                                 CODE OF VIRGINIA

DEFINITIONS (§ 58.1-3740)

As used in this chapter, unless the context requires a different meaning:
		&#8220;Coal producer&#8221; means any holder of an economic interest. Such
persons shall be deemed to be engaged in the business of severing coal from the
earth.
		&#8220;Economic interest&#8221; means the interest possessed by a person who
has acquired by capital investment any interest in the coal in place and
secures, by any form of legal relationship, income from the extraction of the
coal, to which he must look for a return of his capital. A person who has no
capital investment in the coal deposit shall not possess an economic interest
merely because through a contractual relation he possesses a mere economic or
pecuniary advantage derived from production such as persons who have a
contractual right to purchase or process the coal upon production or persons
entitled to compensation for extracting or mining the coal. For purposes of this
chapter, &#8220;economic interest&#8221; does not include interests possessed by
a person who receives only royalty payments solely because of such royalty
payments. Apart from the royalty interest exclusion in this definition, it is
the intent of the General Assembly that &#8220;economic interest&#8221; shall
have essentially the same meaning as for purposes of 26 C.F.R. § 1.611-1.
		&#8220;Gross receipts&#8221; means the purchase price received by a coal
producer for the sale of coal to an unaffiliated purchaser in an
arm&#8217;s-length transaction. &#8220;Gross receipts&#8221; does not include
the cost of transporting the coal to such an unaffiliated purchaser. In
circumstances in which the coal is (i) utilized by the coal producer or an
affiliated individual or entity or (ii) sold in a related-party transaction or
under circumstances that indicate the sale is not an arm&#8217;s-length
transaction, &#8220;gross receipts&#8221; shall be determined by multiplying the
volume of coal utilized or sold by (a) the average sale price received by the
coal producer in arm&#8217;s-length transactions for the sale of other coal
reasonably deemed by the commissioner of the revenue or other local assessing
official of the locality to be of comparable quality during the same time frame
or (b) if no such other sales are available, the sale price of other coal
reasonably deemed by the commissioner of the revenue or other local assessing
official of the locality to be of comparable quality, sold by other coal
producers engaged in the severance of similar coal within the county or city or
neighboring counties or cities during the same time frame. No deductions shall
be taken from gross receipts except for a deduction for non-local coal
transportation and processing costs.
		&#8220;Non-local coal transportation and processing costs&#8221; means only
such costs applicable to coal that is severed in one county or city and then
transported by the coal producer to another county or city for cleaning,
preparation, or processing in order to achieve a dry and clean coal.
&#8220;Non-local coal transportation and processing costs&#8221; includes the
costs of transporting the coal from the county or city in which it was severed
to the second county or city and the costs of cleaning, preparation, and
processing that are incurred within that second county or city. Such costs shall
not include any costs associated with blending dry and clean coals unless such
blending occurs in the same non-local county or city to which the coal is
initially transported for cleaning, preparation, or processing. The amount of
the deduction for non-local coal transportation and processing costs shall be
calculated by dividing the total actual costs incurred per ton in such non-local
transportation, cleaning, preparation, and processing by the total costs per ton
of mining, transportation, cleaning, preparation, and processing of such coal to
derive a factor or percentage. Such factor or percentage shall then be
multiplied by the gross receipts from the sale or utilization of such coal to
determine the applicable deduction for non-local coal transportation and
processing costs.
		&#8220;Small mine&#8221; means a mine that sells less than 10,000 tons of coal
per month.

HISTORY: 2013, cc. 305, 618.