Nicole Crighton and Robert A. Swiech, of Oreck, Bradley, Crighton, Adams & Chase, for Petitioner BP America Production Company (BP).

Lawrence J. Wolfe, of Holland and Hart, for Anadarko E&P Production Company LP (Anadarko).

William J. Thomson, II and Randall B. Reed, of Dray, Thomson & Dykeman, P.C., for the Petitioner Chevron U.S.A., Inc. (Chevron).

Karl D. Anderson and Martin L. Hardscog, of the Wyoming Attorney General’s Office, for the Department of Revenue (Department).

In the late spring of 2003, BP, Anadarko, and Chevron (the “Petitioners” or “Taxpayers”) filed annual reports related to their 2002 gas production processed through the Whitney Canyon gas processing plant. The Department prepared Notices of Valuation for that production, and all three taxpayers filed timely appeals of the Notices of Valuation received pursuant to Wyo. Stat. Ann. §39-14-209(b). The State Board of Equalization (Board) may hear objections to the Department’s determination of the fair market value of natural gas production year, and accordingly has jurisdiction to consider these appeals. The parties stipulated that the appeals were timely filed and the Board properly has jurisdiction. [Stipulated Updated Summary of Uncontroverted Facts].

The matter came on for hearing August 16 through 20, 2004, by the Board consisting of Chairman Roberta A. Coates, Vice Chairman Alan B. Minier, and Board Member Thomas R. Satterfield. Chairman Coates resigned from the Board prior to the decision and Order. Board Member Thomas D. Roberts considered the matter by reviewing the file, hearing transcript, and exhibits, and participated in the Findings of Fact, Conclusions of Law, and Order.

This case renews Petitioners’ dispute with the Department regarding its use of the statutory comparable value method. The Department used that method to determine the fair market value of natural gas processed at the Whitney Canyon gas processing plant during production year 2002. In litigation regarding the preceding production years, 2000 and 2001, this Board affirmed the Department’s selection and application of the comparable value method. Union Pacific Resources Company et al., Docket No. 2000-147 et al., June 9, 2003, 2003 WL 21774603 (Wyo. St. Bd. Eq.) (hereafter Whitney Canyon 2000); Chevron U.S.A., Inc. et al., Docket No. 2002-54, January 25, 2005, 2005 WL 221595 (Wyo. St. Bd. Eq.) (hereafter Whitney Canyon 2001). In this proceeding, Petitioners call the Board’s attention to unfavorable economic conditions and urge it to reach different conclusions than it did for production years 2000 and 2001. Petitioners’ statutory and constitutional claims are otherwise similar to, and in many instances identical to, the claims they made for production years 2000 and 2001.

We affirm the Department’s determination of value. The Petitioners failed to show either that the Department’s valuation was not in accordance with the constitutional and statutory requirements for valuing state-assessed property, or to show that the Department’s valuation was contrary to its rules, regulations, orders or instructions.

The Board’s procedures afford the parties several opportunities to document and refine the issues they would have us adjudicate. In this proceeding, these opportunities occurred at least in the original notice of appeal; in formal statements of contentions; in a prehearing listing of issues of fact and law submitted with an index of hearing exhibits; and in proposed findings of fact and conclusions of law submitted to the Board after the transcript of the hearing was prepared. One difficulty the Board encountered in this case was the large number of issues inconsistently stated over time.

As their final summary of issues prior to the hearing, the Petitioners stated these principal contentions for our consideration:

To establish comparable value, the Department relied upon contracts that do not meet the requirements of Wyo. Stat. Ann. §39-14-203(b)(vi)(B).

The proportionate profits method was authorized by law, determined fair market value, and has been confirmed on audit.

The Petitioners cannot use the statutory netback method of valuation because they own the Whitney Canyon plant, and therefore process their own production.

The comparable value method used by the Department does not accurately reflect the fair market value of Petitioners’ gas production stream, because:

A. The comparable value method as applied by the Department is unconstitutional.

B. The Department failed to follow standard appraisal techniques when it determined the fair market value of Petitioners’ production.

C. The comparable value processing contracts selected by the Department do not meet statutory requirements.

D. Concepts of judicial estoppel and res judicata prevent a decision in this matter different from one previously reached by the Wyoming Supreme Court.

Petitioners supported these principal points with numerous, more detailed propositions. Specifically, the contention that the Department’s comparable value method did not accurately reflect fair market value was supported by twenty-six propositions of fact and/or law. In a pleading filed simultaneously, Petitioners identified fifteen contested issues of fact and twenty-four contested issues of law. [Petitioners’ Joint Issues of Fact and Law and Exhibit Index].

Many issues were restated, and some new issues added, in Petitioners’ proposed findings of fact and conclusions of law. For example, the Petitioners originally contended that, “[t]he 25% in-kind charge is not intended to represent all costs plus a return on investment.” [Petitioners’ Joint Updated Summary of Contentions, item C.10]. This was amended to an argument that the Board find “[t]he 25 percent fee does not cover actual costs.” [Taxpayers’ Proposed Findings of Fact and Conclusions of Law, pp. 17-18]. The modifications in pleadings left us in doubt about whether Petitioners maintained all of their theories after the close of evidence. In Petitioners’ pre-hearing contentions we found collateral estoppel and judicial estoppel theories. [Petitioners’ Contentions, items D.1. and D.2.; Petitioners’ Joint Issues of Law, item 18]. In their proposed findings and conclusions, Petitioners did not refer to either theory.

A. The Department’s objective in valuing minerals for taxation purposes is to determine the fair market value of the mineral.

B. The proportionate profits method, using the direct cost ratio the Taxpayers have used (which excludes production taxes and royalties from direct production costs), does not render full value of the minerals.

C. The Department’s rejection of the proportionate profits method, and selection of the comparable value method for valuation, was reasonable, appropriate and consistent with Wyoming law.

D. The Board affirmed the Department’s use of the comparable value method for the 2000 production year for Whitney Canyon production.

E. Although Petitioners claim that use of a comparable is impossible, some Petitioners have in the past reported taxable value using the comparable values method for various gas production.

F. The Department had sufficient information and documentation to apply the comparable value method using a 25% processing deduction as the comparable fee for the 2002 production year.

G. The use of the selected 25% comparable processing deduction yields an accurate reflection of the fair market value of Petitioners’ gas for the 2002 production year.

Whether the Department properly and correctly applied the Comparable Value method of valuation, as set forth in Wyo. Stat. §39-14-203(b)(vi)(B), to value the oil and gas produced by BP America Production Company, Chevron USA Inc. and Anadarko E&P Company for Production Year 2002?

In its proposed findings and conclusions, the Department further described its contentions:

A. As to each of the plant owners, the other owners are “other parties” within the meaning of the statute.

B. The 25% processing fee established by the Whitney Canyon Construction and Operation Agreement is a reasonable processing fee and the maximum fee ever charged by the plant for processing, regardless of quantity or quality of gas or terms and conditions.

C. The 25% processing fee, since it is a reasonable fee reflective of the marketplace, is the proper processing deduction for the Petitioners regardless of whether or not that fee yields either a return on investment or covers the processing costs that the Petitioners incurred for that production year.

D. The proportionate profits method does not produce a representative fair market value for the Petitioners’ products processed at the Whitney Canyon plant, and as applied by the Petitioners, yields the absurd and inequitable result that gas produced from the same well, field, or reservoir, and processed under similar or identical terms is valued so as to give these producers disproportionately large processing deductions.

E. The comparable value statute requires use of fees charged to other parties without regard to whether such fees cover expected return on investment or actual costs of processing.

[Wyoming Department of Revenue’s Proposed Findings of Fact and Conclusions of Law, pp. 4-5].

We have grouped the subject matter of the parties’ contentions into seven issues of fact and four issues of law that embrace all of the contentions raised by the parties.

Did the Department have a reasoned basis for determining the value of Petitioners’ production?

Did a processing fee of 25% enable the Whitney Canyon plant owners to recover their actual processing costs?

In the context of production year 2002, for BP individually, yes; for Anadarko and Chevron individually, no; for the three plant owners together, no.

Did the Petitioners demonstrate that the Department improperly applied the comparable value method by its selection of sources of comparable value?

Did the Petitioners demonstrate that the Department erred by not applying general appraisal principles when determining the value of Petitioners’ production using the comparable value method?

Did the Petitioners demonstrate that the values determined by the Department did not reach fair market value?

Did the Petitioners demonstrate that the Department violated prescribed procedures when it determined the value of each Petitioner’s gas production?

Did the Petitioners demonstrate that there were other taxpayers similarly situated to themselves who were allowed to report taxable value using the proportionate profits method?

Did the Department correctly apply the comparable value method to determine the value of each Petitioner’s production?

Did the Department violate prescribed requirements by the procedures it used to determine each Petitioner’s production?

Was the Department barred from use of the comparable value method by collateral estoppel or judicial estoppel?

1. The Whitney Canyon plant processes sour gas, i.e., natural gas with relatively high concentrations of hydrogen sulfide and carbon dioxide. [Trans. Vol. II, p. 346]. The plant cost $341 million to construct, and went into operation in November, 1983. [Trans. Vol. I, p. 182]. In production year 2002, the Whitney Canyon plant processed natural gas for producers BP America, Anadarko, Chevron, Forest Oil, Merit Energy, and Anschutz Corporation. [Trans. Vol. I, p. 184].

2. In production year 2002, BP America Production Company, Anadarko Petroleum Company, ChevronTexaco, Inc., and Forest Oil Corporation were the owners of the Whitney Canyon plant. [Trans. Vol. I, p. 183]. Forest is not a party to this appeal. [Board Record].

3. The original owners of the Whitney Canyon plant were Amoco, Champlin, Gulf, and Apache. [Trans. Vol. I, p. 183]. Percentages of ownership have not changed since 1983, although the identity of the owners has. [Trans. Vol. I, p. 184].

4. Some brief points about the identity of predecessors and affiliates of the parties are necessary to provide context for the testimony on which the Board will rely. BP acquired Amoco in 1999. [Trans. Vol. II, p. 223]. ChevronTexaco acquired Gulf in 1985. [Trans. Vol. V, p. 821]. Anadarko acquired its ownership in the plant from Union Pacific Resources Company in 2000. [Trans. Vol. I, p. 191, Vol. II, p. 276]. Forest Oil acquired the interest of Forcenergy Exploration in the plant, which had acquired the interests previously held by Apache. [Trans. Vol. II, p. 308].

5. Each plant owner was a successor in interest under an agreement for the joint Construction, Ownership and Operation of the Whitney Canyon Gas Processing Plant, Uinta County, Wyoming (“the C&O Agreement”), dated March 3, 1980. [Exhibit 21]. No witness in our proceeding participated directly in the negotiations leading up to the execution of this Agreement. [Trans. Vol. I, p. 108, Vol. II, p. 324, Vol. III, p. 665. Vol. V, p. 893]. We find the agreement itself to be the best expression of the intent of the parties.

6. According to the C&O Agreement, “[t]he Owners hereto recognize that this Agreement creates a partnership for tax purposes.” [Exhibit 21, Section 16.4 and Exh. G].

7. By executing the C&O Agreement, the parties to the C&O Agreement simultaneously executed a Gas Processing Agreement attached to the C&O Agreement as Exhibit F. Under the Gas Processing Agreement, each party to the C&O Agreement is identified both individually as a Producer, and collectively as an Owner of the Gas Processing Plant. [Exhibit 21, Section 23.1, Exh. F; see also Section 1(d) of Exhibit 21].

8. The Exhibit F Gas Processing Agreement obliges each producer to pay, to the plant owner[s], an in-kind processing fee of 25% of the plant production attributable to that Producer. [Exhibit 21, Exh. F, Section 12.1].

9. The plant owners are responsible for all operating costs of the Gas Processing Plant. [Exhibit 21, Exh. F, Section 12.2].

10. The Gas Processing Agreement recites that the compensation percentage, the in-kind fee, “can be readjusted to provide a discounted cash flow rate of return of 25% after Federal Income Taxes” if the anticipated capital investment of slightly less than $340 million is exceeded. [Exhibit 21, Exh. F, Section 12.3]. BP concedes that the original intent of the 25% fee was to cover operating expenses and provide a profit. [Trans. Vol. II, pp. 257-258]. Up to the time of the hearing in this matter in 2004, the 25% in-kind fee adopted in 1980 has never been altered. [Trans. Vol. II, p. 259; Exhibit 22]. The plant operator, BP, acknowledged it would be difficult to change the fee. [Trans. Vol. I, p. 247].

11. The 25% in-kind fee paid for processing is distributed to the plant owners based upon each company’s interest in the Gas Plant. [Exhibit 21, Section 12.1]; infra, ¶72. The fee is extracted from each producer’s share of volumes coming into the plant, accounted for daily, and totaled on a monthly basis. The plant owners receive this monthly statement of volumes which they individually take in kind and separately dispose of. [Trans. Vol. II, pp. 251-252].

12. The C&O Agreement required all processing for third parties to be under agreements similar to those of the C&O Agreement parties, but without any right to take plant products in kind. [Exhibit 21, Section 23.1].

13. If the plant operator determines that the plant is no longer economical to operate and should be closed down, the C&O Agreement may be terminated. [Exhibit 21, Section 18.1]. On termination, the plant may be offered for sale to the plant owners, or dismantled if no plant owner elects to purchase the plant. [Exhibit 21, Sections 18.1, 18.2]. The Exhibit F Gas Processing Agreement includes a related provision regarding unprofitable operations, which authorizes a producer to negotiate with the plant owners for a higher processing fee to maintain plant operations. [Exhibit 21, Exh. F, Section 12.6].

14. In 2002, the plant processed gas for Merit Energy pursuant to a Gas Processing Agreement dated March 1, 1994, between Texaco Exploration and Production Company and the then owners of the processing plant (“the Merit Agreement”). [Exhibit 33; Trans. Vol. II, pp. 210-211]. The Merit Agreement provides for a 25% in-kind processing fee for gas, but the plant owners take 100% of Merit’s sulfur. [Exhibit 33, Section 12.1(c)].

15. In 2002, the plant processed Chevron gas that was produced from interests in the Whitney Canyon field held by Chevron before it acquired the C&O Agreement interest of Gulf Oil Corporation in 1985. The Plant processed that gas pursuant to a Gas Processing Agreement dated April 1, 1995, between Chevron U. S. A., Inc., and the then plant owners. [Exhibit 31; Trans. Vol. II, pp. 235-236]. This 1995 Chevron Agreement (sometimes called the Chevron/Chevron Agreement to distinguish it from interests acquired through Gulf in 1985) provides for a maximum 25% in-kind processing fee. [Exhibit 31, Section 12.1, Attachment 1]. Chevron paid the 25% fee on all gas processed under this Agreement in 2002. [Trans. Vol. II, p. 237]. Chevron used the same fee in its reporting to the Department for the gas processed pursuant to the Agreement. [Trans. Vol. V, pp. 886-887].

16. In 2002, the plant processed gas for the Anschutz Corporation produced from locations outside the Whitney Canyon field, and delivered through the Wahsatch Gathering System. The plant processed the Wahsatch Gathering System gas pursuant to a Gas Processing Agreement completed June 22, 1994, originally between Union Pacific Resources Company (UPRC) and the then plant owners. [Exhibit 26].

17. That Agreement was subsequently re-adopted to modify the processing priority of the gas, but the processing fee was not affected. [Exhibit 82; Trans. Vol. II, pp. 207-210]. (The existence of Exhibit 82 was not disclosed in prior Whitney Canyon proceedings.) Anschutz acquired the Wahsatch Gathering System properties in a transaction completed in 2000. [Trans. Vol. II, p. 191].

18. The Wahsatch Gathering System Processing Agreement provided an up-front fee benefit to offset the risks associated with its development, in the form of a threshold limit that was reached around May, 1998. [Trans. Vol. I, pp. 193-194]. The Agreement thereafter included a fee schedule with a sliding scale to encourage development. [Trans. Vol. I, p. 192]. For all of 2002, the processing fee was 25%. [Trans. Vol. II, p. 237].

19. The Merit and 1995 Chevron Agreements have an unprofitable operations provision identical to that of Exhibit F of the C&O Agreement, authorizing the producer to negotiate with the Plant Owner for a higher processing fee to maintain plant operations. [Exhibit 31, Section 12.4; Exhibit 33, Section 12.4]. The Wahsatch Gathering System Agreement provides that the plant may be shut down if unprofitable, but does not speak to negotiations. [Exhibit 26, Section 12.5; Exhibit 82, Section 13.4].

20. In 2002, the Whitney Canyon plant processed gas from the Carter Creek field pursuant a letter agreement of March 17, 1993, by which the plant operator of the Whitney Canyon Gas Processing Plant agreed with the plant operator of the Carter Creek Gas Processing Plant to provide mutual back-up gas processing services. [Exhibit 32; Trans. Vol. II, pp. 243-245]. The Mutual Back-Up Agreement allows the producers using the two facilities to produce reserves and maintain cash flow during periods when their wells would otherwise be shut in. [Trans. Vol. II, p. 244].

21. The Whitney Canyon plant commingled the gas of all producers during processing, although the Wahsatch Gathering System gas joined the plant process stream at a different point than Whitney Canyon field gas. [Trans. Vol. II, p. 372]. The products of commingled gas were sold from the tailgate of the plant. [Trans. Vol. I, p. 188].

22. In 2002, the Whitney Canyon plant processed 154 million standard cubic feet a day on an annually averaged basis, measured at the plant inlet. [Trans. Vol II, pp. 184-185, 244; Exhibit 56]. The nameplate capacity of the plant was 250 million standard cubic feet a day, but due to the hydrogen sulfide composition of the gas being processed, the sulfur plant limits overall capacity to 210 million standard cubic feet a day. [Trans. Vol. I, pp. 358-359]. In 2002, production curtailments were not related to capacity, but were caused by operating events. [Trans. Vol. I, p. 253].

23. On August 31, 1999, the Administrator of the Department’s Mineral Tax Division issued a Memorandum to all Wyoming oil and gas producers. The Administrator notified these producers that the Department elected the Comparable Value Method of valuation, Wyo. Stat. Ann. §39-14-203(b)(vi)(B), for production years 2000, 2001, and 2002, where oil and gas production, like that of Petitioners, was not sold at or prior to the statutory point of valuation. [Exhibit 1]. By this Memorandum, the Department satisfied its obligation to notify taxpayers of the selected method as required by Wyo. Stat. Ann. §39-14-203(b)(vi). The Memorandum recited the statutory definition of the Comparable Value Method:

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.

24. The Memorandum obliged the taxpayer to notify the Department if the “taxpayer has made a determination that a representative Comparable Value does not exist for a specific mineral property....” [Exhibit 1].

25. Within the next thirty days, all three Petitioners either denied the existence of comparable values, or that the comparable value method accurately reflected fair cash market value. Each requested use of the proportionate profits method. Wyo. Stat. Ann. §39-14-203(b)(vi)(D). [Exhibits 2, 3, 4].

26. The Department refused to accept the Petitioners’ attestations. [Trans. Vol. V, p. 505]. On November 16, 1999, the Administrator sent each Petitioner a letter broadly seeking specific documentation “to verify your claim of the non-existence of a comparable value and /or your believe [sic] that comparable value does not represent fair market value.” [Exhibits 5, 6, 7, 8].

27. During November and December, 1999, the Petitioners identified only the C&O Agreement, the Wahsatch Gathering System Agreement, and an agreement for short-term processing during Whitney Canyon turnarounds. [Exhibits 9, 10].

28. By letters dated February 4, 2000, the Department informed each Taxpayer that it had reviewed the agreements provided, and reiterated the requirement that the Taxpayer determine taxable value using the Comparable Value Method. [Exhibits 11, 12, 13].

29. In response to letters from Chevron and BP, the Department identified the Gas Processing Agreement that was Exhibit F to the C&O Agreement and the Wahsatch Gathering System Agreement as sources of comparable value. [Exhibits 14, 15, 16, 17]. In late March of 2000, the Administrator stated that:

The fact that the processing fee in Yellow Creek [Wahsatch] can never exceed twenty-five percent (25%) is certainly comparable to the Whitney Canyon C&O agreement and, in fact, is the exact processing fee that is being reported by one of the Whitney Canyon Plant owners for severance and ad valorem tax purposes. Hence, the DOR will not allow a processing fee of more than 25% for Whitney Canyon production....

[Exhibits 16, 17]. We find that the Department unequivocally communicated its position nearly a year before annual reports for production year 2000 were due from the taxpayers, Wyo. Stat. Ann. §39-14-207(a)(i), and some three years before reports for production year 2002 were due. Our finding is reinforced by supplemental communications from the Department to all three Taxpayers dated May 29, 2001, after contracts other than the C&O Agreement and Wahsatch Gathering System Agreement had come to light. [Exhibits 18, 19, 20]. Any lingering doubt about the Department’s view was dispelled during the litigation concerning production years 2000 and 2001. Whitney Canyon 2000; Whitney Canyon 2001.

30. Wyoming has a self-reporting system for mineral taxpayers. [Trans. Vol. III, pp. 393-395]. Complex issues related to reporting are generally resolved on audit rather than when the taxpayer calculates and reports the taxable value of its production. [Trans. Vol. III, pp. 394-398]. Although Petitioners’ attorneys still claim that the Petitioners could not comply with the comparable value statute because the Department’s policy was unclear [Taxpayers’ Proposed Findings of Fact and Conclusions of Law, ¶160], Petitioners’ witnesses did not claim any such lack of understanding with respect to reporting for production year 2002. [Trans. Vol. I, p. 101, Vol. IV, p. 734, Vol. V, p. 895]. Anadarko paid its taxes under protest based on the 25% processing fee associated with the comparable value method, but reported using a different method. [Trans. Vol. I, p. 96]. Chevron reported using its calculation of the proportionate profits method, but paid taxes under protest based on the 25% processing fee, and requested Uinta County to put the difference in escrow. [Trans. Vol. IV, p. 832].

31. As with production years 2000 and 2001, the dispute about use of the comparable value method overlays a secondary dispute about calculation of the proportionate profits method. Since 2001, this Board has ruled that production taxes and royalties are direct costs of producing for purposes of the proportionate profits computation. Appeal of Amoco Production Company, June 29, 2001, 2001 WL 770800 (Wyo. St. Bd. Eq.); on reconsideration, September 24, 2001, 2001 WL 1150220, reversed on other grounds, Amoco Production Company v. Department of Revenue et al, 2004 WY 89, 94 P.3d 430 (2004). The Petitioners have never accepted this ruling. [Trans. Vol. I, p. 47, Vol. IV, p. 779, Vol. V, p. 901]. BP and Chevron prepared proportionate profits calculations that did not include production taxes and royalties as direct costs of producing. [Exhibit BP-2; Exhibit 200]. Anadarko prepared alternative calculations; one included production taxes and royalties as direct costs of producing, and the other did not. [Exhibit 105].

32. Chevron reported its 2002 production from the properties associated with the 1995 Chevron Agreement using the statutory netback method, i.e., using the 25% processing fee. [Trans. Vol. V, pp. 886-887]. Chevron considered the fees paid under that agreement to be third party fees. [Trans. Vol. V, pp. 888-889].

33. The Department responded to the Petitioners’ annual reports by preparing a Notice of Valuation for each Taxpayer. [Exhibits 53, 54, 55]. A Notice of Valuation states the Department’s determination of the value of production from each Mineral Group, but does not restate confidential information from a taxpayer’s annual reports. [Exhibits 53, 54, 55].

34. The Department derived the processing deduction for all Whitney Canyon Mineral Groups by applying a 25% deduction against the reported Gross Sales Value of Plant Products, and recalculating Taxable Value using the 25% processing deduction. [Trans. Vol. II, pp. 429-430]. The Taxable Value of each Notice of Valuation reflected this adjustment for all natural gas that the Whitney Canyon plant processed for the Petitioners. [Exhibits 53, 54, 55].

35. Forest Oil, the fourth owner of the Whitney Canyon plant, reported a processing fee of between 18% and 20% for production year 2002. [Trans. Vol. III, p. 474]. The Department assumes that Forest Oil reported under the comparable value method since it did not seek an exception to the Department’s directive to report using the comparable value method. [Trans. Vol. III, p. 474]. The record does not disclose how Forest Oil calculated its processing fee.

Did the Department have a reasoned basis for determining the value of Petitioners’ production?

