Duke Energy Natural Gas Corporation - Page 11

                                       - 11 -                                         

          1972-1 C.B. 721, the Commissioner changed this language to read             
          exactly as the first sentence of asset class 13.2 reads today.              
          See Rev. Proc. 77-10, 1977-1 C.B. 548.  In making the latest                
          change, the Commissioner noted explicitly that the change was               
          "not intended to modify the composition of the existing classes             
          of Rev. Proc. 72-10."  Sec. 1.04 of Rev. Proc. 77-10, supra at              
               We conclude that the gathering systems are included in asset           
          class 46.0, and we so hold.  In so holding, we have considered              
          the recent opinion of the U.S. District Court for the District of           
          Wyoming, which reaches a contrary holding in a setting that is              
          similar to the one at hand.  See True v. United States, No.                 
          96-CV-1050-J (D. Wyo. Nov. 3, 1997)(order granting motion for               
          partial summary judgment).  Although we agree with the District             
          Court that the classification of assets for depreciation purposes           
          rests on each asset's primary use, we do not agree that pipeline            
          companies such as petitioner use gathering lines primarily to               
          produce petroleum.  The District Court did not consider the                 
          evolution of the language in asset class 13.2, which we find to             
          be most helpful to our inquiry.  The court also did not consider            
          the industry definition of the word "production".                           
               We have carefully considered all arguments made by                     
          petitioner for a contrary holding and, to the extent not                    
          discussed above, find them to be irrelevant or without merit.               

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  Next

Last modified: May 25, 2011