Clajon Gas Co., L.P., Aquila Gas Pipeline Corp., Tax Matters Partner - Page 25

                                       - 25 -                                         
          Court of Appeals for the Tenth Circuit also relies.  See Duke               
          Energy Natural Gas Corp. v. Commissioner, 172 F.3d at 1261-1262.            
          We reject petitioner’s argument for several reasons.                        
               To begin with, 46.0, although entitled “Pipeline                       
          Transportation”, encompasses “assets used in the private,                   
          commercial, and contract carrying of * * * gas * * * by means of            
          pipes”.  (Emphasis added.)  The alleged term of art,                        
          “transportation”, nowhere appears in the descriptive language of            
          46.0, and it is clear that Clajon’s primary use of its gathering            
          pipelines is “in * * * carrying * * * gas”.13  Thus, the plain              

               13  In our discussion to this point, we have not                       
          distinguished between the pipelines, compression stations, and              
          metering installations constituting what we have termed “the                
          gathering pipelines”.  Although respondent made separate                    
          adjustments with respect to such components, the adjustments were           
          similar, and the bulk of the adjustments (in excess of 90                   
          percent) were with respect to the pipelines. (Less than 0.5                 
          percent were with respect to the meter runs.)  We have had no               
          need to distinguish among the components since the issue is                 
          whether petitioner is a natural gas producer, not whether the               
          components of its gathering system are within the meaning of the            
          term “gathering pipelines” as it is used in 13.2.  With respect             
          to the placement of such components within 46.0, certainly                  
          Clajon’s primary use of its pipelines was in carrying or                    
          transporting gas.  Moreover, because the sole function of field             
          compression is, in the words of petitioner’s expert, “to push the           
          gas from one location to another through the gathering system”,             
          the same is true of Clajon’s compressor stations.  The so-called            
          “meter runs” are not separately discussed in either the trial               
          record or the briefs.  However, if they are simply meters used to           
          ascertain the quantity of gas flowing through the pipelines (the            
          definition of a “meter” set forth in Williams & Meyers, Manual of           
          Oil and Gas Terms 626 (11th ed. 2000)), we see no reason to                 
          differentiate them from the pipelines in terms of primary use.              

Page:  Previous  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  Next

Last modified: May 25, 2011