36. The Department concluded that the words “of like quantity,” as they appear in the statutory definition of the comparable value method, are clear [Trans. Vol. III, p. 441]; the Department decided it must consider comparable quantities of gas in the context of the contractual fees charged for processing. [Trans. Vol. III, pp. 439-440]. The Department concluded that quantity was not an issue that affected the processing fees charged in this case. [Trans. Vol. III, pp. 440-441]. In the Department’s view, “like quantity” does not mean the same quantity. [Trans. Vol. III, p. 440].

37. The Department concluded that the word “quality,” as it appears in the statutory definition of the comparable value method, is clear, and that the Department’s application of the comparable method satisfied the requirements of the statute. [Trans. Vol. III, p. 443]. The Department further concluded that:

a. The processing contracts did not attribute significance to gas quality, which is not addressed in the contracts;

c. The quality was comparable because all gas was processed without requiring changes to the plant’s processing functions;

d. All of the gas processed for any producer was commingled with all other gas and became a unified product.

38. The Department concluded that the words “terms and conditions,” as they appear in the statutory definition of the comparable value method, relate to the contracts under which gas is processed. [Trans. Vol. III, p. 443-444]. Further, the Department concluded that:

a. The terms and conditions were identical or almost identical in Exhibit F to the C&O Agreement, the Merit Agreement, the Wahsatch Agreement, and the 1995 Chevron Agreement;

b. Regardless of any differences in terms and conditions, the processing fee never exceeded 25%;

c. The processing fee was not affected by the contractual priority contained in each of the various gas processing contracts.

39. The Department interpreted the words “other parties” in Wyo. Stat. Ann. §39-14-203(b)(vi)(B) to mean anyone other than the particular taxpayer whose production is subject to valuation. [Trans. Vol. III, pp. 438-439]. The Department does not interpret “other parties” to mean the same as third parties, based on the Legislature’s choice of words in Wyo. Stat. Ann. §39-14-203(b)(vi). [Trans. Vol. III, p. 439].

40. The Department concluded that the statutory definition of the comparable value method did not require a processing fee charged to other parties to be arms-length, and that the words “arms-length,” as they appear in Wyo. Stat. Ann. §39-14-203(b)(vi)(B), only modify the words “sales price.” [Trans. Vol. III, p. 439]. The Department nonetheless further concluded that each of the agreements included a processing fee derived from an arms-length contract. [Trans. Vol. III, pp. 438-439, 451-454, 460-461, 466, 470-471].

41. The Department concluded that the C&O Agreement and its attached Exhibit F gas processing agreement [Exhibit 21], under which Petitioners paid the plant owners a processing fee of 25% of the gas product, was a comparable value which the Department could use to determine the processing deduction for valuing an individual producer’s production. Specifically, the Department concluded that:

a. The original parties to the C&O Agreement negotiated it in an arms-length manner because they acted in their own interest, were not controlled by each other, and were competitors at the time [Exhibit 21; Trans. Vol. III, pp. 451-453];

b. The 25% processing fee paid by BP, Chevron, Anadarko, and Forest Oil individually to the plant owners together under Exhibit F to the C&O Agreement was, for each individual company, a fee charged by the plant owners to an other party within the meaning of the statutory definition of comparable value [Trans. Vol. III, pp. 449-451];

c. The 25% processing fee that the plant owners received was intended to cover plant operating costs and depreciation, and to provide a return on investment to the plant owners [Exhibit 21; Trans. Vol. III, p. 449];

d. Prior to 1988, Amoco (BP’s predecessor) affirmatively asserted that the 25% processing fee was the actual fee paid to process Whitney Canyon field gas, and that the Department should accept the fee for the purpose of determining a processing deduction [Exhibit 68; Trans. Vol. III, pp. 478-480];

e. The 25% processing fee that the plant owners charged to process each Petitioner’s gas was also imposed on all other producers under the C&O Agreement, and no producer paid a fee greater than 25% during production year 2002 [Trans. Vol. II, p. 421];

f. On a per mcf basis, no Petitioner ever paid more than a 25% processing fee regardless of quantity differences or any other circumstances [Trans. Vol. III, pp. 441-442, 456];

g. All gas the plant processed was of similar chemical quality and was commingled for processing at the plant. The C&O Agreement did not require a different processing fee to account for any differences in quality of gas [Exhibit 21; Trans. Vol. III, pp. 442-443];

h. The Exhibit F contractual terms and conditions were the same for all producers, and the processing fee never exceeded 25% [Exhibit 21; Trans. Vol. III, pp. 444-446, 456];

i. Petitioners were contractually able to modify the processing fee, but over two decades have not done so. [Exhibit 22; Trans. Vol. II, pp. 259-260].

42. The Department concluded the Wahsatch Gathering System Processing Agreement [Exhibits 26, 82], under which Anschutz Corporation paid the plant owners a processing fee of 25% of its gas product during production year 2002 [Trans. Vol. I, p. 194], was a comparable value which the Department could use to determine the processing deduction for valuing a producer’s production. Specifically, the Department concluded that:

a. The plant owners and Union Pacific Resources Company, as a third priority producer, negotiated the Wahsatch Agreement in an arms-length manner with Amoco and resolved outstanding areas of difficulty. Specifically, UPRC as producer was motivated to pay the lowest possible processing fee, and the plant owners without interest in the Yellow Creek gas (a majority) were motivated and would receive benefit from receiving the highest possible processing fee. UPRC assigned its interest in the Wahsatch Gathering System Agreement to Anschutz before production year 2002. Anschutz was not a Whitney Canyon plant owner [Exhibit 26; Trans. Vol. III, pp. 458-461];

b. Amoco competitively negotiated with UPRC for the rights to process Yellow Creek gas at the Whitney Canyon plant. Amoco benefitted as a plant owner because it received incremental revenue [Trans. Vol. I, pp. 192-193];

c. The Wahsatch Gathering System Agreement provided UPRC processing fees based on the volume of gas processed discounted to as low as 14.17% for the first 40 billion cubic feet of gas, with a maximum of 25%, thereby encouraging the development of the Yellow Creek gas [Exhibit 26, Section 12.1 and Attachment 1];

d. The quantities of gas produced by the Petitioners and Anschutz in production year 2002 were similar, and to the extent that quantities varied, the Wahsatch Gathering System Agreement attributed no difference to the disparities insofar as the maximum processing fee was 25%. The Wahsatch Gathering System contained no quantity limitation other than the capacity of the Whitney Canyon plant. On a per mcf basis, Anschutz paid no more than a 25% fee [Exhibits 26, 82; Trans. Vol. III, pp. 461-462];

e. The quality of Wahsatch Gathering System gas was similar to other gas processed at the Whitney Canyon plant, because the gas was commingled for processing, no additional processing expense was required, and the processing agreement did not require fee adjustments based on quality of gas [Exhibits 26, 82; Trans. Vol. III, p. 462];

f. The terms and conditions of the Wahsatch Agreement were similar to the terms and conditions of other contracts pursuant to which the Whitney Canyon plant processed gas. No fee adjustments were required for such terms and conditions. [Exhibits 26, 82; Trans. Vol. III, pp. 462-464].

43. The Department concluded that the Merit Agreement [Exhibit 33], under which Merit paid the plant owners a processing fee of 25% of the gas product and 100% of the sulfur product, was a comparable value which the Department could use to determine the processing deduction for valuing a producer’s production. Specifically, the Department concluded that:

a. The plant owners negotiated the Merit Agreement in an arms-length manner with Merit’s predecessor in interest. Merit’s predecessor was not affiliated with any of the plant owners, and the parties to the processing agreement were in a position to protect or further their competing economic interests [Exhibit 33; Trans. Vol. III, pp. 465-466];

b. The quantities of gas produced by the Petitioners and Merit in production year 2002 were similar, and to the extent that quantities varied, the Merit Agreement attributed no difference to the disparities insofar as the maximum processing fee was 25%. The Merit Agreement contained no quantity limitation other than the capacity of the Whitney Canyon plant. On a per mcf basis, Merit paid no more than a 25% fee [Exhibit 33, Section 12.1; Trans. Vol. III, pp. 467-468];

c. The quality of Merit gas was similar to other gas processed at the Whitney Canyon plant. Because the gas was commingled at the inlet, no additional processing expense was required, and the processing agreement did not require fee adjustments based on quality of gas [Exhibit 33; Trans. Vol. III, p. 467];

d. The terms and conditions of the Merit Agreement were similar to the terms and conditions of other contracts pursuant to which the Whitney Canyon plant processed gas. No fee adjustments were required for such terms and conditions. [Exhibit 33; Trans. Vol. III, pp. 467-468].

44. The Department concluded that the 1995 Chevron Agreement (or Chevron/Chevron Agreement) [Exhibit 31], under which Chevron paid the plant owners a processing fee of 25% of the gas product, was a comparable value which the Department could use to determine the processing deduction for valuing a producer’s production. Specifically, the Department concluded that:

a. The Petitioners and Chevron, originally as a third priority producer, negotiated the 1995 Chevron Agreement in an arms-length manner. When the agreement was originally negotiated, Chevron did not own an interest in the plant, and the plant owners were motivated to receive, and would benefit by receiving, the highest possible processing fee from Chevron. The original agreement was also negotiated during a period when relations between Chevron and the plant operator, Amoco, were strained, and there was intense competition between Chevron and Amoco. In the 1995 negotiation, Chevron gained freedom to process Chevron/Chevron gas at its Carter Creek facility, and a reduction in its processing fee from 35% to 25%. Amoco gained processing simplicity [Trans. Vol. III, pp. 469-471];

b. The quantities of gas produced by Chevron under the 1995 Chevron Agreement were similar to the quantities produced by the other Petitioners, and to the extent that quantities varied, the 1995 Chevron Agreement attributed no difference to the disparities insofar as the maximum processing fee was 25%. The 1995 Chevron Agreement contained no quantity limitation other than the capacity of the Whitney Canyon plant [Exhibit 31, p. 0249; Trans. Vol. III, p. 471];

c. The quality of gas produced by Chevron under the 1995 Chevron Agreement was similar to other gas processed at the Whitney Canyon plant and produced from the Whitney Canyon field. The processing agreement did not require fee adjustments based on quality of gas [Exhibit 31; Trans. Vol. III, pp. 471-472];

d. The terms and conditions of the 1995 Chevron Agreement were similar to the terms and conditions of other contracts pursuant to which the Whitney Canyon plant processed gas. No fee adjustments were required for such terms and conditions [Exhibit 31; Trans. Vol. III, p. 473];

e. Chevron characterized its production under the 1995 Chevron Agreement as not being producer processed gas, and reported production under the 1995 Chevron Agreement using the statutory netback method, Wyo. Stat. Ann. §39-14-203(b)(vi)(C), with a 25% processing fee deduction. When a taxpayer reports using the statutory netback method, the taxpayer indicates the existence of a third party processing fee. [Trans. Vol. III, pp. 472-473].

45. Although the Department was generally committed to the application of the comparable value method, its witnesses commented on the Department’s position with regard to whether other methods were available. The Department took the position that the Taxpayers in this case are producer-processors, so they could not use the statutory netback method to report Whitney Canyon production. [Trans. Vol. II, p. 401]. No data existed to apply the comparable sales method, Wyo. Stat. Ann. §39-14-203(b)(vi)(A), because all sales of gas were from the tailgate of the plant. [Trans. Vol. II, p. 400].

46. The Department disfavors the proportionate profits method because it tends to approximate fair market value only by happenstance. [Trans. Vol. II, pp. 404-407]. In the Department’s view, the proportionate profits method tends to consistently yield a deduction from value that substantially exceeds actual costs of production. [Trans. Vol. II, pp. 407-408]. The only virtue of the proportionate profits method is that it will always generate a positive valuation, even in year when revenue is low compared to costs. [Trans. Vol. II, p. 408]. Otherwise, the Department views the proportionate profits method as a “concoction” that does not reflect market negotiations or any other market force. [Trans. Vol. V, p. 1005].

47. The Department also disfavors the proportionate profits method for administrative reasons. The proportionate profits method has fostered unceasing disputes with taxpayers over the classification of costs, the point of valuation, and the absence of sound taxpayer accounting information. [Trans. Vol. II, pp. 402-404]. In the Department’s experience, some taxpayers have aggressively pursued tax reduction by classification practices. [Trans. Vol. II, p. 404].

48. The Board finds that the Department had a reasoned basis for applying the comparable value method to each Petitioner’s production. However, it remains for us to consider whether all of the details of the Department’s conclusions are sound in light of the contrary views of the Petitioners, and our consideration of aspects of the record to which neither party specifically directed our attention.

49. We find the Taxpayers presented no credible evidence that the Department selected the comparable value method solely and exclusively because it generates the highest taxable value. [See Taxpayers’ Proposed Conclusions of Law, ¶222].

Did a processing fee of 25% enable the Whitney Canyon plant owners to recover their actual processing costs?

50. For production year 2002, as in previous years, Petitioners assert that the 25% processing fee does not cover the plant owners’ actual processing costs. [Taxpayers’ Confidential Proposed Findings of Fact, ¶¶1-12].

51. Information about plant revenues and costs came from producers paying taxes, because only producers are required to report production, processing costs, and taxable value to the Department. The owners of a processing plant have no similar reporting obligation. So, any comparison of 2002 plant revenues and costs rests principally on the information reported by the Petitioners as producers, and supplemented by information generated specifically for the hearing of this matter. The majority of this information was confidential.

52. The parties generally agreed that actual plant costs were comprised of three separate components: (1) current operating costs; (2) return of investment, in the form of depreciation for the current year; and (3) annual return on investment, expressed as percentage of capital currently invested.

53. BP’s introduced its annual gross products reports [Exhibit BP-1; Trans. Vol. IV, pp. 696-697], and summarized revenue and cost data related to the proportionate profits calculation BP used to make those reports. [Exhibits BP-2, BP-3]. BP showed how its reporting by Mineral Group [Exhibit BP-1] tied to the summaries of revenues, volumes, and taxable value calculations for each Mineral Group. [Exhibit BP-3]. BP’s confidential processing allowance ratio appears at the top of the “processing allowance” columns on the third and fourth pages of Exhibit BP-3. [Exhibit BP-3; Trans. Vol. IV, p. 712].

54. BP also showed how it has revised its original reporting [Exhibit BP-2; Trans. Vol. IV, pp. 714- 717] to recalculate a processing allowance and taxable value. [Exhibit BP-3; Trans. Vol. IV, pp. 720-727]. The changes were substantial. Among other things, BP increased federal royalties; decreased stated revenues; eliminated overhead; and decreased processing, in part to take gas gathering system costs out of gas collection system costs for the plant. [Trans. Vol. IV, pp. 746-748; Exhibit BP-2]. We presume BP eliminated gathering system cost because the Wyoming Supreme Court rejected a claim that Whitney Canyon processing costs include gathering system costs all the way to the wellhead. Amoco Production Company v. Dept. of Revenue, 2004 WY 84, ¶¶28-37, 94 P.3d 430 (2004).

55. BP clearly identified and explained the records which are the sources of its cost calculations, and how those sources tied to the joint interest billings used by Chevron and Anadarko to calculate operating costs. [Exhibits 57, 83; e.g., Trans. Vol. IV, pp. 678-695]. Broadly speaking, the joint interest billings are the plant operator’s compilation of plant costs that are billed monthly to the plant owners. [Trans. Vol. III, pp. 682-684; Exhibit 83]. The joint interest billings are organized by four different types of monthly invoices: basic gross ownership, gas collection system, sulfur loading terminal, and sulfur haul road. [Exhibit 83]. When questions arose during the hearing about how BP’s sources of cost information tied to its revised proportionate profits calculation [Exhibit BP-3; e.g., Trans. Vol. IV, pp. 787-789, 792-793, 797-800], BP provided timely supplementation that enabled us to identify and correct errors. [Exhibit BP-4; Trans. Vol. V, pp. 724-734].

56. Chevron introduced clear documentation of the sources of its revenues, divided into revenues associated with its Chevron (Gulf) interests and its interests related to the 1995 Chevron Agreement. [Exhibit 203; Trans. Vol. V, pp. 854-855]. The revenues for these separate interests were broken out by Mineral Group and well name, together with processing deductions and taxable value for each Mineral Group. [Exhibit 203]. Like BP, Chevron introduced its annual reports, providing the volumes, revenues, royalties, processing deduction, and calculated taxable value for each Mineral Group. [Exhibit 207; Trans. Vol. V, pp. 849-850].

57. There are four Mineral Groups from which Chevron produced gas associated with both its Chevron (Gulf) interests and its 1995 Chevron Agreement interests: 1009 (ACG #2), 1022 (ACG #5), 14336 (ACG #7), and 39921 (ACG #8). [Exhibit 203].

58. Chevron introduced clear documentation of its costs, and how those costs tied to its proportionate profits calculations. [Exhibits 200, 201, 202, 206; Trans. Vol. V, pp. 847-849, 852-854]. Chevron’s confidential processing cost allowance percentage appears on Exhibit 200. [Exhibit 200; Trans. Vol. V, p. 865]. There were some minor errors in allocation (and hence tabulation) in Chevron’s summaries of joint interest billings, due to the fact that the average monthly cost appearing in these summaries was not necessarily equal to the sum of individual monthly costs divided by twelve. [Exhibit 206; see Trans. Vol. V, pp. 856-860, 875]. However, the total of all of these errors only amounts to several tens of thousands of dollars, and we accepted Chevron’s cost figures.

59. Like the other two Taxpayers, Anadarko showed a summary of it proportionate profits calculations, one of which includes production taxes and royalties in direct costs of producing, and one of which does not. [Exhibit 105; Trans. Vol. I, p. 49]. Andarko’s confidential processing percentage appears on Exhibit 105. [Exhibit 105]. Like the other two Taxpayers, Anadarko’s costs are taken from the joint interest billings. [Trans. Vol. I, p. 50]. However, unlike BP and Chevron, Anadarko did not introduce its annual reports, so the only information we have for Anadarko by Mineral Group is what appears on its Notices of Valuation. [Exhibits 54, 106].

60. Unlike Chevron and BP, Anadarko provided summary historical information going back to 1990 in support of a critical analysis of the results of different valuation methods over time. [Exhibits 100, 101, 102, 103; Trans. Vol. I, pp. 60-72].

61. The core of the Department’s comparison of plant revenues and plant costs was the estimate of an implied rate of return, calculated in a series of steps. [Trans. Vol. V, pp. 957-960]. This estimate appears in the Department’s Exhibit 501 as a separate calculation for each Taxpayer, on a single sheet entitled “Comp III Statistics.” [Exhibit 501]. “Comp III Statistics” refers to the fact that this case is the third in a series of comparable value cases involving the Whitney Canyon plant for production years 2000, 2001, and 2002. [Trans. Vol. V, p. 958].

62. The Department began with a gross revenue figure for each Taxpayer. The gross revenue appears in line G of the Comp III Statistics for each Taxpayer. [Exhibit 501; Trans. Vol. V, p. 958]. The Department and the Taxpayers agreed on the amounts of total revenue generated from the volumes of gas processed by the Whitney Canyon plant, with two caveats. [Exhibits 501, BP-2, 105, 203]. The Department relied on the revenue originally reported by BP, which BP had revised by the time of the hearing. Supra, ¶54. The Department also relied on the Chevron revenue associated exclusively with Chevron’s Chevron(Gulf) interests. Because the parties appear to agree on the revenue totals, we have no reason to examine the details of Mineral Group reporting, including the listing of specific Mineral Groups identified by the parties as subject to appeal. [Notices of Appeal].

63. Starting with gross revenue, the Department calculated a surrogate for plant revenue. This was done by simply multiplying gross revenue for each of the producer taxpayers by the 25% processing allowance. [Trans. Vol. V, p. 958]. The Department noted that there was a slight difference between this amount and what was actually assessed in the Notices of Valuation, due to the effect of royalties. [Trans. Vol. V, pp. 955, 959]. This surrogate for plant revenue is identified as line H, “DOR Processing allowed,” in the Comp III Statistics for each Taxpayer. [Exhibit 501; Trans. Vol. V, p. 958].

64. To make a comparison, the Department accounted for processing costs reported by each Taxpayer. These costs are identified as line B, “Total Proc Expenses,” and line C, “Proc Depreciation,” in the Comp III Statistics for each Taxpayer. [Exhibit 501; Trans. Vol. V, p. 958]. The Department’s total processing expenses include depreciation. The Department observed that its calculations were taxpayer-specific, due in part to different depreciation practices for each Taxpayer. [Trans. Vol. V, p. 960]. The Department’s figures for operating cost and depreciation agreed with what was reported by each Petitioner. [Exhibit 501; Exhibit 105, Total Direct Processing (Plant) Costs; Exhibit 201, Total Plant Costs 2002 and DD&A; Exhibit BP-2, Total Processing Costs and Depreciation/IDC Amortization]. However, we stress that BP subsequently revised its reported information, and Chevron associated these reported costs only with its Chevron (Gulf) interests.

65. The Department made no effort to tie the Taxpayers’ reported costs to the joint interest billings. [Trans. Vol. V, p. 961].

66. The Department then computed an un-depreciated asset balance for each Taxpayer. [Exhibit 501; Trans. Vol. V, p. 958]. The Department did so by using the un-depreciated asset balance for each Taxpayer from the case for production year 2001, Whitney Canyon 2001, and subtracting each Taxpayer’s depreciation from 2001. [Trans. Vol. V, p. 958]. The un-depreciated asset balance appears as line D in the Comp III Statistics for each Taxpayer. [Exhibit 501; Trans. Vol. V, p. 958]. Only BP offered an alternative calculation of its un-depreciated asset balance. [Trans. Vol. IV, p. 724; Exhibit BP-3].

67. Finally, the Department computed an implied rate of return on investment. [Trans. Vol. V, p. 959]. It subtracted total processing expenses (line B) from the surrogate for plant revenue (line H, “DOR Processing allowed”), then divided by the un-depreciated asset balance (line D). The result appears as line M, “ROI on Assessed Processing.” [Exhibit 501]. For comparison, the Department computed a rate of return on investment using each Taxpayer’s reported processing, which appears in Line L. The Department’s results, which we find not to be confidential, were:

	DOR’s ROI on Assessed Processing	DOR’s ROI on Reported Processing
BP	-0.58%	10.62%
Chevron	-12.58%	13.22%
Anadarko	-25.05%	15.42%

[Exhibit 501; Trans. Vol. I, p. 959]. The aggregate difference between the Department’s approximation of the comparable value processing allowance and the processing allowance reported by the Petitioners is slightly over $21 million. [Exhibit 501]. This amount adequately approximates the taxable value at stake in this case.

68. Based on our review of the parties’ data, we do not accept the rates of return calculated by the Department and find it necessary to adjust other data based on the evidence presented at the hearing. The Board has accordingly performed its own analysis of the testimony and of confidential information in the record. We did not and could not conduct a proportionate profits method audit, which requires access to the plant operator’s books to assure that the individual taxpayers have consistently handled plant costs. We had to work with the information available to us in the record.

69. In an effort to protect the confidential information, we have frequently been obliged to explain how we viewed or manipulated information in the record, rather than disclosing the results of our calculations.

70. The Department also prepared a chart that expresses a number of aggregated indicators of value, for the general purpose of providing “a feel for where the taxable values end up . . . . numberwise . . . . versus just what the statutory method implies.” [Exhibit 501; Trans. Vol. V, pp. 951-957]. Such a chart would be useful in the absence of the specific information made available to us by the parties about revenues, costs, and un-depreciated investment, but we found it to be of little interest because such information was available. We also note that a comparisons with similar charts in the preceding cases was imperfect, since the Department’s calculations for production year 2002 (unlike preceding cases) included only revenues associated with Chevron’s Chevron (Gulf) interests, rather than all Chevron interests. [Exhibit 85; Trans. Vol. V, p. 979].

71. The Taxpayers argue that when we consider plant revenues, we should look no further than the 25% processing fee applied against each Taxpayer’s gross revenue. For example, one BP witness testified that the 25% processing fee was just “taking money from one pocket and putting it in another.” [Trans. Vol. III, p. 637]. Anadarko’s representative argued that the Wahsatch Gathering System gas and Chevron/Chevron gas were just “gravy” for the plant owners. [Trans. Vol. I, p. 147]. We disagree with these characterizations. Using the Department’s estimate as a base, we will adjust the Department’s estimate to reflect the revenue effect of gas produced from the sources other than BP, Chevron’s Gulf interests, and Anadarko.

