C:\Program Files\WS_FTP\WEBPAGE\2000149.htm

Mr. John L. Bordes, Jr., Mr. Jesse R. Adams, III, and Ms. Nicole Crighton of Oreck, Bradley, Crighton, Adams & Chase, for Petitioner BP Amoco (Amoco).

Mr. William J. Thomson, II, and Mr. John Kuker of Dray, Thomson & Dyekman, P.C., for Petitioner Chevron U. S. A., Inc. (Chevron).

Mr. Lawrence J. Wolfe and Mr. Walter F. Eggers, III, of Holland & Hart, for Petitioner Union Pacific Resources Company, now known as RME Petroleum (UPRC).

Mr. Martin L. Hardsocg and Mr. Karl D. Anderson for the Wyoming Department of Revenue (Department).

Mr. Bruce A. Salzburg of Herschler, Freudenthal, Salzburg & Bonds for Intervenor Uinta County.

This matter came on for hearing on September 3, 2002, by the State Board of Equalization (Board), consisting of Chairman Edmund J. Schmidt, Vice Chairman Roberta A. Coates (Chairman at the time of the Decision and Order), Board Member Sylvia Lee Hackl. Gayle R. Stewart served as Hearing Officer. Chairman Schmidt and Member Hackl resigned from the Board prior to the Decision and Order. Vice Chairman Alan B. Minier and Board Member Thomas R. Satterfield considered the matter by reviewing the file, hearing transcript, and exhibits, and participated in the Decision and Order. This appeal arises from the Departments selection of the A comparable value method for the valuation of gas products processed through the Painter Complex Gas Processing Facility located in Uinta County, Wyoming, for production year 2000, and Notices of Valuation issued by the Department for the same year. We find for the Department, but remand for amendments to the Notices of Valuation for 2000 to reflect actual numbers for 2000 operations.

As required by Wyo. Stat. Ann. §39-14-203(b)(vi), the Department selected the method it intended to apply to calculate the fair cash market value of Petitioners’ production, then duly notified them of selection of the comparable value method on August 31, 1999. All Petitioners appealed this selection of method to the Board pursuant to Wyo. Stat. Ann. § 39-14-203(b)(viii). The Board accordingly has jurisdiction to consider the Petitioners’ appeals of the selection of the comparable value method.

In the late spring of 2001, Petitioners Amoco, Chevron, and UPRC filed annual reports related to their year 2000 gas production processed through the Painter Complex Gas Processing Plant, but used the proportionate profits method to calculate fair cash market value of their production. After reviewing the annual reports, the Department issued each Petitioner a Notice of Valuation using the comparable value method. The Department determined a value using best available information. To do so, the Department calculated a processing deduction equal to (1) plant operating costs plus (2) a fee of $0.25 per thousand cubic feet of gas, measured at the inlet of the Painter Plant.

Petitioners Amoco and Chevron filed timely appeals of the Notices of Valuation received by them, pursuant to Wyo. Stat. Ann. §39-14-209(b). These appeals challenged the Department’s application of the comparable value method. Under Wyo. Stat. Ann. §39-14-209(b)(iv), the Board may hear objections to the Department’s determination of the fair market value of natural gas production, and accordingly has jurisdiction to consider the appeals of Amoco and Chevron. Union Pacific Resources Company did not file a timely appeal of the Department’s Notice of Valuation.

The Department is responsible for determining the fair market value of natural gas production each year. In Wyoming, these taxes are computed on the basis of fair market value after production of gas from the well is completed. This case involves the determination of a value for gas which cannot be sold when production is completed, but instead can only be sold after it has been processed, principally to remove nitrogen.

Where gas is sold after it has been processed, Wyoming law authorizes the Department to select one of four alternative methods to make its determination of value. The Department selected the comparable value method. The Petitioners insist that, for a variety of reasons, the comparable value method cannot and should not be used. They request that we set aside the Department’s selection. The parties agree that the result of a ruling in favor of the Petitioners will be determination of value for production year 2000 using the proportionate profits method, which is the method that had been used in recent years to value production from the Painter Plant.

Generally speaking, the object of the comparable value method is to determine a processing fee. This fee is then subtracted from the value of the actual sales of processed gas, thereby reaching a fair market value for the gas after production is complete, but before processing. To use the comparable value method, the Department must draw inferences based on reliable information about processing fees paid by other persons in similar circumstances.

This case is closely allied to the proceedings in Union Pacific Resources Company et al, Docket No. 2000-147 et al., June 9, 2003, 2003 WL 21774603 (Wyo. St. Bd. Eq.)(“Whitney Canyon”). The Petitioners were parties in Whitney Canyon and have stipulated to the incorporation of all Whitney Canyon testimony into this case. [Stipulations of the Parties, ¶ I.1]. Most of the witnesses in this case previously testified in Whitney Canyon. There are, however, significant differences between this case and Whitney Canyon.

The majority of factual issues in this case arise from the processing conducted at the Painter Plant over time, and the commercial transactions which supported that processing. The details of our findings affect our conclusions regarding sources of comparable value. Although we decide this case in favor of the Department, we do so on the basis of our own view of the findings that can be drawn from the record.

Generally speaking, the legal issues in this case were raised in Whitney Canyon, and have been raised again. We resolve them in the same way. Where issues of fact or law were fully resolved in Whitney Canyon, we have incorporated those determinations into this case by citations to Whitney Canyon Findings of Fact and Conclusions of Law.

1. The three Petitioners in this case are producers of sweet natural gas who also jointly own interests in a facility that processes that gas for sale. The parties have assumed that this circumstance has the effect of limiting the methods available to the Department for the determination of the fair market value of the gas, and represent to the Board that, out of five statutory possibilities (the fifth being mutual agreement of the Department and taxpayer), the only two applicable methods for determining fair market value are the comparable value method and the proportionate profits method. The role of the Board in the first instance is to determine whether the Department properly selected the comparable value method. If not, the Petitioners contend that the proportionate profits method is the only method by which a value can be determined for the gas.

2. This case is the second in a series of four, concerning four natural gas processing plants. The first case involved the valuation of natural gas processed at the Whitney Canyon gas processing plant. We now consider the value of natural gas processed at the Painter Canyon Gas Complex, and find that there is a considerable divergence in the factual premises of the two cases. During the period at issue, the Whitney Canyon and Painter Plants provided different processing services. The Whitney Canyon Plant processed sour gas to remove hydrogen sulfide. [Transcript Vol. I, p. 38; see Wyo. Stat. Ann. §39-14-201(a)(xxv), defining “sweetening”].

3. In contrast, the Painter Plant processed sweet gas, principally to remove nitrogen. [Stipulations, ¶A.4; Transcript Vol. I, p. 38]. At the time of the hearing, the inlet composition of Painter gas was about 66% nitrogen. [Transcript Vol. I, p. 38]. Nitrogen was introduced by the Petitioners to manage their gas resource. Petitioners remove nitrogen from their gas and reinject the nitrogen in various fields. Injecting nitrogen into a field can maintain reservoir pressure and, by doing so, can optimize recovery of gas from the field. [Transcript Vol. I, p. 39].

4. Amoco discovered the Ryckman Creek gas field in 1976. [Transcript Vol. I, p. 78]. The Ryckman Creek Field was unitized in March of 1977. [Transcript Vol. I, p. 78]. Unitizing generally refers to combining the working interest owners in a field to come up with an average weighted working interest, or unit working interest, for the purpose of enhancing the development of the unit as a whole. [Transcript Vol. I, p. 79]. From a production and expense allocation standpoint, individual leases and wells lose their identity when unitized. [Transcript Vol. I, p. 79].

5. The Petitioners or their predecessors have always owned all of the interests in the Ryckman Creek unit. [Transcript Vol. I, p. 79].

6. The Ryckman Creek unit was originally served by a facility designed only to separate and recover free liquids from the gas, and to dehydrate the gas. [Transcript Vol. I, p. 80].

7. Chevron discovered the Painter Reservoir in 1977. [Transcript Vol. I, p. 78]. The Clear Creek and East Painter fields were discovered in 1978 and 1979. [Transcript Vol. I, p. 78]. The Painter Reservoir Unit was formed in 1977. [Transcript Vol. I, p. 78]. The Clear Creek and East Painter areas subsequently joined the Painter Unit. [Transcript Vol. I, p. 79].

8. The Petitioners and their predecessors have always owned the Painter Reservoir. [Transcript Vol. I, p. 80].

9. The Petitioners and Cities Service originally owned the interests in East Painter. [Transcript Vol. I, p. 80]. Cities Service was eventually replaced by OXY USA Inc.. [Transcript Vol. I, p. 81].

10. In Clear Creek, the Petitioners were the principal working interest owners, joined by eleven minority interest owners that collectively held an interest of less than half a percent. [Transcript Vol. I, p. 81]

11. Like Ryckman Creek, the Painter Reservoir was originally served by a typical sweet gas plant, known as the Enron gas products plant. [Transcript Vol. I, p. 81].

12. By 1985, when the Painter Complex Gas Processing Plant was first proposed, the owners of the Ryckman Creek and Painter units had decided to implement a pressure maintenance program using nitrogen. [Transcript Vol. I, p. 85]. Prior to the use of nitrogen, “quite a bit of the gas was being reinjected into the reservoir to maintain pressure.” [Transcript Vol. II, p. 255]. The nitrogen works its way through the reservoir and is produced with the gas as it comes out of the well. [Transcript Vol. I, p. 85]. The nitrogen is then recovered and reinjected. [Transcript Vol. I, p. 39].

13. The use of nitrogen introduces a number of practical issues into the management of gas units. The nitrogen must be manufactured or otherwise acquired. [Transcript Vol. I, p. 58]. The proportion of nitrogen in a pressurized field affects requirements for handling the nitrogen component of the gas. Over time, the nitrogen reaches an “acceptable level” for a field. The operator will then cease nitrogen injection, vent the nitrogen that is separated from hydrocarbons, and sell remaining hydrocarbons until the field reaches its economic limit. [Transcript Vol. II, p. 183]. The cessation of secondary reservoir maintenance by injecting nitrogen is known as “blowdown.” [Transcript Vol. I, p. 58].

14. The Painter Plant was designed to process natural gas composed of as much as 80% nitrogen. [Transcript Vol. I, p. 84]. The Plant is more expensive than a normal sweet gas plant, both in terms of operating cost and investment cost. [Transcript Vol. I, p. 84].

15. Arrangements for construction and operation of the Painter Plant were carefully documented. Petitioners Amoco, Chevron, and UPRC, or their respective predecessors in interest, were and are the principal Parties to the Construction, Ownership and Operation Agreement, Painter Complex Gas Processing Plant, Uinta County, Wyoming, dated March 3, 1985 (Painter C&O Agreement). [Exhibit 120]. The Painter C&O Agreement defines the Plant to be plant and pipeline facilities installed by Amoco, as modified “for the purpose of gathering and processing Gas for the separation of hydrocarbon gas, Nitrogen, Natural Gas Liquids, Condensate, and other incidental constituents.” [Exhibit 120, Sections 1.01(t), 2.01].

16. The original purpose of the Painter Plant was to process natural gas from only four fields: Painter, East Painter, Ryckman, and Clear Creek. [Stipulations, ¶A.2]. These four fields were defined in the C&O Agreement. [Exhibit 122, Section 1.01(c), (j), ®), and (cc)].

17. The approximate cost of the Plant was $120 million. [Transcript Vol. I, p. 94].

18. Each Party to the Painter C&O Agreement is a Plant Owner with an undivided interest in the Plant. [Exhibit 120, p. 1, Sections 1.01(t) and 7.01]. Together, the Petitioners initially owned 99.99652% of the Painter Complex Gas Processing Plant, with seven other persons or entities owning the remaining .00348%. [Exhibit 120, Section 7.01, and attached Exhibit B]. Amoco assumed the minority interests in 1987. [Transcript Vol. I, p. 88]. The ownership allocations relevant to this case are:

[Stipulations, ¶A.3.a; Exhibit 120, attached Exhibit B; Exhibit 129, attached Exhibit B].

Amoco is the Plant Operator. [Exhibit 120, Sections 1.01(v), 3.01]. As Plant Operator, Amoco was and is responsible for the construction and operation of the Plant. [Exhibit 120, Section 3.01]. Article 8 of the C&O Agreement generally describes the requirements for Operation of the Painter Plant. [Exhibit 120, Article 8]. The Plant Operator is also responsible for financial services [Exhibit 120, Articles 4 and 5, Exhibit C], accurate determinations of flows into and out of the Plant [Exhibit 120, Article 9], Worker’s Compensation coverage [Exhibit 120, Section 15.01], the payment of ad valorem taxes on plant property [Exhibit 120, Section 16.01], administration of an attached Gas Processing Agreement [Exhibit 120, attached Exhibit H], and a variety of other services.

20. When the C&O Agreement was being negotiated, Amoco advocated making the Plant a profit center by charging a fee against all gas processed by the Plant, but this position did not prevail. [Transcript Vol. II, p. 185]. In contrast, a profit center arrangement was established at Whitney Canyon.

21. Rather than creating a profit center, the Plant Owners agreed that each Plant Owner would purchase a portion of the processing capacity of the Plant, known as Dedicated Capacity. The C&O Agreement accordingly defines Dedicated Capacity to mean a Plant Owner’s Percentage Ownership of Plant Capacity. [Exhibit 120, Section 1.01(h)]. Plant Capacity in turn means the “throughput capability of the Plant,” expressed in thousands of standard cubic feet per day. [Exhibit 120, Section 1.01(u), Article 6].

