---
kind: "section"
citation: "30 C.F.R. § 1206.56"
title: "30"
number: "1206.56"
heading: "What general transportation allowance requirements apply to me?"
url: "https://uscodex.org/cfr/30/1206.56"
---

# §1206.56. What general transportation allowance requirements apply to me?

- (a) ONRR will allow a deduction for the reasonable, actual costs to transport oil from the lease to the point off of the lease under [§ 1206.52](/cfr/30/1206.52.md) or [§ 1206.53](/cfr/30/1206.53.md), as applicable. You may not deduct transportation costs to reduce royalties where you did not incur any costs to move a particular volume of oil. ONRR will not grant a transportation allowance for transporting oil taken as Royalty-In-Kind (RIK).
- (b)
  - (1) Except as provided in [paragraph (b)(2)](#b-2) of this section, your transportation allowance deduction on the basis of a sales type code may not exceed 50 percent of the value of the oil at the point of sale, as determined under [§ 1206.52](/cfr/30/1206.52.md). Transportation costs cannot be transferred between sales type codes or to other products.
  - (2) Upon your request, ONRR may approve a transportation allowance deduction in excess of the limitation prescribed by [paragraph (b)(1)](#b-1) of this section. You must demonstrate that the transportation costs incurred in excess of the limitation prescribed in [paragraph (b)(1)](#b-1) of this section were reasonable, actual, and necessary. An application for exception (using Form ONRR-4393, Request to Exceed Regulatory Allowance Limitation) must contain all relevant and supporting documentation necessary for ONRR to make a determination. Under no circumstances may the value, for royalty purposes, under any sales type code, be reduced to zero.
- (c) You must express transportation allowances for oil in dollars per barrel. If you or your affiliate's payments for transportation under a contract are not on a dollar-per-barrel basis, you must convert whatever consideration you or your affiliate are paid to a dollar-per-barrel equivalent.
- (d) You must allocate transportation costs among all products produced and transported as provided in [§ 1206.57](/cfr/30/1206.57.md).
- (e) **All transportation allowances are subject to monitoring, review, audit, and adjustment.**
- (f) If, after a review or audit, ONRR determines you have improperly determined a transportation allowance authorized by this subpart, then you must pay any additional royalties due plus late payment interest calculated under [§ 1218.54](/cfr/30/1218.54.md) of this chapter or report a credit for, or request a refund of, any overpaid royalties without interest under [§ 1218.53](/cfr/30/1218.53.md) of this chapter.
- (g) You may not deduct any costs of gathering as part of a transportation deduction or allowance.

## Notes

### Source

Source: 80 FR 24805, May 1, 2015, unless otherwise noted.

### Authority

Authority: 5 U.S.C. 301 et seq., 25 U.S.C. 396, 396a et seq., 398, 398a et seq., 2101 et seq.; 30 U.S.C. 181 et seq., 351 et seq., 1001 et seq., 1701 et seq.; 43 U.S.C. 1301 et seq., 1331 et seq., and 1801 et seq.

### Source

Source: 48 FR 35641, Aug. 5, 1983, unless otherwise noted. Redesignated at 75 FR 61069, Oct. 4, 2010.