72. The ownership interests in the Whitney Canyon plant in 2002 were as follows:

Producers	% Ownership
BP	62.9546%
Anadarko	19.0112%
Chevron (Gulf)	15.0272%
Forest	3.0136%

[Trans. Vol. IV, p. 749, Vol. IV, p. 821, Vol. IV, p. 683; Forest by computation].

73. The Whitney Canyon plant processed known average daily volumes of gas in 2002. These volumes are associated with the following specified producers. Using the volumes, we have calculated proportions of all gas processed for each producer:

Producer	Volume (mmcfd)	% of all Volume
BP	79.93	51.9026%
Anadarko	26.41	17.1494%
Chevron (Gulf)	17.6	11.4286%
Forest	5.03	3.2662%
Chevron (1995)	6.17	4.0065%
Chevron (Carter Cr.)	4	2.5974%
Anschutz	14.6	9.4805%
Merit	0.26	.1688%
Total	154	100%

[Trans. Vol. I, p. 185; Exhibit 56]. We accepted Chevron’s distinction between its ownership and production interests acquired through Gulf, and its independently acquired interests. Supra, ¶¶4, 15, 32. For the findings to follow, we note that we have not been provided corresponding revenues for each producer.

74. We compared the percentages of all processed gas taken from each producer and paid to the plant owners. With one exception, we did so by multiplying each producer’s percent of all gas by the 25% processing allowance, which is the processing fee. For the Carter Creek natural gas processed under the Mutual Back-up Agreement, we used 20%. [Exhibit 32; Trans. Vol. II, p. 335]. We then subtracted the fee from the original percentage of all gas, and show the remaining percentages of volume due to each producer after subtracting the in-kind processing fee of 25%:

Producer	Start % of all volume	25% Fee Paid Owners	Remaining volume
BP	51.9206%	12.9757%	38.9270%
Anadarko	17.1494%	4.2874%	12.8621%
Chevron (Gulf)	11.4286%	2.8572%	8.5715%
Forest	3.2662%	0.8166%	2.4497%
Chevron (1995)	4.0065%	1.0016%	3.0049%
Chevron (Carter Cr.)	2.5974%	.5195%	2.0779%
Anschutz	9.4805%	2.3701%	7.1104%
Merit	.1688%	.0422%	.1266%
Totals	100.00%	24.8701%	75.1299%

75. We determined the processing fee gas each plant owner received by multiplying its respective plant ownership interest (¶72) times the 25% that represents the portion of all processed gas that was the owners’ fee:

Producer	Ownership share of 25% fee
BP	15.6569%
Anadarko	4.7281%
Chevron (Gulf)	3.7373%
Forest	0.7495%
Total	24.8718% of all gas

76. After processing, each plant owner’s total share of all processed gas equaled its producer percentage of gas remaining after processing (Remaining Volume, ¶74), plus its ownership percentage of the processed gas (Ownership Share, ¶75). Supra, ¶¶74-75. For example, BP’s total share of all gas equaled its percentage of gas remaining after processing, 38.9270% (Remaining Volume, ¶74), plus its share of the processing fee gas, 15.6569% (Ownership Share, ¶75), or a total of 54.5839% of all gas. In contrast, since Merit is not an owner, Merit’s total share of all processed gas equals only its share of gas remaining after payment of the processing fee, or 0.1266% (Remaining Volume, ¶74) of the total.

77. For the seven producing sources of gas, the final portion of all gas processed, after the redistribution of processing fees to plant owners interests is taken into account, was as follows:

Producer	% Total Gas Produced	% Total Gas Received After Fees Paid
BP	51.9026%	54.5839%
Anadarko	17.1494%	17.5902%
Chevron (Gulf)	11.4286%	12.3088%
Forest	3.2662%	3.1992%
Chevron (1995)	4.0065%	3.0049%
Chevron (Carter Cr.)	2.5974%	2.0779%
Anschutz	9.4805%	7.1108%
Merit	.1688%	.1266%
Total	100%	100.0017%

78. A taxpayer who was a plant owner in production year 2002 received more plant revenue than just the 25% fee that it paid for processing its own production. For example, the 25% processing fee paid by BP on its production equals 12.9757% (25% of 51.9026% = 12.9757%), supra ¶74. BP’s share of the 25% processing fee charged to all producers is 15.6569% (62.9546% of 24.8701% = 15.6569%), supra ¶75. The difference is 2.6813% of all 2002 gas processed through the Whitney Canyon plant. These differences are modest, but must not be ignored. If we ignored the redistribution of gas for processing fees, we would understate each plant owner’s revenue by the following percentages of all gas produced:

Plant owner	Produced	Total with fees	Difference
BP	51.90026%	54.5839%	2.6813%
Anadarko	17.1494%	17.5902%	.4408%
Chevron (Gulf)	11.4286%	12.3088%	0.8802%

79. In finding that the plant owners’ fee results in more than a simple return of gas equal to the amount of each owner’s processing allowance, we also determined the degree to which the Department’s use of the processing fee of 25% multiplied by gross revenue falls short of being an adequate surrogate for plant revenues. We considered what adjustments should be made to estimates of plant revenue to account for this difference. The necessary adjustment differs for each Taxpayer.

80. For the purposes of comparing plant revenues with plant costs, one can account for our calculated difference from the Department’s 25% processing allowance computation in one of two ways: (1) an appropriate upward adjustment in revenue; or (2) an appropriate credit against costs. For each Taxpayer, we examined revenues and costs using features of the format found in the Department’s “Comp III Statistics.” Supra, ¶61.

81. The Department applied 25% against BP’s total revenues to reach a processing allowance which is the Department’s surrogate for plant revenues. [Exhibit 501]. The Department made no upward adjustment as we did to BP’s total revenues to account for BP’s ownership share of all natural gas processed by the plant, leaving a shortfall in estimated plant revenue of 2.6813% of all gas. Supra, ¶78. We find that the Department made no adjustment to BP’s total revenues, because when we compared total Gross Sales Value in BP’s original proportionate profits calculation with Department’s Comp III Statistics for BP, we found that the two numbers were the same. [Exhibits BP-2, 501].

82. In contrast, we find that the Department made a implicit credit against BP’s costs to partially account for the 2.6813% difference, because it used BP’s total processing costs from BP’s proportionate profits calculation. BP accounted for receipt of its ownership share of Wahsatch Gathering System gas through a credit against its share of plant processing costs. BP recorded this credit in the detail of its proportionate profits calculation as an entry entitled, “WGS/Gulf Ray processing”. [Exhibit BP-2, p. BP 81]. While the record does not disclose precisely who owns the Gulf Ray interests, from Chevron testimony and exhibits we at least know that the Gulf Ray interests do not include gas produced from the 1995 Chevron Agreement interests. [Chevron Exhibit 203].

83. A credit for Wahsatch gas did not fully account for BP’s ownership share of the processing fee gas. The understatement of BP’s share of plant revenues can be expressed in terms of a percentage of all gas processed at the Whitney Canyon plant. BP implicitly claims that its total gas revenue would equal the fee it paid on its own production, or 12.9757% of all gas, plus BP’s share of the Wahsatch processing fee in the amount 1.4921% of all gas (62.9546% plant ownership share (¶72) times the 2.3701% fee paid to all plant owners by the Wahsatch producer (¶74)). Supra, ¶¶72, 74. The sum of these two percentages is 53.3947% of all gas. When we compare BP’s actual ownership share of all gas, 54.5839%, with the percentage that results using BP’s theory, 53.3947%, we see that the difference is 1.1891% of all gas processed at Whitney Canyon. (By computation from supra, ¶¶72, 74, 77).

84. Although the percentage is modest, the difference is enough to materially affect BP’s plant-related revenue and with it, BP’s proportionate profits calculation. BP has adjusted its total direct costs by a credit of only 1.4921% of all gas, representing its ownership share of the Wahsatch gas. Supra, ¶82. The credit should have been for 2.6813% of all gas. Supra, ¶78.

85. As an alternative to adjusting by an additional credit against processing costs, BP’s correct ownership share of plant revenue can be estimated by adjusting the processing fee share for BP upward by 8.37% (i.e. (15.6569% (actual) (¶75) minus 14.5215% (Department calculation)) divided by 14.5215%). By “processing fee share” in this context, we mean the surrogate for plant revenue that the Department has created in its Comp III statistics by multiplying Gross Sales Revenue by 25%.

86. We will apply the 8.37% (¶85) adjustment against the revenue for BP. This presents another choice. One revenue total is reflected in BP’s original proportionate profits calculation, which the Department used for its Comp III Statistics. [Exhibit BP-2; Exhibit 501]. The alternative is revenue information that BP updated shortly before the hearing. This revenue information is supported by the revenue information for each Mineral Group that BP has appealed. [Exhibit BP-3]. We will use the updated revenue information, which also ties to updated cost information. [Exhibit BP-3]. The result is a reduction in revenue of $2,329,091 from the figure used in the Department’s Comp III Statistics. [By computation from Exhibits BP-2, BP-3, and 501]. The 8.37% will be applied to the reduced revenue figure.

87. The Department applied 25% against Anadarko’s total revenues to reach a processing allowance which is the Department’s surrogate for plant revenues. [Exhibit 501]. The Department made no upward adjustment to Anadarko’s total revenues to account for Anadarko’s ownership share of all natural gas (production and fees).

88. We saw no adjustment to Anadarko’s total revenues when we compared total Gross Sales Revenue in Anadarko’s proportionate profits calculation with the Gross Revenue in Department’s Comp III Statistics for Anadarko. [Exhibits 103, 105, 501]. The Department and Anadarko have calculated the same revenue number. Unlike the proportionate profits calculations of BP [Exhibits BP-2, BP-3] and Chevron [Exhibit 201], Anadarko’s proportionate profits calculation shows no adjustment for Wahsatch gas or any other plant revenue. [Exhibit 105].

89. Anadarko’s representative nonetheless testified that the Gross Sales Revenue stated on Anadarko’s proportionate profits calculation included its fees as a plant owner. [Trans. Vol. I, p. 165]. We do not find this testimony credible. Like all other producers, Anadarko reports its production by a specific Mineral Group. Although Anadarko did not introduce the details of its reporting for each Mineral Group at issue, we know from Anadarko’s notices of valuation that it reported by specific Mineral Group, and did not avail itself of any unusual reporting procedures. [Exhibit 106]. Anadarko otherwise conceded that it ignored the Wahsatch gas as “gravy,” and that when it booked revenue, that revenue was associated with a well in the field. [Trans. Vol. I, pp. 139-140, 148]. It was Anadarko’s burden to persuade us that it adjusted its revenue figure to account for gas other than its own, and Anadarko has not carried that burden.

90. We also confirmed that Anadarko made no credit against costs by reviewing the plant owners’ monthly joint interest billings that are the source of those costs. [Exhibit 83]. Each monthly statement included four separate invoices, entitled “basic gross ownership,” “gas collection system,” “sulfur loading terminal,” and “sulfur haul road.” [Exhibit 83]. Anadarko used these joint interest billings as the source for the costs that appear in its proportionate profits calculations. [Trans. Vol. I, pp. 50, 54-55]. The joint interest billings do not reflect any adjustment for plant owner revenue. [Exhibit 83].

91. We find that Anadarko adjusted neither plant revenues nor plant costs to account for the difference between the Department’s comparable value processing allowance and Anadarko’s actual ownership share. This is a difference equal to .4408% of all gas processed at the plant. Supra, ¶78. Stated another way, Anadarko has proceeded as if its processing fee volume of 4.2874% were the measure of its ownership share of plant processing fee revenue, when the Anadarko ownership share of plant was actually 4.7281% (¶¶74, 75).

92. Anadarko’s correct ownership share of plant revenue can be estimated by adjusting the Department’s processing fee share for Anadarko upward by 10.28% (i.e. (4.7281% minus 4.2873%) divided by 4.2873%). [Exhibit 501]. By “processing fee share” in this context, we mean the surrogate for plant revenue that the Department has created in its Comp III statistics by multiplying Gross Sales Revenue by 25%. For our estimate, we will therefore use the Gross Revenue of Anadarko, multiplied by the 25% processing fee, adjusted upward by 10.28%.

93. The Department applied 25% against Chevron’s total revenues to reach a processing allowance which is the Department’s surrogate for plant revenues. [Exhibit 532]. Neither Chevron nor the Department made an upward adjustment to Chevron’s total revenues to account for the difference between the Department’s processing allowance and Chevron’s ownership share of all natural gas. We compared Chevron’s statement of Gross Revenue related to its Gulf interests with the Gross Revenue stated in the Department’s Comp III Statistics, and find that the two numbers are the same. [Exhibits 203, 501].

94. By reference to the Chevron’s statement of Gross Revenue and supporting documentation, we find that Chevron made no upward adjustment to its total revenues to account for its ownership share of all natural gas. [Exhibits 200, 201, 203].

95. By reference to Chevron’s testimony and documentation, we find that Chevron adjusted its plant costs to account for Wahsatch gas revenue. [Exhibits 200, 201]. We also find that Chevron adjusted only for Wahsatch gas. [Trans. Vol. V, pp. 907-908].

96. As with BP, we find that a deduction for Wahsatch gas alone falls short of representing Chevron’s ownership share of the processing fee gas. Supra, ¶¶81-86. Chevron (Gulf) paid a processing fee on its production equal to 2.8572% of all gas processed at the Whitney Canyon plant. Supra, ¶74. The Chevron (Gulf) ownership share of the Wahsatch gas was 0.3562% of all processed gas (15.0272% ownership share (¶72) times the 2.3701% Wahsatch fee (¶74)). Supra, ¶¶72, 74. The total of these two amounts (0.3562% and 2.8572%) is 3.2134% of all gas processed at the plant. Chevron (Gulf)’s correct ownership volume is 3.7373% of all processed gas. Supra, ¶75. The resulting understatement of volume is 0.5239% of all processed gas.

97. Chevron (Gulf)’s correct ownership share of plant revenue can be estimated by adjusting the Department’s processing fee share for Chevron (Gulf) upward by 16.3% (i.e. (3.7373% minus 3.2134%) divided by 3.2134%). [Exhibit 501]. By “processing fee share” in this context, we mean the surrogate for plant revenue that the Department has created in its Comp III statistics by multiplying Gross Sales Revenue by 25%. For our estimate, we will therefore use the Gross Revenue of Chevron (Gulf), multiplied by the 25% processing fee, adjusted upward by 16.3%.

98. The Taxpayers claim that modifying the 25% processing fee would have no impact. [E.g., Trans. Vol. III, p. 637]. To test Petitioners’ claim we assumed an increase in the processing fee from 25% to 30% in all gas processing agreements, except the Mutual Back-up Agreement which we left at 20%. That processing fee increase results in a increase in the total percentage volume of gas going to BP and Anadarko. It likewise raised the total percentage of gas going to Chevron with respect to its Gulf interests, but lowered the total percentage of gas going to Chevron, because its interests under the 1995 Chevron Agreement were adversely affected. Forest was adversely affected. The effect on Wahsatch and Merit, who had no ownership interest in the plant, was a direct decrease in total percentage of gas. From our review and analysis, we find that Taxpayers’ claim is not correct.

99. Broadly speaking, each Taxpayer’s proportionate profits cost data is subject to at least two distortions when used as a surrogate for plant operating costs; one distortion may understate actual costs, and the other may overstate actual costs. These distortions are of concern because the Department’s comparison of plant revenues and plant costs for each Petitioner, the Comp III Statistics, rest on the proportionate profits cost data of each Taxpayer. Supra, ¶¶64-65. As we have said, we modeled some features of our calculations on the Comp III Statistics.

100. The proportionate profits data may understate actual costs if the taxpayers did not report all costs. We found no evidence of such understatement for Anadarko or Chevron, both of whom derived their plant operating costs from the joint interest billings. Supra, ¶¶58, 59.

101. There was an understatement of plant operating costs for BP. BP presented revised cost figures which we understand to be a more accurate reflection of BP revenues and costs for production year 2002. [Trans. Vol. IV, pp. 720-722; Exhibit BP-3]. However, following exploration of these revised calculations during the hearing, BP’s tax representative reviewed his calculations and concluded that he had omitted significant costs. [Trans. Vol V, p. 928]. We agree. Based on the further testimony of BP’s tax representative, we find that it is appropriate to restore the amounts found in the following accounts included in Exhibit BP-4: accounts 720040, 721080, and 722000 on page BP 83; account 745155 on page BP 84; accounts 720040, 722000, and 740070 on page BP 85; accounts 720040 and 722000 on page BP 90. [Trans. Vol. V, p. 923-929, 934-937; Exhibit BP-4]. Following BP’s method, we totaled the values in these accounts and multiplied by BP’s ownership share of 62.9546%. [Trans. Vol. V, p. 926].

102. BP’s tax representative estimated these omitted plant operating costs to be one and one-half million dollars. [Trans. Vol. V, p. 928]. Based on our calculations, we restored $1,580,927 to the costs summarized in BP’s revised proportionate profits calculation. [Exhibit BP-3].

103. The proportionate profits cost data may overstate actual costs to the extent that the taxpayers included expenses that should not be considered processing costs. Wyo. Stat. Ann. §39-14-203(ii), (iv). BP and Chevron have adjusted their costs calculations to eliminate gathering system costs, using somewhat different methods. [Trans. Vol. IV, pp 724-725; Exhibit BP-3; Trans. Vol. V, pp. 857-858; Exhibit 206, second page]. These adjustments are appropriate because the Wyoming Supreme Court rejected an earlier claim that Whitney Canyon processing costs included gathering system costs all the way to the wellhead. Amoco Production Company v. Dept. of Revenue, 2004 WY 84, ¶¶28-37, 94 P.3d 430 (2004).

104. Unlike BP and Chevron, Anadarko made no effort to adjust its plant operating costs to eliminate gathering system costs. [Trans. Vol. I, pp. 150-151]. We find that some adjustment is necessary for the sake of a consistent approach to estimating the plant operating costs of the three Taxpayers. Anadarko’s cost information was not presented in a way that would directly allow us to break out or adjust gathering costs. [Exhibits 103, 105]. However, Anadarko and Chevron both derived their plant operating costs from the joint interest billings. Supra, ¶100. We can therefore estimate the appropriate adjustment by reference to the details of Chevron’s adjustment for gathering costs, which eliminated half of the labor and chemicals costs from the Gas Collection System invoices of the joint interest billings. [Trans. Vol. V, pp. 857-858; Exhibit 206, second page]. We simply take the amounts identified by Chevron in its Exhibit 206 and multiply by Anadarko’s ownership percentage, rather than Chevron’s. [Exhibit 206, second page]. We will reduce the estimate of Andarko’s plant operating expenses by $160,000.

105. Our estimate accepts the property taxes that all Taxpayers included as costs in their respective proportionate profits calculations and/or supporting documents. [Exhibit BP-3; Exhibit 105; Exhibit 201].

106. We find that it is likewise necessary to take a uniform approach to overhead when we consider the revenues and costs of the individual plant owners. For Chevron and Anadarko, overhead is an expense paid to BP. For BP, overhead is a credit against costs, paid to BP as plant operator. Anadarko’s cost estimate already adds overhead costs. [Exhibit 103]. We will add overhead back to our estimate of Chevron’s costs using Chevron’s own documented calculations, which excluded overhead. [Exhibit 206]. BP included a negative overhead figure (i.e., a credit against costs) in its original proportionate profits calculation, but excluded overhead from its revised proportionate profits calculation. [Exhibits BP-2, BP-3]. We will subtract overhead from BP’s plant operating costs using the amount shown in its original proportionate profits calculation. [Exhibit BP-2].

107. For our estimate, we accept Chevron’s depreciation. [Exhibit 201]. We also accept Chevron’s calculation of amortized expense for a 2001 plant turnaround, which is included in the Department’s calculation of total processing costs, but not in Chevron’s depreciation. [Exhibits 201, 501].

108. We accept BP’s revised depreciation from its revised proportionate profits calculation. [Exhibit BP-3]. For our estimate, this increases BP’s depreciation by $757,240 over the amount stated in the original proportionate profits calculation and included in the Department’s Comp III Statistics. [Exhibits BP-2, 501].

109. We accept BP’s revised statement of its net book value, which in the Department’s terminology is the same as BP’s un-depreciated asset balance. [Trans. Vol. IV, pp. 724-725; Exhibit BP-3]. We note that BP adjusted the net book value of its Gas Collection System to eliminate the estimated value of its gathering system. [Trans. Vol. IV, pp. 724-725; Exhibit BP-3]. For our estimate, this increases BP’s un-depreciated asset balance by $820,837 over the amount stated in the Department’s Comp III Statistics.

110. We do not accept Anadarko’s depreciation. Like Chevron, Anadarko distinguished depreciation from the amortized costs of the 2001 turnaround, and we are only concerned about depreciation. [Exhibit 105; depreciation and turnaround costs are combined in Exhibit 103]. Anadarko’s depreciation was disproportionately large. Anadarko’s plant ownership share was 26.5% larger than that of Chevron, but Anadarko claimed depreciation is 330% of Chevron’s depreciation, a dollar amount well more than three times greater. [Exhibit 501]. Anadarko’s plant ownership share is 30% that of BP, but Anadarko’s depreciation was 61% that of BP. [Exhibits 501, BP-3].

111. Anadarko also claims a disproportionately large share of its remaining un-depreciated asset balance as current depreciation. BP’s depreciation equals 7.32% of its un-depreciated asset balance. [Exhibit BP-3]. Chevron’s depreciation equals 10.88% of its un-depreciated asset balance. [Exhibit 501]. In contrast, Andarko claimed depreciation equal to 26.12% of its un-depreciated asset balance. [Exhibit 501]. Andarko claimed over a quarter of its un-depreciated asset balance as current depreciation, even though its representative testified that Anadarko expected its reserves to last for six to ten years, depending on the price of natural gas. [Trans. Vol. I, 149]. Straight line depreciation for those periods of time would be 16.67% to 10.0%.

112. Anadarko’s representative, Gregory Ostroff, did not provide satisfactory support for Anadarko’s processing depreciation. Ostroff did not prepare Anadarko’s tax reports to the Department, but he did prepare Anadarko’s depreciation calculation for the Whitney Canyon facility. [Trans. Vol. I, p. 133]. In 1999, prior to a merger, Anadarko’s depreciation figure came from an internal financial system. [Trans. Vol. I, p. 144]. When the merger occurred, the merged company had a different system of depreciation, and did not calculate depreciation “at this low of a level,” i.e., at the level of the Whitney Canyon plant. [Trans. Vol. I, pp. 53, 144].

113. Ostroff came up with a units of production method, which was a calculation based on the reserve estimates of Anadarko’s engineers. [Trans. Vol. I, p. 134]. The calculation was complicated by Andarko’s treatment of the field and processing facility as a single unit, which implicitly requires an allocation of the depreciation between plant and field. [Trans. Vol. I, pp. 136, 139]. Ostroff conceded that his engineers may be more pessimistic about reserves than other companies, which would result in higher depreciation. [Trans. Vol. I, pp. 134-136]. He also conceded the engineers have been consistently revising their estimates upward, “a little bit each year that I’ve seen it” [Trans. Vol. I, p. 141], which implies that his calculations have consistently overstated depreciation. Another company with more accurate reserve estimates would have a more accurate estimate of depreciation using this method. [Trans. Vol. I, p. 141]. Anadarko introduced no details of these calculations that would have enabled us to explore the integrity of Ostroff’s approach. Ostroff also states that there are no records to which we could refer to gauge the accuracy of the Anadarko engineers’ reserve estimates over time. [Trans. Vol. I, p. 140]. Anadarko also did nothing to tie its calculations to the plant operator’s capital recap introduced as Exhibit 104. [Exhibit 104].

114. Ostroff’s vague and confusing explanation stood in stark contrast to BP’s policy. BP’s depreciation, although a plant-specific estimate [Trans. Vol. III, p. 306], came from books that are kept with respect to the Whitney Canyon plant. [Trans. Vol. IV, p. 802]. BP depreciated the original plant investment over the twenty year life of the plant, and has assigned a twenty year life to any subsequent improvement. [Trans. Vol. IV, p. 802].

115. Anadarko raised two excuses in defense of its claimed depreciation. The first excuse was that any problems with Ostroff’s approach can be worked out in a subsequent audit. [Trans. Vol. I, pp. 53-54, 138-139]. As Anadarko is well aware, if the Board’s decisions upholding the comparable value method are sustained on appeal, there will never be such a cost audit. More important, the Board must consider the comparison of revenues and costs based on its assessment of the integrity of the cost figures now available to us. We find the integrity of Anadarko’s depreciation calculations to be doubtful.

