Opinion ID: 2509156
Heading Depth: 1
Heading Rank: 36

Heading: Other possible devices

Text: 109. We conclude that pipelines are not devices, and cannot be dehydrators. 110. The evidence established that any intentional enlargement of the pipeline, at a point as far upstream as next to the wellhead, could create a pressure drop causing water condensation. Such an enlargement might be characterized as a special-purpose device intended to remove water at that point. By our heavy reliance on the common meaning of device, we do not wish to suggest that the intention of a device wholly governs the result we reach today. We do not conclude Williams has merely failed to identify as a dehydrator some section of the equipment train that was not specifically considered during the course of the hearing. This is therefore an occasion when we believe it is appropriate to depart from the general rule and resort to extrinsic aids to interpretation to confirm the plain meaning. Parker Land & Cattle Co. v. Wyoming Game & Fish, 845 P.2d 1040, 1043 (Wyo. 1993). 111. The Department has suggested that a focus on the word remove can resolve any questions related to the identification of devices that are dehydrators. The common meaning of remove in this context is to take, extract, separate, or withdraw (someone or something from).  Webster's New World College Dictionary (4th Edition 2001) p. 1213. The Department takes the position there is significant nuance in remove. The Department believes that this nuance supports a distinction between active and passive devices. [Transcript Vol. IV, pp. 708-709; Vol. V, pp. 1033-1034]. On this basis the Department would not characterize a passive condensation device as a dehydrator. [Transcript Vol. IV, pp. 708-709; Vol. V, pp. 1033-1034]. The Department's interpretation does not conflict with legislative intent, and we will defer to its conclusion. Board of County Commissioners, Sublette County, v. State Board of Equalization, Id., ถ16 (Wyo. 2001). However, since the common meaning of remove includes the verb separate, which is confusing in this context because the statute defines separating, we are not completely satisfied with this analysis. 112. Taking into account the positions of the parties, we conclude that the definition of dehydrator is ambiguous with respect to what water vapor is the water vapor that is commonly associated with raw natural gas. A statute is ambiguous if it is found to be vague or uncertain and subject to varying interpretations. Parker Land & Cattle Co. v. Game & Fish, 845 P.2d 1040, 1043 (Wyo. 1993). Williams assumes that all water vapor associated with raw natural gas, including the water vapor associated with coalbed methane, satisfies this definition. Williams makes this assumption, however, in the face of the testimony of their expert that there are substantial differences between coalbed methane production and the production of conventional natural gas. Findings of Fact, ถถ1-3. 113. Coalbed methane is distinguished from conventional natural gas by saturation with water; we have accepted Rhinesmith's testimony that coalbed methane initially carries approximately ten times as much water as conventional natural gas. Findings of Fact, ถ3. Indeed, Rhinesmith has testified that in handling coalbed methane, water was a key factor in trying to decide the configuration of the systems, how the gas would be produced, and how to make that gas transportable into downstream markets. [Transcript Vol. II, p. 284]. We question whether the legislature intended to apply the definition of dehydrator to apply in a production environment where condensation is unavoidable throughout the sequence of equipment and piping. 114. The low pressure under which coalbed methane is produced, Findings of Fact, ถ2, also causes us to conclude that coalbed methane must be distinguished from conventional natural gas. The low pressure environment contributes to the ease of creating condensation by simple modifications to the equipment train. Findings of Fact, ถ57. 115. In ascertaining legislative intent in enacting a statute, we may look at the historic setting surrounding the enactment of the statute. Parker Land & Cattle Co. v. Game and Fish, id., at 1044. 116. The legislature enacted the point of valuation statute and the definitions of dehydrator, compressor, separating, and processing in 1990. 1990 Wyo. Sess. Laws, Ch. 54. Coalbed methane was not commercially significant at the time. Findings of Fact, ถ4. We accordingly conclude that the reference to water vapor commonly associated with raw natural gas is a reference to the water vapor in conventional natural gas. Based on the facts presented in this case, the glycol dehydrator, all by itself, possessed adequate capacity to remove water vapor in quantities associated with conventional natural gas. Findings of Fact, ถถ60, 66. We conclude that the legislature's intention was to only identify as a dehydrator a device that is the same or similar to the one identified in this case as the glycol dehydrator. The Department offered a similar rationale for its interpretation of the statute, but declined to concede that the statute is in any way ambiguous. [Transcript Vol. IV, pp. 680-682, 708-709, 750]. 117. We are also obliged to avoid a construction that reaches an absurd result. Stauffer Chemical Company v. Curry, 778 P. 2d 1083, 1093 (Wyo. 1989). It would be absurd to accept as a dehydrator any enlarged space that creates condensation. This would allow the taxpayer to freely manipulate the point of valuation with inexpensive measures. It is also contrary to an expectation expressed in the first sentence of Wyo. Stat. Ann. ง 39-14-203(b)(iv) that the initial dehydrator follows other production functions. As the record in this case also shows, a principal purpose of a glycol dehydrator was to make raw natural gas ready for transportation by pipeline. Further, we believe it is logical to infer that the legislature contemplated that normally such dehydration would be a last step in the production of gas that was not processed. 118. Our resolution of the ambiguity is consistent with the conclusions we have already reached. The glycol dehydrator fits within the statutory definition, but the headers, compressors, pipelines, and pig do not. Our resolution is consistent with, and supports, the Department's interpretation. Our resolution provides a basis for distinguishing between dehydration and incidental condensation during the production process.
119. Williams' alternative theory is that Western's booster compressors and glycol dehydrator are a processing facility. Under this theory, the point of valuation is determined by reference to the second sentence of Wyo. Stat. Ann. ง 39-14-203(b)(iv): When no dehydration is performed, other than within a processing facility, the production process is completed at the inlet to the initial transportation related compressor, custody transfer meter or processing facility, whichever occurs first. Williams' alternative argument rests an assumption that the Board might conclude that the glycol dehydrator was the only dehydrator, and we have done so. Supra., ถถ97 et. seq. If the glycol dehydrator were part of a processing facility, Williams would be correct in concluding that the custody transfer meter is the point of valuation. However, we conclude that Western's equipment is not a processing facility. 120. As a preliminary matter, we note that the second sentence of Wyo. Stat. Ann. งXX-XX-XXX(b)(iv) refers to dehydration rather than to a dehydrator. We conclude that such dehydration must be performed in a statutorily-defined dehydrator. The second sentence begins, When no dehydration is performed.... The word performed, in such close proximity to the word dehydrator at the end of the first sentence, suggests that the statutorily-defined dehydrator is what performs dehydration. However, if dehydration could be performed by a piece of equipment that is not a dehydrator, the statute might prescribe no point of valuation under some circumstances: there might not be a dehydrator to satisfy the requirements of the first sentence, but there might also be dehydration outside of a processing facility, which would negate the contingency of the second sentence. Our interpretation should avoid this absurd result. Stauffer Chemical Company v. Curry, id., at 1093. The statute means that dehydration, as used in the second sentence of Wyo. Stat. Ann. งXX-XX-XXX(b)(iv), is performed in a dehydrator, as defined in Wyo. Stat. Ann. งXX-XX-XXX(a)(viii).