of the operating property of the Taxpayer. Ifflander, Transcript, pp. 859-860. Therefore, interest and overhead are appropriately included in the Taxpayer's unit value.
"Inventory
"28. PVD included inventory items in the unit valuation of the Taxpayer's property. The Taxpayer did not identify any of its inventory that has been inappropriately valued, assessed, and taxed in Kansas.
"Allocation of Unit Valuation to Kansas
"29. The process of dividing up the unit value of a company among the states where it has a presence is called allocation. The process of dividing up the allocated state value among the taxing jurisdictions within a state is called apportionment.
"30. PVD used original cost to allocate all public utility unit values to Kansas for the tax years in question. This includes all pipeline companies subject to state assessment and all other companies whose values are required to be apportioned by K.S.A. 79-5a25.
"31. There are twenty-eight states that use various allocation factors to allocate public utility unit values. Of these, nine states, including Kansas, use original cost as the sole allocation factor. Ten states use original cost along with other factors to allocate unit value.
"32. Original cost is used by FERC to allocate expenses, plant, and intangibles.
"33. The taxpayer used original cost to allocate deferred federal income taxes to the states in which they operate.
"34. Allocation factors are not designed to determine the fair market value of assets in a particular location, but are designed to determine a reasonable apportionment of a unit's value to such assets. All allocation processes are arbitrary and may import or export value to a state. However, even though allocation processes may be arbitrary in nature, the process used to allocate value must have some relation to the assets whose value is being allocated. Allocation is not an appraisal process.
"35. Original cost as an allocation factor accounts for the amount of investment made throughout the utility system, the quantity of utility property at different locations, the age of the utility property and has a high correlation with income.
"36. Michael W. Goodwin, PVD's expert witness, compared PVD's original cost allocation factors for the subject tax years with allocation factors obtained by the use of other generally recognized allocation methodologies, such as inch miles and MCF miles of transmission lines, as well as horsepower hours of compressors, and he concluded that PVD's original cost allocation factors for the tax years in question were reasonable.
"37. No state uses rate base to allocate unit value either alone or in conjunction with other factors. Rate base is not recognized as a generally accepted appraisal methodology for allocating unit value.
"38. Fully depreciated assets receive no allocated value when rate base is used an allocation factor. The Taxpayer has assets in service in Kansas which have been fully depreciated for purposes of FERC's rate base determination. The Taxpayer has 28.4% of its assets in Kansas fully depreciated. A fully depreciated pipeline is not part of the rate base and therefore, is not part of the rates. However, such pipeline can still transmit volumes of gas. Once the rate is approved by FERC, that rate is multiplied times the volume of gas transmitted to generate income for the Taxpayer. Therefore, fully depreciated assets generate income for the Taxpayer, even though they are not included in the rate base.
"39. No evidence was presented establishing that the use of original cost as the sole allocation factor imported or exported value to Kansas. However, it is uncontested that the use of original cost as a sole allocation factor may import or export value."
The parties disagree about the significance of BOTA's factual findings. CIG contends that those facts relied upon by BOTA distort the overall picture and fail to support BOTA's conclusions of law. The PVD cites additional facts in the record to support the legal conclusions of BOTA. Before examining the allegations of the parties we first address CIG's contention that BOTA again failed to apply the correct standard of review. Equally important to our own decision is the identification of our standard of review of the BOTA decision.
I. BOTA STANDARD OF REVIEW
CIG contends that BOTA paid only lip service to our mandate and again deferred to the PVD's judgment. Resolution of this issue necessarily requires consideration of what we said in Colorado Interstate Gas, regarding BOTA's standard of review. In our reversal of BOTA's prior decision, we concluded that BOTA erred by paying deference to the PVD. BOTA's appropriate standard of review is as follows:
"The law in Kansas is clear. It is the duty of BOTA, in reviewing a valuation by the PVD, to exercise its judgment anew based on the evidence presented to it at the hearing and without giving deference to the PVD's valuation. K.S.A.1996 Supp. 74-2438." 270 Kan. at 318.
We rejected the PVD's argument that BOTA exercised its judgment anew in light of the language used by BOTA that the taxpayer had a duty to show that the PVD "had intentionally and grossly disregarded the standards in order to prevail." 270 Kan. at 318-19.