116. The second excuse is that Anadarko’s aggressive depreciation claim was harmless because “at the end of the day, [Anadarko’s] depreciation will be no more than the investment we made in the plant.” [Trans. Vol. I, p. 139]. It is certainly true that depreciation is ultimately limited by total investment. At the same time, if the proportionate profits method had been approved for production year 2002, Anadarko’s depreciation claim varies so significantly from that of BP and Chevron that allowing that claim would give Anadarko a material relative advantage over BP and Chevron. Anadarko effectively seeks license to reduce its taxes in a way that gives Anadarko current use of tax dollars, while other taxpayers using the proportionate profits method would be denied such use until later years. We will not ignore the time value of money if it threatens the constitutional standard of a uniform method, consistently applied. Infra, ¶264.

117. Anadarko’s own historical information shows an unexplained change from the period 1989-1995, when a relatively constant depreciation figure suggested that Anadarko used straight line depreciation. [Exhibit 103]. Anadarko’s 2002 depreciation, exclusive of the amortized 2001 turnaround costs, is 74% higher than its 1995 depreciation. [Exhibit 103].

118. We do not find Anadarko’s 2002 depreciation to be a credible surrogate for its share of the depreciation component of Whitney Canyon plant costs. As an adjusted figure for processing depreciation, we used the same amount Anadarko used for production years 1992 through 1995. This figure represents 14.99% of Anadarko’s un-depreciated asset balance, a percentage much more in line with Anadarko’s own testimony regarding the anticipated operating life of the plant. Supra, ¶111. It is nonetheless twice the effective rate of depreciation claimed by BP against its un-depreciated asset balance, and over a third greater than the rate of depreciation claimed by Chevron.

119. Based on our findings, we adjusted the Department’s Comp III Statistics for each Taxpayer to make our own comparison of Whitney Canyon plant revenues and plant costs. We then performed a type of netback analysis, as we discussed in detail in Whitney Canyon 2001, ¶¶137-150. As in that case, we now focus on return on invested capital, also known as return on investment. We have calculated return on investment using our surrogate plant revenues and costs; we simply divide the difference between revenues and costs by each Taxpayer’s un-depreciated asset balance. The un-depreciated asset balance is the amount of capital investment that each Petitioner has not yet recovered through its accounting for depreciation.

120. We derived rate of return on investment in the same manner as the Department did in its Comp III Statistics for each Taxpayer. [Exhibit 501]. We have simply used different numbers for our calculation, for the reasons we have described.

121. For BP, we find that plant revenues cover plant operating expenses and reasonable depreciation, plus a slight return on investment. For Anadarko and Chevron, we find that plant revenues do not cover plant operating expenses and reasonable depreciation. For the three plant owners combined, we find that plant revenues do not cover plant operating expenses and reasonable depreciation, by a small margin.

122. For BP, we revised the Department’s calculation of an implied rate of return [Exhibit 501] in seven ways:

(2) We multiplied BP’s revised Gross Revenue by the 25% processing fee to revise the Department’s processing allowance, which is the Department’s surrogate for plant revenue.

(3) We adjusted that processing allowance upward by 8.37% to account for actual volumes of processed gas. Supra, ¶85.

(4) We accepted BP’s revised cost calculation, including a revised statement of depreciation, as the basis for our cost estimate. Supra, ¶108.

(5) We revised BP’s cost estimate upwards by $1,580,927 to account for omitted costs. Supra, ¶102.

(6) For the purposes of BP’s individual estimate, we restored an overhead credit in the amount reflected in BP’s original proportionate profits calculation. Supra, ¶54.

(7) We accepted BP’s revised statement of its un-depreciated asset balance. Supra, ¶109.

123. With these BP adjustments, we found an implied rate of return on investment of 1.53%.

124. For Anadarko, we revised the Department’s calculation of implied rate of return [Exhibit 501] in three ways:

(1) We adjusted the Department’s estimated revenue upward by 10.28% to reflect actual volumes of processed gas. Supra, ¶92.

(2) We reduced Anadarko’s total costs to adjust for gathering costs improperly characterized as processing costs, thereby making our estimate consistent with the approaches of BP and Chevron. Supra, ¶104.

(3) We adjusted Anadarko’s depreciation by substituting the depreciation Anadarko’s predecessor took during the period 1992 through 1995. Supra, ¶117.

125. With these Anadarko adjustments, we found a negative implied rate of return on investment of 9.87%.

126. For Chevron, we revised the Department’s calculation of implied rate of return [Exhibit 501] for the Chevron (Gulf) interests in two ways:

(1) We adjusted the Department’s estimated revenue upwards by 16.3%, to reflect actual volumes of processed gas. Supra, ¶97.

(2) For the purposes of Chevron’s individual estimate, we added Chevron’s plant owner share of overhead, to make our estimate consistent with the estimates for the other two Taxpayers. Supra, ¶106.

127. With these Chevron adjustments, we found a negative implied rate of return on investment of 11.49%.

128. The Department calculated an implied rate of return using each Taxpayer’s reported processing allowance. Supra, ¶67. Our results for the same calculation, again using the revisions we have described, are as follows:

	Return on investment: Board estimate	Return on investment: DOR using reported processing
BP	1.53%	11.38%
Anadarko	-9.87%	27.48%
Chevron	-11.49%	9.97%

129. Although the Board’s results are not identical to the Department’s, the Board’s and Department’s calculations show similar differentials in the spread of calculated returns on investment for each Taxpayer, with Anadarko’s being the widest and BP’s the narrowest. [Exhibit 84]; supra, ¶67. The Department attributes the spreads to three differences between and among the Taxpayers: (1) Current depreciation; (2) Un-depreciated asset balances; and (3) Value received per unit of production. [Trans. Vol. V, p. 1016].

130. We combined the information for each Taxpayer to estimate an overall implied rate of return for the plant, exclusive of the interest of Forest Oil. In doing so, we eliminated the overhead credit from BP’s processing costs, and eliminated overhead charges from Anadarko’s and Chevron’s processing costs, because we believe the elimination of these internal transfers improved the accuracy of the comparison of revenues and costs.

131. For our comparison of plant revenues and plant costs, we reached the following consolidated amounts:

Total surrogate plant revenue, as adjusted	$25,588,677
Total surrogate plant costs, including depreciation	$27,710,188
Total un-depreciated asset balance	$127,988,032

132. From these consolidated amounts, we reach a negative implied rate of return on investment of 1.66%. Using the same method, we find an implied rate of return of 12.95% using the reported processing. We note in passing that our comparison of these plant revenues and plant costs with Whitney Canyon 2001 reflects a sharp decline in surrogate plant revenue, which in turn reflects a decline in gas prices between 2001 and 2002. Whitney Canyon 2001, ¶159; infra, ¶197.

Did the Petitioners demonstrate that the Department improperly applied the comparable value method by its selection of sources of comparable value?

133. The Taxpayers request the Board to view each of the Department’s selected comparable contracts in light of numerous criticisms. The Taxpayers rely principally on the evidence of witnesses who testified for BP. Those witnesses were:

Rebecca Leo, a retired BP Amoco lawyer. Leo was an Amoco employee when the C&O Agreement was negotiated. [Trans. Vol. III, pp. 624-628].

Clyde Miller, BP’s Commercial Engineer. Miller is currently responsible for contract management, oversight of joint interest accounting, and new business development for the Whitney Canyon plant. He is the BP employee most knowledgeable about BP contracts. [Trans. Vol. I, pp. 174-176].

Neil Bidwell, BP’s Overthrust turnaround manager and project engineer. BP’s Overthrust area includes the Whitney Canyon Plant. [Trans. Vol. II, pp. 342-343].

134. The Taxpayers’ Proposed Findings of Fact have generally served as our guide to the specific matters on which the Taxpayers rely for their position that the Department misapplied the comparable value method. We have endeavored to address each of the many fact issues raised by Petitioners, even though some bear marginally on the ultimate issues in the case. We note that many fact issues embraced by the initial statements of the parties were not in dispute after the close of evidence. For example, there is no dispute that Merit gas is of like quality compared to the gas of the Petitioners. [Trans. Vol. II, p. 226]. Similarly, the Department does not rely on the Mutual Back-up Agreement as a comparable value. [Department of Revenue’s Proposed Findings of Fact and Conclusions of Law, ¶57].

135. Broadly speaking, Rebecca Leo attempted to persuade the Board that the C&O Agreement was not a valid comparable due to its structure as a contract. Leo argued that none of the Taxpayers is a third party or third party producer with respect to the plant owners. [Trans. Vol. III, pp. 633-634]. However, she also testified that the negotiation of the C&O Agreement was arms-length, a point on which Clyde Miller agrees. [Trans. Vol. III, p. 653, Vol. II, p. 222].

136. Leo nonetheless went on to argue that the Exhibit F gas processing agreement could not be arms-length, because once the C&O Agreement was in place, the relationship between the plant owners and any given producer ceased to be arms-length. [Trans. Vol. III, pp. 653-655]. Her distinction turns in part on characterizing Exhibit F as a feature of implementing the C&O Agreement, rather than being negotiated as an element of the C&O Agreement. [Trans. Vol. III, p. 655]. We do not find this distinction persuasive, and note that Leo conceded that her explanation was like “counting angels on the head of a pin.” [Trans. Vol. III, p. 654]. Since the Exhibit F Processing Agreement was an element of the C&O Agreement, and executed as a part of the C&O Agreement, we find that the Exhibit F Processing Agreement was also an arms-length agreement. Lay and expert opinions to the contrary are merely statements of the Petitioners’ position, and are not credible.

137. Our doubts about Leo’s arms-length analysis increased when she argued that the Merit Agreement, which she agreed was a third party agreement, was not arms-length because Merit’s gas was captive due to its relatively small volume. [Trans. Vol. I, pp. 661-662]. As we understand her testimony, this equates arms-length status with bargaining power. [Trans. Vol. I, pp. 661-662]. This analysis was not persuasive.

138. We find that Leo’s testimony must be taken in light of her sensible concession, as a general principle, that a contract between a group of related parties and one of their number is enforceable. [Trans. Vol. III, p. 670]. Indeed, one of her duties at BP Amoco was to explain to BP Amoco employees that they had different obligations under different contractual relationships. [Trans. Vol. I, pp. 648-649]. She readily distinguishes between BP as a producer and BP as an owner processor. [Trans. Vol. I, pp. 649-650].

139. Leo argued that the Wahsatch Gas Agreement, to which Anschutz (not a plant owner) is a party, is not arms-length, on the ground that the Wahsatch Gas Agreement was not originally arms-length, and as a successor in interest Anschutz is bound by that status for the life of the lease. [Trans. Vol. I, p. 664]. We find the important fact is that the Wahsatch Gas Agreement is enforceable, not whether the contract is fairly characterized as arms-length.

140. For its part, the Department concluded that each of the contracts it selected as a source of comparable value included a processing fee derived from an arms-length agreement. [Trans. Vol. III, pp. 438-439, 451-454, 460-461, 466, 470-471].

141. In the end, we believe the conflicting views of the parties about third party or arms-length status to be best resolved as a question of law rather than a question of fact, and we will address it as such. Infra, ¶¶282-283. However, Leo made a variety of other points.

142. Leo testified that any modification to the 25% processing fee would simply be “taking money out of one pocket and putting it in another pocket.” [Trans. Vol. III, pp. 637, 656]. We have already rejected the one-pocket-to-the-other analysis. Supra, ¶71. Miller’s testimony supports our analysis. [Trans. Vol. II, pp. 260-261]. We agree with Miller that the gas taken by the plant owners as a fee is redistributed among the plant owners based on their respective ownership interests. [Trans. Vol. II, p. 252].

143. Leo testified to various personal opinions regarding the intentions of the parties to the C&O Agreement, while acknowledging that she was unaware of the source of such specific matters as the 25% fee, or the contract language indicating that the fee was intended to recover operating costs plus a return on investment. [Trans. Vol. III, pp. 655, 657]. Leo’s understanding of the C&O Agreement negotiations is based on attorney staff meetings at Amoco during the time when the C&O Agreement was negotiated. [Trans. Vol. III, pp. 627, 652]. Frank Hauck, the staff attorney who represented Amoco on the C&O Agreement drafting team, is deceased. [Trans. Vol. III, p. 626]. Her personal involvement in the C&O Agreement was limited to reviewing or drafting subsequent amendments. [Trans. Vol. III, p. 628]. We have accorded little weight to her opinions regarding the intentions of the parties to the C&O Agreement, and prefer to rely on the C&O Agreement itself.

144. Leo generally views the provisions of the C&O Agreement as consistent with joint operating agreements, and stated that provisions of joint operating agreements are commonly drawn from a model agreement copyrighted by the Council of Petroleum Accountants Society. [Trans. Vol. III, pp. 634-636].

145. In a brief discussion of other agreements providing for the construction and operation of gas processing plants, Leo glossed over significant distinctions between and among the agreements. [Trans. Vol. III, pp. 641-643; Exhibits 74, 75, 77, 78]. While it is undoubtedly true that these agreements shared the common feature of producers who have grouped together to provide a gas processing facility, Leo made no persuasive effort to address distinctions between and among construction and operating agreements. [Trans. Vol. III, p. 643].

146. Leo testified that the C&O Agreement does not create a partnership or any other separate legal entity under Wyoming law. [Trans. Vol. III, p. 629]. Miller similarly testified that the C&O Agreement did not create a partnership. [Trans. Vol. II, p. 220]. However, Miller’s testimony that the plant owners are not partners “in the legal tax definition of the word” directly contradicts the plain language of the C&O Agreement. [Trans. Vol. II, p. 256; Exhibit 21, Section 16.4 and Exh. G]. Similarly, we note that Leo freely concedes that she is neither a tax lawyer nor familiar with Wyoming tax law. [Trans. Vol. III, p. 644]. BP did not call a tax lawyer.

147. The Department applied the comparable value method by determining that the plant owners acted in the manner of an entity separate and distinct from the producers, but without concerning itself about either the nature of that entity, or whether a specific type of legal entity exists. [Trans. Vol. III, pp. 514-516]. The Department did not dispute Leo’s testimony that the parties did not intend to create a partnership. [Trans. Vol. III, p. 516].

148. Clyde Miller attempted to persuade the Board that the C&O Agreement was not a valid comparable from the perspective of contract and business administration. His testimony often echoed that of Leo on the characterization of the relationships of the parties to the C&O Agreement.

149. Miller was most persuasive when explaining BP’s approach to managing the Whitney Canyon plant, which is a small part of BP’s business. In practice, BP does not look at a return on money invested in the plant, because it cannot directly impact that return. [Trans. Vol. II, pp. 304-305]. Instead, BP simplifies its asset information at the expense of detail that would be needed to evaluate past performance. [Trans. Vol. II, pp. 305-306]. According to Miller, Wall Street investors don’t even know that Whitney Canyon exists. [Trans. Vol. II, p. 308]. The only direct market information about the value of specific assets like Whitney Canyon is from sales of those assets, which typically occur on the basis of producing lease and plant combined, although Miller acknowledged that the recent acquisition of the Wahsatch interests by Anschutz did not fit this profile. [Trans. Vol. II, pp. 308-309]. BP itself looks at the plant and its leases as a single economic unit. [Trans. Vol. II, p. 221]. So does Anadarko. [Trans. Vol. I, p. 76]. While BP and Anadarko look at the plant and its leases as a single economic unit, the Department pointed out that the field itself was not unitized. [Trans. Vol. V, p. 965].

150. At the operating level, the plant operator is held accountable to expense, production, and down-time targets based on historical performance. [Trans. Vol. II, pp. 317-318]. The plant has operating budgets for operating expense by cost category. [Trans. Vol. II, p. 318]. Its capital budget is on a license-to-operate basis, which means that the plant has access to capital necessary to keep the plant running, and to make it more efficient or increase production. [Trans. Vol. II, p. 319]. Capital budget decisions are made in London, “then trickle down and are handled at the more local level in Houston.” [Trans. Vol. II, p. 319]. The basis for closing the plant is whether or not it is covering current operating costs, but divestiture is also possible if BP can make more money elsewhere. [Trans. Vol. 307].

151. We find that two things follow from this management structure. First, the processing fee is too small a part of BP’s overall picture to be a concern in the same way that a fee might concern a smaller independent plant owner like Forest. [Trans. Vol. II, pp. 320-322]. The same may be said of the details of a contract like the C&O Agreement with its Exhibit F, and the details of the operations of Whitney Canyon itself. Second, BP must adapt the information it collects in order to respond to Wyoming’s statutory valuation scheme. Miller characterizes BP’s Whitney Canyon plant depreciation as an estimate, even though BP’s tax representative explained the straight-line approach BP used to calculate depreciation. [Trans. Vol. II, p. 306]. Supra, ¶114.

152. The problem of BP’s scale cannot override the Department’s – and the State’s – interest in administering the tax statutes of Wyoming in a way that can be applied to all Wyoming taxpayers, whether they are organized on an international scale, or organized as a small regional or local independent. The Department can only do so by making use of the tools at its disposal, including Exhibit F to the C&O Agreement, whether or not those tools are beneath the notice of senior BP management.

153. Miller testified that the original business plans and forecasts for the Whitney Canyon plant did not prove to be accurate. [Trans. Vol. II, pp. 224-225]. His testimony was not supported by documentation from the period, although he claims knowledge based on company files. [Trans. Vol. II, p. 223]. We find that this testimony of original plans and forecasts to be unpersuasive as a criticism of the Department’s use of the comparable value method, or of the plain language of the C&O Agreement with its Exhibit F. The contracts which are the source of the processing fee were still effective in production year 2002. Miller conceded that modification of the processing fee is unlikely. [Trans. Vol. II, p. 247].

154. Miller testified that the C&O Agreement does not allow the plant operator a profit component in the plant overhead accounting. [Trans. Vol. II, p. 232]. The plant operator’s overhead compensation has no bearing on whether the plant owners’ operation of the plant covers their costs. We have made adjustments to our own estimates to address the treatment of overhead in the context of the individual Petitioners as plant owners, and the Petitioners collectively as plant owners. Supra, ¶¶122, 126, 130.

155. Miller argued that the 25% processing fee did not represent the value of the processing “in the current time frame,” that is, had ceased to be a sound indicator of processing value with the passage of time since the original enactment of the C&O Agreement. [Trans. Vol. II, p. 234]. Since Exhibit F to the C&O Agreement remains in effect and governs the amount of the fee, this argument is unpersuasive. We likewise find all similar arguments regarding the aging of the other sources of comparable value to be unpersuasive for the same reason.

156. The Department introduced evidence intended to show that in previous years and other locations, Anadarko reported production using the comparable value method. [Exhibits 3, 63, 66, 70; Trans. Vol. I, pp. 83-85, 102-103, Vol. III, pp. 475-476]. The record also contained exhibits showing that Amoco at one time proposed to report using the 25% processing fee, or reported using comparable value. [Exhibits 64, 65, 68, 69]. We placed no weight on such evidence. Some of the conduct was under a different statutory regime, some of it involved different locations about which we know little. We likewise placed no weight on an preliminary audit dated January 12, 1989 [Exhibit 71], that was not completed and redone by a different auditor. [Trans. Vol. III, p. 574]. This preliminary audit also antedated the 1990 statutory changes.

157. Petitioners have also asked us to consider testimony and argument from previous proceedings on the subject of whether the 25% processing fee in Exhibit F is an arms-length fee. [Taxpayers’ Proposed Findings of Fact and Conclusions of Law, ¶¶227-228, 231-237]. Petitioners did not introduce such materials into the record in this case, and we refuse to consider either the materials, or the related arguments made in Petitioners’ proposed conclusions of law. In addition to our statutory obligation to decide this case based on the record, any consideration of such material works a prejudice to the Department, which cannot respond to the Petitioners’ materials and could not prepare for the Petitioners’ materials. The late references to materials also impair the Board’s ability to make timely enquiry of witnesses with knowledge of such matters.

158. The Wahsatch Gathering System Agreement was a component of a larger transaction involving the development of the Yellow Creek field. [Trans. Vol. III, pp. 637-638]. Amoco owned the Yellow Creek property, but elected not to develop the property because it expected that the amount of gas available for processing would be very small. [Trans. Vol. III, pp. 637-638; Trans. Vol. II, p. 270]. Amoco sold the property to Union Pacific Resources Company, but the transaction depended in part on assurances that a venue would be available to process the Yellow Creek gas. [Trans. Vol. III, pp. 637-638]. As part of the sale transaction, Amoco proposed to the plant owners, including UPRC, that UPRC would get a Whitney Canyon processing agreement. [Trans. Vol. III, pp. 637-638]. All plant owners recognized the potential revenue from processing the gas to be a benefit. [Trans. Vol. I, p. 147, Vol. II, p. 228].

159. Taking the history into account, we nonetheless find that the Wahsatch Gathering System Agreement (the gathering system transports Yellow Creek gas to Whitney Canyon) is a suitable source for determining comparable value. We doubt the contention that the contract was unduly favorable, particularly in view of BP testimony that the costs associated with processing the Wahsatch gas are less than for other gas. Infra, ¶160. To the extent that the original processing fee was in some way preferential, that preference must be viewed in the context of the plant owners’ common interest in securing processing revenue from the Wahsatch production, and in light of the costs of transporting the Wahsatch gas to Whitney Canyon. As important, this history has generally ceased to be of interest. By 2002, the reciprocal rights established by the gas processing agreement were no longer contingent upon aspects of the earlier global transaction; a contractual 40 BCF residue limit was achieved in 1999. Supra, ¶42c. The Wahsatch producer, now Anschutz, was no longer a plant owner. Supra, ¶14.

160. Anschutz compressed and separated its gas before that gas joined the process stream at the Whitney Canyon plant, although the Wahsatch gas was otherwise processed the same way as all other gas. [Trans. Vol. II, pp. 352-353, 372]. It follows that Anschutz received less service from the Whitney Canyon plant for its 25% fee than the other producers received. [Trans. Vol. II, pp. 361-363]. Bidwell argued that the additional cost of processing the Wahsatch gas was “minimal, almost nil.” [Trans. Vol. II, pp. 368-369]. There was, however, no specific documentation to support this claim, or any documentation to show how plant operating costs vary with the volumes of gas processed. [Trans. Vol. II, pp. 381-382].

161. We accept the general proposition that Anschutz received less service for its fee than other producers. Even if Anschutz received less service for its fee than other producers, Petitioners did not persuade us that the Wahsatch Gathering System Agreement cannot be a source of comparable value. A purchaser of services commonly cannot avail itself of the full range of services included in a package of services that has a set fee, even though another purchaser may be able to enjoy all of the benefits of the package. Similarly no one testified that Anschutz needed these additional services, but was deprived of them. Separation and compression would in fact be necessary for transportation of gas from the Yellow Creek property through the Wahsatch Gathering System.

162. There is no question that Anschutz incurred more expense to get to the plant inlet than Whitney Canyon field producers. Ostroff testified that at one time total Wahsatch fees approached 50 to 60% of the value of the gas. [Trans. Vol. I, p. 80]. The fact that the Wahsatch producer has higher costs to reach the tailgate of the plant does not persuade us that the Wahsatch costs must be viewed as unique or unrepresentative. Wahsatch merely incurred costs that the Whitney Canyon field producers did not incur.

163. Petitioners next argued that, because the Wahsatch gas receives fewer processing services, it is of higher quality, and therefore not of like quality. [Trans. Vol. I, p. 198]. For the purposes of applying the comparable value method, it is enough that gas has been processed in the same plant without substantial special adjustment to the plant operations, and we know that is so from Bidwell’s testimony. Moreover, the quality of gas in the Whitney Canyon field varies from well to well, infra, ¶173, which implies that gas from some Whitney Canyon wells places greater demands on the plant than gas from other wells, although all gas is subject to the same fee of 25%. We find the Department’s focus on the consistency in the processing fee for gas from this plant is more compelling than the Petitioners’ focus on the ways in which one might describe the Wahsatch gas as different.

