Clajon Gas Co., L.P., Aquila Gas Pipeline Corp., Tax Matters Partner - Page 27

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          the Court of Appeals for the Tenth Circuit, which involved the              
          question of FERC jurisdiction over an interstate gathering                  
          system.  See Northwest Pipeline Corp. v. FERC, 905 F.2d 1403                
          (10th Cir. 1990).  In that case, FERC had asserted jurisdiction             
          over the system on the basis that the primary function of the               
          system was “the transportation of natural gas in interstate                 
          commerce.”  Id. at 1405, 1410.  The Court of Appeals disagreed              
          that transportation was the primary function of the system if               
          transportation was only incidental to an exempt function of the             
          system (i.e., gathering natural gas):  “Some transportation must            
          occur to move the gas from the wellhead in some manner.  What the           
          Commission must decide in applying the primary function test is             
          whether that transportation is incidental to traditional                    
          gathering functions and, thus, exempt from its jurisdiction.”               
          Id. at 1410-1411 (fn. ref. omitted).  It is clear, however, that            
          both FERC and the Court agreed that gathering pipelines are used            
          to transport natural gas.                                                   
               Thirdly, although petitioner’s expert was of the opinion               
          (and respondent’s principal expert did not disagree) that                   
          gathering pipelines have a shorter useful life than do                      
          transmission or distribution pipelines,15 that does not persuade            

               15  Distribution pipelines, like transmission pipelines,               
          carry lean gas.  They are fed by transmission pipelines and                 
          connect to the premises of the ultimate consumers of the gas.               

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