In an attempt to demonstrate that BOTA again applied an incorrect standard of review, CIG points to language in the BOTA decision which stated that CIG failed to establish by a preponderance of the evidence that the PVD's unit valuation and apportionment to Kansas was in error. CIG points to the following language in the BOTA decision which it claims supports its contention that BOTA again yielded to the PVD's determination:
"46. The Taxpayer has the burden of proof to show by a preponderance of the evidence that the Director has not appropriately valued and allocated the valuation as prescribed by K.S.A. 79-5a04.
. . . .
"49. The Board finds that PVD used appropriate methodologies and came to a rational conclusion in its determination of the appropriate capitalization rate for large gas transmission companies for the tax years in question. The Taxpayer has not provided sufficient evidence to show that PVD's rates are in error. Based on the foregoing, the Board finds that the appropriate capitalization rate for tax year 1993 was 11%, for tax year 1994 was 11% and for tax year 1995 was 11.5%.
. . . .
"56. While the Board does not agree with the Director that he is 'required' to allocate public utility unit valuation to Kansas by use of original cost, the director may use original cost if it is a generally accepted appraisal procedure and it results in the taxpayer's property located in Kansas being valued at fair market value. As noted previously, K.S.A. 79-5a25 requires that the apportionment of the assessed valuation to the various taxing jurisdictions in Kansas is to be in proportion to original cost. K.S.A. 79-5a04 and 79-5a25, read in pari material, provide a two-step process to first allocate, and then apportion, unit valuation to Kansas. Testimony was that PVD for the years at issue herein did perform the two-step process. However, as contended by the Director in his brief on pages 14-15 and by Mr. Badenoch in his testimony, the process of allocation and apportionment need not be a two step process if each taxing jurisdiction's share of the whole can be directly determined, as it can in Kansas. The Board concludes that the Director's interpretation is reasonable, has a rational basis, and should be upheld.
. . . .
"68. The Board finds that the Taxpayer has not shown by a preponderance of the evidence that PVD's unit valuation and apportionment to Kansas is in error. After considering the standards prescribed by K.S.A. 79-5a04, the Board concludes that the correlated unit value of the Taxpayer's property for 1993 is $525,000,000, for 1994 is $465,000,000 and for 1995 is $430,000,000. The Board further concludes that the fair market value of the Taxpayer's property allocated to Kansas for 1993 is $50,820,480, for 1994 is $48,041,475, and for 1995 is $44,549,720." (Emphasis added.)
CIG argued that the above language makes clear that BOTA once again gave deference to the PVD and required that CIG shoulder the burden of providing that the PVD erred. CIG noted that it should have no burden to show that the PVD erred or to negate the contentions of the PVD but argued that its burden is limited to showing by a preponderance of evidence that its proposed values are correct. We agree that CIG's burden before BOTA was to establish by a preponderance of evidence that its proposed values are correct. We, however, disagree that the above language in the BOTA decision provided a basis for concluding that BOTA gave deference to the PVD in its decision on the fair market value of CIG's property in Kansas.
Following remand, the proceeding continued with an agreement by the parties to consider the matter based upon the existing record. At that point, the record contained the PVD's determinations as to CIG's value, together with all supporting evidence. CIG's value, together with its supporting evidence, was also before BOTA. In order to prevail before BOTA, the burden fell upon CIG to establish by a preponderance of the evidence the accuracy of its valuation. BOTA recognized its role when it said that CIG "has the burden of proof to show by a preponderance of the evidence that the [PVD] has not appropriately valued and allocated the valuation as prescribed by K.S.A. 79-5a04." In other words, CIG's burden was to show that the PVD was wrong and the value it asserted was supported by substantial competent evidence. Thus, BOTA was giving no deference to the PVD except to say that when the PVD established evidence that its valuation was accurate, CIG must necessarily attack and undermine the PVD's valuation. It is up to BOTA which side presents the most compelling case.
CIG argues that Paragraph 46, quoted above, shows how BOTA deferred to the PVD's judgment. Within this context, BOTA's statement that the taxpayer has the burden of proof to show by a preponderance of the evidence that the director has not appropriately valued and allocated the valuation, as prescribed by K.S.A. 79-5a04, is another way of saying that the burden lies with CIG. In order for CIG to prove its valuation, it would be required to prove that the PVD valuation was incorrect.