22. Each Plant Owner has the exclusive right to utilize its Dedicated Capacity for processing its own Gas. [Exhibit 120, Section 6.01] The Painter C&O Agreement defines Gas as the Plant Owner’s “entire stream as delivered to the Plant at the Delivery Point(s) including all components, elements and mixtures indigenous to such stream.” [Exhibit 120, Section 1.01(k)]. In other words, a Plant Owner’s Gas includes nitrogen as well as hydrocarbons.

23. The Plant Owners retained various other individual rights regarding the affairs of the Plant. For example, a Plant Owner with a Percentage Ownership greater than 10% could elect to have the Plant operated in a manner that recovers Natural Gas Liquids [Exhibit 120, Article 10]. The Plant Owners retained the right to audit. [Exhibit 120, Exhibit C, Section 5]. The Plant Owners retained rights to approve use of the Plant by third parties. [Exhibit 120, Section 6.09].

24. A Delivery Point is a point of interconnection to the Plant facilities for the delivery and measurement of Gas for processing. [Exhibit 120. Section 1.01(I)]. The Painter C&O Agreement specifically identified the delivery and redelivery points for the four fields which were the subject of the Agreement. [Exhibit 120, attached Exhibit E].

25. To account for the monthly operating cost of each Plant Owner’s use of Plant Capacity, the Plant Operator calculates an allocation. [Exhibit 120, Article 11]. This calculation rests on the mass of Gas delivered to the Delivery Points for processing. [Exhibit 120, Article 11]. Each Plant Owner’s allocation includes an allocation of Plant Fuel. [Exhibit 120, Section 11.07].

26. Each entity for which the Plant processed gas took its allocated share of products in kind from the tailgate of the Plant, and individually marketed those products. [Transcript Vol. I, pp. 92-93, 129; Exhibit 120, Sections 13.01, 13.02].

27. The Painter C&O Agreement addresses investment and operating costs separately. The C&O Agreement first made each Plant Owner responsible to the Plant Operator for a share of the investment costs and expenses related to construction and initial operation of the Plant. [Exhibit 120, Article 4 and Exhibit C].

28. The C&O Agreement then made each Plant Owner responsible to the Plant Operator for a share of the monthly operating expenses of the Plant. This share of monthly operating expenses is based on the allocation that accounts for each Plant Owner’s use of the Plant Capacity. [Exhibit 120, Section 5.01, Article 11].

29. The C&O Agreement authorizes the Plant Operator to maintain a permanent cash operating fund “approximately equal to the expense of operation for a period of thirty (30) days,” and to bill all Plant Owners for Plant expenses on a monthly basis. [Exhibit 120, Section 5.02].

30. Exhibit C to the C&O Agreement addresses the Plant Operator’s Accounting Procedures in detail, and in doing so defines the Plant Operator’s compensation. [Exhibit 120, attached Exhibit C]. The Plant Operator’s compensation includes an overhead fee equal to 16% of a “total direct cost of operation and maintenance.” [Exhibit 120, attached Exhibit C, Section III.B.]. Exhibit C defines overhead, and the related total direct cost, with significant limitations and exclusions. [Exhibit 120, attached Exhibit C, Section III. and III.B.]

31. A Plant Owner that used precisely its share of Dedicated Capacity never paid more than its proportionate share of the Article 4 investment costs and the Article 5 monthly operating costs. [Transcript Vol. I, p. 127]. However, we find that the Parties clearly understood that there could be circumstances in which one or more Plant Owners used either more or less than its Dedicated Capacity.

32. From Amoco’s perspective, Chevron had opted out of full participation in the Painter Plant due to Chevron’s then-existing commitment to an Enron gas processing plant. [Transcript Vol. II, p. 187]. Beginning in the late 1970's, Chevron processed Painter field gas at a facility that was eventually operated by Enron. [Transcript Vol. II, pp. 252-253]. This plant was originally constructed to process Natural Gas Liquids, and to process those liquids into discrete fractions, such as butane, propane, and hexane. [Transcript Vol. II, pp. 253-254]. A nitrogen rejection component was added in 1986. [Transcript Vol. II, p. 256]. Amoco was concerned that Chevron might disengage from its Enron arrangement and consume a greater share of Painter Plant volume. [Transcript Vol. II, p. 187].

33. Relations between Amoco, Chevron, and UPRC were not friendly during the early 1980's. [Transcript Vol. II, p. 191]. The Petitioners were competitors when the C&O Agreement was negotiated. [Transcript Vol. II, p. 206]. We find that the parties continue to actively enforce their rights under the C&O Agreement. For example, the Plant Operator is audited “every two years like clockwork.” [Transcript Vol. II, pp. 192, 231].

34. The Painter C&O Agreement carefully addressed the rights and responsibilities of the Plant Owners when an imbalance occurred between Dedicated Capacity and actual use. [Exhibit 120, Sections 6.07, 6.08, 6.09]. The C&O Agreement required use of an attached Gas Processing Agreement in three specific circumstances: (1) when a Plant Owner processed gas in excess of its Dedicated Capacity [Exhibit 120, Section 6.07]; (2) to process the gas of certain working interests owners in the East Painter and Clear Creek Fields [Exhibit 120, Section 6.08]; (3) to process the gas of unspecified third parties, subject to the approval of the majority Plant Owners [Exhibit 120, Section 6.09].

35. The Gas Processing Agreement is Exhibit H to the Painter C&O Agreement, although Section 6.07 erroneously refers to Exhibit G. [Exhibit 120, attached Exhibit H; Transcript, pp. 144-145, 196-197].

36. The parties to the Exhibit H Gas Processing Agreement are a Producer and the Plant Owners. The Plant Owners are identified as Amoco, Chevron, and UPRC. [Exhibit 120, attached Exhibit H]. Any Plant Owner using more than its Dedicated Capacity became a Producer under Exhibit H, because execution of the C&O Agreement constituted execution of the Gas Processing Agreement. [Exhibit 120, Section 24.01; Transcript Vol. I, p. 126].

37. The Exhibit H Gas Processing Agreement requires a Producer to pay a monthly fee for processing service. The processing fee has two parts. The first is the Producer’s share of Plant operating expense, calculated in a manner generally the same as Article 11 of the C&O Agreement. [Exhibit 120, attached Exhibit H, Sections 9.2 and 13.1].

38. The second part of the fee is a charge of $0.25 per thousand cubic feet (MCF). [Exhibit 120, attached Exhibit H, Section 13.1; Transcript Vol. II, p. 198]. The fee is “based on the volume, in MCF, of the Gas delivered to Plant Operator at the delivery point(s) for each Month.” [Exhibit 120, attached Exhibit H, Section 13.1]. Just as in the C&O Agreement, Exhibit H broadly defines Gas to include the entire stream delivered to the Plant, and therefore includes nitrogen. [Exhibit 120, attached Exhibit H, Section 1.1(h)]. A Delivery Point is likewise defined as the point of interconnection to the Plant facilities for the delivery and measurement of Gas for processing. [Exhibit 120, attached Exhibit H, Section 1.1(g)]. So, the fee is applied against Gas accepted at the inlet of the Painter Plant.

39. The Exhibit H Gas Processing Agreement states that the fee of $0.25 per MCF “represents a charge designed to provide Plant Owners a return on the investment made in the Plant.” [Exhibit 120, attached Exhibit H, Section 13.2].

40. When we compare the expense incurred by a Plant Owner for Dedicated Capacity with the fees paid by Producers, we find a precise symmetry between the Article 4 investment of the Plant Owners and the $0.25 per MCF fee found in Section 13.2 of Exhibit H. A Plant Owner and a Producer both pay a share of the Plant operating expense, calculated in the same manner. However, a Plant Owner has already paid for investment in the Plant Capacity, as provided in Article 4 of the C&O Agreement. In contrast, a Producer pays a fee designed to provide the Plant Owners a return on that same investment. We find that the contractual characterization of the $0.25 per MCF fee as a return on investment is a reliable expression of the intention and understanding of all Parties to the Painter C&O Agreement.

41. The Painter C&O Agreement disposes of the Exhibit H processing fees based on whose Dedicated Capacity is utilized to satisfy the Producer’s requirements. 1.9% of Plant Capacity was made available to working interest owners in the East Painter and Clear Creek Fields from Amoco’s Dedicated Capacity, so Amoco received all of the associated processing fee. [Exhibit 120, Section 6.08]. Processing fees associated with the Plant Owners that exceed Dedicated Capacity were instead distributed to “those Plant Owners whose unused capacity is being utilized;” this is calculated on a proportionate basis where more than one Plant Owner has unused capacity. [Exhibit 120, Section 6.07(d)]. The latter distribution also applied to third party contracts. [Exhibit 120, Section 6.09].

42. The term of the Exhibit H Gas Processing Agreement was concurrent with the term of the C&O Agreement. [Exhibit 122, Section 6.1 of attached Exhibit H]. The Exhibit H Gas Processing Agreement could be freely assigned, and bound successors in interest. [Exhibit 122, Section 18.1 of attached Exhibit H]. The Exhibit H Gas Processing Agreement included no limit on the quantity of gas that could be processed. [Exhibit 122, attached Section H; Transcript Vol. II, p. 145].

43. The C&O Agreement states that it “is not intended to create and shall not be construed to create a relationship of partnership or an association for profit between or among the Parties hereto.” [Exhibit 120, Section 17.04]. Further, each Party “states that income derived from operations under this [C&O] Agreement can be adequately determined without computation of partnership taxable income.” [Exhibit 120, Section 17.04].

44. Notwithstanding the language of the Painter C&O Agreement, Clyde Miller of Amoco testified that, after signing the Painter C&O Agreement, the Petitioners “were co-owners or joint venturers in the plant.” [Transcript Vol. II, pp. 206-207]. Christopher Chambers of Chevron similarly testified that the Petitioners were “partners”. [Transcript Vol. II, pp. 291, 301]. No company representative of UPRC testified at the Painter hearing.

45. The Plant went into operation in 1987 with a nameplate capacity of 240 million cubic feet a day. [Transcript Vol. I, p. 36; Exhibit 120, Section 6.02].

46. On May 22, 1987, Amoco (as opposed to all three Plant Owners) entered into an Agreement with Northwest Pipeline Corporation for nitrogen removal at the Painter Plant. [Exhibit 527]. This Agreement was an outgrowth of prior litigation. [Transcript Vol. I, p. 134]. Gas processed under this Agreement would come from Amoco’s Dedicated Capacity. [Transcript Vol. I, p. 134].

47. Amoco’s Agreement with Northwest Pipeline Corporation resembled an Exhibit H Gas Processing Agreement, but varied in respects other than those we have already mentioned. For example, it did not recite that the “base charge” payable under the agreement was a designed to provide anyone a return on investment made in the Painter Plant. [Exhibit 527, Article XII and Section 12.2]. This base charge nonetheless began at $0.2553 per MCF in 1987, then gradually declined to $0.1860 per MCF in 1992. [Exhibit 527, Section 12.2]. This treating fee “was meant to represent an avoided investment cost by Northwest Pipeline [to install nitrogen removal facilities] in its Opal Plant.” [Transcript Vol. I, p. 134].

48. Processing under the Northwest Pipeline Corporation Agreement ended in the fourth quarter of 1992. [Transcript Vol. I, p. 99].

49. In the years after the Painter Plant began operating, the Plant Owners entered into two gas processing agreements which precisely followed the template of the Exhibit H Gas Processing Agreement. OXY USA Inc. is identified as the Producer in a Gas Processing Agreement dated August 18, 1989 (“OXY Agreement”). [Exhibit 123]. Morgan Richardson Operating Company is identified as the Producer in a Gas Processing Agreement dated September 1, 1991 (“Morgan Richardson Agreement”). [Exhibit 525].

50. OXY held a working interest in East Painter, but had declined to participate in the original investment in the Painter Plant. [Transcript Vol. I, pp. 88-89, 100, 123]. The OXY interests were among those for which 1.9% of Plant capacity had been reserved from Amoco’s Dedicated Capacity. [Transcript Vol. I, pp. 88-89, 100; Exhibit 122, Section 6.08]. Under the OXY Agreement, OXY paid its pro rata share of operating costs, and the investment-related fee of $0.25 per MCF. [Transcript Vol. I, p. 139] As required by the Painter C&O Agreement, OXY’s payments for the use of Plant Capacity went to Amoco alone. [Exhibit 120, Section 6.08; Transcript Vol. I, p. 102].

51. OXY processed gas from 1989 through May of 1998, when UPRC acquired OXY’s interest. [Transcript Vol. I, p. 120]. Amoco takes the position, disputed by UPRC, that UPRC must continue to pay the $0.25 per MCF base charge required under the OXY Agreement. [Transcript Vol. I, p. 140]. (Every entity processing gas, whether Plant Owner or Producer, paid a pro rata share of operating expenses.) UPRC actually paid the $0.25 per MCF base fee, plus pro rata operating expenses, in 2000. [Transcript Vol. I, p. 140]. UPRC retains the right to demand a correction “should the parties agree that the correct interpretation is that the [OXY Agreement] terminated in 1998.” [Transcript Vol. I, p. 140]. There was no evidence that Amoco is or was inclined to agree that the OXY Agreement terminated in 1998. Instead, we find this to be a clear example of the adverse economic interests of the Petitioners as parties to the C&O Agreement.