164. Petitioners argue that the terms and conditions of the Wahsatch Gathering System Agreement distinguish it from the other contracts, because the plant curtailed production of Wahsatch gas more frequently than other gas. Bidwell testified that curtailments occurred for three reasons: (1) the water in the Wahsatch gas exceeded specifications and would limit the plant’s production; (2) the Wahsatch gas exceeded any of several condensate specifications; (3) one of the plant’s two trains was shut down for maintenance. [Trans. Vol. II, pp. 359-360]. During the curtailments, the plant actually continued to receive a small volume of Wahsatch gas, due to potential re-start problems if the gas flow stopped entirely. [Trans. Vol. I, p. 195, Vol. II, p. 379]. Bidwell did not quantify the effect of the curtailments; he could only testify that curtailments occurred two to three times a month, and lasted from several hours to a whole day. [Trans. Vol. II, pp. 385-386]. The Taxpayers have not persuaded us that these operational concerns were more important than the pattern of processing fees in the Whitney Canyon processing agreements.

165. BP generally contrasted curtailments with shut-ins. Wells in the Whitney Canyon field were periodically shut in to build up pressure for optimal production. [Trans. Vol. II, pp. 373-374]. Here the overriding concern was not processing priority under an agreement, but field management. Since the Whitney Canyon field wells generally had at least one first priority among the producers sharing in the single gas stream from the well, shut-ins in the field were dictated by operations concerns. [Trans. Vol. II, pp. 378-379]. For this reason, we find that contract priority, even if vigorously negotiated, is not a term or condition that is as important as the processing fees in the Whitney Canyon processing agreements. This finding applies to the Merit and 1995 Chevron Agreements, as well as the Wahsatch Gathering System Agreement.

166. BP witnesses testified that Wahsatch gas production is falling. [Trans. Vol. I, p. 196]. To the extent that this forecast has any bearing on production year 2002, we have taken it into account in our estimated comparison of revenues and costs.

167. Merit owns 32.5% of the gas produced from the Champlin 505B1 well, and no other share of any gas processed at the Whitney Canyon plant. [Trans. Vol. II, pp. 210-212]. Leo has no recollection of negotiations with Merit, and Miller did not know who negotiated the Merit Agreement. [Trans. Vol. II, p. 325, Vol. III, p. 662]. Leo and Miller nonetheless stressed that Merit had no alternative for processing its gas, so that it was “tagalong” or “captive” gas. [Trans. Vol. II, p. 212, Vol. III, p. 661]. However, the plant owners were themselves constrained from charging Merit a higher fee by the practical concern that charging a producer in Merit’s position a higher fee could “come back to haunt you later.” [Trans. Vol. II, p. 212]. Leo also acknowledged that the field operator has an incentive to reserve space for small interests “because they can make trouble for you if you don’t.” [Trans. Vol. III, p. 661]. Nothing about this uncontradicted testimony persuades us that the contract is not valid and enforceable, or that it cannot serve as a comparable.

168. Miller testified that if Merit had not agreed to the existing gas processing agreement, BP would likely have produced the gas with a 25% processing fee, and treated the produced gas as an imbalance. [Trans. Vol. II, p. 284]. This supports the fact that the 25% fee was a standard for the Whitney Canyon plant, and that the Merit fee was unaffected by concerns for quantity or quality. [Trans. Vol. II, pp. 246, 284-285].

169. The Merit processing agreement was the only one with a processing fee that includes 100% of sulfur produced. [Trans. Vol. II, p. 211]. The origin of this provision was the plant owner’s desire to control such a small portion of the total sulfur. [Trans. Vol. II, pp. 214-215]. Sulfur also generated losses for the other producers in 2002, which we take to be a fair measure of its economic value. [Trans. Vol. II, p. 345]. The unique arrangement for sulfur in the Merit contract does not persuade us that the Merit contract must be disregarded as a source of comparable value.

170. Petitioners’ principal point regarding Merit concerns volume; Miller and Leo considered the Merit volumes to be insignificant. [Trans. Vol. II, p. 213, Vol. III, p. 661]. Miller concluded that the Merit gas is therefore not of like quantity when compared to that of the Taxpayers. [Trans. Vol. II, p. 213]. We nonetheless agree with the Department that quantity did not affect pricing terms. Supra, ¶¶36, 43b.

171. The Taxpayers have assumed but not demonstrated that comparisons of processing agreements must be based on aggregated volumes. The plant owners nonetheless considered additional volumes of gas to be economically beneficial. [Trans. Vol. I, p. 147, Vol. II, pp. 227-228, 239, Vol. II, p. 371].

72. The question of like quantity takes on a different complexion when viewed in the context of the unit by which Petitioners actually report their production, which is the Mineral Group. The Mineral Group is often associated with individual wells, and is likewise the pertinent unit for appeal purposes. Supra, ¶62. Merit produces 32.5% of the gas from the Champlin 505B1 well. [Trans. Vol. II, p. 211]. Thirty-two point five percent is a significant percentage in the context of that Mineral Group.

173. If we focus on individual Mineral Groups rather than on an aggregation of Mineral Groups associated with the plant, the Department’s point about the consistency of the 25% fee becomes stronger. It is clear that the fee is a constant despite variations in the quantity and quality of gas produced from individual Mineral Groups, and from individual producers. We can see these variations by comparing volumes and revenues from the reporting of BP and Chevron. [Exhibits BP-1, 207].

174. The Petitioners have asked us to consider legal argument from previous proceedings on the subject of the Department’s previous interpretation of the comparable value statute, including aspects of the “like quantity” words of the statute. [Taxpayers’ Proposed Findings of Fact and Conclusions of Law, ¶¶173, 175, 181]. Petitioners made no effort to introduce

the referenced materials into the record in this case, and we refuse to consider either the materials or related arguments made in Petitioners’ proposed conclusions of law. See supra, ¶157.

175. The Petitioners produced no witnesses with direct personal knowledge of the negotiations leading up to the 1995 Chevron Agreement. [Trans. Vol. II, p. 325]. They nonetheless presented a consistent explanation of its pertinent history, which reaches back to the period when the Whitney Canyon C&O was negotiated. [Trans. Vol. III, p. 645]. After being involved in negotiations with Amoco and others, Chevron pulled out and built the Carter Creek plant, creating “innate hostility” between Chevron and Amoco. [Trans. Vol. II, p. 295, Vol. III, p. 645]. Chevron’s interest in the ACG wells was not well situated to be served by the Carter Creek plant, and the Whitney Canyon plant owners insisted on a processing fee that was originally 50%. [Trans. Vol. II, pp. 235-238, Vol. III, p. 645].

176. There was further conflict when Chevron bought Gulf’s share of the Whitney Canyon plant in 1985, and sought a 25% processing fee for the ACG gas already processed by the Whitney Canyon plant. [Trans. Vol. III, p. 645]. These negotiations eventually led to a reduction in the processing fee to 35%. [Trans. Vol. III, pp. 645-646, Vol. II, p. 238].

177. When the 1995 Agreement was negotiated, Amoco and Chevron were each in the position of desiring well improvements that required the cooperation of the other to accomplish. [Trans. Vol. II, p. 239-240]. These issues became linked to modification of terms for processing Chevron’s non-Gulf gas. [Trans. Vol. II, p. 240]. As a result, the 1995 Chevron Agreement included a sliding scale of fees like that found in the Wahsatch Gathering System Agreement that had been negotiated in 1994, a ten-year term with a subsequent evergreen provision, second priority status, and Chevron’s power to take the non-Gulf gas to Carter Creek for processing. [Trans. Vol. II, pp. 236, 240-241]. In 2002, the processing fee required by the sliding scale was 25%. [Trans. Vol. II, p. 237].

178. Nothing in the history of the 1995 Chevron Agreement caused us to doubt the rights established by the 1995 Chevron Agreement, or otherwise persuaded us that it cannot be used as source of comparable value.

179. We accept Leo’s testimony that priorities are a commercially significant contract term. [Trans. Vol. III, p. 641]. However, we note that Leo fails to make the important distinction between the limits of plant capacity and curtailments for operational reasons. [Trans. Vol. III, p. 641]. She also acknowledges that the fees in the various agreements are not affected by different priorities. [Trans. Vol. III, pp. 659-660].

180. Miller testified that during 2002, the Whitney Canyon plant processed less than a million standard cubic feet a day of 1995 Chevron Agreement gas. [Trans. Vol. II, p. 237]. This cannot be readily squared with the totals that appear on his own Exhibit 56, which show an annual average of 6.17 MMCFD. [Exhibit 56; Trans. Vol. II, p. 185]. We accept the larger figure, reflecting plant production in its entirety, as the accurate figure. In any event, we disagree with the conclusion that the quantity of production under the 1995 Chevron Agreement is cause for disregarding the Agreement as a source of comparable value.

181. The Carter Creek Mutual Back-up Agreement provides for short term processing during plant shutdowns, on a third priority basis. [Exhibit 32]. The Whitney Canyon plant processed Carter Creek gas during 2002. [Trans. Vol. II, pp. 243-245]. The fee for that processing was 20%. [Trans. Vol. II, p. 335].

182. We find that the Mutual Back-up Agreement lends support to the Department’s general position, but do not find that it is a comparable.

183. Under the Gas Processing Agreement attached to the C&O Agreement as Exhibit F, BP is a Producer separate and distinct from the Plant Owners identified in the same Gas Processing Agreement. [Exhibit 21]. The Plant Owners are likewise separate and distinct from BP as a Producer. BP’s rights and responsibilities as Producer, with respect to the Plant Owners, are established by the Gas Processing Agreement.

184. Under the Gas Processing Agreement attached to the C&O Agreement as Exhibit F, Chevron is a Producer separate and distinct from the Plant Owners identified in the same Gas Processing Agreement. [Exhibit 21]. The Plant Owners are separate and distinct from Chevron as a Producer. Chevron’s rights and responsibilities as a Producer, with respect to the business entity of Plant Owners, are established by the Gas Processing Agreement.

185. Under the Gas Processing Agreement attached to the C&O Agreement as Exhibit F, Anadarko is a Producer separate and distinct from the Plant Owners identified in the same Gas Processing Agreement. [Exhibit 21]. The Plant Owners are likewise separate and distinct from Anadarko as a Producer. Anadarko’s rights and responsibilities as Producer, with respect to the business entity of Plant Owners, are established by the Gas Processing Agreement.

186. With respect to BP as a Producer under its Exhibit F Gas Processing Agreement, we find that the Exhibit F Gas Processing Agreement of Chevron, as a Producer, is a reliable source of information, or a comparable, from which the Department could infer and impute a reasonable processing fee which would be paid by an other party for processing of gas of like quantity, taking into consideration the quality, terms and conditions under which the gas was processed. The same is true of the Exhibit F Gas Processing Agreements of Anadarko, as a Producer, and Forest Oil, as a Producer. That fee is an in-kind processing fee of 25% of the plant production recovered during each settlement period, and attributable to the Producer in question. Sufficient similarity in quantity is assured by the fact that the fee provided in the comparable Exhibit F Gas Processing Agreements does 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 the product(s) recovered after processing. Sufficient similarity of terms and conditions is assured by the identical terms and conditions of the Exhibit F Gas Processing Agreements.

187. With respect to Chevron as a Producer under its Exhibit F Gas Processing Agreement, we find that the Exhibit F Gas Processing Agreement of BP, as a Producer, is a reliable source of information, or a comparable, from which the Department could infer and impute a reasonable processing fee which would be paid by an other party for processing of gas of like quantity, taking into consideration the quality, terms and conditions under which the gas was processed. The same is true of the Exhibit F Gas Processing Agreements of Anadarko, as a Producer, and Forest Oil, as a Producer. That fee is an in-kind processing fee of 25% of the plant production recovered during each settlement period, and attributable to the Producer in question. Sufficient similarity in quantity is assured by the fact that the fee provided in the comparable Exhibit F Gas Processing Agreements does 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 the product(s) recovered after processing. Sufficient similarity of terms and conditions is assured by the identical terms and conditions of the Exhibit F Gas Processing Agreements.

188. With respect to Anadarko as a Producer under the Exhibit F Gas Processing Agreement, we find that the Exhibit F Gas Processing Agreement of BP, as a Producer, is a reliable source of information, or a comparable, from which the Department could infer and impute a reasonable processing fee which would be paid by an other party for processing of gas of like quantity, taking into consideration the quality, terms and conditions under which the gas was processed. The same is true of the Exhibit F Gas Processing Agreements of Chevron, as a Producer, and Forest Oil, as a Producer. That fee is an in-kind processing fee of 25% of the plant production recovered during each settlement period, and attributable to the Producer in question. Sufficient similarity in quantity is assured by the fact that the fee provided in the comparable Exhibit F Gas Processing Agreements does 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 the product(s) recovered after processing. Sufficient similarity of terms and conditions is assured by the identical terms and conditions of the Exhibit F Gas Processing Agreements.

189. For all three Taxpayers, as Producers, the Wahsatch Gathering System Agreement is a reliable source of information, or a comparable, from which the Department could infer and impute a reasonable processing fee which would be paid by an other party for processing of gas of like quantity, taking into consideration the quality, terms and conditions under which the gas was processed. [Exhibits 26, 82]. That fee is an in-kind processing fee of 25% of the plant production recovered during each settlement period, and attributable the Wahsatch Gathering System interests. Sufficient similarity in quantity is assured by the fact that the maximum processing fee required (except with regard to sulfur) during 2002, under any known gas processing agreement related to Whitney Canyon, was 25%. Sufficient similarity in quality is assured by the fact the gas processed in the plant is commingled, and the measure of the fee is the product(s) recovered after processing. Sufficient similarity of terms and conditions is assured by comparison of the terms and conditions of the Exhibit F Gas Processing Agreements of the Producers and the terms and conditions of the Wahsatch Gathering System Agreement. [Exhibits 21, 26, 82].

190. For all three Taxpayers, as Producers, the Merit Agreement is a reliable source of information, or a comparable, from which the Department could infer and impute a reasonable processing fee which would be paid by an other 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 an in-kind processing fee of 25% of the plant production recovered during each settlement period, and attributable to Merit. [Exhibit 33]. Sufficient similarity in quantity is assured by the fact that the maximum processing fee required (except with regard to sulfur) during 2002, under any known gas processing agreement related to Whitney Canyon, was 25%. Sufficient similarity in quality is assured by the fact the gas processed in the plant is commingled, and the measure of the fee is the product(s) recovered after processing. Sufficient similarity of terms and conditions is assured by comparison of the terms and conditions of the Exhibit F Gas Processing Agreements of the Producers and the terms and conditions of the Merit Agreement. [Exhibits 21, 33].

191. For BP and Anadarko, as Producers, the 1995 Chevron Agreement is a reliable source of information, or a comparable, from which the Department could infer and impute a reasonable processing fee which would be paid by an other 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 an in-kind processing fee of 25% of the plant production recovered during each settlement period, and attributable to the Chevron interests covered by the 1995 Chevron Agreement. [Exhibit 31]. Sufficient similarity in quantity is assured by the fact that the maximum processing fee required (except with regard to sulfur) during 2002, under any known gas processing agreement related to Whitney Canyon, was 25%. Sufficient similarity in quality is assured by the fact the gas processed in the plant is commingled, and the measure of the fee is the product(s) recovered after processing. Sufficient similarity of terms and conditions is assured by comparison of the terms and conditions of the Exhibit F Gas Processing Agreements of BP and Anadarko as Producers and the terms and conditions of the 1995 Chevron Agreement. [Exhibits 21, 31].

Did the Petitioners demonstrate that the Department erred by not applying general appraisal principles when determining the value of Petitioners’ production using the comparable value method?

192. The Department views itself as responsible for determining taxable value by applying Wyoming statutes. [Trans. Vol. III, pp. 511, 529]. In determining the value of Petitioners’ minerals, the Department did not consider itself to be an appraiser, and did not use the guidelines that an appraiser would use. [Trans. Vol. III, pp. 510-511]. The Administrator of the Mineral Tax Division concedes that neither he nor anyone on his staff is a certified appraiser, but adds that he is unaware of any organization that provides such certification for mineral valuation. [Trans. Vol. III, pp. 511, 530, 612]. We note that the Petitioners did not direct our attention to any such organization. [Trans. Vol. I, pp. 155-156]. No witness for any party held himself or herself out to be an appraiser or appraisal expert. The Petitioners did not bring any specific appraisal standards to the attention of the Administrator. [Trans. Vol. III, p. 529].

193. Petitioners direct our attention to a February 1, 1990, Memorandum to Members of the Fiftieth Wyoming Legislature from the Chairman of the Joint Interim Revenue Committee. [Exhibit 80]. In pertinent part, the Memorandum states:

The Committee spent a great deal of time receiving testimony and analyzing various appraisal methods that could be used for valuing WYOMING’S minerals. The Committee felt that the “proportionate profits” method was best suited to the valuation of coal, while the valuation of oil and gas could be developed using any one of the four valuation methods. It is the feeling of the Committee that the methods approved for coal, uranium and oil and gas meet the uniform and equal requirements of the Constitution and also meet professional valuation standards.

[Exhibit 80, p. WC 0668]. We understand BP to argue that the Department must overlay the four statutory methods with professional valuation standards. [Taxpayers’ Proposed Conclusions of Law, ¶180].

194. Setting aside the question of whether Exhibit 80 may be considered legislative history, the Memorandum merely stated that each of the four statutory methods – comparable sales, comparable value, netback, and proportionate profits – satisfied professional valuation standards, and that all four methods were suitable for the valuation of oil and gas. We found nothing in the quoted paragraph, or elsewhere in the Memorandum, to the effect that the four methods required further interpretation in light of professional valuation standards, were subject to modification by professional valuation standards, or the like. If anything, the Memorandum persuaded us that the Joint Interim Revenue Committee intended to have the Department apply any one of the chosen valuation methods without further refinement by reference to professional valuation standards.

Did the Petitioners demonstrate that the values determined by the Department did not reach fair market value?

196. This is the first case involving Whitney Canyon in which the Petitioners have demonstrated that the comparable value method, as applied, yields a processing deduction less than current operating costs and the depreciation associated with processing for the production year at issue. See Whitney Canyon 2000; Whitney Canyon 2001. For Chevron, this difference between the deduction and plant costs does not apply to production under the 1995 Chevron Agreement or production from Carter Creek under the Mutual Back-up Agreement, where Chevron acted only in the capacity of a producer.

197. Estimated plant revenues were less than estimated plant costs for production year 2002 because sale prices dropped precipitously. BP’s average price per million Btu in 2002 was $2.03, compared to $4.40 per million Btu in production year 2001. [Trans. Vol II, p. 225]. Similarly, Anadarko’s average price in 2001 was “approximately $4,” and dropped to “the $2 range” in production year 2002. [Trans. Vol. I, p. 43]. Historical revenue data for Anadarko showed that its gross revenue for production year 2002 was the least since 1996; its 2002 revenue was equal to about 75% of 1999 and 2001 gross revenue; and its 2002 revenue was equal to about 57% of 2000 gross revenue. [Exhibit 103, line entitled “Gross Revenue”]. Historically, prices have been worse; the mid-90's were a low price environment when there were years in which Anadarko’s predecessor received about a dollar per million cubic feet of gas. [Trans. Vol. I, p. 46]. Anadarko’s historical revenue data were consistent with testimony concerning the earlier low price environment. [Exhibit 103, line entitled “Prod/Proc Revenue”].

198. For production year 2002, Petitioners took the position that the proportionate profits method yields fair market value because it is a method authorized by statute. [Trans. Vol. I, pp. 90, 145; see Trans. Vol. V, p. 901]. With nothing more, this position also leads to the conclusion that the comparable value method yields fair market value. However, Petitioners add the principle that the resulting value should produce “a reasonable number that is very close to the other methods.” [Trans. Vol. V, p. 902].

199. Petitioners further state that the taxable value produced by the comparable value method is not reasonable because it does not allow the plant owners to recover plant operating costs and depreciation. [Trans. Vol. I, pp. 71, 146]. Strictly speaking, this is a non sequitur, because the processing deduction is not itself revenue. We take this as an assertion that, in principle, the processing deduction should always exceed actual operating costs, including depreciation.

200. Overall, Petitioners believe that fair market value should not include beneficiation costs past the point of valuation, and should allow a reasonable rate of return on processing. [Trans. Vol. V, pp. 918-919]. In contrast, the Department specifically rejects the premise that the purpose of any of the statutory valuation methods is to find a value for the processing. [Trans. Vol. V, p. 982]. The Department contends that the purpose of every valuation method is to find a value at the point of valuation, which does not necessarily tie to actual processing costs. [Trans. Vol. V, p. 982].

201. Petitioners acknowledge if prices are low enough, the proportionate profits method may yield a taxable value that is less than their plant operating costs and depreciation costs. [Trans. Vol. IV, p. 780, Vol. V, p. 904]. However, the proportionate profits method as reported by Taxpayers yielded a deduction in excess of estimated plant operating costs and plant depreciation in production year 2002. [Exhibit 501]. For the purposes of this case, we will proceed as if this were true, even though the demonstration is not persuasive because Taxpayers reported with an erroneous variant of the proportionate profits method. Supra, ¶31.

202. Like the Petitioners, the Department took the position that comparable value represents fair market value as defined by statute, as does the proportionate profits method. [Trans. Vol. V, pp. 988-989]. Unlike the Petitioners, the Department further argues a policy basis to support comparable value as fair market value. The Department views the comparable value method as market driven. [Trans. Vol. III, p. 499]. The Department believes that a contract negotiated in the marketplace and still in use is a sound indicator of fair market value. [Trans. Vol. V, p. 1004]. When it has such a contract to rely on, the Department is not particularly concerned about actual costs. [Trans. Vol. IV, p. 1001]. The Department also believes the Taxpayers only deserve an opportunity for achieve a return on investment, not a guarantee. [Trans. Vol. V, p. 1003]. The Department points out that in the open market, one does not know what future conditions will be. [Trans. Vol. IV, p. 1004].

203. The Department’s view of the comparable value method is broadly consistent with the letter of the statutory netback method, which relies on a value established by third party processing fees without regard to the components of those third party processing fees. From Chevron’s reporting of taxable value for the 1995 Chevron Agreement, we know that the processing fee used to apply the comparable value and netback methods was the same, i.e., 25%. Supra, ¶32.

204. The C&O Agreement includes specific provisions to protect the plant owners from unprofitable operations. Supra, ¶¶13, 19. Andarko’s representative testified that these provisions allow the plant operator to shut the wells in and demand a higher fee. [Trans. Vol. I, pp. 93, 130]. Miller of BP testified that invocation of the unprofitability clause posed an unacceptable risk to the entire plant operation. [Trans. Vol. II, p. 265]. We infer that even though plant revenues did not equal or exceed plant costs in production year 2002, the plant owners were not prepared to deem the plant operation unprofitable, and did not do so.

205. Anadarko, at least, acknowledges that if there are some years in which the plant owners do not recover their costs, they hope to do so, and more, in other years. [Trans. Vol. I, pp. 130-131]. We find this to be a reasonable perspective for a plant owner.

206. Anadarko prepared a study of valuation results from 1990 through 2002, comparing the results of (1) comparable value, (2) proportionate profits as required by the Board’s decision in Docket No. 96-216, supra, ¶31, and (3) the Petitioners’ variant of proportionate profits against (4) a netback standard. [Trans. Vol. I, pp. 48-49; Exhibits 101, 102, 103]. Among other things, the study purports to show that if the comparable value method had been used since 1990, the cumulative deduction would not have equaled cumulative plant costs. [Trans. Vol. I, p. 71; Exhibit 101]. However, the Department did not use comparable value for Whitney Canyon prior to production year 2000.

207. More generally, Anadarko claims that comparable value is the one method “that seems to be out of whack” when compared to the others. [Trans. Vol. I, p. 72]. As we have already observed, this is not true when the yardstick is the statutory netback method, Wyo. Stat. Ann. §39-14-203(b)(vi)(C), as opposed to Anadarko’s use of operating costs, depreciation, and an assumed return on investment of 10%. [Exhibit 103]. Taking Chevron’s reporting of production under the 1995 Chevron Agreement into account, supra, ¶32, we find that the correct processing deduction under the present statutory netback is 25%, precisely the same as the processing deduction under comparable value.

208. We do not have sufficient information in this record to evaluate Anadarko’s calculations for years before 2002. Without the means to evaluate Anadarko’s calculations for other years, and being mindful of the shortcomings of Anadarko’s calculations for production year 2002, supra, ¶¶90, 91, 104, 110-117, we accord little weight to Anadarko’s calculations for earlier years.

