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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
(1991).
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