52. During the Tax Period at issue in this case, the volume of gas processed for UPRC under the OXY Agreement was approximately five million cubic feet a day. [Transcript Vol. I, p. 100]. Three to four million cubic feet of gas a day were processed under the OXY Agreement in 1998. [Transcript, Vol. I, p. 106].

53. Morgan Richardson, the Producer in the second Exhibit H Gas Processing Agreement, held a working interest in the Clear Creek Field. [Transcript Vol. I, p. 103]. Morgan Richardson acquired this interest from Amoco in 1991. [Transcript Vol. I, p. 103]. As provided in the Exhibit H Gas Processing Agreement, Morgan Richardson paid a pro rata share of operating expenses and the processing fee of $0.25 per MCF. [Transcript Vol. I, p. 104]. Morgan Richardson held a third of the interests in Clear Creek field, which all together produced eight to ten million cubic feet of gas per day. [Transcript Vol. I, pp. 103-104].

54. The Clear Creek property was excluded from the Painter Reservoir Unit in the mid-1990's. [Transcript Vol. I, p. 81]. No production from Clear Creek was processed at the Painter Plant after 1993. [Transcript Vol. I, pp. 162-163]. Gas production under the Morgan Richardson Agreement likewise ceased in 1993. [Transcript Vol. I, p. 105].

55. The Ryckman Creek field ceased production in 1995. [Transcript Vol. I, pp. 93, 162]. So by 1995, only two of the original four fields remained in production.

56. In early 1993, the Plant Owners negotiated a deal with the working interest owners of the West Participating Unit of the Anschutz Ranch East Unit (AREU). [Transcript Vol. II, p. 194]. The purpose of the deal was to create a pipeline link between the Painter Plant and the similar Anschutz Plant, so that the gas fields served by the two Plants could share nitrogen. [Transcript Vol. I, pp. 106-107]. When completed, the new pipeline link enabled the Painter Plant to serve more fields than the four which are identified in the Painter C&O Agreement.

58. For all fields that could be served by either Plant, “the ability to maintain adequate [nitrogen] injection was the key to maximizing production rates...” [Transcript Vol. I, pp. 106-107]. However, the available nitrogen was limited by (1) how much could be produced and processed back from the reservoirs after injection, and (2) how much could be purchased from third parties. [Transcript Vol. I, pp. 106-107]. The ability to share nitrogen allowed greater control over the nitrogen available for injection in all locations. [Transcript Vol. I, pp. 106-107].

59. This nitrogen sharing plan led to modifications of the Painter C&O Agreement and its attached Gas Processing Agreement. The Painter Plant Owners entered into a Letter Agreement for this purpose on May 19, 1993, “contingent upon the approval of the [Anschutz Ranch East/Painter Complex Gas Plant] Pipeline Facility by the AREU working interest owners.” [Exhibit 125]. The record does not include precise information about AREU working interest ownership in 1993. [Transcript Vol. I, p. 110]. However, the AREU working interest owners are generally the same as the entities identified as owners of the AREU processing facility, and in 1999 those ownership interests were as follows:

Owner	Plant Share
BP [Amoco]	.4774765
RME [UPRC]	.1172242
Mobil	.1837901
Forest	.0835866
FBA Trust	.1139117
Headington	.0112443
BWAB	.0112443
Chevron	.0015223

[Stipulations, ¶H.1; Exhibit 185, contract recitals]. Because Chevron’s interest in the AREU processing facility was so minor, we find that Chevron’s business interests in creating the pipeline link were distinctly different from those of Amoco, which held the principal ownership stake in both the Painter Plant and the Anschutz Plant.

60. The AREU Letter Agreement of May 19, 1993, provided for substantial changes in Painter processing fees after January 1, 1994, for all activity under the Painter C&O Agreement and its Exhibit H. [Exhibit 125]. The processing fee charged to Amoco, UPRC, and Chevron for use of the Plant in excess of Dedicated Capacity was reduced from $0.25 per MCF to $0.08 per MCF. [Exhibit 125, Section 1.g. and h.]. For three specified years, Chevron was entirely relieved of the processing fee for varying amounts of gas in excess of its Dedicated Capacity. [Exhibit 125, Section 1.h.].

61. In contrast, the total fee for AREU producers other than the Painter Plant Owners — the combined pro rata share of expenses and processing fee — was capped $0.23 per MCF during 1995. The fee was adjusted upwards for inflation each year through 1998. [Exhibit 125, Section 2.e.]. After 1998, the cap expired. Like a Painter Plant Owner that used more than its share of Dedicated Capacity, the AREU producers would then be charged a pro rata share of operating expenses, and a processing fee of $0.08 per MCF. [Exhibit 125, Section 2.e.]. In the years when the cap was in effect, the Painter Plant Owners agreed to bear any shortfall in operating expense among themselves, in proportion to the gas processed by each Plant Owner during the month. [Exhibit 125, Section 1.e.].

62. All AREU gas would be subject to an additional fee of $0.01 per inlet MCF to cover the operating expense associated with removal of mercury. [Exhibit 125, Section 1.d.].

63. Exhibit H Gas Processing Agreements with third parties, if executed prior to June 1, 1993, would continue to include a Processing Fee of $0.25 per MCF. [Exhibit 125, Section 1.f.].

64. The Letter Agreement of May 19, 1993, created an annual Reserve Capacity for AREU gas against the Painter Plant Capacity. This Reserve Capacity began at 20 million cubic feet per day for 1995, and escalated to 80 million cubic feet per day for 1999-2003. [Exhibit 125, Section 1.a.]. The Letter Agreement required the creation of a system under which the AREU operator (Amoco) would nominate capacity requirements each year. [Exhibit 125, Sections 1.b., 2.b.]. The purpose and effect of the nominations was to adjust Reserve Capacity annually. [Exhibit 125, Section 1.b.].

65. The Letter Agreement called for a term running from the date of execution until December 31, 2003. [Exhibit 125, Section 2.a.].

66. Before the AREU Letter Agreement changes were formally incorporated into the Painter C&O Agreement, Enron and Chevron entered into a new gas processing agreement. On April 1, 1994, Chevron and Enron contracted to continue existing functions at the Enron facility. [Exhibit 528]. The Enron facility could process approximately thirty-eight million cubic feet of gas a day. [Transcript Vol. II, p. 265].

67. Under the 1994 Agreement, Enron charged Chevron a fee of $0.34 per MCF, plus electricity and fuel costs. [Transcript Vol. II, p. 257; Exhibit 528, Sections12.1, 12.2, 12.3]. Twenty one cents of the fee was for liquid hydrocarbon extraction, and thirteen cents was for nitrogen rejection. [Exhibit 528, Section 12.1]. Together, these fees were higher than fees at the Painter Plant [Transcript Vol. II, p. 284], but the Painter Plant did not perform fractionation services [Transcript Vol. II, p. 267]. Since Chevron chose to enter into the processing agreement with Enron even after the Exhibit H processing fee at Painter had been reduced by the terms of the AREU Letter Agreement, we find that Chevron considered the terms of the Enron Agreement to be favorable even when evaluated in light of the reduced Exhibit H processing fee.

68. From 1994 to 1996, Chevron was processing about thirty-four million cubic feet a day at the Enron facility and seventy-one million cubic feet a day at the Painter Plant. [Transcript Vol. II, pp. 282-283].

69. Chevron’s relationship with Enron continued until June 13, 1996, when there was a catastrophic failure of the Enron plant. [Transcript Vol. II, p. 258]. After that, all of Chevron’s Painter gas was processed at the Painter Plant. [Transcript Vol. II, pp. 258-259].

70. The Painter Plant Owners amended the Painter C&O Agreement on April 6, 1995, to make the changes required by the AREU Letter Agreement. [Exhibit 129]. The amendments provided for: (1) Reserve Capacity and annual nominations [revised Section 6.05(a)-(d)]; (2) the revised processing fee for Plant Owners [revised Section 6.07(c) and 6.07(e)]; (3) the new Mercury Removal fee [new Section 6.10]; and (4) sharing cost reimbursement shortfalls resulting from the AREU operating expense limitation [new Section 11.01]. [Exhibit 129].

71. The AREU Producers and the Painter Plant Owners entered into a separate Anschutz Ranch East Unit (AREU) Gas Processing Agreement in 1996 (the precise date is uncertain). [Exhibit 185; Transcript Vol. I, p. 163, regarding unsigned copies of contracts]. The Gas Processing Agreement included modifications to the former Exhibit H, as required by the Letter Agreement. These modifications to the former Exhibit H provided for: (1) Reserve Capacity and annual nominations [Article IV]; (2) a term until December 31, 2003 [Section 6.1]; (3) the Mercury Removal fee of $0.01 per MCF [Section 13.2]; (4) the revised Processing Fee of $0.08 per MCF [Section 13.3]; (5) the total fee cap of $0.23 per MCF, escalated for inflation until expiring at the end of 1998 [Section 13.4]. [Exhibit 185].

72. Like the previous Exhibit H Gas Processing Agreements, but unlike the 1987 Agreement between Amoco and Northwest Pipeline, the AREU Gas Processing Agreement includes a recitation of purpose describing the $0.08 processing fee: “The parties recognize that the Processing Fee is designed to provide Plant Owners a return on the investment made in the Plant.” [Exhibit 185, Section 13.3, second sentence]. We find this to be a reliable statement of fact when made in 1996. Based on the date of the Letter Agreement, we find this to be a reliable statement of fact in 1993.

73. We find corroboration in the record for the recital that a fair “return on the investment made in the Plant” should be reduced from the $0.25 per MCF to which the parties originally agreed in 1985. We find that the Section 13.04 cap on total fees for AREU Producers other than the Petitioners was “tied to pretty much match what [the Anschutz Ranch East unit owners were] were currently paying internally to process their gas at the Anschutz Ranch Plant.” [Transcript Vol. I, p. 115]. The average cost to process AREU gas at the time was about $0.23, and the Anschutz Corporation “saw no reason to pay a premium to process gas at Painter.” [Transcript Vol. I, p. 157]. Forty-one percent of the AREU owners had no stake in the Painter Plant [Transcript Vol. II, p. 149], and so would receive no benefit from any processing charges that created a profit for the Painter Plant Owners. The third party AREU owners clearly had a strong incentive to negotiate for a price that fairly reflected Painter Plant costs at the time.

74. Amoco claims that Chevron took “advantage of the situation” in 1993 to withhold approval of the deal if the Processing Fee were not lowered to $.08 per MCF for all processing activity of the Painter Plant Owners. [Transcript Vol. I, p. 157]. In Amoco’s view, Chevron anticipated exceeding its Dedicated Capacity for a prolonged period. [Transcript Vol. I, p. 157]. While the Chevron witness agreed that the true motivation for the 1993 Letter Agreement was the nitrogen pipeline [Transcript Vol. II, p. 273], we find that Chevron had ample motivation to negotiate for a Processing Fee that accurately reflected a value for return on investment in 1993 and going forward.

75. In discussing the $0.25 fee in the context of the Morgan Richardson Agreement in place from 1991 to 1993, the Amoco witness observed that there had not been any reason “to squeeze every last penny out of Morgan to improve the profitability of the Painter Plant.” [Transcript Vol. II, p. 190]. We infer that the Processing Fee was profitable by that time, both from the standpoint of Amoco’s original desire to make the Plant a profit center [Transcript Vol. II, p. 185], and from the standpoint of being a fee larger than necessary to provide a minimally satisfactory return on investment.

76. Amoco indicated that the Plant Owners originally set the Processing Fee in a way to accelerate recovery of the millions of dollars of investment in the Plant, with an eye to creating opportunities to make the Plant profitable in the future. [Transcript Vol. II, pp. 189-190]. The base charge schedule found in the Agreement between Amoco and Northwest Pipeline supports this testimony — that base charge declined with each year, but was nonetheless tied to avoided capital costs. [Exhibit 527, Section 12.2; supra, ¶47]. We infer and find that the processing fee could be lower in 1993 than 1985, and still provide the Plant Owners a return on their investment in the Painter Plant.

77. The Petitioners would have us question any contract recital concerning the relationship between the Processing Fee and a return on investment in the Painter Plant. Amoco and Chevron witnesses testified that the Processing Fee was originally intended to be penalty for consumption of another Plant Owner’s Dedicated Capacity. [Transcript Vol. I, p. 123; Transcript Vol. II, p. 267]. We do not find this testimony to be a persuasive reason for disregarding the language of the Gas Processing Agreements. None of the Gas Processing Agreements refers to the Processing Fee as a penalty. [Exhibit 120, attached Exhibit H, Section 13.2; Exhibit 123, Section 13.2; Exhibit 525, Section 13.2; Exhibit 185, Section 13.3]. Even if the intent of the party with the greatest investment in Painter Plant were punitive, the amount of the Processing Fee could still be set so as to provide a return on investment.

