Opinion ID: 2509156
Heading Depth: 1
Heading Rank: 41

Heading: The initial transportation related compressor

Text: 132. In light of our disposition of the processing facility issue, we need not address Williams' characterization of the screw compressor as the initial transportation related compressor. This issue only arises if the point of valuation is determined under the second sentence of Wyo. Stat. Ann. ง 39-14-203(b)(iv). We have concluded that the point of valuation is determined under the first sentence.
133. Williams argues that the Board's Findings of Fact and Conclusions of Law in this case are controlled by Findings made in In the Matter of the Appeal of Lance Oil & Gas Company, SBOE Docket No. 2001-117, 2002 WL 31256340 (Wyo. St. Bd. Eq.) ( Lance Oil & Gas ). In Lance Oil & Gas, the Board determined that a sales tax was due on services performed for the installation of underground gathering lines between coalbed methane wells and the pod, because the services were part of equipping for production within the meaning of Wyo. Stat. Ann. งXX-XX-XXX(a)(i)(K). 134. Williams directs our attention to ถ22 of the Findings of Fact. Paragraph 22 appears in a section of the Board's opinion entitled, Gathering Lines are Part of Equipping for Production: 22. The Wyoming Statutes specify that when valuing natural gas for severance and ad valorem purposes, production is complete when gas travels through the gathering lines and enters the custody transfer meter. Wyo. Stat. Ann. งXX-XX-XXX(b)(iv). Lance Oil & Gas, ถ22. 135. The Finding of Fact was accompanied by a related Conclusion of Law, which appears in a section of the Board's opinion entitled, The Services Performed on the Gathering Lines Were Taxable Because They Were Services That Were Equipping for Production: 49. The placement of the [custody transfer] meter as the physical point when equipping for production ceases to be taxable is reasonable given the surrounding facts is consistent with Wyoming Statute ง39-2-208(b)(ii) (recodified as Wyo. Stat. งXX-XX-XXX(b)(iv)). Lance Oil and Gas, ถ49. 136. The point of valuation statute contemplates four different valuation points, depending on the facts in hand: the outlet of the initial dehydrator; or, the inlet to the initial transportation related compressor, custody transfer meter or processing facility. Wyo. Stat. Ann. งXX-XX-XXX(b)(iv). Williams argues that the precedent of Lance Oil & Gas binds the Department to select the custody transfer meter as the valuation point for coalbed methane production. [Petitioners' Hearing Brief, pp. 9-12]. We note that this argument asks us to exalt Lance Oil & Gas above the plain language of the statute, which directs attention to the circumstances of each taxpayer. 137. Williams neglects to account for a significant distinction of fact between Lance Oil & Gas and the case at hand. In Lance Oil & Gas, there is no mention of a dehydrator, much less a processing facility. In the absence of a dehydrator, and assuming that the equipment train is otherwise the same as the equipment train at issue in this case, the point of valuation must be the custody transfer meter. This is a direct consequence of the second sentence of Wyo. Stat. Ann. งXX-XX-XXX(b)(iv). Both the Department and this Board were obliged to so find under the circumstances then presented. In light of this difference, we conclude that Lance Oil & Gas cannot and does not control this case. 138. There are other practical distinctions between this case and Lance Oil & Gas. The Findings of Fact in Lance Oil & Gas focus on gathering lines between the wellhead and the pod. The existence of a point of valuation beyond the custody transfer meter was of no practical interest for sales tax purposes. Even if the taxpayer instead had procured the installation of lines to a point beyond the custody transfer meter, the taxpayer would have had no reason to dispute the results of its audit by taking a position that extended the point of valuation further from the wellhead. Doing so would only have increased the taxpayer's exposure to sales taxes. 139. Although the facts of Lance Oil & Gas turned on the treatment of services related to gathering lines, sales tax issues so predominated that the Board had not reason to cite the statutory definition of gathering for any purpose. See Wyo. Stat. Ann. งXX-XX-XXX(a)(ix). This proceeding was different. Williams presented evidence to demonstrate that any gathering in the statutory sense ended at the CDP, or pod. Transcript Vol. III, p. 422. We note that the statutory definition of gathering does not coincide with the terminology of Barrett's Gas Gathering Agreement with Western. Compare Findings of Fact, ถ8. 140. Williams next argues that we must bind the Department to a point of valuation at the custody transfer meter by application of the doctrine of collateral estoppel. We begin with a statement of the principles involved: 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). 141. The Wyoming Supreme Court has identified four factors that we must consider: 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 is asserted was in 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 the prior proceeding. Tenorio, 931 P. 2d at 238-239. 142. Williams claims that the issue decided in Lance Oil & Gas was where the production process for CBM gas is completed. Petitioner's Hearing Brief, p. 16. Its arguments for application of the four elements of collateral estoppel stem from that principal point. We conclude that the doctrine of collateral estoppel does not apply, for at least three reasons. 143. First, the issue decided in Lance Oil & Gas was whether a sales tax was due on services performed for the installation of underground gathering lines between coalbed methane wells and the pod. This case does not involve a sales tax. We conclude not only that the issue differed, but also that there was not a judgment on the pertinent merits in the prior proceeding. 144. Second, the Board had no occasion in Lance Oil & Gas to examine the application of the definitions on which the point of valuation depends. There is no reference in Lance Oil & Gas to either a dehydrator or a processing facility. We conclude not only that the issue differed, but also that there was not a full and fair opportunity to litigate the issues of this case in the prior proceeding. 145. Third, because the parties in Lance Oil & Gas were interested in sales tax related to gathering lines between the wellhead and the CPD, the ancillary references to Wyo. Stat. Ann. งXX-XX-XXX(b)(iv) had no direct impact on the decision. That is, there was no practical impetus for a careful examination of the factual premises on which the point of valuation depends. We conclude not only that the issue differed, but also that there was not a full and fair opportunity to litigate the issues in this case in the prior proceeding. 146. We believe our conclusion is even clearer when broadly considered in light of the common law policy concern for relitigation. Williams did not come to us as a petitioner that has taken a consistent position over time on either the facts or the application of those facts under the statute. This is a very different dispute than that presented to us in Docket No. 2001-117, and one made considerably more complex by the Petitioner's own shifting positions. We conclude that the concern for relitigation is groundless. 147. Despite our ruling, there may be some value in clarifying the intent of our ruling in Lance Oil & Gas. The Finding in ถ22 might be more correctly stated as, The Wyoming Statutes specify a number of alternatives for valuing natural gas for severance and gross products tax purposes, depending on specific circumstances. Wyo. Stat. Ann. งXX-XX-XXX(b)(iv). One of those alternatives is the custody transfer meter. The Conclusion of Law in ถ49 might be more correctly stated as, The custody transfer meter is a convenient line of demarcation between the ownership of the gas producer and the gas gatherer. Even when it is not the point of valuation for severance and gross products tax purposes, it remains convenient and useful for excise tax purposes. To the extent that this clarification may be characterized as a departure from our opinion in Lance Oil & Gas, it is one that is necessary to vindicate plain obvious principles of law.... Goodrich v. Stobbe, 908 P.2d 416 (Wyo. 1995), quoting Gueke v. Board of County Commissioners, 728 P.2d 167, 171 (Wyo. 1986).