209. Anadarko’s comparisons also ignored a likely future effect. The Whitney Canyon plant is relatively late in its productive life – in the nineteenth of it original twenty years, with six to ten years left. [Trans. Vol. I, pp. 149, 182, Vol. IV, p. 802]. In a plant’s late years, as the remaining un-depreciated asset balance becomes progressively smaller, a constant difference between costs and revenues will yield ever larger implied rates of return, because the difference between costs and revenues is being measured against a progressively smaller investment base. In other words, the same margin of revenue over cost will generate increasing rates of return on investment. We can foresee circumstances under which the 25% comparable value processing allowance exceeds operating costs and depreciation, and provides a handsome implied return on the remaining capital investment. Although we cannot and do not find that the difference between costs and revenues will be constant in future years, we nonetheless find that Anadarko’s backward-looking analysis provides an incomplete picture.

210. Taking these various facts into account, we find that the Petitioners have not demonstrated that the Department’s use of the comparable value method did not reach fair market value. This finding is based on these facts:

2. 2002 was the low revenue year in the three year cycle during which the Department used the comparable value method to determine the value of gas processed at Whitney Canyon;

3. The plant operator and plant owners showed no inclination to invoke the unprofitability provisions of the C&O Agreement and the gas processing agreements;

4. The Department has a sensible rationale for preferring the market-oriented comparable value results;

5. The comparable value method yields the same taxable value as the statutory netback method Chevron used to report production under the 1995 Chevron Agreement; and

6. We could and did consider the foregoing in the context of our estimate of the degree to which plant revenues failed to cover plant operating costs and plant depreciation in production year 2002, supra, ¶¶123, 125, 127, 128, 131-132.

211. Although we find that Petitioners did not demonstrate that the Department’s use of the comparable value method did not reach fair market value, we have nonetheless found that for production year 2002, plant revenues were less than plant cost for at least two Petitioners. We will later consider whether this means that we must conclude as a matter of law that the Department has failed to properly apply the comparable value method. Conclusions of Law (Conclusions) infra, ¶¶307-308.

Did the Petitioners demonstrate that the Department violated prescribed procedures when it determined the value of each Petitioner’s gas production?

212. Beginning in 1990, every three years, the Department has directed all oil and gas taxpayers to report taxable value using the comparable value method. [Exhibits 1, 35, 37, 41]. These three year intervals correspond to the requirements of Wyo. Stat. Ann. §39-14-203(b)(vi) and (viii). Each time, the Department’s directive also addressed reporting using an alternative method if the comparable value method could not be applied. [Exhibits 1, 35, 37, 41]. The Department thereby addressed the statutory requirement that the Department’s selected method was to be used “until changed by mutual agreement between the department and the taxpayer.” Wyo. Stat. Ann. §39-14-203(b)(viii).

213. With the passage of time, the Department has changed its approach to the administration of the comparable value method. In 1992, an Administrator of the Mineral Tax Division issued a formula for determining comparable value. [Exhibit 46]. The approach of that formula was challenged by Amoco and rejected by the Wyoming Supreme Court. Amoco Production Company v. State Board of Equalization, 882 P.2d 866 (Wyo. 1994). The record does not show that the formula in Exhibit 46 was ever successfully used to determine the value of any taxpayer’s oil and gas production, nor does the record show that the formula was ever adopted by rule making.

214. For production years 1995 and 1996, the Department had a stated policy for allowing taxpayers to report using the proportionate profits method. On November 30, 1995, the Department issued a Memorandum to all oil and gas producers, entitled “Valuation of Gas for 1995 Production year/Severance and Ad Valorem Tax – Non Arms-Length Transactions.” [Exhibit 41]. The Memorandum referred to the Department’s choice of the comparable value method for production years 1991-1993, and 1994-1996. [Exhibit 41, p. 1]. For taxpayers who attested to the fact that no comparable values existed for their production, the Department authorized the use of the proportionate profits method. [Exhibit 41, p. 1]. A letter to Chevron dated January 31, 1996, underscored the condition that the Taxpayer was attesting to the fact that no comparable values existed. [Exhibit 43]. A subsequent letter agreement between the Department and Chevron refers to the Memorandum of November 30, 1995, as “describing how the valuation procedure for the 1995 and 1996 production years would be carried out.” [Exhibit 44].

215. When the Department notified oil and gas producers of its selection of the comparable value method for production years 1997-1999, the Department expressed a similar policy for allowing taxpayers to report using the proportionate profits method. [Exhibit 45]. If the taxpayer attested that no comparable values existed in an “exception letter,” the Department notified the taxpayer that the proportionate profits method was to be used. [Exhibit 45, p. WC0292]. A letter to Chevron dated December 21, 1996, looking forward to valuing production year 1997 as the first year of a three year valuation cycle, underscored the condition that the Taxpayer was attesting to the fact that no comparable values existed. [Exhibit 46].

216. When the Department notified oil and gas producers of its selection of the comparable value method for production years 2000-2002, it did not reiterate the attestation/exception letter policy that had been in place for the preceding years. [Exhibit 1]. Instead, the Department’s revised policy was as follows:

In the event the taxpayer has made a determination that a representative Comparable Value does not exist for a specific mineral property the taxpayer shall notify the Department in writing by October 30, 1999. This notification shall include specific justification for that determination. It shall also include the identification, with statutory citation, of the method that the taxpayer proposes to use. The department will respond in writing to the taxpayer on or before December 15, 1999 stating acceptance or rejection of the requested method.

217. The tax representatives for BP and Chevron believed that the Memorandum of November 30, 1995, governed reporting beyond production year 1996. [Trans. Vol. IV, p. 732, Vol. IV, pp. 833-834]. For example, Chevron’s tax representative complained that the Department never notified them that the November 30, 1995, Memorandum had been revoked. [Trans. Vol. IV, p. 834]. We find that Taxpayers’ characterization of the 1995 Memorandum as a policy of indefinite longevity is not supported by the Memorandum itself, by contemporary documents, or by witnesses from the Department. We note, for example, that the policy expressed in the November 30, 1995, Memorandum was never adopted by rule making. The Department’s policy for each separate three-year cycle of valuation method was adequately expressed in contemporaneous documents. We find that the Petitioners’ various complaints to the contrary are groundless.

218. In a similar vein, the Petitioners direct our attention to the fact that audits of production years 1999 and earlier were directed to the Taxpayers’ actual costs, an entirely appropriate focus in view of the valuation methods employed for those audited years. [Taxpayers’ Proposed Findings of Fact, ¶¶129-130]. These audits have no discernible bearing on the taxable values determined for production year 2002.

219. Petitioners ask that we view the actions of the Department over the decade preceding production year 2001, and find that the Department’s use of comparable value was an abrupt departure from established policy, and the product of mercurial positions and idiosyncratic definitions. [Taxpayers’ Proposed Conclusions of Law, ¶¶ 163, 230, 231]. We find no reason to condemn the actions of the Department. To the contrary, we will conclude that the Department’s emerging conviction that sources of comparable value existed for Whitney Canyon, supra, ¶¶23-29, implied a constitutional obligation on the Department to apply the comparable value method. Conclusions, infra, ¶331.

Did the Petitioners demonstrate that there were other taxpayers similarly situated to themselves who were allowed to report taxable value using the proportionate profits method?

220. Petitioners base one or more of their constitutional claims on the premise that they are similarly situated to other mineral taxpayers who (1) sent their gas to processing plants prior to sale, and (2) requested and were granted the right to report on a proportionate profits basis, as an exception to the comparable value method. In production year 2002, the only taxpayers who sought to use the proportionate profits were Petitioners, Burlington Resources, and Marathon. [Trans. Vol. III, pp. 506-507]. Chevron views these taxpayers as a class of large sour gas processors. [Trans. Vol. IV, pp. 916-917].

221. The Taxpayers stated five points of similarity between and among these mineral taxpayers without specific references to the record:

(1) They were producers of production that was processed at plants in which they owned an interest. Throughout the history of Supreme Court and Board litigation, entities in that position have been referred to as “producer-processors;”

(4) The C&O Agreements provided that one of the producers would be chosen as the “Operator” of the plant; and

(5) Any producer who was not an Operator, could audit the operations of the plant.

[Taxpayers’ Proposed Conclusions of Law, ¶244]. The Petitioners have not carried their burden of demonstrating these five points, for at least three reasons.

222. First, Petitioners did not call witnesses with first hand knowledge of the other plants and the operations of those plants, or of the revenues, costs, and tax reporting of producers serviced by the other plants. The Department has made direct enquiry about the contracts and operations of the Marathon and Burlington Resources plants. [E.g., Trans. Vol. III, pp. 552, 561-562, 580]. The Department has concluded that there are no comparables for the Marathon and Burlington Resources plants, and that the comparable value method cannot be applied. [Trans. Vol. III, pp. 551, 609-610].

223. Second, Petitioners’ points of similarity highlighted potential differences more than they established actual similarities. Petitioners relied heavily on cross-examination of Administrator Bolles to establish similarities, but the principal points of Bolles testimony tended to contradict Petitioners’ second and third points:

At the Garland and Oregon Basin properties, gas from different formations is produced from the same well bore, so there are separate streams of gas of differing composition [Trans. Vol. III, p. 561];

Marathon’s Garland facility did not process any third party gas [Trans. Vol. III, p. 558], although some sweet gas from the Garland unit was processed at a plant known as Big Horn [Trans. Vol. III, p. 560];

At the Oregon Basin plant, the plant owners do not charge a fee for processing gas, but simply their proportionate share of plant costs [Trans. Vol. III, pp. 565-566];

Marathon’s Oregon Basin plant did not process any third party gas [Trans. Vol. III, p. 572];

At Lost Cabin, owners bear a proportionate share of costs, subject to a specific charge if an owner does not send its proportionate share of gas to the plant. [Trans. Vol. III, pp. 584-585].

224. Although Petitioners directed our attention to numerous similarities between the Whitney Canyon C&O Agreement and the operating agreements of the other facilities [Exhibits 74, 75, 77, 78; Taxpayers’ Confidential Proposed Findings of Fact, ¶20], they did not persuade us that they presented a complete and accurate comparison of Whitney Canyon with the Marathon and Burlington Resources plants. The fragmented picture that Petitioners presented did not carry their burden of establishing that other gas processing plants were similar.

225. Third, the premise of the Petitioners’ fourth and fifth points is incorrect. We find that the parties to the Whitney Canyon C&O Agreement are plant owners, and that Petitioners are only producers with respect to the processing agreement which is Exhibit F to the C&O Agreement. [Exhibit 21]. BP is Operator of the Whitney Canyon plant by virtue of its position as a plant owner, not as a producer. [Exhibit 21]. Similarly, any right to audit the Operator is the right of a plant owner. [Exhibit 21, Section 16.2]. A producer may only examine the Operator’s records with respect to product account. [Exhibit 21, attached Exhibit F, Section 14]. All this being said, it is not clear why Petitioners selected these two features of the C&O Agreement among the many that were discussed in the record.

226. We find Petitioners’ approach to similarity to be unpersuasive for other factual reasons. Bidwell of BP (not designated or qualified as an expert) opined that the Lost Cabin and LaBarge plants could both process Whitney Canyon gas. [Trans. Vol. II, pp. 367-368]. However, he acknowledges that using the LaBarge Plant to process Whitney Canyon gas “would be like hitting a fly with a bazooka, their plant’s so big” [Trans. Vol. II, pp. 383-384], and it would make no common sense to do so. [Trans. Vol. II, p. 368]. Bidwell acknowledged that the Lost Cabin gas is sixteen per cent carbon dioxide, compared to Whitney Canyon’s five per cent; that the Lost Cabin plant has one train more than Whitney Canyon and a larger volumetric operating capacity; and that he has no knowledge of Lost Cabin cost figures. [Trans. Vol. II, pp. 368-369]. Lost Cabin gas is also hotter than Whitney Canyon gas. [Trans. Vol. III, p. 586].

227. Chevron introduced a one-page letter for the purpose of documenting the similarity of the Lost Cabin Plant. Anthony Fasone, identified as Senior Advisor, Royalty Compliance, sent the letter to Chevron’s tax representative. [Exhibit 205]. Mr. Fasone handles taxes for the Lost Cabin plant. [Trans. Vol. V, p. 880]. The letter is dated August 12, 2004, and is on Burlington Resources letterhead. [Exhibit 205]. No Petitioner listed or called Mr. Fasone as a witness.

228. The Fasone letter states unaudited confidential figures for 2002, on the following subjects: Direct Cost ratio, calculated with and without including production taxes and royalties as direct costs of producing; Total Plant Expenses and Total Transportation Expenses; Total Field Expenses, calculated with and without including production taxes and royalties as direct costs of producing; Gross Inlet Volume per day; Total Processing and Transportation Deduction, calculated with and without including production taxes and royalties as direct costs of producing; and Deduction percentage, calculated with and without including production taxes and royalties as direct costs of producing. [Exhibit 205]. The figure for the Deduction percentage, calculated with production taxes and royalties as direct costs of producing, was publicly disclosed as 52.7%. [Trans. Vol. V, p. 915]. Chevron points out that this deduction is twice that allowed for Whitney Canyon production under the comparable value method. [Trans. Vol. V, pp. 915-916].

229. However, the Fasone letter discloses nothing about accounting policies with regard to such items as gathering costs or depreciation policies. [Exhibit 205; Trans. Vol. V, pp. 896-898]. The letter does not describe the operations of the Lost Cabin Plant, or its age or gas stream. [Exhibit 205]. The summary cost information is not supplemented by information regarding an un-depreciated asset balance, return on investment, or any detailed cost information that might enable us to evaluate whether its cost structure truly resembles that of Whitney Canyon, or other plants. All of the aforementioned information has proven significant for our understanding of the merits of Petitioners’ case. The comparison is also complicated by a turnaround situation that substantially affected costs at Lost Cabin. [Trans. Vol. V, pp. 879-880]. The letter is inadequate to support a claim that Lost Cabin expenses are similar to those of Whitney Canyon. Petitioners failed to provide enough information to show that the expenses of other plants were similar, and failed to carry their burden of demonstrating that the other plants are similar in any way other than being gas processing plants.

230. The record is uncertain as to what production, processed through the Marathon and Burlington Resources plants, has been audited for 2000 and after. [Trans. Vol. III, pp. 567, 579]. Audits to date have not caused the Department to change its views about use of the proportionate profits method because comparable value cannot be used. [E.g., Trans. Vol. III, p. 580]. The Department nonetheless would reconsider its position if presented with new information that demonstrated the comparable value method could be applied to Burlington Resources or Marathon. [Trans. Vol. III, pp. 609-610].

231. Any portion of the Conclusions of Law: Principles of Law or the Conclusions of Law: Application of Principles of Law set forth below which includes a finding of fact, may also be considered a Finding of Fact, and therefore is incorporated herein by reference.

232. 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. Further, “[a]ll taxation shall be equal and uniform within each class of property. The legislature shall prescribe such regulations as shall secure a just valuation for taxation of all property, real and personal.” Wyo. Const. art. 15, § 11(d).

233. For oil and gas, the “‘[v]alue of the gross product’ means fair market value as prescribed by W. S. 39-14-203(b) less any deductions and exemption allowed by Wyoming law or rules.’” Wyo. Stat. Ann. §39-14-201(a)(xxix).

234. The fair market value for natural gas must be determined “after the production process is completed.” Wyo. Stat. Ann. §39-14-203(b)(ii). Expenses “incurred by the producer prior to the point of valuation are not deductible in determining the fair market value of the mineral.” Wyo. Stat. Ann. §39-14-203(b)(ii).

235. “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.” Wyo. Stat. Ann. §39-14-203(b)(iv). “When no dehydration is performed, other than within a processing facility, the production process is completed at the inlet of the initial transportation related compressor, custody transfer meter or processing facility, whichever occurs first.” Wyo. Stat. Ann. §39-14-203(b)(iv).

236. If the producer does not sell its natural gas prior to the point of valuation “by a bona fide arms-length sale,” the Department must identify the method it intends to apply to determine fair market value, and “notify the taxpayer of that method on or before September 1 of the year preceding the year for which the method shall be employed.” Wyo. Stat. Ann. §39-14-203(b)(vi).

237. If the Department determines fair market value using one of the four methods found in Wyo. Stat. Ann. §39-14-203(b)(vi), it must use the same method “for three years including the year in which it is first applied or until changed by mutual agreement between the department and the taxpayer.” Wyo. Stat. Ann. §39-14-203(b)(vi).

238. The Department may unilaterally employ only one of four methods to determine fair market value of natural gas not sold prior to the point of valuation. Wyo. Stat. Ann. §39-14-203(b)(vi). All four methods have been discussed in the record:

(A) Comparable sales – The fair market value is the representative arms-length market price for minerals of like quality and quantity used or sold at the point of valuation provided in paragraphs (iii) and (iv) of this subsection taking into consideration the location, terms and conditions under which the minerals are being used or sold;

(B) Comparable value – The fair 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;

(C) Netback – The fair market value is the sales price minus expenses incurred by the producer for transporting produced minerals to the point of sale and third party processing fees. The netback method shall not be utilized in determining the value of natural gas which is processed by the producer of the natural gas;

(I) The total amount received from the sale of the minerals minus exempt royalties, nonexempt royalties and production taxes times the quotient of the direct cost of producing the minerals divided by the direct cost of producing, processing and transporting the minerals; plus

Wyo. Stat. Ann. §39-14-203(b)(vi). The Legislature prescribed these methods in 1990. 1990 Wyo. Sess. Laws, Ch. 54.

239. “[T]he reasonableness of the comparable value methodology is tested by whether there exist reliable, available information within the ‘market’ of natural gas processing fees paid by others (i.e., the ‘known’), which can be used to reasonably infer or estimate a just and fair processing fee (the ‘unknown’) that would have been paid by Petitioner had it been in a ‘third party’ producer position vis-à-vis the processing plant.” Appeal of Amoco Production Company, SBOE Docket 91-174, 1992 WL 126533 (Wyo. St. Bd. Eq. 1992); quoted in Amoco Production Company v. State Board of Equalization, 882 P.2d 866, 870 (Wyo. 1994); Whitney Canyon 2000, ¶134.

240. General appraisal principles must be applied sparingly, if at all, in the context of Wyo. Stat. Ann. §39-14-203(b)(vi) and the specific methods the legislature has chosen to define fair market value. Whitney Canyon 2000, ¶¶173-182.

241. The Department has not issued rules interpreting the comparable value, netback, or proportionate profits methods. However, rule making is not required “so long as statutory and constitutional rights to protest and contest are afforded the taxpayer.” Pathfinder Mines v. State Board of Equalization, 766 P.2d 531, 535 (Wyo. 1988); Amoco Production Company v. Wyoming State Board of Equalization, 899 P.2d 855, 860 (Wyo. 1995).

242. The Board previously interpreted the words and phrases employed in the definition of the comparable value method. Whitney Canyon 2000. The words “other parties” mean simply persons or groups distinct from the individual taxpayer. Whitney Canyon 2000, ¶127. The words are unambiguous. Whitney Canyon 2000, ¶128.

243. 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 applies 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 taxpayer had it been in the position of a third party producer requiring the services of a gas processing plant. Whitney Canyon 2000, ¶¶130-135.

244. The phrase “taking into consideration the quality, terms and conditions under which the minerals are being processed or transported” is likewise a test. Under this test, the Department must reasonably assure itself of the reliability of any comparison upon which it bases inferences regarding processing fees. The Department must consider at least the quality of the minerals, and the terms and conditions under which the minerals are being processed. Whitney Canyon 2000, ¶140.

245. The Board previously interpreted a key phrase employed in the proportionate profits method. “Direct cost of producing the minerals” includes production taxes, and includes royalties. In the Matter of the Appeal of Marathon Oil Co., Docket No. 2004-08, 2005 WL 794788 (Wyo. St. Bd. of Eq. 2005); In the Matter of the Appeal of BP America Production Co., Docket No. 2003-114, 2005 WL 676580 (Wyo. St. Bd. of Eq. 2005); In the Matter of the Appeal of BP America Production Co., Docket No. 2003-102, 2005 WL 558991 (Wyo. St. Bd. of Eq. 2005); In the Matter of the Appeals of Chevron U.S.A., Inc., Docket Nos. 2002-50, et al., 2004 WL 1294512 (Wyo. St. Bd. of Eq. 2004); In the Matter of the Appeal of Burlington Resources Oil & Gas Co., Docket No. 2002-49, In the Matter of the Appeals of Louisiana Land & Exploration Co., Docket Nos. 2002-123 & 2003-14, 2004 WL 1174649 (Wyo. St. Bd. of Eq. 2004); In the Matter of the Appeal of ME Petroleum Company, Docket No. 2002-52, 2003 WL 22814612 (Wyo. St. Bd. of Eq. 2003); In the Matter of the Appeal of Fremont County, Docket No. 2000-203, 2003 WL 21774604 (Wyo. St. Bd. of Eq. 2003).

246. The Wyoming Supreme Court recently set out the process used to value mineral production:

The process of “valuing” mineral production for tax purposes is lengthy, involving these steps:

1. The taxpayer files monthly severance tax returns. Wyo. Stat. Ann. §39-14-207(a)(v)(LexisNexis 2001).

2. The taxpayer files an ad valorem tax return by February 25 in the year following production, and certifies its accuracy under oath. Wyo. Stat. Ann. §39-14-207(a)(i) (LexisNexis 2001).

3. The Department of Revenue values the production at its fair market value based on the taxpayer’s ad valorem return. Wyo. Stat. Ann. §39-14-202(a)(ii) (LexisNexis 2001).

4. The Department of Revenue then certifies the valuation to the county assessor of the county the minerals were produced in to be entered on the assessment rolls of the county. Wyo. Stat. Ann. §39-14-202(a)(ii) (LexisNexis 2001).

5. The taxpayer then has one year to file an amended ad valorem return requesting a refund. Wyo. Stat. Ann. §39-14-209(c)(i) (LexisNexis 2001).

6. The Department of Audit has five years from the date the return is filed to begin an audit, and must complete the audit within two years. Wyo. Stat. Ann. §39-14-208(b)(iii), (v)(D), (vii) (LexisNexis 2001).

7. Any assessment resulting from the audit must be issued within one year after the audit is complete. Wyo. Stat. Ann. §39-14-208(b)(v)(E) (LexisNexis 2001).

Board of County Commissioners of Sublette County v. Exxon Mobil Corporation, 2002 WY 151, ¶11, 55 P.3d 714 (Wyo. 2002). (The period for commencement of audits was shortened, effective January 1, 2003.)

247. A taxpayer “aggrieved by any final administrative decision of the Department may appeal to the state board of equalization.” Wyo. Stat. Ann. §39-14-209(b)(i),(vi). Oil and gas taxpayers are entitled to this remedy:

Following [the Department’s] determination of the fair market value of... natural gas production the department shall notify the taxpayer by mail of the assessed value. The person assessed may file written objections to the assessment with the state board of equalization within thirty (30) days of the date of postmark and appear before the board at a time specified by the board...

Wyo. Stat. Ann. §39-14-209(b)(iv). This provision is found in Title 39, Chapter 14, of the Wyoming Statutes, pertaining to Mine Products Taxes on Oil and Gas.

248. Wyoming Statute Annotated §39-14-209(b) does not establish any specific standard to guide the Board’s review. In the absence of specific standards set by statute or rule, the Board must judge the Department’s valuation by the general standard that the valuation must be in accordance with constitutional and statutory requirements for valuing state-assessed property. Amoco Production Company v. Department of Revenue et al, 2004 WY 89, ¶¶7-8, 94 P.3d 430; Wyo. Stat. Ann. §39-14-209(b)(vi); Whitney Canyon 2001, ¶¶300-302. In doing so, the Board must take into account “the rules, regulations, orders and instructions prescribed by the department.” Wyo. Stat. Ann. §39-11-102.1(c)(iv); Whitney Canyon 2001, ¶302. The Board must also consider the case in the context of the Board Rule governing the burdens of going forward and of persuasion. Rules, Wyoming State Board of Equalization, Chapter 2, §20; Whitney Canyon 2001, ¶302.

249. From Title 39, Chapter 13 of the Wyoming Statutes, one subsection addresses ad valorem tax appeals:

Following the determination of the fair market value of property the department shall notify the taxpayer by mail of the assessed value. The person assessed may file written objections to the assessment with the [the state board of equalization] within thirty (30) days of the date of the postmark and appear before the board at a time specified by the board. The person assessed shall also file a copy of the written objections with the county treasurer of the county in which the property is located, who shall notify the county assessor and the board of county commissioners, with an estimate of the tax amount under appeal based upon the previous year’s tax levy.