78. Amoco testimony about the original calculations of an appropriate return on investment, made in 1984 or 1985, is similarly unpersuasive with regard to the appropriate value in 1993 and after. These calculations, unsupported by any documentation, were said to show that $0.40 per MCF should be the actual fee. [Transcript Vol. II, p. 185]. This figure was negotiated down to $0.25 per MCF, at a time when Amoco’s position was that the negotiated fee should be charged against all gas processed at the Plant. [Transcript Vol. II, p. 185]. Charging a fee on all gas would have been inconsistent with the concept finally embodied in the C&O Agreement, that no Plant Owner would be subject to an additional charge for the invested capital used to acquire Dedicated Capacity. Supra., ¶¶20-21, 27-28. Amoco’s witness also conceded that he hadn’t “looked at the cash flows to ascertain” whether the $0.25 per MCF fee was a commercially reasonable fee for return on investment. [Transcript Vol. I, p. 159]. Although the same witness testified that the $0.08 fee established in 1994 was “triply” inadequate, we find no documentation or calculation to support this position. [Transcript Vol. II, pp. 199-200].

79. The Painter Plant processed the highest volumes of AREU gas in 1995 and 1996, at approximately eighty million cubic feet a day. [Transcript Vol. I, p. 59]. This amount exceeded the contractual Reserve Capacity of those years, which was twenty million cubic feet for 1995 and forty million cubic feet a day for 1996. [Exhibit 185]. However, there was more than eighty million cubic feet a day of excess capacity during these years, so the Plant Owners were amenable to processing these volumes. [Transcript Vol. II, p. 167].

80. The Painter Plant processed gas from the AREU during the first seventeen days of 2000, at the rate of approximately twelve to thirteen million cubic feet a day. [Transcript Vol. I, pp. 112-113].

81. The pipeline link between Painter and Anschutz passed close by one more field, Glasscock Hollow. [Transcript Vol. I, p. 60, 62-63]. Prior to 1999, the Glasscock Hollow field operator (Amoco) had been reinjecting gas to maintain reservoir pressure. [Transcript Vol. I, p. 60]. In the first part of 1999, a decision was made to inject nitrogen and sell the residue gas. [Transcript Vol. I, p. 60-61]. The Glasscock Hollow field needed access to a plant that could process nitrogen. Its gas could be sent to either the Painter Plant or the Anschutz Plant for nitrogen removal. [Transcript Vol. I, p. 61].

82. Glasscock Hollow gas was commingled with AREU gas and sent to the Painter Plant during 1999 and the first seventeen days of 2000. [Transcript Vol. I, pp. 61, 114-115]. After that, an additional facility was added to Glasscock Hollow’s existing plant to control hydrocarbon dew point, so the Glasscock Hollow gas was processed thereafter at Anschutz. [Transcript Vol. I, pp. 63-64].

83. The Painter Plant processed Glasscock Hollow gas under the terms of the Anscuhtz Ranch East Unit Gas Processing Agreement. [Transcript Vol. I, pp. 114-115]. Chevron owns approximately two thirds of the working interest in Glasscock Hollow, and Amoco owns the remaining third. [Transcript Vol. I, pp. 114]. Amoco operates the Glasscock Hollow field, which Amoco includes in the same operating center as Anschutz Ranch East. [Transcript Vol. I, p. 114].

84. Permission to process the AREU and Glasscock Hollow gas was secured by a telephone conference of the Painter Plant Owners, without a formal nomination under the Anschutz Ranch East Unit Gas Processing Agreement. [Transcript Vol. I, pp. 147-148; Transcript Vol. II, pp. 203-204].

85. At the time of the hearing on September 3, 2002, the Painter Plant was processing 48 million cubic feet a day from Painter A and 196 million cubic feet a day from East Painter. [Transcript Vol. I, p. 42]. The Plant was operating at a rate of 258 million cubic feet a day; and Plant capacity was 265 million cubic feet a day. [Transcript Vol. I, p. 65]. The additional capacity was achieved by bypassing the Plant’s amine system, which removes

carbon dioxide, with a portion of the inlet gas. [Transcript Vol. I, pp. 65-66]. By way of comparison, the AREU Letter Agreement recited in 1993 that the Plant’s capacity was 241.5 million cubic feet a day. [Exhibit 185, Section 4.1].

86. Although there appears to have been some variation in processing volumes during 2000 and 2001 [Transcript Vol. I, p. 42], Petitioners have proposed that we find the Plant was operating at or near full capacity during the Tax Period. [Petitoners’ Proposed Findings of Fact and Conclusions of Law, ¶¶39, 57]. We do so.

87. In 2000 and 2002, we find that at least Chevron paid processing fees to the Plant Owners under an Exhibit H Gas Processing Agreement. The record does not include any tally of the frequency with which Plant Owners used more or less than their Dedicated Capacities. [E.g., Transcript Vol. I, pp. 174-175]. We find that inlet volumes for each Plant Owner varied depending on which part of the field the operator is producing from. [Transcript Vol. I, p. 174]. One witness observed that Amoco’s inlet percentage could vary from about 38% to about 50%, depending on rates of production from different fields [Transcript Vol. I, p. 90]; this contrasts with Amoco’s 52% ownership. [Stipulations, ¶A.3.a]. However, when the plant is being fully utilized, if one Plant Owner is exceeding its Dedicated Capacity, another must be using less than its Dedicated Capacity. [Transcript Vol. I, pp. 174-175]. An Amoco witness confirmed, as an example, that Chevron paid processing fees in July 2002. [Transcript Vol. I, p. 174]. We also infer from the figures for Painter revenues in 2000 that Chevron’s share of total revenues exceeded its ownership share of the Painter Plant, so that Chevron was obliged to pay Exhibit H processing fees. [Confidential Stipulations of Amoco, Chevron, UPRC; Exhibits 531, 532, 533].

88. The Department of Revenue requested that the Board of County Commissioners of Uinta County consider intervening in this case. [Stipulations, ¶G.1].

89. Because it was made aware of the appeal in this case, and the differential between the Petitioners’ reported taxable value and the value which would be certified, when preparing its annual budget in 2001, the Board of County Commissioners of Uinta County used the taxable value estimates provided by the Petitioners pursuant to the Rules of the Department of Revenue, Chapter 6, Section 7(a)(i)(G)(III), rather than the taxable values certified by the Department of Revenue. Uinta County School District No. 1 used the value certified by the Department of Revenue and, as a result, experienced a budget shortfall in the school year following the certification of value for 2000 production. [Stipulations, ¶G.2].

90. The County is aware of no statutory or decisional law which would authorize a change in the 2001 mill levy in the future. [Stipulations, ¶G.3].

91. In Whitney Canyon, we described how Randy Bolles, the Administrator of the Mineral Tax Division of the Department of Revenue, notified the Petitioners that the comparable value method would be used for production years 2000-2002, and the Department’s reasons for selecting that method. Whitney Canyon, Findings, ¶¶23-24. The same findings apply in this case. [Exhibit 500; Transcript Vol. III, pp. 361-362].

92. In Whitney Canyon, we described how each of the Petitioners wrote to the Department in October 1999 to resist the use of the comparable value method, and how each Petitioner sought to use the proportionate profits method instead. Whitney Canyon, Findings, ¶¶25-27. In each instance, this correspondence referred to the Painter Complex as well as Whitney Canyon, and the same findings apply in this case. [Exhibits 501, 507, 512].

93. As in Whitney Canyon, the Department doubted that the Petitioners had come forward with all pertinent contract documents. [Transcript Vol. III, pp. 365-365]. On November 16, 1999, the Department sent each of the Petitioners a broad request for such documents in order to evaluate the requests to use the proportionate profits method. [Exhibits 502, 508, 513]. Each of these requests referred to both Whitney Canyon and Painter.

94. Christopher Chambers, manager of upstream property tax for Chevron Texaco, replied for Chevron on November 30, 1999. [Exhibit 108]. We have previously described the response both generally, and as it applied to Whitney Canyon. Whitney Canyon, Findings, ¶32. With regard to Painter, Chambers stated that, “For [Painter] there is the C&O Agreement for operating expenses plus a cents/mcf component for ROI recoupment. There have been and may be some small volume third party agreements from [Painter] that do not meet the like quantity.” [Exhibit 108, page 2].

95. Paul Syring, senior tax representative for Amoco, confirmed that his correspondence regarding Painter and Whitney Canyon was interrelated. [Transcript Vol. II, pp. 214-215]. Our Whitney Canyon findings are accordingly pertinent to this case, including all of our findings regarding the difficulties we face in ascertaining facts when witnesses assume an advocacy role. Whitney Canyon, Findings, ¶¶33-36.

96. Syring believes that his December 16, 1999, reply to the Department included the Painter C&O Agreement. [Exhibit 503; Transcript Vol. II, p. 216]. Syring thought about producing the AREU Letter Agreement, but did not provide it because it was being “terminated by the end of 1999.” [Transcript Vol. II, p. 233]. We find that Amoco, acting as Plant Operator on behalf of the Plant Owners, largely failed to provide the documents we have discussed in our Findings of Fact, and by doing so impeded the Department’s ability to fully evaluate the history and background of processing fees in the vicinity of the Painter Plant.

97. This case presents a independent example of how an advocacy position can undermine the credibility of testimony. In production years 1990 and 1991, Petitioner Amoco reported its Painter production using the comparable value method. At that time, Amoco determined that the Northwest, OXY, and Morgan Richardson agreements were comparables. [Stipulations, ¶E.1; Whitney Canyon Transcript Vol. VIII, pp. 1554-1557]. Syring testified that Amoco used the comparable approach during those years because the results were very similar to proportionate profits. [Transcript Vol. II, p. 223]. However, Syring did not review any calculations or business records to assure himself of the truth of this claim, nor did Syring speak with the person who was the predecessor in Syring’s position at Amoco. [Transcript Vol. II, pp. 223, 242-244]. Syring’s sole source of information was John Bordes, Amoco’s in-house counsel. [Transcript Vol. II, p. 244]. We find that Syring’s testimony regarding Amoco’s reasons for using the comparable value method in 1990 and 1991 is not the type of evidence commonly relied upon by reasonably prudent men in the conduct of their serious affairs.

98. By letters dated February 4, 2000, the Department informed each of the Petitioners that it had reviewed the agreements provided, and reiterated the requirement that the Petitioner determine taxable value for Whitney Canyon, Painter, and other properties using the comparable value method. [Exhibits 110, 111, 112; Stipulations, ¶C.7].

99. Chevron and Amoco made further enquiries regarding pertinent comparables. [Exhibits 113, 114].

100. On March 30 and 31, 2000, respectively, the Department responded to Chevron and Amoco. The Department explained its rationale for the requirement that the Painter production be valued pursuant to the comparable value method. [Exhibits 506, 510]. In reaching its conclusion, the Department cited the Exhibit H Gas Processing Agreement [Exhibit 120, attached Exhibit H], and its provision setting the fee for gas processing as the proportionate share of plant operating costs, plus $0.25/per MCF. The Department also cited the AREU Letter Agreement of May 19, 1993, regarding the modification of the Painter C&O and Gas Processing Agreements. [Exhibit 526; Stipulations, ¶C.9]. In doing so, the Department stated that it had not “been provided any modifications to the $0.25/MCF processing fee contained within the Painter C&O,” other than the Letter Agreement. [Exhibits 115, 116].

101. This case is indistinguishable from Whitney Canyon with respect to Petitioners’ concern for the absence of rules and regulations to aid their application of the comparable value method, and their concern regarding an earlier version of the comparable value method, entitled “Determinative Formula for Computation of Comparable Value,” dated July 9, 1992. Our earlier ruling disposes of the factual dimensions of these issues, and applies in this case. Whitney Canyon, Findings, ¶¶38-40; Conclusions of Law, ¶¶161-168, 183-184.

102. Notwithstanding the Department’s directive that the comparable value method was to be used, each of the Petitioners used the proportionate profits method to report the taxable value of the production processed through the Painter Plant during production year 2000. The tax reports for 2000 production were filed with the Department of Revenue prior to the Board’s decision in its Docket Number 96-216. In their computations of taxable value, each of the Petitioners excluded production taxes and royalties from the direct cost ratio. [Stipulations, ¶C.10]. As in Whitney Canyon, our references to the proportionate profits method in this case are to that method actually employed by the Petitioners.

103. Acting on behalf of the Department, Bolles continued to believe that the comparable value methodology was appropriate for production from the Painter Plant. The Painter C&O Agreement, with Exhibit H, was the source of a processing fee equal to a proportionate share of operating expenses plus $0.25 per MCF. [Transcript Vol. III, p. 370]. The Department concluded that this fee was the maximum that would be charged for any quantity of gas. [Transcript Vol. III, p. 390; Department’s Proposed Findings of Fact and Conclusions of Law, ¶51]. Bolles also concluded all of the Petitioners were “other parties” with respect to one another. [Transcript Vol. III, pp. 370-375].

104. Bolles found no relationship between the processing fee and the quality of gas streams, which were generally commingled from all sources. [Transcript Vol. III, pp. 378-379]. He noted that the Painter and East Painter fields were unitized. [Transcript Vol. III, pp. 378-379]. He found no processing fee adjustments related to quantity of gas processed. [Transcript Vol. III, p. 382]. Bolles made a similar analysis of the AREU Letter Agreement, noting the presence of third parties, and that quantity and quality had no effect on processing fee, with the exception of mercury. [Transcript Vol. III, pp. 384-392].

