In re the Appeals of Various Applicants from a Decision of the Division of Property Valuation, 313 P.3d 789

Consolidated Kansas property tax appeal about ad valorem taxation of natural gas stored in interstate pipelines under contracts with pipeline companies.
Taxpayers consist of three groups: out-of-state marketers/brokers, out-of-state local distribution companies certified as public utilities in their states, and out-of-state municipalities.
Gas is stored in underground pipeline facilities in Kansas; taxpayers do not own Kansas storage facilities and do not operate in Kansas as public utilities.
PVD initially treated gas as public utility property under 79-5a01(a); COTA denied exemptions, applying the statute against all groups.
Kansas Supreme Court, with remand, held 79-5a01 unconstitutional as applied to marketers/brokers and out-of-state municipalities, but constitutional as applied to some out-of-state LDCs; remanded for individual determinations.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Commerce Clause application to gas stored in Kansas	Quill dictates no nexus if only common-carrier connection to Kansas.	Complete Auto nexus supports tax where gas stored in Kansas; substantial nexus and services relation exist.	Tax does not violate Commerce Clause
Due Process and minimum contacts	No sufficient contact; gas in pipelines controlled by others; no Kansas property ownership.	Gas stored in Kansas creates minimum nexus via property located there and contract-based presence.	Due process satisfied; nexus exists
Constitutional scope of 79-5a01 as applied to marketers/brokers	Statutory definition conflicts with common meaning; marketers/brokers not true public utilities.	Statutory definition consistent with common meaning and legislative authority to define subclasses.	Unconstitutional as applied to marketers/brokers
Constitutional scope of 79-5a01 as applied to out-of-state municipalities	Municipalities should be treated like private utilities for exemption purposes.	Municipal utilities are governmental entities; not public utilities under Article 11, § 1.	Unconstitutional as applied to out-of-state municipalities
Public utility status of out-of-state LDCs and other groups	LDCs in other states should be exempt as merchants’ inventory.	LDCs may meet public utility concept under statutory definition; exemptions denied only where appropriate.	Statutory application upheld for some out-of-state LDCs

Quill Corp. v. North Dakota, 504 U.S. 298 (1992) (bright-line rule on common-carrier nexus for use tax cases)
Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977) (four-part test for Commerce Clause tax validity)
Oklahoma Tax Comm'n v. Jefferson Lines, Inc., 514 U.S. 175 (1995) (commerce/nexus and state tax considerations in transportation context)
Peoples Gas, Light v. Harrison Central App., 270 S.W.3d 208 (Tex. App. 2008) (illustrates nexus and services considerations in interstate gas storage taxation)
Colorado Interstate Gas Co. v. Board of Morton County Comm'rs, 247 Kan. 654 (1990) (self-executing merchants’ inventory exemption and public utility definition in Kansas)
Central Illinois Public Services Co., 276 Kan. 612 (2003) (legislative definition of public utility tethered to common understanding at time of amendment)
In re Assessment of Personal Property Taxes, 234 P.3d 938 (Okla. 2008) (gas storage nexus and due process in Oklahoma; storage anticipated and intended)
In re Assessment, 234 P.3d 952, 234 P.3d 952 (Okla. 2008) (nexus and taxation of gas stored in interstate pipelines in Oklahoma context)
In re Appeal of Director of Property Valuation, 284 Kan. 592 (2007) (public utility definition and legislative attempts to redefine)
United Teleservices, Inc., 267 Kan. 570 (1999) (reseller of telecommunications and statutory vs constitutional definitions)
State v. Limon, 280 Kan. 275 (2005) (constitutional consideration in state taxation context)