Clajon Gas Co., L.P., Aquila Gas Pipeline Corp., Tax Matters Partner - Page 32

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               BEGHE, J., dissenting:  Elementary economic analysis                   
          supports the conclusion of Judge Foley, who tried this case, that           
          the gathering system assets in issue are class 13.2 assets “used            
          by * * * producers for * * * production of * * * natural gas”               
          under Rev. Proc. 87-56, 1987-2 C.B. 674, 678.  Petitioner’s                 
          gathering systems are used for production of natural gas by all             
          the well owners/operators/producers from whose wells originated             
          the gas processed through the systems.  This is true,                       
          notwithstanding such producers do not own and operate any                   
          gathering system, with most such producers selling to petitioner            
          at the wellhead the bulk of the gas processed through a system1             
          and a few other such producers paying petitioner fees for                   
          processing their gas through the system.                                    
               Back in 1937, R.H. Coase, in the first of the papers for               
          which he was awarded the Nobel Prize in Economics in 1991, “The             
          Nature of the Firm”,2 raised and answered a basic question about            
          the concept of the firm and its boundaries.  Coase explained why            
          businesses exist and operate as they do, why, for instance,                 

               1Albeit pursuant to contracts under which most such                    
          producers and petitioner share the ultimate proceeds of sale to a           
          pipeline company that transports the processed product to public            
          utilities for distribution to consumers.                                    
               2Economica 4 (Nov. 1937), reprinted in Coase, “The Firm, the           
          Market and the Law” 33 (1988), and Williamson & Winter, Eds.,               
          “The Nature of the Firm Origins, Evolution, and Development” 18             

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