105. The Department then used each Petitioner’s annual report in the same manner described in Whitney Canyon, Whitney Canyon, Findings, ¶¶43-45, and calculated a taxable value using the comparable value method. [Transcript Vol. III, p. 402]. For the Painter Plant, the Department determined that the processing deduction should include an allowance based on each Petitioner’s share of plant operating expense plus a processing fee of $0.25 per/MCF. For 2000, the Department did not have any information related to each Petitioner’s proportionate share of operating costs. [Transcript Vol. III, p. 402]. The Department did, however, have information regarding (1) gross operating costs for Painter in 1999, (2) ownership shares as recited in the Painter C&O Agreement, and (3) inlet volumes. The Department used the best available information to calculate a processing deduction for each Petitioner. [Transcript Vol. III, p. 403; Confidential Stipulations for all Petitioners, ¶¶8 and10 of each Stipulation].

106. No Petitioner claimed transportation costs. [Confidential Stipulations, ¶3.g. of each Stipulation.] As in Whitney Canyon, only processing costs are at issue.

107. Between May 14 and 31, 2001, the Department issued its Notices of Valuation to each of Petitioners using the comparable value method. [Stipulations, ¶C.11; Exhibits 531, 532, 533].

108. All parties agree that none of the processing calculations prepared by the Department have been verified by audit. All parties further agree that, in the event this Board upholds the Department’s selection of comparable value, the Department’s calculations of value and Notices of Valuation must be adjusted to reflect actual numbers for 2000 operations. [Confidential Stipulations for all Petitioners, ¶13 of each Stipulation].

109. The Department did not have a copy of the OXY Gas Processing Agreement when it determined values for production year 2000. [Transcript Vol. III, pp. 392, 394]. Bolles

stated that the OXY processing cost supports the Department’s selection of processing cost. [Transcript Vol. III, pp. 394-395].

110. As in Whitney Canyon, the difference in processing deductions resulting from the two methods is very large. Whitney Canyon, Findings, ¶¶48-50. One impediment to precise comparison is that the Department relied on 1999 information for its calculations of comparable value. The Department has nonetheless calculated aggregate values using values actually reported by the Petitioners, and the values certified by the Department to the counties. The total value actually reported by the three Petitioners using the proportionate profits method was $109,425,910. [Exhibit 529; Transcript Vol. III, p. 496]. The aggregate comparable value calculated by the Department and certified to the counties was $150,742,773. [Exhibit 529; Transcript Vol. III, p. 497].

111. As a further and separate basis for comparison, and again using only the figures reported by the Petitioners, the Department aggregated gross revenues, then subtracted total operating costs, total depreciation, and federal and state royalties. [Transcript Vol II, p. 495]. The result was $166,377,501. [Exhibit 529].

112. The Petitioners have once again directed our attention to the fact the Department has authorized the Lost Cabin sour gas processing facility to employ the proportionate profits method. Whitney Canyon, Findings, ¶¶52-53. Our decision in this case recognizes that there is a difference in quality between sweet gas and sour gas. We find the same distinction between the Painter Complex Gas Processing Plant, which processes sweet gas, and the Lost Cabin facility, which processes sour gas.

113. As important, gas was processed in the year at issue under each of the comparables we have identified for Painter (a statutory requirement urged by the Petitioners). There is no evidence regarding what gas, if any, was actually processed at the Lost Cabin facility under agreements that would satisfy our requirements for comparables. [Transcript Vol III, pp. 416-417]. The same is true for the other facilities identified by Petitioners. [Petitioners’ Proposed Findings of Fact and Conclusions of Law, ¶91]. The Department also drew the distinctions that the Lost Cabin facility (1) does not process gas from any field other than its own; (2) has not sent gas from its field to any other plant for processing; and (3) does not have a standing arrangement in its construction and operation agreement for a fee for nondedicated gas. [Transcript Vol. III, pp. 416-417]. We find that these additional distinctions are grounded in fact.

114. A point now urged by the Petitioners is that the Lost Cabin C&O Agreement provides for a fee analogous to the processing fee in Exhibit H to the Painter C&O Agreement. [Transcript Vol. II, pp. 260-262] This Lost Cabin fee is imposed when a producer is “underprocessed.” [Transcript Vol. II, p. 260; Exhibit 183, attached Exhibit H, Section 10.2]. The Petitioners view the Lost Cabin fee as a penalty, and characterize the Painter C&O processing fee as a similar penalty, but for being “overprocessed.” [Transcript Vol. II, p. 261]. As we have already observed, nothing in the various Painter Gas Processing Agreements refers to the Processing Fee as a penalty. [Exhibit 120, attached Exhibit H, ¶

13.2; Exhibit 123, ¶13.2; Exhibit 525, ¶13.2]; Exhibit 185, ¶13.3]. We decline to accept Petitioners’ characterizations.

115. As in Whitney Canyon, the Petitioners produced no evidence to shed light on the difference in cost structures between the Painter Plant and the locations at which producers were authorized to use the proportionate profits method. Whitney Canyon, Findings, ¶53. Specifically, we decline to draw conclusions about the relative expenses at the Lost Cabin and Painter Plants based on unsubstantiated testimony that the operating expenses at Lost Cabin “are higher but not significantly so.” [Transcript Vol. II, p. 261]. On the evidence presented to us, and without prejudging the findings and conclusions that we might make on other evidence in proceedings directly involving Lost Cabin and the testimony of witnesses with knowledge, we find that there is ample reason to distinguish the operation of the Painter Paint from the Lost Cabin facility.

116. The Department has correctly identified the statutory definition of the comparable value method, which is:

Comparable Value — The fair cash market value is the arms-length sales price less processing and transportation fees charged to other parties for minerals of like quantity, taking into consideration the quality, terms and conditions under which the minerals are being processed or transported.

Wyo. Stat. Ann. §39-14-203(b)(vi)(B). For all Petitioners, the arms-length sales price in this case is the price charged at the tailgate of the Painter Plant, after processing is completed.

Under the Gas Processing Agreement attached to the Painter C&O Agreement as Exhibit H, Chevron is a Producer and a separate and distinct entity from the Plant Owners collectively identified in the same Gas Processing Agreement. [Exhibit 120]. (We use the capitalized term “Producer” only when referring to the term of art found in a Gas Processing Agreement.) The Plant Owners are likewise an entity separate and distinct from Chevron as a Producer. Chevron’s rights and responsibilities as Producer, with respect to the business entity of Plant Owners, are established by the Gas Processing Agreement.

118. Chevron is the only Party to the Painter C&O Agreement for whom gas was processed under the Exhibit H Gas Processing Agreement during the period at issue. Supra., ¶87.

119. Under the Painter C&O Agreement, Amoco’s Gas is processed at the Painter Plant. Amoco is a separate and distinct entity from the Plant Owners collectively identified in the Exhibit H Gas Processing Agreement. [Exhibit 120, attached Exhibit H]. The Plant Owners are likewise an entity separate and distinct from Amoco. Amoco’s rights and responsibilities with respect to the business entity of Plant Owners are established by the Painter C&O Agreement.

120. Under the Painter C&O Agreement, UPRC’s Gas is processed at the Painter Plant. UPRC is a separate and distinct entity from the Plant Owners collectively identified in the Exhibit H Gas Processing Agreement. [Exhibit 120, attached Exhibit H]. The Plant Owners are likewise an entity separate and distinct from UPRC. UPRC’s rights and responsibilities with respect to the business entity of Plant Owners are established by the Painter C&O Agreement.

121. With respect to Amoco Gas processed at the Painter Plant under the Painter C&O Agreement, we find that the Exhibit H Gas Processing Agreement of Chevron, as a Producer, is a reliable source of information, or a comparable, from which we may infer and impute a reasonable processing fee which would be paid by another party for processing of gas of like quantity, taking into consideration the quality, terms and conditions under which the gas was processed. For all of Amoco’s plant production under the Painter C&O Agreement during production year 2000, that fee is a proportionate share of operating costs plus a processing fee of $.08 per MCF of all gas delivered to the Plant Operator for processing. [Exhibit s120, 129]. Sufficient similarity in quantity is assured by the fact that the fee provided in the comparable Exhibit H Gas Processing Agreement does not vary with respect to volumes processed, all of which were above Chevron’s Dedicated Capacity. Sufficient similarity in quality is assured by the fact all gas processed in the Plant is commingled, and the measure of the fee is in all instances based on the Producer’s gas at the inlet (Delivery Point) of the Painter Plant. Petitioners have also conceded that quality is not an issue in this case. [Transcript Vol. II, p. 227]. Sufficient similarity of terms and conditions is assured by the identical terms and conditions of the Exhibit H Gas Processing Agreements.

122. With respect to UPRC Gas processed at the Painter Plant under the Painter C&O Agreement, we find that the Exhibit H Gas Processing Agreement of Chevron, as a Producer, is a reliable source of information, or a comparable, from which we may infer and impute a reasonable processing fee which would be paid by another party for processing of gas of like quantity, taking into consideration the quality, terms and conditions under which the gas was processed. For all of UPRC’s plant production under the Painter C&O Agreement during production year 2000, that fee is a proportionate share of operating costs plus a processing fee of $.08 per MCF of all gas delivered to the Plant Operator for processing. Sufficient similarity in quantity is assured by the fact that the fee provided in the comparable Exhibit H Gas Processing Agreement does not vary with respect to volumes processed, all of which were above Chevron’s Dedicated Capacity. Sufficient similarity in quality is assured by the fact that all gas processed in the Plant is commingled, and the measure of the fee is in all instances based on the Producer’s gas at the inlet (Delivery Point) of the Painter Plant. Petitioners have also conceded that quality is not an issue in this case. [Transcript Vol. II, p. 227]. Sufficient similarity of terms and conditions is assured by the identical terms and conditions of the Exhibit H Gas Processing Agreements.

123. We have not found the Exhibit H Gas Processing Agreements of Amoco or UPRC to be reliable sources of information, or comparables, because we were unable to determine that any Gas was processed by Amoco or UPRC in excess of Dedicated Capacity during production year 2000.

124. We addressed and rejected the views of two taxpayer experts regarding “other party” relationships in our previous decision. Because the general testimony of Petitioners’ experts was incorporated by reference into this case, we reaffirm the pertinent findings. Whitney Canyon, Findings, ¶64.

125. This case differs from Whitney Canyon due to the business relationship between and among the Plant Owners established by the Painter C&O Agreement. The Painter C&O Agreement recites that it does not establish a partnership, Findings of Fact, supra. ¶43, although Miller of Amoco and Chambers of Chevron have testified the contrary. Findings of Fact, supra. ¶44. We do not find it necessary to characterize the type of business relationship established between and among the Painter Plant Owners. We find it sufficient that the Plant Owners have adverse economic interests, and have generally chosen to serve and protect those interests by obliging any Producer to execute a Gas Processing Agreement with the Plant Owners collectively. Amoco’s Agreement with Northwest Pipeline demonstrates the point that alternative contract arrangements were possible, but not pursued by the Petitioners.

126. Petitioners’ expert Adair testified in this case about the significance and interpretation of the Painter C&O Agreement. [Transcript Vol. II, pp. 307-308]. We have weighed her testimony on these points against our own examination of the contracts and the testimony of other witnesses, and do not accept her views. Among other things, we disagree that the Painter C&O Agreement was merely an extension of the existing working interest owner arrangement. [Transcript Vol. II, p. 307]. We disagree that the Painter C&O Agreement was only structured to provide the recoupment and allocation of operating costs. [Transcript Vol. II, p. 308].

127. The Petitioners went to some lengths in Whitney Canyon to support their view that the Whitney Canyon C&O Agreement and its associated Gas Processing Agreement could not provide adequate insight into current processing costs to support a current market value. After examination of the record, we concluded instead that the structure of the Whitney Canyon C&O Agreement assured a substantial relationship between costs and current market value, particularly when accounting for a spike in gas prices during 2000. Whitney Canyon, Findings, ¶¶65-70. We further concluded that the proportionate profits method would undervalue the gas in the same circumstances. Whitney Canyon, Findings, ¶72. It is not clear to us what portion of the Whitney Canyon testimony Petitioners would have us apply in the somewhat different factual context of the Painter Plant. This being so, we incorporate all of these referenced Whitney Canyon Findings into this case.

128. Of course, the passage of time from the inception of the Painter C&O Agreement could create a problem for the reliability of the value stated in the Painter C&O Agreement. Time could conceivably erode the truth of the recital that the processing fee “represents a charge designed to provide Plant Owners a return on the investment made in the Plant.” However, we have found that the record supports the conclusion that the 8% figure was sound in 1993. Findings of Fact, supra. ¶72, We also know the AREU parties who did not have an ownership interest in the Painter Plant were willing to accept a fee schedule that did not escalate to 8% until 1999. Findings of Fact, supra. ¶61. Since the fee schedule applied to gas processed during production year 2000, we find no reason for concern that it was not reasonably current. We also view these fees, negotiated by parties with adverse economic interests, to be more reliable than undocumented testimony that an appropriate charge to provide a return on investment should have been as much as 40%. Findings of Fact, supra. ¶78.

129. As in Whitney Canyon, the Petitioners made no showing that the proportionate profits method achieves fair market value. Adair, for example, again confirmed that she had no opinion as to whether proportionate profits yields fair market value. [Transcript Vol. II, p. 329]. The Department’s witnesses again testified that the proportionate profits method is an inherently defective approach to determining fair market value. [Transcript Vol. III, pp. 404, 497-498]. We find that, because the proportionate profits method depends heavily on the direct cost of producing the gas, its resulting calculation of fair market value is likely to be accurate within a limited range of values.

