Duke Energy Natural Gas Corporation - Page 10

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          production facility, which, as such, brings them within asset               
          class 46.0.  See sec. 1.167(a)-11(b)(4)(iii)(b), Income Tax Regs.           
               Our conclusions herein are supported by our understanding of           
          the evolution of asset class 13.2.  In Rev. Proc. 62-21, 1962-2             
          C.B. 418, the Commissioner began grouping assets into broad                 
          industry classes for depreciation purposes.  Group Three,                   
          Guideline Class 17(b), entitled "Exploration, Drilling and                  
          Production" states:  "Includes the exploration, drilling,                   
          maintenance and production activities of petroleum and natural              
          gas producers.  Includes gathering pipelines and related storage            
          facilities of such producers.  Excludes gathering pipelines and             
          related storage facilities of pipeline companies."  Id. at 424.             
          Under this description, petitioner's gathering systems clearly              
          would not have been included in this class because the pipelines            
          are owned by a pipeline company and not a producer.                         
               Later, when the Commissioner prescribed the asset classes              
          and guideline lives for purposes of the asset depreciation range            
          system, the Commissioner carried forward a similar limitation.              
          Rev. Proc. 71-25, 1971-2 C.B. 553, 556, provides that asset class           
          13.2 "Includes assets used for drilling of wells and production             
          of petroleum and natural gas, including gathering pipelines and             
          related storage facilities, when these are related activities               
          undertaken by petroleum and natural gas producers."  After                  
          restating this description without change, see Rev. Proc. 72-10,            

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