CIG also complains that evidence of BOTA deference is found in Paragraph 49, where BOTA said that the PVD came to rational conclusions. However, BOTA also said in the same sentence that the PVD's methodologies were appropriate. Consistent with exercising judgment anew, it would be logical for BOTA to adopt conclusions reached by "appropriate" methodologies. BOTA determined anew that the original cost was the appropriate method to determine fair market value of CIG properties in Kansas. This method was advanced by the PVD and rejected by CIG, providing BOTA with a choice among the many methods set forth in K.S.A. 79-5a04. BOTA selected the most appropriate method, which was also the method used by the PVD
CIG argued that BOTA erred by using language in Paragraph 56 when it said that the PVD's "interpretation is reasonable, has a rational basis, and should be upheld." We do not believe BOTA's language indicates that it ignored its standard of review. BOTA is faced with a decision between two competing positions as to value. Key to its decision is the process used by each in ascertaining such value. The allocation process used by each party is key to its final decision. In determining that the PVD's interpretation is reasonable, BOTA has determined that the evidence as a whole supports the determination made by the PVD, not that deference must be given to the PVD. The language used by BOTA demonstrates to this court that BOTA understood the role it was required to play in its determination of value.
In Paragraph 68, when BOTA said in its original order on remand that CIG has not showed "by a preponderance of the evidence that the PVD's unit valuation and apportionment of value to Kansas is in error," it was also saying that the PVD had shown by a preponderance of evidence that its valuation was correct. In its brief on appeal, CIG failed to offer a complete quotation of Paragraph 68, which indicates BOTA's conclusions with respect to the unit value and the allocation of that value to Kansas. Unlike the previous appeal, there is no indication that BOTA relied on an intentional and gross disregard standard of review or deferred to the PVD in determining fair market value in Kansas. See Colorado Interstate Gas, 270 Kan. at 315.
BOTA understood the mandate of this court in Colorado Interstate Gas. BOTA applied a correct standard of review as demonstrated in its order denying CIG's motion for reconsideration:
"5. The Taxpayer asserts that the Board did not exercise its judgment anew, but instead, found that the Taxpayer did not meet its burden to show that the Director has not appropriately valued and allocated the valuation. The Taxpayer further argues that the Board's standard of review inherently gives deference to the Director's valuation in direct contravention of the Supreme Court's remand. The Board believes the Taxpayer has misinterpreted the Board's findings and conclusions.
"6. The Board is well aware that the standard of review requires that the Board exercise its judgment anew based on the evidence presented and without giving deference to the Director's valuation. The Taxpayer's argument in these matters is basically that the Director has excessively valued and allocated the valuation of the Taxpayer's property. The Taxpayer must provide evidence to show that the Director's valuation is in error and the Director must provide evidence in support of his valuation. The Board must review the evidence provided and by applying the factors enumerated in K.S.A. 79-5a04 determine the appropriate valuation and allocation of the Taxpayer's property. In these matters, the Board gave no deference to the Director's valuations, but rather reviewed the evidence presented and concluded by the weight of the evidence that the appropriate unit valuation for 1993 is $525,000,000 (now corrected to $510,000,000), $465,000,000 for 1994 and $430,000,000 for 1995, which are the same as determined by the Director. The Board further concluded that the fair market value of the Taxpayer's property allocated to Kansas for 1993 is $50,820,480, for 1994 is $48,041,475, and for 1995 is $44,549,720, which are the same as determined by the Director."
Nevertheless, CIG argues that a decision on whether BOTA applied the correct standard of review should be determined by considering the record as a whole, not by considering what BOTA said in its order denying reconsideration. Further, CIG argues that BOTA's order denying reconsideration does not negate the admissions of deference in BOTA's original order since BOTA's figures matched those of the PVD's despite the subjective nature of the judgment exercised by the PVD.
The fact that BOTA's figures matched those of the PVD's provides little if any evidence that BOTA applied a deferential standard of review. CIG is right that this determination must be made from the record as a whole. If BOTA is to be believed, it gave no deference to the PVD in its determination of value. However, we must point out that initially it was the responsibility of the PVD to value CIG's property for ad valorem taxation in Kansas. It did so based upon the judgment of its experts and all of the factors which are now before this court. The proceeding before BOTA started with the PVD's determination of value and its contention before BOTA that fair market value in Kansas was established. The assessment had been made by the PVD. Before BOTA, the PVD presented its testimony and CIG presented its testimony and its determination of fair market value in Kansas.