130. In Whitney Canyon, Petitioners’ experts Brown and Adair criticized the Department’s use of contracts which were not recently executed, and which did not otherwise fit within standard appraisal techniques. We considered the details of this testimony and doubted the expertise of these witnesses in the context in question, and doubted the validity of their opinions. Our findings on these matters in Whitney Canyon apply to this case as well. Whitney Canyon, Findings, ¶¶74-75.

131. In the specific context of this case, we also find that the arguably unusual use of nitrogen injection is not, in and of itself, an impediment to the application of the comparable value method where, as here, there are other indicia that the comparable value is reliable. We accordingly reject the opinion of Adair on this subject. [Transcript Vol. II, pp. 306-307].

132. Having addressed these objections, we find that the Department’s reliance on Chevron’s Exhibit H Gas Processing Agreement as a comparable, taking into account the specific relationships between the entities we have identified, was reasonable. We further find that the Department’s overall approach was reasonable in light of the limited information made available by the Petitioners.

133. Under the Anschutz Ranch East Unit Gas Processing Agreement, each AREU interest owner was a Producer and a separate and distinct entity from the Plant Owners collectively identified in the same Gas Processing Agreement. [Exhibit 185]. The Plant Owners were likewise an entity separate and distinct from each AREU interest owner as a Producer. Each AREU interest owner’s rights and responsibilities as Producer of AREU gas, with respect to the business entity of Plant Owners, were established by the Anschutz Ranch East Unit Gas Processing Agreement.

134. With respect to each Petitioner, we find that the Anschutz Ranch East Unit Gas Processing Agreement is a reliable source of information, or a comparable, from which we may infer and impute a reasonable processing fee which would be paid by another party for processing of gas of like quantity, taking into consideration the quality, terms and conditions under which the gas was processed. For each Petitioner, we make this finding on the basis of the processing fee paid by all interest owners other than the Petitioner itself. That fee is a proportionate share of operating costs plus a processing fee of $0.08 per MCF of all gas delivered to the Plant Operator for processing. [Exhibits 120, 129, 185]. Sufficient similarity in quantity is assured by the fact that the fee required by the Anschutz Ranch East Unit Gas Processing Agreement did not vary with respect to production from AREU. Sufficient similarity in quality is assured by the fact the gas processed in the Plant is commingled. Petitioners have also conceded that quality is not an issue in this case. [Transcript Vol. II, p. 227]. Sufficient similarity of terms and conditions is assured by comparison with terms and conditions of other Gas Processing Agreements to which the Plant Owners are a party, and by the numbers of Producers subject to the terms of the Anschutz Ranch East Unit Gas Processing Agreement.

135. In production year 2000, gas from the Glasscock Hollow field was also processed under the terms of the Anschutz Ranch East Unit Gas Processing Agreement. Chevron and Amoco were the working interest owners in the Glasscock Hollow field.

136. Under the Anschutz Ranch East Unit Gas Processing Agreement, Chevron was a Producer of Glasscock Hollow gas and a separate and distinct entity from the Plant Owners collectively identified in the same Gas Processing Agreement. [Exhibit 185]. The Plant Owners were likewise an entity separate and distinct from Chevron as a Producer. Chevron’s rights and responsibilities as Producer, with respect to the business entity of Plant Owners, were established by the Anschutz Ranch East Unit Gas Processing Agreement.

137. Under the Anschutz Ranch East Unit Gas Processing Agreement, Amoco was a Producer of Glasscock Hollow gas and a separate and distinct entity from the Plant Owners collectively identified in the same Gas Processing Agreement. [Exhibit 185]. The Plant Owners were likewise an entity separate and distinct from Amoco as a Producer. Amoco’s rights and responsibilities as Producer, with respect to the business entity of Plant Owners, were established by the Anschutz Ranch East Unit Gas Processing Agreement.

138. With respect to Amoco and UPRC as a producers of Gas processed at the Painter Plant, we find that the Anschutz Ranch East Unit Gas Processing Agreement, for Chevron as a Producer of Glasscock Hollow gas, is a reliable source of information, or a comparable, from which we may infer and impute a reasonable processing fee which would be paid by another party for processing of gas of like quantity, taking into consideration the quality, terms and conditions under which the gas was processed. That fee is a proportionate share of operating costs plus a processing fee of $0.08 per MCF of all gas delivered to the Plant Operator for processing. [Exhibit 120, 129, 185]. Sufficient similarity in quantity is assured by the fact that the fee required by the Anschutz Ranch East Unit Gas Processing Agreement did not vary with respect to production. Sufficient similarity in quality is assured by the fact the gas processed in the plant is commingled, and the measure of the fee is in all instances based on the Producer’s gas at the inlet of the Painter Plant. Petitioners have also conceded that quality is not an issue in this case. [Transcript Vol. I, p. 227]. Sufficient similarity of terms and conditions is assured by comparison with terms and conditions of other Gas Processing Agreements to which the Plant Owners are a party, and by the numbers of Producers subject to the terms of the Anschutz Ranch East Unit Gas Processing Agreement.

139. With respect to Chevron and UPRC as a producers of Gas processed at the Painter Plant, we find that the Anschutz Ranch East Unit Gas Processing Agreement, for Amoco as a Producer of Glasscock Hollow gas, is a reliable source of information, or a comparable, from which we may infer and impute a reasonable processing fee which would be paid by another party for processing of gas of like quantity, taking into consideration the quality, terms and conditions under which the gas was processed. That fee is a proportionate share of operating costs plus a processing fee of $0.08 per MCF of all gas delivered to the Plant Operator for processing. [Exhibit 120,129, 185]. Sufficient similarity in quantity is assured by the fact that the fee required by the Anschutz Ranch East Unit Gas Processing Agreement did not vary with respect to production. Sufficient similarity in quality is assured by the fact the gas processed in the plant is commingled, and the measure of the fee is in all instances based on the Producer’s gas at the inlet of the Painter Plant. Petitioners have also conceded that quality is not an issue in this case. [Transcript Vol. II, p. 227]. Sufficient similarity of terms and conditions is assured by comparison with terms and conditions of other Gas Processing Agreements to which the Plant Owners are a party, and by the numbers of Producers subject to the terms of the Anschutz Ranch East Unit Gas Processing Agreement.

140. The Anschutz Ranch East Unit Gas Processing Agreement did not terminate before December 31, 2003. Although no gas was processed under the Anschutz Ranch East Unit Gas Processing Agreement in 2001 and 2002, we find that the nomination process was at no time a substantial impediment to continued activity under the Anschutz Ranch East Unit Gas Processing Agreement. Amoco was simultaneously the Operator of the Painter Plant, the AREU, and the Glasscock Hollow field, and there is no written memorial of the telephone conference during which the Plant Owners granted permission to process gas at the Painter Plant in 2000.

141. We find that the consistent gas processing activity at the Painter Plant under the Anschutz Ranch East Unit Gas Processing Agreement from its inception provides additional support for the reliability of the same Agreement as a comparable during production year 2000.

142. Petitioners’ expert Adair (relying on Miller’s testimony) urged us to view the Anschutz Ranch East Unit Gas Processing Agreement as an insignificant aspect of a larger nitrogen transportation arrangement, a piece that “got tacked on at the end.” [Transcript Vol. II, p. 309]. In light of our examination of the processing fee and its history, we disagree with this characterization. We similarly disagree with Adair’s view that the Anschutz Ranch East Unit Gas Processing Agreement should be disregarded as “limited processing on a nomination basis.” [Transcript Vol. II, p. 310]. The volumes of Gas actually processed in 1995 and 1996, and the flexibility shown in accommodating Glasscock Hollow gas production, cause us to find otherwise.

143. We find the Department’s reliance on the Anschutz Ranch East Unit Gas Processing Agreement as a comparable was reasonable in every respect.

144. The OXY Agreement was not available to the Department before the commencement of litigation. [Transcript Vol. III, p. 392]. We nonetheless find that it should be taken into consideration in resolving this dispute. We find the Department’s failure to secure a copy of the OXY Agreement before the commencement of litigation cannot be attributed to a failure of diligence on the part of the Department, but rather to the failure of the Petitioners to produce the document.

145. For Amoco and Chevron, for whom Gas is processed at the Painter Plant under the Painter C&O Agreement, the OXY Agreement (to which UPRC is the successor in interest) is a reliable source of information, or a comparable, from which we may infer and impute a reasonable processing fee which would be paid by another party for processing of gas of like quantity, taking into consideration the quality, terms and conditions under which the gas was processed. That fee is a proportionate share of operating costs plus a processing fee of $0.25 per MCF of all gas delivered to the Plant Operator for processing. [Exhibit 123]. Sufficient similarity in quantity is assured by the fact that the maximum processing fee required by the Plant Owners during 2000, under any known Gas Processing Agreement related to the Painter Plant, was the fee charged under the OXY Agreement. Sufficient similarity in quality is assured by the fact the gas processed in the plant is commingled. Petitioners have also conceded that quality is not an issue in this case. [Transcript Vol. II, p. 227]. Sufficient similarity of terms and conditions is assured by comparison of the terms and conditions of the Exhibit H Gas Processing Agreements provided under the Painter C&O Agreement, and the terms and conditions of the OXY Agreement, taking into account the requirement for such similarity found in 6.08 of the Painter C&O Agreement. [Exhibit 120].

146. Our conclusion that the OXY Agreement is a comparable is supported by the fact that Amoco identified the OXY Agreement as a comparable in earlier years. Findings of Fact, supra. ¶97. We are not persuaded by Amoco’s attempt to explain away its own earlier use of the OXY Agreement as a comparable. Findings of Fact, supra. ¶97. If the passage of time has caused the processing fee to become outdated in any way, we find that the charge of $0.25 per MCF should be replaced by a charge of $0.08 per MCF.

147. We find that the Morgan Richardson Agreement was not a comparable because there was no production under the Morgan Richardson Agreement after 1993. Supra., ¶54. The Morgan Richardson Agreement has long been terminated [Transcript Vol. III, p. 396], and Department concedes that it would not look to a terminated contract as a comparable. [Transcript Vol. III, p. 408]. However, we find that the similarity between the Morgan Richardson Agreement and the OXY Agreement provides additional support for the reliability of the OXY Agreement as a comparable.

148. We find that the Agreement between Amoco and Northwest Pipeline Corporation was not a comparable, because there was no production under the Agreement after 1992. Supra., ¶48. However, we find that this Agreement was relevant for other purposes, including the light it sheds on the investment component of the processing fees.

149. We find that the Agreement between Chevron and Enron was not a comparable, because there has been no production under the Agreement since 1996. Supra., ¶69. The pricing under the Agreement also makes a meaningful comparison difficult. Supra., ¶67. However, we find that this Agreement was useful for other purposes, including the confirmation of an adverse economic relationship between Chevron and the other Painter Plant Owners.

150. Our consideration of the objections related to Chevron’s Exhibit H Gas Processing Agreements, supra., ¶¶124-132, is applicable to the other Gas Processing Agreements.

151. Our findings with respect to Chevron’s Exhibit H Gas Processing Agreement and the Anschutz Ranch East Unit Gas Processing Agreement, considered without regard to other comparables, support the decision of the Department. Although our analysis of the facts differs somewhat from the Department’s, the Department’s selection and application of the comparable value method was free from error, and free from indications of carelessness.

152. Our findings related to the Chevron’s Exhibit H Gas Processing Agreement, the Anschutz Ranch East Unit Gas Processing Agreement, the OXY Agreement, and the other relevant Agreements including the Painter C&O Agreement, taken together, support the decision of the Department. Although our analysis of the facts differs somewhat from the Department’s, the Department’s selection and application of the comparable value method was free from error, and free from indications of carelessness.

153. We find no evidence that the Department’s selection of the comparable value method was unfounded, capricious, arbitrary, and without merit, as alleged by Chevron. We find no evidence that the Department’s application of the comparable value method was unfounded, capricious, arbitrary, and without merit. We find no evidence that the Department’s calculation of the three Notices of Valuation was unfounded, capricious, arbitrary, and without merit.

154. Any Conclusion of Law set forth below which includes a Finding of Fact may also be considered a finding of fact and is therefore incorporated herein by reference.

155. We find no credible evidence of a waiver, express or implied, of the Department’s right and authority to use the comparable value method as it has done in this case.

156. We find no credible evidence that one or more of Petitioners have been the object of selective enforcement procedures by the Department.

157. The Department selected one of the four methods available by law for valuing natural gas production not sold at the point of valuation, as it was authorized and required to do pursuant to Wyo. Stat. Ann. §39-14-203(b)(vi). The Petitioners have appealed to this Board for a change of methods, on the ground that “the valuation method selected by the department does not accurately reflect the fair market value of the....natural gas...” Wyo. Stat. Ann. §39-14-203(b)(viii). In deciding this dispute, we return to principles generally stated in Whitney Canyon. We rely heavily on the Whitney Canyon decision in part because Petitioners have, in this case, largely duplicated their submission of Proposed Conclusions of Law from Whitney Canyon. Petitioners’ listing of issues is characterized by the same degree of similarity.

158. The Department’s selection of method and the relation of the selected method to fair market value is the principal subject of our review. As in Whitney Canyon, the Petitioners suggest that the “accurately reflect fair market value” test applies to specific comparables. We conclude instead that the test applies to the valuation method. Whitney Canyon, Conclusions of Law, ¶106.

159. To determine whether the method selected by the Department accurately reflects fair market value, we consider whether the Department’s selected method is free from error, or is in some way marked by carelessness. Whitney Canyon, Conclusions of Law, ¶107. We also consider the relative merits of the competing methods in reaching the statutory objective of fair market value. Whitney Canyon, Conclusions of Law, ¶¶108-109.