250. The Board shall “review final decisions of the department [of revenue] upon application of any interested person adversely affected...under the contested case procedures of the Wyoming Administrative Procedure Act....In addition, the board shall:

(iv) Decide all questions that may arise with reference to the construction of any statute affecting the assessment, levy and collection of taxes, in accordance with the rules, regulations, orders and instructions prescribed by the department:

(viii) Hold hearings after due notice in the manner and form prescribed by the Wyoming Administrative Procedure Act and its own rules and regulation of practice and procedure...

251. Among other requirements for contested case procedures, the Wyoming Administrative Procedure Act states, “[o]pportunity shall be afforded all parties to respond and present evidence and argument on all issues involved.” Wyo. Stat. Ann. §16-3-107(j).

252. The Board may adjudicate a dispute between a taxpayer and the Department only by “approving the determination of the Department, or by disapproving the determination and remanding the matter to the Department.” Amoco Production Company v. Wyoming State Board of Equalization, 12 P.3d 668, 674 (Wyo. 2000).

253. The Supreme Court recently summarized the procedure the Board must follow when an oil and gas taxpayer challenges the fair market value determined by the Department of Revenue:

The Department’s valuations for state-assessed property are presumed valid, accurate, and correct. Chicago, Burlington & Quincy R.R. Co. v. Bruch, 400 P.2d 494, 498-99 (Wyo. 1965). This presumption can only be overcome by credible evidence to the contrary. Id. 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. Id.

The petitioner has the initial burden to present sufficient credible evidence to over come the presumption, and a mere difference of opinion as to value is not sufficient. Teton Valley Ranch v. State Board of Equalization, 735 P.2d 107, 113 (Wyo. 1987); Chicago, Burlington & Quincy R.R. Co., 400 P.2d 499. If the petitioner successfully overcomes the presumption, then the Board is required to equally weigh the evidence of all parties and measure it against the appropriate burden of proof. Basin [Electric Power Coop. Inc. v. Dep’t of Revenue, 970 P.2d 841,] at 851 [(Wyo. 1998)]. Once the presumption is successfully overcome, the burden of going forward shifts to the Department to defend its valuation. Id. The petitioner, however, by challenging the valuation, bears the ultimate burden of persuasion to prove by a preponderance of the evidence that the valuation was not derived in accordance with the required constitutional and statutory requirements for valuing state-assessed property. Id.

Amoco Production Company v. Department of Revenue et al, 2004 WY 89, ¶¶7-8, 94 P.3d 430; accord, Airtouch Communications, Inc. v. Department of Revenue, State of Wyoming, 2003 WY 114, ¶12, 76 P.3d 342, ¶12 (2003); Colorado Interstate Gas Company v. Wyoming Department of Revenue, 2001 WY 34, ¶¶9-11, 20 P.3d 528, ¶¶9-11. The presumption that the Department correctly performed the assessment rests in part on the complex nature of taxation. Airtouch Communications, Inc., 2003 WY 114, ¶13, 76 P.3d 342, ¶13 (2003).

254. The Board’s Rules describe a petitioner’s burden of going forward, and its burden of persuasion:

Except as specifically provided by law or in this section, 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....

255. The initial step in arriving at a correct interpretation of a statute is an enquiry respecting the ordinary and obvious meaning of the words employed according to their arrangement and connection. A statute must be construed as a whole in order to ascertain its intent and general purpose and also the meaning of each part. We give effect to every word, clause and sentence and construe all components of a statute in pari materia. Parker Land & Cattle Company v. Wyoming Game and Fish Commission, 845 P.2d 1040, 1042 (Wyo. 1993).

256. “Affidavits by legislators or other persons involved in the enactment of a statute are not a proper source of legislative history.” Independent Producers Marketing Corp. v. Cobb, 721 P.2d 1106, 1108 (Wyo. 1986).

257. “A specific provision in a statute controls over an inconsistent general provision pertaining to the same subject.” Thunder Basin Land, Livestock & Investment Co. v. County of Laramie County, 5 P.3d 774, 782 (Wyo. 2000).

258. “No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.” U. S. Const. amend. XIV, § 1, second sentence.

259. “No person shall be deprived of life, liberty or property without due process of law.” Wyo. Const. art. 1, §6.

260. “All laws of a general nature shall have a uniform operation.” Wyo. Const. art. 1, §34. (Petitioners misquote Article 1, §34 in their proposed conclusions of law. [Taxpayers’ Proposed Conclusions of Law, ¶267].)

261. “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).

262. A valuation method may yield a deduction so low that the valuation method is constitutionally impermissible. If:

an artificially low price were utilized for purposes of taxation, the result would be a lower tax for operators [with the excessive deduction] than that paid by other operators. That lack of uniformity would be unacceptable because ‘the Wyoming Constitution mandates that all [minerals] shall be uniformly taxed on the value of their gross product.’ Amax Coal West, Inc., 896 P.2d at 1332.

Wyodak Resources Development Corporation v. Wyoming Department of Revenue, 2002 WY 181, ¶34, 60 P.3d 129, 142 (Wyo. 2002).

263. “Many types of property are included within each of the three constitutional classes of property....For example, it has long been recognized that, even though mineral products are one class of property, different valuation methods should be applied to different types of minerals. Oil is not valued by using the same method as is used in valuing coal or uranium. See, e.g., Pathfinder Mines v. State Board of Equalization, 766 P.2d 531 (Wyo. 1988) (recognizing that uranium is valued by using a different method than is used in valuing other mineral products).” Amoco Production Company v. Wyoming State Board of Equalization, 899 P.2d 855, 860 (Wyo. 1995).

264. “Uniformity of assessment requires only that the method of appraisal be consistently applied....It is an intrinsic fact in mineral valuation that differences in values result from the application of an appraisal method.” In re Monolith Portland Midwest Company, Inc., 574 P.2d 757, 761 (Wyo. 1978).

265. Procedural due process is satisfied “if a person is afforded adequate notice and an opportunity to be heard at a meaningful time and in a meaningful manner.” Robbins v. South Cheyenne Water and Sewage Dist., 792 P.2d 1380, 1385 (Wyo. 1990)(citing Higgins v. State ex rel. Workers’s Compensation Div., 739 P.2d 129 (Wyo. 1987), cert. den. 484 U. S. 988 (1987).

266. Collateral estoppel and res judicata are generally stated, and distinguished, as follows:

The doctrines of res judicata and collateral estoppel incorporate “‘a universal precept of common-law jurisprudence * * *”’ that a right, question or fact put in issue, and directly determined by a court of competent jurisdiction, cannot be disputed in a subsequent suit by the same parties or their privies....While the interests of finality served by this doctrine are the same, this court has carefully distinguished between the two:

[A]lthough many cases speak of res judicata in the administrative context, they actually apply collateral estoppel. * * * Collateral estoppel...bars relitigation of previously litigated issues. * * * Res judicata on the other hand bars relitigation of previously litigated claims or causes of action.

Tenorio v. State ex rel. Wyoming Workers’ Compensation Division, 931 P. 2d 234, 238 (Wyo. 1997)(emphasis in original).

Generally, four factors are considered when determining application of collateral estoppel: (1) whether the issue decided in the prior adjudication was identical to the issue presented in the present action; (2) whether the prior adjudication resulted in a judgment on the merits; (3) whether the party against whom collateral estoppel was asserted was a party or in privity with a party to the prior adjudication; and (4) whether the party against whom collateral estoppel is asserted had a full and fair opportunity to litigate the issue in a prior proceeding.

Tenorio v. State ex rel. Wyoming Workers’ Compensation Division, 931 P.2d 234, 238-239 (Wyo. 1997).

268. Res judicata bars relitigation of previously litigated claims. Tenorio, 931 P.2d at 238. Res judicata applies if: (1) the parties were identical; (2) the subject matter was identical; (3) the issues were the same and related to the subject matter; and (4) the capacities of the persons were identical in reference to the subject matter and the issues between them. Livingston v. Vanderdiet, 861 P.2d 549, 551-552 (Wyo. 1993).

269. “Judicial estoppel is a doctrine which precludes a party from asserting inconsistent positions in different judicial proceedings. Under this doctrine, a party who by his pleadings, statements, and contentions, under oath, has assumed a particular position in a judicial proceeding is estopped to assume an inconsistent position in a subsequent action.” Ottema v. State ex. rel. Workers’ Compensation Division, 968 P.2d 41, 45 (Wyo.1998). “The principle is that if you prevail in Suit #1 by representing that A is true, you are stuck with A in all later litigation growing out of the same events.” Eagle Foundation, Inc., v. Dole, 813 F.2d 798, 810 (7^th Cir. 1987). However, a party is not bound to maintain a position it unsuccessfully maintained in the original claim. Matter of Cassidy, 892 F.2d 637, 641 (7^th Cir. 1990); 74 Am. Jur. 2d Estoppel and Waiver §73, p. 498.

Did the Department correctly apply the comparable value method to determine the value of each Petitioner’s production?

270. Chevron brought this appeal under Wyo. Stat. Ann. §39-14-209(b)(iv) and Wyo. Stat. Ann. §39-13-102(n); BP and Anadarko appealed under Wyo. Stat. Ann. §39-14-209(b)(iv). [Notices of Appeal]. The Petitioners thereby challenge the Department’s determination of value of their gas production, a value that is used to levy state severance taxes and to levy county ad valorem taxes. [Notices of Appeal]. As a practical matter, a successful challenge to the valuation used for severance tax purposes also affects ad valorem taxes.

271. Wyoming Statute Annotated §39-14-209(b) does not establish any specific standard to guide the Board’s review. The Board must judge the Department’s valuation by the general standard that the valuation must be in accordance with constitutional and statutory requirements for valuing state-assessed property. Whitney Canyon 2001, ¶¶300-302. In doing so, the Board must take into account “the rules, regulations, orders and instructions prescribed by the department,” and its own Rule governing the burdens of going forward and of persuasion. Whitney Canyon 2001, ¶302.

272. As we did for prior production years, we begin with the phrase “other parties.” Whitney Canyon 2000, ¶¶127-128; Whitney Canyon 2001, ¶303. We previously concluded that this phrase means persons or groups distinct from the individual taxpayer, and is unambiguous. Whitney Canyon 2000, ¶¶127-128. The Taxpayers have offered no new arguments that cause us to reconsider this conclusion.

273. Petitioners have presented evidence to support their view that the plant owners were not a partnership or business entity of any specific nature. Findings of Fact (Findings) ¶146. The Department does not disagree. Findings, ¶147. Instead, the Department was simply satisfied that the plant owners were separate and distinct from each producer. Findings, ¶147. We take the Department’s position as the starting point for our analysis.

274. We conclude the Plant Owners collectively are an “other party” with respect to each of the individual Producers. Each of the Taxpayers is before us in its capacity as a producer. The distinction between an individual producer and a multiparty processor is central to the processing fee that the plant owners charge and collect under Exhibit F to the C&O Agreement, the Wahsatch Gathering System Agreement, the Merit Agreement, and the 1995 Chevron Agreement. The plant owners are not distinct just from the individual producers who are party of Exhibit F to the C&O Agreement. The multiparty plant ownership established by the C&O Agreement is central to the structure of all contract relationships by which the Whitney Canyon plant processes natural gas for producers. The plant owners, acting through the plant operator, enforce the collection of the processing fee and rigorously account for its disposition. The disposition of the fee has a substantial redistributive effect. Findings, ¶¶71-98.

275. Chevron’s longstanding practice of using the netback method to report production under the 1995 Chevron Agreement reinforces our conclusion that the plant owners are an “other party” with respect to each producer. Findings, ¶32. No Petitioner objected to this method of reporting. No Petitioner objected to Chevron’s reliance on the 25% processing fee as the measure of its processing allowance under the 1995 Chevron Agreement. Chevron could only report using the statutory netback method if it met the statutory requirement that has been in place since 1990:

276. To report using the statutory netback method, Chevron deducted expenses it incurred, as a producer, for “third party processing fees.” Chevron treated the plant owners – itself among their number since 1985 – as a third party. If the plant owners are a third party for purposes of the statutory netback method, we conclude that they are other parties as well for purposes of the comparable value method.

277. Chevron’s netback reporting is also significant because the netback method is not available to determine the value of natural gas “which is processed by the producer of the natural gas.” Wyo. Stat. Ann. §39-14-203(b)(vi)(C). By its actions, Chevron conceded that under the 1995 Chevron Agreement, Chevron did not process the natural gas. Chevron’s reporting could only be lawful if the plant owners – Chevron among their number since 1985 – were viewed as distinct from Chevron in its capacity as a producer. Chevron’s netback reporting is consistent with the Department’s view that the plant owners are other parties for purposes of the comparable value method.

278. We conclude that there is no distinction between Chevron in its capacity as a producer under its two different sets of interests. As we have seen, where Chevron reported the two different sets of interests in the same well, it reported a single taxable value. Findings, ¶56. The Chevron that produced gas acquired through its Gulf interests, and the Chevron that produced gas under the 1995 Chevron agreement, are one and the same.

279. Chevron’s netback reporting cannot be squared with the Department’s stated position that the netback method was not available to the Petitioners because they are producer-processors. Findings, ¶45. As we indicated in prior proceedings, the better view is that none of the Petitioners are producer-processors, because the plant owners are the processor and the individual taxpayers are producers. Whitney Canyon 2000, ¶¶155; Whitney Canyon 2001, ¶310. Based on the extensive information developed in this case and the statutory changes enacted in 1990, we conclude that any Board decisions decided under prior statutes are no longer precedent. [See Taxpayers’ Proposed Conclusions of Law, ¶194, footnote 11].

280. In this case, the taxable value determined by the comparable value and netback methods was the same, because processing cost was measured by the same contractual processing fee of 25%. Because two of the four valuation methods reached the same result, we are confident that neither result is an anomaly. In passing we note that the results contradict the view that the Legislature necessarily intended a positive rate of return on investment. The third party processing fee in the statutory netback method is not disaggregated into current operating costs, depreciation, and return on investment, and therefore differs from the pre-1990 netback method. Whitney Canyon 2001, ¶138. Whether the processor’s fee covers its current operating costs and depreciation, and provides a return on investment in a given year is immaterial, because the statutory netback method is only concerned with the fee the producer pays.

281. Under our view of the producer-processor limitation in the statutory netback method, the netback method would not be available where the producer and processor are one and the same, as with Exxon Mobil’s LaBarge facility. Appeal of Sublette County Board of County Commissioners, Docket Nos. 2000-142, et. al., 2004 WL 1174651 (Wy. St. Bd. of Eq. 2004).

282. The Petitioners have presented testimony intended to establish that the processing contracts do not reflect an arms-length relationship between third parties. E.g., Findings, ¶136. From its plain language, the comparable value statute does not require the Department to concern itself with either an arms-length or a third party standard, despite the fact that both phrases are used elsewhere in Wyo. Stat. Ann. §39-14-203(b)(vi). Parker Land & Cattle Company, 845 P.2d at 1042. We conclude that there is no reason to read either an arms-length test or a third party test into the comparable value method.

283. Petitioners lay the rationale for a third party test at the feet of the Board. We concluded long ago that the Department may “reasonably infer or estimate a just and fair processing fee…that would have been paid by Petitioner had it been in a ‘third party’ producer position vis-à-vis the processing plant.” Appeal of Amoco Production Company, 1992 WL 126533 (Wyo. St. Bd. Eq. 1992); quoted in Amoco Production Company, 882 P.2d at 870 (Wyo. 1994); Whitney Canyon 2000, ¶134. Under this principle, the Department must only concern itself with the position of the Petitioner and the fees paid by the producers on which the estimated fee is based, not on whether the Petitioner (as a producer) or comparable producers are in fact third parties with respect to the processing plant. Each of the Petitioners in this case is at least in a third party producer position vis-a-vis the processing plant. Whitney Canyon 2001, ¶315. The more restrictive third party test is confined to the statutory netback method.

284. Questions of third party status aside, the Petitioners remain free to question whether the inferences that the Department drew were sound. They have done so in this case.

285. Petitioners assert, based on the testimony of Rebecca Leo, that the C&O Agreement is “essentially a joint operating agreement.” [Taxpayers’ Proposed Findings of Fact and Conclusions of Law, ¶¶ 142, 143, 196], see Findings, ¶144. From this premise, they note that the Department commonly treats a take-in-kind owner who is party to joint operating agreement as a taxpayer. [Taxpayers’ Proposed Conclusions of Law, ¶196]. Proceeding from this fact, Petitioners would have us conclude that none of them were in the position of a third party producer. [Taxpayers’ Proposed Conclusions of Law, ¶198]. In addition to the reasons we have already given for rejecting this conclusion, we would add (1) each of the Petitioner/producers is indeed being treated as an individual taxpayer, and (2) the plant owners do not pay mineral taxes in their capacity as plant owners – only as producers.

286. Finally, based on a plain reading of the language of the comparable value method, we reject Petitioners’ view that “other parties” means “entities other than the taxpayers or plants in which they have an interest.” [Taxpayers’ Proposed Conclusions of Law, ¶156]. If the legislature had intended the “other parties” standard to include the words “plants in which they have an interest,” or plants owned only in part by the producer, those words would appear in the statute. Those words do not. Perhaps as important, the Whitney Canyon plant processes gas for three producers who were, for all intents and purposes, customers of a merchant plant – Anschutz, Merit, and Chevron under the 1995 Chevron Agreement.

287. 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. Whitney Canyon 2000, ¶¶130-135; Whitney Canyon 2001, ¶319. The Taxpayers disagree with our conclusion regarding this principle, but have made no arguments that would cause us to reconsider our prior ruling.

288. The Taxpayers urge us to conclude that the words “like quantity” are ambiguous. [Taxpayers’ Proposed Conclusions of Law, ¶¶176, 177, 181]. We considered and rejected a similar general argument for preceding years. Whitney Canyon 2000, ¶136; Whitney Canyon 2001, ¶320. In this case, we note further that our conclusion regarding the words “like quantity” takes those words in the context of the complete phrase, “processing fees . . . charged to other parties for minerals of like quantity.” Whitney Canyon 2000, ¶¶131-134. There is no merit in reading the words in isolation.

289. Based upon a 1990 Mineral Taxation Report prepared by the Chairman of the Joint Revenue Interim Committee, the Taxpayers urge us to direct our attention to unspecified professional valuation standards. [Taxpayers’ Proposed Conclusions of Law, ¶¶179-181]. Petitioners contend that reference to professional valuation standards should lead us to the conclusion that the statute is ambiguous. [Taxpayers’ Proposed Conclusions of Law, ¶181]. The 1990 Mineral Taxation Report is not a proper source of legislative history. Independent Producers Marketing Corp., 721 P.2d at 1108 (Wyo. 1986). Even if we accept the guidance of the 1990 Mineral Taxation Report, it merely declared that each of the four statutory valuation methods meets professional valuation standards – nothing more. Findings, ¶¶193-194. Indeed, the 1990 Mineral Taxation Report is entirely consistent with conclusions we have previously reached regarding the applicability of appraisal principles in the context of Wyo. Stat. Ann. §39-14-203(b)(vi). Whitney Canyon 2000, ¶¶173-182. If each of the valuation methods already meet professional valuation standards, there is no reason to shoehorn any of the four valuation methods into an unspecified valuation framework. Likewise, we reject Petitioners’ argument that use of any of the four valuation methods requires specific appraisal expertise on the part of the Department.

290. The Taxpayers otherwise urge us to view the words “like quantity” as a technical term used in the appraisal industry. [Taxpayers’ Proposed Findings of Fact and Conclusions of Law, ¶¶ 8, 178]; Wyo. Stat. Ann. §8-1-103(a)(i). We reject this proposition as a matter of law. Whitney Canyon 2000, ¶¶173-182; Whitney Canyon 2001, ¶319. No expert witnesses were called to establish the proposition as a matter of fact. Findings, ¶195. Petitioners have failed to carry their burden of persuasion on this point.

291. Petitioners premise arguments concerning “like quantity” on material that was not included in the record. [Taxpayers’ Proposed Conclusions of Law, ¶¶173, 175]. We refuse to consider those arguments.

292. The phrase “taking into consideration the quality, terms and conditions under which the minerals are being processed or transported” is a test under which the Department must reasonably assure itself of the reliability of any comparison upon which it bases inferences regarding processing fees. Whitney Canyon 2000, ¶140; Whitney Canyon 2001, ¶319. The Taxpayers disagree with our conclusion regarding this principle, but have made no arguments that would cause us to reconsider our prior ruling.

293. Petitioners urge us to focus on several practical aspects of the service provided to the Wahsatch Gathering System, and conclude that the Department could not have reasonably assured itself of the reliability of the Wahsatch agreement as a source of comparable value. [Taxpayers’ Proposed Conclusions of Law, ¶¶ 182-188]. First, they direct our attention to services not provided to the Wahsatch producer, due to the location at which Wahsatch gas enters the plant. The fact is correct, but Petitioners overstate the conclusion. We found that the Wahsatch Agreement was still a source of comparable value in spite of the location at which Wahsatch gas enters the plant. Findings, ¶¶160-163.

294. Second, we have considered, as a fact issue, whether the reduced service provided the Wahsatch producer precluded a finding of like quality, and found to the contrary. Findings, ¶161.

295. Third, we have considered, as a fact issue, whether curtailments of Wahsatch gas precluded a finding of like quality, and found to the contrary. Findings, ¶¶164-165.

296. Fourth, we have considered, as a fact issue, whether the additional expense associated with transport of Wahsatch gas to the Whitney Canyon plant precluded a finding of like quality, and found to the contrary. Findings, ¶162. Having considered these points, we conclude that the Department reasonably assured itself of the reliability of the Wahsatch gas agreement as a source of information upon which it based inferences regarding processing fees.

297. In the context of the statutory requirement for the Department to take into account the quality, terms and conditions under which the minerals are being processed or transported, the Taxpayers argue – largely by repetition in a variety of contexts – the significance of supposed professional valuation standards; the parties’ expectations in 1982; and the importance of relying on contracts negotiated in 2002 to establish a market based rate. [Taxpayers’ Proposed Conclusions of Law, ¶¶ 184, 188-191]. We considered, and rejected, the factual premises of these arguments, and accordingly reject the related conclusions of law.

298. A high processing priority was more desirable than a low processing priority, but contractual priority had no discernible effect on the processing fee. For production from the Whitney Canyon field, contract priority seemed to have little role in field operation decisions. Findings, ¶165. Similarly, curtailment was undesirable, and did have an effect on processed volumes of the Wahsatch producer in 2002, but vulnerability to curtailments had no discernible effect on the processing fee. Findings, ¶¶42, 164-165.

299. The Taxpayers argue that the Department has failed to consider a large number of pertinent distinctions between and among various gas processing contracts, and hence 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, ¶¶133-191. We conclude the Department has met the requirements of the statute with respect to considering the terms and conditions under which the minerals are being processed. The Taxpayers have failed to carry their burden of persuasion. We likewise conclude that the Department has met the requirements of the statute with respect to considering quality. The Taxpayers have failed to carry their burden of persuasion on that point as well.

300. Under our reading of the plain language of the statute, the Department correctly applied the comparable value method, subtracting an inferred processing fee from a known sales price to reach a value. For BP, the fees charged to other parties include:

302. Chevron is not an “other party” to itself as a producer even though it has two separate gas processing agreements with the Plant Owners. Conclusions, ¶278.

304. We conclude that, with respect to the 25% in-kind processing fee charged under all of the agreements referenced in Conclusions ¶¶300, 301, 303, the Department correctly determined by comparison of processing rates in the context of suitably measured volumes that there was a constant rate applied against any and all volumes processed under the referenced agreements during 2002. Findings, ¶¶183-191. As a further and separate ground for our decision in this regard, we find that the Taxpayers failed to carry their burden of persuasion.

305. We conclude that, in the course of satisfying itself that the inferences being drawn from the agreements referenced above 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. In all instances, the terms and conditions were sufficiently similar to conclude that the comparison was valid. Findings, ¶¶186-191. We conclude that the Department met the requirements of the statute. As a further and separate ground for our decision in this regard, we find that the Taxpayers failed to carry their burden of persuasion.

306. As an independent basis for contesting the Department’s use of the comparable value method, the Taxpayers claim that the 25% processing allowance is invalid because it did not allow plant owners Anadarko and Chevron individually, or the Taxpayers together, a processing deduction sufficient to exceed the costs of processing incurred by the plant owners, without taking into consideration a return of or a return on investment on the processing plant. [Taxpayers’ Proposed Conclusions of Law, ¶¶219, 220]. This claim was supported by the evidence. Findings, ¶¶50-132. The claim is nonetheless groundless as a matter of law.

