N.M. Code R. § 3.18.5.8 - REASONABLE EXPENSE OF TRUCKING
A. When the person trucking product is not
affiliated with the interest owner or operator, the reasonable expense of
trucking means the cost paid in an arm's-length transaction by the interest
owner or operator for trucking services performed from a point within the
production unit, as that term is defined in Paragraph 3.18.1.7E(1) NMAC, to the
first point of market. This version of Subsection 3.18.5.8A NMAC is applicable
to trucking performed on or after July 15, 1998.
B. When trucking is performed by the interest
owner or operator or by a person affiliated with the interest owner or operator
or when trucking is performed by a non-affiliated person in a non-arm's-length
transaction, the reasonable expense of trucking from a point within the
production unit, as that term is defined in Paragraph 3.18.1.7E(1) NMAC, to the
first place of market shall be determined in accordance with the first
applicable benchmark. This version of Subsection 3.18.5.8B NMAC is applicable
to trucking performed on or after July 15, 1998.
C. Benchmark 1: If trucking charges are
subject to regulatory approval, the reasonable expense of trucking shall not
exceed any applicable tariff set or approved by the federal energy regulatory
commission or any other federal or state agency having jurisdiction.
D. Benchmark 2: If the amount of product
trucked under arm's-length contracts during the reporting period is at least
fifty percent of the total amount trucked during that reporting period by the
person performing the trucking, the reasonable expense of trucking shall be not
more than the highest charge nor less than the lowest charge made to
non-affiliated persons by the person performing the trucking.
E. Benchmark 3: If the reasonable expense of
trucking is not determined under the preceding benchmarks, then it shall not
exceed the sum of actual allowable trucking costs. Allowable trucking costs
are:
(1) operating expenses, which include
operations supervision, operations labor, fuel, utilities, materials and
supplies, property taxes, rent and any other directly attributable operating
expense of the trucking operation;
(2) maintenance expenses, which include
maintenance of the truck fleet and associated equipment, maintenance labor and
any other directly attributable maintenance expense;
(3) overhead expenses, which include
administrative and other overhead expenses directly attributable to the
operation or maintenance of the trucking operation but excluding federal and
state taxes (other than property taxes), payments for product, royalties and
any expense which may be included in a processing or transportation adjustment;
and
(4) either depreciation
expense, which includes depreciation on the truck fleet and associated
equipment determined on the straight-line method based on the class life of the
truck fleet and equipment and appropriate salvage values; a successor in
business or purchaser of assets shall base depreciation expense for the
purposes of Section 3.18.5.8 NMAC upon the depreciation schedules of the
previous owner; or
(5) in lieu of
item 4), a reasonable rate of return on depreciable capital assets used in the
trucking operation.
F.
The reasonable expense of trucking is a deduction either from actual price
received when actual price is established at the production unit under an
arm's-length contract among non-affiliated persons or from the reasonable value
established by the department in all other situations, but not both.
G. This version of Section 3.18.5.8 NMAC is
retroactively applicable to production on or after September 1, 1991.
Notes
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