160. Amoco timely filed a separate notice of appeal of its annual valuation pursuant to Wyo. Stat. Ann. §39-14-209(b) [“appeals”] and Chapter 2, Section 5 of the Board’s Rules [requirements for filing]. Amoco listed twelve specific complaints about the Department’s action. With minor typographical changes, the list is the same as in Whitney Canyon:

3. The quality, terms and conditions under which the minerals are being processed or transported are not comparable.

4. The Department of Revenue has failed to make proper adjustments in their alleged comparables as required by accepted appraisal authority.

5. The same parties, same property and the same issues were previously decided by the Wyoming Supreme Court in Case No. 93-104 [Amoco Production v. State Board of Equalization, 882 P.2d 866 (Wyo. 1994)] and the Department of Revenue is collaterally estopped from rearguing the issue.

6. The Department of Revenue has previously acknowledged it cannot allow Amoco to fully participate in the development and use of acceptable comparables.

7. The Department of Revenue has previously accepted the proportionate profits methodology on the subject properties and it has not been disallowed on audit.

8. Previously alleged comparables identified by the Department of Revenue fail to adequately establish the fair market value of the minerals produced from the subject property.

9. No valid inference can be drawn from the limited number of alleged comparables identified by the Department of Revenue.

10. Market value cannot be inferred based on the Department’s limited information.

11. The Department has failed to collect and analyze sufficient data to project a typical processing fee or a processing fee that is statistically valid.

12. The Department of Revenue’s selective action violates the uniform and equal provisions of the Wyoming Constitution and Statutes.

161. Just as in Whitney Canyon, the relief requested by Amoco was reinstatement of the values Amoco originally reported. See Whitney Canyon, Conclusions of Law, ¶110.

162. Chevron timely filed a notice of appeal of its annual valuation under the same authorities as Amoco, raising essentially the same issues and requesting essentially the same relief. Chevron was sharply critical of the particular comparables selected by the Department for the Painter Complex Gas Plant. Its list of other specific failures of the Department was otherwise nearly identical to Amoco’s, although Chevron refers more specifically to other “producer/processors” that were allowed to use the proportionate profits method. Chevron concluded that both the selection of “the comparable methodology” was “unfounded, capricious, arbitrary, and without merit.”

163. UPRC filed a similar notice of appeal of its annual valuation but that notice was not timely, and therefore was dismissed. [Board Record].

164. The initial claims and contentions were supplemented and amended during the course of the proceedings. We have taken these restatements and refinements of the issues into account in our decision of the case. However, the Petitioners did not identify or state theories of res judicata, judicial estoppel, and waiver until they submitted proposed findings of fact and conclusions of law following the hearing. [Board Record].

It is only by either approving the determination of the Department, or by disapproving the determination and remanding the matter to the Department, that the issues brought before the Board can be resolved successfully without invading the statutory prerogatives of the Department.

Amoco Production Company v. Wyoming State Board of Equalization, 12 P.2d 668, 674 (Wyo. 2000). In this case, the Board may not oblige the Department to use the processing deduction that is most consistently supported by the evidence, but must instead determine whether to accept or reject the Department’s action.

166. The burden of proof is on the party asserting an improper valuation. Amoco Production Company v. Wyoming State Board of Equalization, 899 P. 2d 855, 858 (Wyo. 1995); Teton Valley Ranch v. State Board of Equalization, 735 P. 2d 107, 113 (Wyo. 1987). The Board’s Rules provide that, “the Petitioner shall have the burden of going forward and the ultimate burden of persuasion, which burden shall be met by a preponderance of the evidence. If Petitioner provides sufficient evidence to suggest the Department determination is incorrect, the burden shifts to the Department to defend its action...” Rules, Wyoming State Board of Equalization, Chap. 2, §20.

167. Under the analysis which follows, taken in light of our Findings of Fact, we conclude the Petitioners have not met their burden.

168. To properly interpret the various statutes applicable to natural gas valuation, we must first review their fundamental objective. Wyodak Resources Development Corporation v. Wyoming Department of Revenue, 2002 WY 181, ¶33, 60 P.3d 129, 141-142 (Wyo. 2002). The Wyoming Constitution requires the gross product of mines to be taxed in proportion to the value thereof and uniformly valued for tax purposes at full value as defined by the legislature. Wyo. Const. Art. 15, §§3, 11. For oil and gas, the “value of the gross product “means fair market value as prescribed by Wyo. Stat. Ann. §39-14-203(b), less any deductions and exemptions allowed by Wyoming law or rules. Wyo. Stat. Ann. §39-14-201(a)(xxix). The fair market value for natural gas must “be determined after the production process is completed.” Wyo. Stat. Ann. §39-14-203(b)(ii). “The production process for natural gas is completed after extracting from the well, gathering, separating, injecting and any other activity which occurs before the outlet of the initial dehydrator. When no dehydration is performed, other than within a processing facility, the production process is completed at the inlet to the initial transportation related compressor, custody transfer meter or processing facility, whichever occurs first.” Wyo. Stat. Ann. §39-14-203(b)(iv). All of these provisions read together provide the context within which the specific valuation methods contained in Wyo. Stat. Ann. §39-14-203(b)(vi) must be interpreted. Wyodak Resources Development Corporation v. Wyoming Department of Revenue, id.

169. No Petitioner sells its natural gas at the point of production. Wyo. Stat. Ann. §39-14-203(b)(vi) therefore obliges the Department to value the production of each Petitioner using one of four methods defined by statute: comparable sales, comparable value, netback, or proportionate profits.

170. The Department identified the valuation method it intended to apply pursuant to Wyo. Stat. Ann. §39-14-203(b)(vi), and duly notified each Petitioner before September 1 of the year preceding the year for which the method was to be employed, as required by Wyo. Stat. Ann. §39-14-203(b)(vi). As in Whitney Canyon, we conclude that the identification and notice requirements of the statute were met. We further conclude that the Department was under no obligation to accept any request to substitute the proportionate profits method simply because such requests had been granted in previous years. Whitney Canyon, Conclusions of Law, ¶119.

171. The Petitioners have complained that the Department failed to provide them with sufficient notice of how to apply the comparable value method. In light of our findings of fact with regard to the positions taken by the Petitioners, we conclude that they have failed to carry their burden of proof to establish their complaint as a matter of fact. Findings of Fact,¶¶95-101. We further conclude that the Petitioners have been fully afforded their “statutory and constitutional rights to protest and contest.” Pathfinder Mines v. Wyoming State Board of Equalization, 766 P. 2d 531, 535 (Wyo. 1988). We also conclude that the Department, rather than the individual Petitioner, is responsible for determining value. Wyo. Stat. Ann. §39-14-203(b)(vi); infra., ¶¶176-177.

172. In this case, the Petitioners reprise their dispute with Department regarding interpretation of the statutory definition of comparable value:

Comparable Value - The fair cash market value is the arms-length sales price less processing and transportation fees charged to other parties for minerals of like quantity, taking into consideration the quality, terms and conditions under which the minerals are being processed or transported.

173. As in Whitney Canyon, we conclude that “the arms-length sales price” refers to the price Petitioners received for sales of gas from the tailgate of the plant. Whitney Canyon, Conclusions of Law, ¶125.

174. As in Whitney Canyon, we conclude that “other parties” are simply persons or groups distinct from the individual Petitioner, and that this is “the ordinary and obvious meaning of the words employed according to their arrangement and connection.” Whitney Canyon, Conclusions of Law, ¶127. We also conclude that the words “other parties” are not ambiguous. Whitney Canyon, Conclusions of Law, ¶128.

175. We further conclude that the Plant Owners are an “other party” with respect to any Producer under the Gas Processing Agreements we have identified as comparables. We conclude that the Plant Owners are a business entity separate from each Producer and from each Petitioner. Our conclusion is based upon our analysis of the Painter C&O Agreement and the referenced Gas Processing Agreements. As in Whitney Canyon, we decline to gloss over these separate identities by referring to each Petitioner as a “producer-processor.” Whitney Canyon, Conclusions of Law, ¶129.

176. As in Whitney Canyon, we conclude that the phrase, “processing fees...charged to other parties for minerals of like quantity” is a broad test which must be used by the Department when the Department selects the comparable value methodology to determine fair market value. That test requires the Department to exercise its sound discretion to analyze available information of known processing fees in the context of known volumes of gas for which such fees are charged, with the objective of securing reliable information from which reasonable estimates can be made regarding processing fees which would be paid by a specific Petitioner had it been in the position of a third party producer requiring the services of a gas processing plant. This is primarily a determination of fact. We conclude that we have reached “the ordinary and obvious meaning of the words employed according to their arrangement and connection.” Whitney Canyon, Conclusions of Law, ¶¶130-135. In this regard, we also reconfirm our discussion of concerns raised by the Petitioner, including concerns regarding the latitude of the Department’s discretion. Whitney Canyon, Conclusions of Law, ¶¶136-139.

177. We likewise reaffirm our previous ruling regarding the phrase, “taking into consideration the quality, terms and conditions under which the minerals are being processed or transported.” The Department must assure itself of the reliability of any comparison upon which it bases inferences regarding processing fees, and in doing so it must consider at least the quality of the minerals, and the terms and conditions under which

the minerals are being processed. We conclude that we have reached “the ordinary and obvious meaning of the words employed according to their arrangement and connection.” Whitney Canyon, Conclusions of Law, ¶140.

178. The Petitioners argue that the Department has failed to consider pertinent distinctions between and among various gas processing contracts, and therefore has failed to consider “terms and conditions” as required by the statute. We conclude that this is a dispute between the parties regarding the significance of those distinctions for applying the comparable value method. As such, we view the resolution of that dispute as a question of fact. We have made various findings in this regard. E.g., Findings of Fact, ¶¶121-122, 134. We conclude that the Department has met the requirements of the statute with respect to considering the terms and conditions under which the minerals are being processed, and conclude that the terms and conditions to which the Petitioners have directed our attention are not commercially significant. Therefore, the Petitioners have failed to carry their burden of proof. On the same grounds, we likewise conclude that the Department has taken the quality of the gas into account, as required by the statute, and that the Petitioners have failed to carry their burden of proof.

179. Under our reading of the plain language of the statute, the Department correctly applied the comparable value method by subtracting an inferred processing fee from a known sales price to reach a value. We decide this issue based upon all of the information known at the close of the hearing, and not just on the basis of the information known to the Department when it prepared the Notices of Valuation for the three Petitioners. For Amoco, the fees charged to other parties include:

● Processing fees charged by the Plant Owners to Chevron under the Exhibit H Gas Processing Agreement

● Processing fees charged by the Plant Owners to all Producers except Amoco under the Anschutz Ranch East Unit Gas Processing Agreement for AREU processing

● Processing fees charged by the Plant Owners to Chevron under the Anschutz Ranch East Unit Gas Processing Agreement for Glasscock Hollow processing

Amoco is not an “other party” to itself. Processing fees charged to Amoco under the AREU Gas Processing Agreement are not a comparable for Amoco.

● Processing fees charged by the Plant Owners to all Producers except Chevron under the Anschutz Ranch East Unit Gas Processing Agreement for AREU processing

● Processing fees charged by the Plant Owners to Amoco under the Anschutz Ranch East Unit Gas Processing Agreement for Glasscock Hollow processing

Chevron is not an “other party” to itself. The Exhibit H Gas Processing Agreement is therefore not a comparable for Chevron. Processing fees charged to Chevron under the AREU Gas Processing Agreement are not a comparable for Chevron.

● Processing fees charged by the Plant Owners to Chevron under the Exhibit H Gas Processing Agreement

● Processing fees charged by the Plant Owners to all Producers except UPRC under the Anschutz Ranch East Unit Gas Processing Agreement for AREU processing

● Processing fees charged by the Plant Owners to Chevron under the Anschutz Ranch East Unit Gas Processing Agreement for Glasscock Hollow processing

● Processing fees charged by the Plant Owners to Amoco under the Anschutz Ranch East Unit Gas Processing Agreement for Glasscock Hollow processing

UPRC is not an “other party” to itself. Processing fees charged to UPRC under the Anschutz Ranch East Unit Gas Processing Agreement are not a comparable for UPRC. The OXY Agreement is not a comparable for UPRC.

182. The Department did not, however, choose to apply the processing fee most strongly supported by weight of available Agreements. The Chevron Exhibit H Agreement and the AREU Gas Processing Agreement require payment of a proportionate share of costs plus a fee of $0.08 per MCF of Gas, measured at the inlet to the Painter Plant. Instead of $0.08, the Department chose $0.25 per MCF. This higher fee was supported principally by the OXY Agreement, including its prior history as a comparable, and by testimony from Amoco that $0.08 understated the Plant Owners’ return on investment. However, as we have previously observed, the role of the Board in this case is to decide the dispute, not to establish a value. Supra., ¶165. We conclude that the selection of $0.25 rather than $0.08 was within the Board’s discretion. As a further and separate ground for our decision in this regard, we find that the Petitioners have not carried their burden of proof with respect to demonstrating that $0.25 was insufficiently related to return on investment in the Plant.