307. Petitioners argue that the 25% processing fee fails to achieve fair market value because it fails to remove from value all of the value added by processing. The only authority they cite is Chevron U.S.A., Inc. v. State, 918 P.2d 980 (Wyo. 1996). That case involved and audit of production years 1984 through 1989, and therefore cannot directly apply because it rests on a valuation statute that was changed in 1990. The Court overturned a ruling by the State Board of Equalization that “improperly included compression costs, which were not necessary for the production of gas, as taxable production costs.” Chevron U.S.A., Inc., 918 P.2d at 985. In doing so, the Court also noted the definition of “processing” found in the Department’s Rules. Id. at 986. The definition in the Department’s Rules has since been changed to conform, word for word, to the statute. Wyo. Stat. Ann. §39-14-201(a)(xviii); Rules, Wyoming Department of Revenue, Chapter 6, §4b(i). Taking this definition into account, and being mindful of the statutory distinction between production and processing, Wyo. Stat. Ann. §39-14-203(b)(ii)-(iv), we understand the Taxpayers’ argument to be that the four statutory methods of Wyo. Stat. Ann. §39-14-203(b)(vi) must all be read in the specific context of that statutory distinction, and cannot be used if they would have the practical effect of reaching a taxable value that exceeds costs of production.

308. The difficulty with the Taxpayers’ argument is that, under the specific language of the statute, each of the four statutory methods determines fair market value rather than a processing cost. Wyo. Stat. Ann. §39-14-203(b)(vi). We also know that even the proportionate profits method does not always reach a processing allowance that is greater in value than the plant operating costs. Findings, ¶201. If we were to conclude that the distinction between production and processing were paramount, we would face the problem that none of the methods might meet that test in a given year. We believe it makes more sense to view this as a case in which the more specific provisions of Wyo. Stat. Ann. §39-14-203(b)(vi) control the general distinction between production and processing in Wyo. Stat. Ann. §39-14-203(b)(ii)-(iv). Thunder Basin Land, Livestock and Investment Co., 5 P.3d at 782. For this reason, we reject Petitioners’ legal argument. We have already rejected the Petitioners’ claim based on the facts known to us. Findings, ¶210.

309. We conclude that the Petitioners did not correctly apply the proportionate profits method to the extent that they reported taxable value without including production taxes and royalties as direct costs of producing. Findings, ¶31; Conclusions, ¶245. For production year 2002, we note that the Petitioners did not all report and pay their taxes in the same way. Findings, ¶31.

310. The Taxpayers have not disputed the mathematical calculations performed by the Department.

Did the Department violate prescribed requirements by the procedures it used to determine each Petitioner’s production?

311. As in Whitney Canyon 2000, Petitioners introduced evidence of the Department’s efforts, more than ten years ago, to determine comparable value by an entirely different approach. [Exhibit 36]. We previously considered the significance of the litigation surrounding that failed approach, and find neither new evidence or new argument that would cause us to change our prior assessment of Amoco Production Company v. Wyoming State Board of Equalization, 882 P.2d 866 (Wyo. 1994), or this Board’s related opinion, Appeal of Amoco Production Company, SBOE Docket 91-174, 1992 WL 126533 (Wyo. St. Bd. Eq. 1992). We accordingly reaffirm that discussion and its related rulings. Whitney Canyon 2000, ¶¶161-168. In doing so, we generally reject Petitioners’ characterization of those cases. It remains to supplement our prior discussion with a number of specific points.

312. Petitioners argue that if the taxpayer could not participate in the selection of a specific comparable, the Department cannot require the taxpayer to use the comparable value method, citing Amoco Production Company, 882 P.2d at 872. [Taxpayers’ Proposed Conclusions of Law, ¶154]. We reject the argument. Under the method proposed by the Department in 1992, the Department was to select sources of comparable value without disclosing confidential information to the taxpayer; since all of the Department’s sources were to be confidential, the result was to force the taxpayer to defend against an unknown. Id., at 871-872. For production year 2002, the Department relied on sources that were fully disclosed, and the Petitioners have had every “opportunity to ‘respond and present evidence and argument’ on all issues involved.” Id., at 872; Wyo. Stat. Ann. §16-3-107(j).

313. The Petitioners’ demand for a study of third party fees likewise arises from the Department’s failed 1992 approach to comparable value. [Taxpayers’ Proposed Conclusions of Law, ¶¶158-160]. We conclude that no such study is required, beyond the investigation already reflected in the Department’s reasoned basis for applying the comparable value method to Petitioners’ 2002 production. Findings, ¶¶36-49. In this context, we further conclude that Petitioners mistakenly cite Hercules Powder Company v. State Board of Equalization, 208 P.2d 1096, 1112 (Wyo. 1949). This is not a case in which the Department has failed to meet “standards of morality, equity, and fair dealing...” Id. at 1112. Nor is it a case in which the Department has failed to give adequate notice of its policy, or to clarify its position. Findings, ¶23-30. This is simply a case in which the Taxpayers disagree with the Department’s policy, and refused to follow that policy when preparing the reports that Wyoming statutes oblige them to make. Board of County Commissioners of Sublette County, 2002 WY 151, 55 P.3d 174, 719, ¶11.

314. As in preceding years, the Taxpayers criticized the Department’s refusal to pursue rule making to more fully define the comparable value method. [Taxpayers’ Proposed Conclusions of Law, ¶155]. They again rely on a suggestion made by the Court in Amoco Production Company v. State Board of Equalization, 882 P.2d 866, 871 (Wyo. 1994), which the Court itself characterized as being “in the nature of an aside.” This suggestion was made in the context of different facts than those presented in this case. See Whitney Canyon 2000, ¶¶165-166.

315. Rule making is not required “so long as statutory and constitutional rights to protest and contest are afforded the taxpayer.” Pathfinder Mines v. State Board of Equalization, 766 P.2d 531, 535 (Wyo. 1988); Amoco Production Company v. Wyoming State Board of Equalization, 899 P.2d 855, 860 (Wyo. 1995). We have afforded Taxpayers those rights.

316. We have also rejected the factual premises of Taxpayers’ demand for rule making. [Taxpayers’ Proposed Conclusions of Law, ¶166]. On the record made in this case, we found that the Petitioners’ witnesses no longer claimed a lack of understanding about how to report using the comparable value method. Findings, ¶30. In addition, Chevron had no difficulty applying the 25% processing fee to report production under the 1995 Chevron Agreement using the statutory netback method. Findings, ¶32.

317. Petitioners argue that the Department’s Memorandum of November 30, 1995 [Exhibit 41] obligated the Department to accept Petitioners’ attestations of the absence of sources of comparable value, and obligated the Department to authorize use of the proportionate profits method. [Taxpayers’ Proposed Conclusions of Law, ¶155]. We reject this argument for two main reasons. First, we did not find that the Memorandum was either of indefinite duration, or the basis of the Department’s decision to allow reporting under the proportionate profits method after 1996. The Memorandum was supplanted by memoranda memorializing the Department’s selection of method for the cycles beginning in 1997 and 2000. Findings, ¶¶214-216.

318. Second, the Petitioners have not referred to any authority that supports their view of the 1995 Memorandum. The 1995 Memorandum is not a statute; it is not a rule, regulation, or order of the Department. Wyo. Stat. Ann. §39-11-102.1(c)(iv); see Pathfinder Mines, 766 P.2d at 563. At most, the Memorandum was a superceded instruction. Findings, ¶217.

319. More generally, Petitioners ask that we censure the Department for changes in policy since 1992. Petitioners argue that the Department’s policy has been characterized by abrupt departures; by an unreasonable refusal to accept Petitioners’ attestations to the absence of comparables; by inadequate response to the Petitioners’ correspondence; by a failure to provide meaningful guidance; by mercurial positions and interpretations; by idiosyncratic definitions based on new interpretations caused by faulty memory. [Taxpayers’ Proposed Conclusions of Law, ¶163-167, 230-231]. Our findings are contrary to all of these claims. Findings, ¶219.

320. Petitioners make four different constitutional claims. Two claims arise from the Department’s inability to apply the comparable value method to Burlington Resources and Marathon, due to the absence of sources of comparable value. Findings, ¶¶220-230. Two claims arise from the procedures used by the Department to determine Petitioners’ taxable value. Findings, ¶¶212-219; Conclusions, ¶¶311-319.

321. We address Petitioners’ equal protection claim first. Petitioners claim that the Department deprived them of a right to fair and uniform treatment under the Equal Protection Clauses of the United States and Wyoming Constitutions. U. S. Const. amend. XIV, § 1, second sentence; Wyo. Const. art. 1, § 34. The core of this claim is that other similarly situated taxpayers were allowed to use the proportionate profits method, while the Petitioners were not. [Taxpayers’ Proposed Conclusions of Law, ¶¶238, 243-244, 247].

322. The Wyoming Constitution assigns the role of defining full value, or fair market value, to the Legislature. Wyo. Const. art. 15, § 11. The Legislature has considerable constitutional latitude to prescribe the method by which the Department may determine fair market value. Amoco Production Company, 899 P.2d at 860. For the circumstances of this case, the Legislature has done so through Wyo. Stat. Ann. §39-14-203(b)(vi), which authorizes the Department to choose among four specified methods to determine the value of natural gas sold away from the point of valuation.

323. The four statutory methods cannot be used simultaneously to value any producer’s gas; they are mutually exclusive. Whitney Canyon 2000, ¶¶173-182. We agree with Petitioners’ tax representatives that the proportionate profits method, if properly applied, reaches fair market value. Findings, ¶198. However, the same is true of all four methods.

324. At the same time, all four methods cannot be used for all taxpayers. The Legislature forbade the use of the netback method for gas processed by a producer, thereby generally limiting one of the methods that might be available for producers who do not sell their natural gas production “prior to the point of valuation by bona fide arms-length sale.” Wyo. Stat. Ann. §39-14-203(b)(vi). We note in passing that the Petitioners’ tax representatives tend to assume that Wyo. Stat. Ann. §39-14-203(b)(vi) was enacted to address valuation problems associated with large sour gas processing plants [Trans. Vol. V, p. 917], but this assumption is not supported by the language of the statute. The language of the statute is of broader application.

325. The Legislature implicitly recognized that one or more of the methods might not be available to the Department because the information necessary to apply that method was unavailable. In this case, no one disputes that the comparable sales method cannot be applied because there is no information that would enable to Department to do so. Findings, ¶45. The Legislature went further, and recognized that there may be circumstances in which none of the four methods reaches a representative fair market value. For those circumstances, the Legislature authorized the Department and an affected taxpayer to employ a mutually acceptable alternative method. Wyo. Stat. Ann. §39-14-203(b)(vii); see generally Appeal of Sublette County Board of County Commissioners, Docket Nos. 2000-142 et al., May 20, 2004, 2004 WL 1174651 (Wy. St. Bd. of Eq.).

326. The Department has testified that no sources of comparable value were available to determine the value of gas processed for Burlington Resources and Marathon at the Lost Cabin plant and other facilities. Findings, ¶¶222, 230. The Petitioners have not carried their burden to persuade us that the Department was incorrect. Findings, ¶¶220-230. The Department authorized Burlington Resources and Marathon to use the proportionate profits method because it was unable to apply the comparable value method.

327. The Petitioners argue that if sources of comparable value are not available for two taxpayers whose gas must be processed, the Department loses control over the method to be applied to other taxpayers whose gas must be processed. The argument is contrary to law.

328. By statute, the Legislature has given the Department exclusive authority to select a method. The Department’s authority is constrained by a requirement that the method be selected for three-year periods. The taxpayer can only force a change of method by successful appeal during the year when the method is first selected. Wyo. Stat. Ann. §39-14-203(b)(viii).

329. Nothing in the statute vests the taxpayer with the discretion to select a method when one or more of the methods are unavailable due to lack of information. The taxpayer may only select a method when the Department fails to timely notify the taxpayers of the Department’s selection. Wyo. Stat. Ann. §39-14-203(b)(ix). We presume that the Petitioners agree that they do not have such discretion. They request here, as they did in the preceding cases, that we require the Department to accept their proportionate profits reporting by default.

330. Under the Wyoming Constitution, if the Department or this Board were to allow these Taxpayers the right to select the method of their choice, the proportionate profits method, the result would be constitutionally impermissible. They would enjoy a lower tax than other operators subject to the comparable value method, due to an “excessive deduction.” Wyodak Resources Development Corporation, 2002 WY 181, ¶34, 60 P.3d at142. We conclude that the Department’s designated method is the key to determining whether the Department has complied with the Wyoming Constitution, and to determining what other taxpayers are similarly situated to the Petitioners. The factual enquiry must be directed to whether the Department has applied its designated method to every taxpayer for whom the designated method is available.

331. As a corollary, we conclude that Department is constitutionally required to apply the comparable value method to the Petitioners’ production if information is available to do so. We do not start by asking whether other taxpayers who process gas are allowed to use the proportionate profits method. Instead, we start by asking whether the Department has applied its designated method to every taxpayer for whom the method is available.

332. Although the Petitioners have no valid equal protection claim based on the Department’s inability to apply its selected method to another taxpayer, it remains open to the Petitioners to question whether the Department has correctly determined that sources of comparable value information are available for them, just as they have done in this case.

333. We have reached a different conclusion than the Taxpayers about what it means to be similarly situated as a matter of law. We also found that the Petitioners did not demonstrate that the other taxpayers were similarly situated under Petitioners’ own view. Findings, ¶¶220-230.

334. Petitioners also argue that the “Department never articulated any cogent basis for distinguishing between” Petitioners and the other two taxpayers, Burlington Resources and Marathon. [Taxpayers’ Proposed Conclusions of Law, ¶247]. The Petitioners did not demonstrate the truth of this factual allegation. Findings, ¶230. We have, in any event, articulated what we conclude is a cogent basis for the Department’s distinction.

335. Finally, Petitioners object that the Department relies on future audits of Burlington Resources and Marathon to assure that the comparable value method cannot be used to determine the value of their gas. [Taxpayers’ Proposed Conclusions of Law, ¶248]. The Department stated its intention to investigate the existence of sources of comparable value when Burlington Resources and Marathon are audited, and if such sources are found, to require a redetermination of value under the comparable value method. Findings,¶230. The Taxpayers protest that confidential future audit records of other taxpayers will be unavailable to vindicate their present right to uniform treatment.

336. The Taxpayers misunderstand the significance of future audits. The Department’s intention to apply the comparable value method assures us that the Department has done its best to use comparable value to determine the value of production of all taxpayers for which the method is available. This is consistent with what the Department elected to do for all oil and gas taxpayers, including Petitioners. Findings, ¶23.

337. Petitioners claim that the valuation statute, as applied by the Department, violates Article 15, §3, of the Wyoming Constitution, requiring ad valorem taxes on gas to be imposed “in proportion to the value thereof.” Petitioners reason that the results of the comparable value method consistently and dramatically vary from the results of the proportionate profits and netback methods. [Taxpayers’ Proposed Conclusions of Law, ¶222]. Petitioners further argue that Wyo. Stat. Ann. §39-14-203(b)(vi) thereby “vests the Department with complete and arbitrary discretion to pick the result that gives the highest value,” and therefore cannot be said to impose tax in proportion to value. [Taxpayers’ Proposed Conclusions of Law, ¶222]. The argument rests entirely on the language of Article 15, §3, without reference to related constitutional provisions, and without reference to any other authority.

338. We found no credible evidence that the Department selected the comparable value method solely and exclusively because it generated the highest taxable value. Findings, ¶49. We also disagree that the Department’s discretion is unfettered, for reasons stated in our discussion of Petitioners’ equal protection claim. Conclusions, ¶¶322, 325, 328, 331.

339. For their factual predicate, Petitioners rely principally on Anadarko’s comparison of the results of the comparable value, proportionate profits, and netback methods over a twelve year period. [Taxpayers’ Proposed Conclusions of Law, ¶221]. We generally did not accept Anadarko’s calculations. Findings, ¶¶206-209.

340. We specifically found that the statutory netback method yields the same result as the comparable value method under the facts of this case. Findings, ¶203; Conclusions, ¶280. The Anadarko study did not demonstrate the alleged variance between the comparable value and statutory netback methods.

341. We agree that results of the comparable value and proportionate profits methods diverge, but Petitioners have not adequately described the problem. There is also a substantial divergence of results between and among taxpayers who used the proportionate profits method. Findings, ¶¶67, 128. Much of this divergence is the result of variations in accounting for depreciation. Findings, ¶¶107-118. If consistency is a concern, surely the single processing allowance of 25% for gas from the same well is more consistent. We are also concerned that, if the day ever comes when these Taxpayers are not closely aligned and the Department allows the use of the proportionate profits method, the divergence in accounting policies may itself give rise to constitutional claims on the grounds now articulated by the Taxpayers.

342. We reject the principle that divergence of valuation results is the correct test of compliance with Article 15, §3, of the Wyoming Constitution. At a minimum, it is up to the Legislature to define fair market value. Conclusions, ¶322. The Legislature authorized the Department to determine fair market value by use of methods that yield divergent results. There is no constitutional offense in divergence as long as the Department consistently applies a selected method. In re Monolith Portland Midwest Company, Inc., 574 P.2d at 761.

343. We otherwise conclude that Anadarko’s study provided an unpersuasive policy perspective because it ignored the likely results of the comparable value method over the remaining life of the Whitney Canyon plant. Findings, ¶209.

344. Petitioners make a somewhat different constitutional claim under Article 15, §3, based on the principle that the Legislature cannot give the Department the authority to arbitrarily select a valuation method that generates the highest taxable value, citing Kelsey v. Taft, 263 P.2d 125, 136 (Wyo. 1953) and Chevron U. S. A., Inc., v. State, 918 P.2d 980, 984-985 (Wyo. 1996). [Taxpayers’ Proposed Conclusions of Law, ¶222]. Neither case is directly on point. Kelsey held that the Wyoming could not collect inheritance taxes on property transferred in contemplation of death, because the statute failed to say so directly and positively. Chevron U. S. A., Inc., held that the expense of compressing gas was not a taxable production expense, but rather was a deductible processing expense. We take Petitioner’s claim to generally relate to the issues that we address in the context of their other constitutional claims. We conclude that the claim is baseless.

345. Petitioners claim that their rights to procedural due process were violated because they were not afforded an opportunity to be heard in a meaningful time and a meaningful manner. U. S. Const. amend. XIV, § 1, second sentence; Wyo. Const. art. 1, §6. In the main, this argument is merely a constitutional extension of complaints about the Department’s procedures: the absence of regulations or other guidance, the absence of a comparable value study, etc. [Taxpayers’ Proposed Conclusions of Law, ¶¶227, 228, 230-232]. We have already concluded that those complaints are baseless. Conclusions, ¶¶311-318. As a related argument, Petitioners assert they were denied adequate notice of what they would be required to prove, due to the Department’s “mercurial positions and interpretations” and the Department’s “idiosyncratic definitions based on new interpretations caused by faulty memory.” [Taxpayers’ Proposed Conclusions of Law, ¶226, 230-231]. This argument is baseless as well. Conclusions, ¶319.

346. In support of their procedural due process claim, Petitioners also argue that the Department’s valuation has lost its presumption of validity because the valuation was determined without the benefit of clear statutory authority, citing Basin Electric Power Cooperative, Inc., v. Department of Revenue, 970 P.2d 841, 851 (Wyo. 1998). We have concluded to the contrary; the Department acted under clear statutory authority. Conclusions, ¶¶272, 287, 292. We also conclude that Basin Electric Power Cooperative does not apply. We have decided this case principally based upon the Petitioners’ failure to carry its burden of persuasion, i.e., to demonstrate that the Department has violated constitutional and statutory requirements for valuing state-assessed property. Our decision does not generally rest on the presumption of validity.

347. Petitioners claim that their rights to substantive due process were violated because the Department’s actions were arbitrary, relying principally on Mortgage Guaranty Ins. Corp. v. Langdon, 634 P.2d 509 (Wyo. 1981) and White v. State, 784 P.2d 1313 (Wyo. 1989). [Taxpayers’ Proposed Conclusions of Law, ¶233-237]. Neither case is on point. In Mortgage Guaranty Ins. Corp., the Wyoming Supreme Court set aside an order of the Wyoming insurance commissioner because he had failed to consider all pertinent value factors when issuing an order, but the Court found no violation of due process. In White v. State, the Court upheld a provision of the Wyoming Governmental Claims Act that provided immunity from suit for design, construction and maintenance of highways. In doing so, the Court rejected an argument that the statute in question warranted the heightened degree of scrutiny associated with a fundamental interest or an inherently suspect classification. We accordingly conclude that Petitioners’ argument is merely a constitutional extension of the claim that the Department has misapplied the comparable value method, or followed improper procedures. We have already concluded that both sorts of claims are groundless. Conclusions, ¶¶272-319.

348. We conclude that the Petitioners have not carried their burden of persuasion with respect to any of the constitutional claims.

Was the Department barred from use of the comparable value method by collateral estoppel or judicial estoppel?

349. Based upon our ruling in Whitney Canyon 2000 (we refer to Whitney Canyon 2000 because the Petitioners did not advance specific argument on this issue), we understand the core of Petitioners’ claim to be that the same parties, the same property and the same issues were previously decided by the Wyoming Supreme Court. Amoco Production Company v. Wyoming State Board of Equalization, 882 P.2d 866 (Wyo. 1994), or by this Board in Appeal of Amoco Production Company, SBOE Docket 91-174, 1992 WL 126533 (Wyo. St. Bd. Eq. 1992). Whitney Canyon 2000, ¶193. We have concluded to the contrary. Conclusions, ¶311.

350. The principal issue in this case is whether the Department’s valuation is in accordance with constitutional and statutory requirements for valuing state-assessed property for production year 2002. Conclusions, ¶271. This issue was not and could not have been decided in a previous proceeding. Tenorio, 931 P.2d at 238-239. Neither this Board nor the Court previously had jurisdiction to rule on anything related to the matter of production in 2002. Production year 2002 valuations were not identified as issues by the parties in the previous proceedings. No such issue was decided by the Board as a fact finder. The Board did not purport in earlier proceedings to determine any questions related to production year 2002. The earlier judgments of the Court and the Board were not dependent upon determination of any issues with regard to production year 2002. On this basis alone, we conclude that the doctrine of collateral estoppel does not apply. We do not deem it necessary to list the many issues that were decided in this case, but were not previously advanced and decided. Any concern for relitigation is groundless.

351. The subject matter of this case is the Department’s application of the comparable value method to value Petitioners’ gas production for production year 2002, and a variety of specific claims regarding application of that method. Findings, ¶¶36-230. This factor alone is enough for us to conclude that the doctrine of res judicata does not apply, although further analysis would show a general failure to meet the criteria for res judicata. Livingston, 861 P.2d at 551-552.

352. Based upon our ruling in Whitney Canyon 2000 (we refer to Whitney Canyon 2000 because the Petitioners did not advance specific argument on this issue), we understand Taxpayers to argue that, some ten years ago, the Department took a different position with respect to the application of the phrase “other parties” than it does now, directing our attention to Amoco Production Company, 882 P.2d 866. Since the Department did not succeed in employing the method advanced in 1992, supra, ¶213, 311, we conclude that judicial estoppel does not apply. Eagle Foundation, Inc., v. Dole, 813 F.2d at 810; Matter of Cassidy, 892 F.2d at 641; 74 Am. Jr. 2d Estoppel and Waiver §73, p. 498. Having reached this conclusion, we find it unnecessary to discuss other defects in the application of judicial estoppel in this case, or the application of the principle that “the initial position taken must be one regarding fact.” Willowbrook Ranch v. Nugget Exploration, 796 P.2d 769, 771 (Wyo. 1995). See generally, Whitney Canyon 2000, ¶¶201-203.

353. The Petitioners did not carry their burden of persuasion. They failed to show that the Department’s valuation was not in accordance with constitutional and statutory requirements for valuing state-assessed property, or to show that the Department’s valuation was contrary to its rules, regulations, orders or instructions.

IT IS THEREFORE HEREBY ORDERED the Department’s determination of the value of Petitioners’ 2002 gas production is affirmed.

Pursuant to Wyo. Stat. Ann. §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 appropriate district court by filing a petition for review within 30 days of the date of this decision.