CIG had the burden to establish that the determination by the PVD was invalid based upon the record as a whole. Based upon all evidence presented, BOTA concluded that CIG failed to meet its burden, thus providing a basis for concluding that the valuation determined by the PVD was correct. Instead of giving deference to the PVD by adopting its valuation, BOTA determined that the record supported the determination made by the PVD. To say that BOTA adopted the PVD's values without any consideration of the evidence ignores the record as a whole as well as BOTA's expressed conclusion that its determination was made anew based upon all the evidence presented.
II. OUR STANDARD OF REVIEW
In reviewing a BOTA decision, several well-established principles govern. BOTA is a specialized agency and is considered to be the paramount taxing authority in this state. Wirt v. Esrey, 233 Kan. 300, 314, 662 P.2d 1238 (1983). BOTA is a specialized agency that exists to decide taxation issues. Hixon v. Lario Enterprises, Inc., 257 Kan. 377, 378-79, 892 P.2d 507 (1995). Its decisions are given great weight and deference when it is acting in its area of expertise. In re Tax Appeal of Boeing Co., 261 Kan. 508, 515, 930 P.2d 1366 (1997). The party challenging BOTA's decisions has the burden to prove that the action taken was erroneous. Board of Ness County Comm'rs v. Bankoff Oil Co., 265 Kan. 525, 537, 960 P.2d 1297 (1998). However, if BOTA's interpretation of law is erroneous as a matter of law, appellate courts will take corrective steps. In re Tax Appeal of Family of Eagles, LTD, 275 Kan. 479 Syl. ¶ 1, 66 P.3d 858 (2003).
Orders of BOTA are subject to judicial review under the Act for Judicial Review and Civil Enforcement of Agency Actions. See K.S.A. 77-601 et seq.; K.S.A. 74-2426(c); In re Appeal of Topeka SMSA Ltd. Partnership, 260 Kan. 154, 162, 917 P.2d 827 (1996). In reviewing BOTA decisions, this court determines whether relief is warranted under the provisions of K.S.A. 77-621(c), which provides:
"(1) The agency action, or the statute or rule and regulation on which the agency action is based, is unconstitutional on its face or as applied;
"(2) the agency has acted beyond the jurisdiction conferred by any provision of law;
"(3) the agency has not decided an issue requiring resolution;
"(4) the agency has erroneously interpreted or applied the law;
"(5) the agency has engaged in an unlawful procedure or has failed to follow prescribed procedure;
"(6) the persons taking the agency action were improperly constituted as a decision-making body or subject to disqualification;
"(7) the agency action is based on a determination of fact, made or implied by the agency, that is not supported by evidence that is substantial when viewed in light of the record as a whole, which includes the agency record for judicial review, supplemented by any additional evidence received by the court under this act; or
"(8) the agency action is otherwise unreasonable, arbitrary or capricious."
"Arbitrary or capricious" may be established under K.S.A. 77-621(c)(8) where an administrative order is not supported by substantial evidence. Kansas Racing Management, Inc. v. Kansas Racing Comm'n, 244 Kan. 343, 365, 770 P.2d 423 (1989). "Substantial evidence is evidence which possesses both relevance and substance so as to form a basis of fact from which the issues can be reasonably resolved. [Citation omitted.]" Dalmasso v. Dalmasso, 269 Kan. 752, 758, 9 P.3d 551 (2000).
III. ALLOCATION METHODOLOGY
With these principles firmly in mind, we recognize that the primary dispute between the parties in this case centers upon allocation. CIG argued allocation by original cost was error because the Kansas assets are relatively depreciated when compared to CIG's system-wide assets. The PVD argued that original cost allocation was the best measure of the fair market value of CIG's Kansas assets. Contrary to the arguments of CIG, the questions presented with reference to allocation are factual and not legal questions. The method used by the PVD and adopted by BOTA to partially determine the fair market value of CIG's property in Kansas is one identified by Kansas statute, K.S.A. 79