183. We conclude that, with respect to the processing fees charged under all of the Gas Processing Agreements referenced in ¶¶179-181, the Department correctly determined, by comparison of processing fees in the context of suitably measured volumes of gas, that there was a consistent range of fees applied against any and all volumes processed under the referenced Gas Processing Agreements during 2000. Findings of Fact, ¶¶121-122, 137, 141-142, 148. As a further and separate ground for our decision in this regard, we find that the Petitioners failed to carry their burden of proof.

184. We conclude that, in the course of satisfying itself that the inferences being drawn from the Gas Processing Agreements were based on valid comparisons, the Department adequately considered both the quality of the gas being processed, and the terms and conditions under which the gas was being processed. In all instances, similarity of quality was assured by virtue of the fact that all gas was commingled before becoming available at the tailgate of the plant, among other considerations. In all instances, the terms and conditions were sufficiently similar to conclude that the comparison was valid. Findings of Fact, ¶¶121-122, 134, 138-139, 145. We conclude that Department met the requirements of the statute. As a further and separate ground for our decision in this regard, we find that the Petitioners failed to carry their burden of proof.

185. Although we approve the use of the selected comparables, the parties have agreed that if this Board upholds the Department’s selection of comparable value, the Department’s calculations of value and Notices of Valuation must be adjusted to reflect actual numbers for 2000 operations. Findings of Fact, ¶108. We will accordingly remand this case to the Department for that purpose.

186. As explained above, supra., ¶159, in determining whether the method selected by the Department accurately reflects fair market value, Wyo. Stat. Ann. §39-14-203(b)(viii), we consider the results of the method rather than the results of specific comparables, and consider whether the Department’s selected method is free from error. We also consider whether an alternative method would reach fair market value. We have weighed the evidence that has been presented to us. In all respects, we conclude that the Department’s selected method accurately reflects fair market value. We summarize the main points, while incorporating by reference details set forth in our Findings of Fact.

187. The selected fee covers operating costs, plus return on investment. E.g., Findings of Fact, ¶¶72-78. The Petitioners have not drawn our attention to any other components of an appropriate processing cost.

188. The Department’s selection and application of the comparable value method was free from error, both with respect the Department’s analysis of the facts, and with respect to the law. Findings of Fact, ¶¶151-152. Our conclusion in this regard would be sufficient to decide the dispute between the parties.

189. There is no evidence that the alternative method requested by the Petitioners, the proportionate profits method, would accurately reflect fair market value for 2000. To the contrary, there is considerable evidence that the proportionate profits method would not accurately reflect fair market value, but would instead result in an excessive deduction, thereby raising constitutional issues if it were used to value year 2000 production processed at the Painter Plant. Whitney Canyon, Conclusions of Law, ¶109. Moreover, it is clear that the Petitioners were aware that the proportionate profits method would yield a distorted value for this tax year. Whitney Canyon, Findings, ¶72.

190. As in Whitney Canyon, the Petitioners contend that the Department’s use of the comparable value method is a species of netback formula, and therefore prohibited by statute. Our ruling in Whitney Canyon generally applies to this case, and disposes of the Petitioner’s contentions. Whitney Canyon, Conclusions of Law, ¶¶151-159. It bears repeating that the comparable values we have approved are in each instance based on the contracts of parties other than the individual Petitioners. Further, we again decline to entertain a blanket rejection of the proportionate profits method. Whitney Canyon, Conclusions of Law, ¶¶157-158.

191. The Petitioners have not disputed the mathematical calculation performed by the Department and reflected in the Notices of Valuation, except as to use of actual numbers for 2000 operations.

192. In Whitney Canyon, we addressed Petitioners’ various claims concerning the effect in this case of Amoco Production Company v. Wyoming State Board of Equalization, 882 P.2d 866 (Wyo. 1994)(Case No. 93-104, referenced as item No. 5 in Amoco’s notice of appeal, supra., ¶163). Whitney Canyon, Conclusions of Law, ¶¶160-168. Our ruling in Whitney Canyon determines the same issues here. Although there are differences between the contracts in the Whitney Canyon case and those related to the Painter Plant, there are again many reasons to conclude that the circumstances of production year 2000 differ from the circumstances of the earlier proceeding, and were not decided by that earlier proceeding.

193. As in Whitney Canyon, Petitioners contend that the processing fee calculated by the Department represents a hypothetical processing allowance. Taken in conjunction with our findings of fact in this case, including our reliance on costs that are not hypothetical, the ruling in Whitney Canyon determines the issue. Whitney Canyon, Conclusions of Law, ¶¶169-172.

194. As in Whitney Canyon, Petitioners have raised a number of issues related to the application of appraisal principles, including application of recognized appraisal techniques. Supra., ¶¶160, 162. After careful review of the Wyoming tax statutes, we concluded that there is no reason to supplement and modify the plain language of Wyo. Stat. Ann. §39-14-203(b)(vi) with an overlay of appraisal theory. Our ruling in Whitney Canyon is therefore equally applicable in this case. Whitney Canyon, Conclusions of Law, ¶¶173-182. Petitioners’ various objections based on appraisal theory are without merit.

195. As in Whitney Canyon, Petitioners have criticized the Department’s refusal to pursue rule making to more fully define the comparable value method. We reject that criticism for the same reasons stated in Whitney Canyon, the most important of which is that rule making is not required “so long as statutory and constitutional rights to protest and contest are afforded the taxpayer.” Whitney Canyon, Conclusions of Law, ¶¶183-184. Our conclusion is supported by our doubt that rule making would have been a productive endeavor, Whitney Canyon, Findings of Fact, ¶39, which we have adopted in this case. Findings of Fact, ¶101.

196. Petitioners have raised the same constitutional issues that were raised in Whitney Canyon. Our disposition of those issues is essentially the same in this case. Whitney Canyon, Conclusions of Law, ¶¶185-190. In doing so, we recognize that the facts in this case are somewhat different, and accordingly rest on additional findings. However, we again conclude that Petitioners have failed to carry their burden to demonstrate that they have been the object of selective or arbitrary enforcement of the tax laws of Wyoming. See Findings of Fact,¶¶112-115, 156.

197. We also conclude, under the specific circumstances in this case, that the Petitioners have failed to show that they are situated similarly to other taxpayers that are being treated in a way that gives rise to the concern for lack of uniformity. “Equal protection in Wyoming requires a law to operate alike upon all persons or property under the same circumstances and conditions.” W. W. Enterprises, Inc., v. City of Cheyenne, 956 P. 2d 353, 356 (Wyo. 1998)(Emphasis in original). This is a case involving sweet gas, not sour gas. Findings of Fact, ¶112. This is a case in which fees were actually charged under the contracts which we have found to be comparables, in contrast to the facts known about the producers of concern to Petitioners. Findings of Fact, ¶113. We have rejected the characterization of the Exhibit H fees as penalties, and the Petitioners’ related argument. Findings of Fact, ¶¶77, 114. Petitioners have again failed to come forward with meaningful evidence to compare the cost structure at Painter with those of the producers of concern. Findings of Fact, ¶115.

198. In Whitney Canyon, we ruled against Petitioners’ request that we apply the doctrine of collateral estoppel to bar the relitigation of issues said to have been previously decided in Amoco Production Company v. Wyoming State Board of Equalization, 882 P.2d 866 (Wyo. 1994) and related proceedings before the Board. Whitney Canyon, Conclusions of Law, ¶¶191-195. Petitioners renew those arguments in this case. Our ruling in Whitney Canyon generally disposes of those arguments here as well. However, our focus in Whitney Canyon on facts pertaining to 2000 likewise extends to the extensive facts we have found with regard to the Painter Plant and comparables related to production year 2000. Petitioners’ own insistence that “gas is ‘being’ processed under the particular contract chosen as a comparable” highlights the difference in circumstances. [Petitioners’ Proposed Findings of Fact and Conclusion of Law, ¶208]. We again conclude that Petitioners’ concern for relitigation of issues is groundless.

199. As in Whitney Canyon, the Petitioners request us to apply the doctrine of stare decisis to conclude that precedent governs our decision of various issues of fact and law. We rejected Petitioner’s analysis of the precedent, the facts, and, to some extent, the law. The arguments are essentially the same in this case, and so is our conclusion to reject those arguments. Whitney Canyon, Conclusions of Law, ¶¶196-198.

200. In Whitney Canyon, we ruled against Petitioners’ request that we apply the doctrine of res judicata to bar the relitigation of causes and claims said to have been previously decided in Amoco Production Company v. Wyoming State Board of Equalization, 882 P.2d 866 (Wyo. 1994) and related proceedings before the Board. Because the subject matter is the Department’s selection of valuation for production beginning in tax year 2000, and a variety of specific claims regarding application of that method for production year 2000, we again conclude that the doctrine of res judicata does not apply, and that further analysis would show a general failure to meet the criteria for res judicata. Whitney Canyon, Conclusions of Law, ¶199.

201. As a further and separate reason for rejecting the proposed application of the doctrine of res judicata, Petitioners failed to raise this issue in prehearing statements as required under our Rules. Rules, Wyoming State Board of Equalization, Chap. 2, §10(d).

202. As in Whitney Canyon, the Petitioners urge us to conclude that the Department is asserting inconsistent positions in different judicial proceedings, particularly with respect to its interpretation of “other parties.” We again conclude that the doctrine of judicial estoppel does not apply because even if we accept the Petitioners’ characterization of the Department’s earlier position, the Department was not successful in the earlier litigation. Our position in Whitney Canyon determines the matter. Whitney Canyon, Conclusions of Law, ¶¶201-202.

203. As a further and separate reason for rejecting the proposed application of the doctrine of judicial estoppel, Petitioners failed to raise this issue in prehearing statements as required under our Rules. Rules, Wyoming State Board of Equalization, Chap. 2, §10(d).

204. Petitioners raise the same claim in this case as in Whitney Canyon that the Department, by virtue of a position taken in Amoco Production Company, supra., ¶192, over a decade ago, has waived the right to introduce documentation of comparables as it has done in this case. As in Whitney Canyon, we conclude the Petitioners are incorrect as a matter of law. Whitney Canyon, Conclusions of Law, ¶¶204-206. We have also determined as a matter of fact that there was no such waiver. Findings of Fact, supra., ¶158.

205. As a further and separate reason for rejecting the proposed application of the doctrine of waiver, Petitioners failed to raise this issue in prehearing statements as required under our Rules. Rules, Wyoming State Board of Equalization, Chap.2, §10(d).

206. All issues that the Petitioner has raised regarding Uinta County intervention were previously addressed and resolved. We again conclude that limits on a county’s authority to appeal ad valorem tax decisions do not apply to actions initiated by the taxpayer. Whitney Canyon, Conclusions of Law, ¶208. We again conclude that Wyo. Stat. Ann. §18-3-504(a)(v) provides an adequate statutory power for the Uinta County to intervene. Whitney Canyon, Conclusions of Law, ¶209. We again conclude that a county is the public entity best positioned to represent many interests that, for whatever reason, are not prepared to acquiesce in the judgments of the Department of Revenue and/or Department of Audit. Whitney Canyon, Conclusions of Law, ¶210. We again conclude that the public interest is served by airing the concerns of the county at the earliest possible stage under conditions required by the Board, and prefer to exercise whatever discretion we might have to do just that. Whitney Canyon, Conclusions of Law, ¶¶211-212. To these reasons, we add the further observation that the Legislature has granted counties, as governmental entities, access to confidential taxpayer information after an appropriate showing to the Department. Wyo. Stat. Ann. §39-14-202(b)(iii)(B). At a minimum, this access supports an inference that the counties are entities with a sufficient interest in the matters at issue in this case to allow intervention as the Board has done.

207. As a further and separate ground for our decision, there is presumption favoring the Department’s action:

The Department’s valuations for state-assessed property are presumed valid, accurate, and correct. [citation omitted]. This presumption can only be overcome by credible evidence to the contrary. [citation omitted]. In the absence of evidence to the contrary, we presume that the officials charged with establishing value exercised honest judgment in accordance with the applicable rules, regulations, and other directives that have passed public scrutiny, either through legislative enactment or agency rule-making, or both.

Colorado Interstate Gas Company v. Wyoming Department of Revenue, 20 P.3d 528, 531 (Wyo. 2001). We find and conclude that Petitioners have not produced credible evidence to overcome the presumption.

208. We conclude that production under Chevron’s Exhibit H Gas Processing Agreement and the Anschutz Ranch East Unit Gas Processing Agreement, considered without regard

to other comparables, supports the decision of the Department. In other words, the Department properly applied the comparable value method based on the information available to it when it issued Notices of Valuation to the Petitioners.

209. We conclude that production under the Anschutz Ranch East Unit Gas Processing Agreement and the OXY Agreement, considered without regard to the other comparable, supports the decision of the Department. In other words, the Department properly applied the comparable value method even if one disregards Chevron’s Exhibit H Gas Processing Agreement.

IT IS THEREFORE HEREBY ORDERED: The Department’s selection of the comparable value with respect to all three Petitioners is affirmed;

The Department’s application of the comparable value method for production year 2000 to Amoco and Chevron is affirmed, provided that;

With respect to all Petitioners and as agreed in the Confidential Stipulations of all Petitioners, this matter is remanded to the Department, which shall amend and adjust its calculation of value and Notices of Valuation for 2000 to reflect actual numbers for 2000 operations.

Pursuant to Wyoming Statute Section 16-3-114 and Rule 12, Wyoming Rules of Appellate Procedure, any person aggrieved or adversely affected in fact by this decision may seek judicial review in the appropriated district court by filing a petition for review within 30 days of the date of this decision.