- (a) For ad valorem leases subject to § 1206.257, ONRR shall, as authorized by this section, allow a deduction in determining value for royalty purposes for the reasonable, actual costs incurred to wash coal, unless the value determined pursuant to § 1206.257 was based upon like-quality unwashed coal. Under no circumstances will the authorized washing allowance and the transportation allowance reduce the value for royalty purposes to zero.
- (b) If ONRR determines that a lessee has improperly determined a washing allowance authorized by this section, then the lessee shall be liable for any additional royalties, plus interest determined in accordance with § 1218.202 of this subchapter, or shall be entitled to a credit without interest.
- (c) Lessees shall not disproportionately allocate washing costs to Federal leases.
- (d) No cost normally associated with mining operations and which are necessary for placing coal in marketable condition shall be allowed as a cost of washing.
- (e) Coal washing costs shall only be recognized as allowances when the washed coal is sold and royalties are reported and paid.