Does washing frac sand in 'attrition cell scrubbers' to remove clay make it taxable processed sand under Texas law?

Plain-English summary

A third same-batch ruling reaches the same "unprocessed and exempt" conclusion for another frac-sand producer, this one using "attrition cell scrubbers" — washers that agitate the sand slurry to strip off clay, organics, and surface contaminants without chemicals. The company's process: excavate sand, screen out debris, add water and pump to a size/grade separator, wash in the attrition cell scrubbers, and dry in three stages (de-watering screens, natural air-drying, then mechanical dryers) before sorting into two precise final sizes with no remixing. Notably, the taxpayer's own submission stated that at no point is any of the sand "crushed, cut, chipped, or mixed with another aggregate, even other sand."

The Comptroller's key legal point in this ruling: attrition scrubbers "have the capacity to change the size and shape of sand, which constitutes processing" — so this type of equipment isn't automatically safe just because it's called a "scrubber." The exemption survives here specifically because, ON THESE FACTS, the scrubbers used didn't actually change the sand's size or shape. This is a more careful, equipment-capability-aware version of the reasoning in the other same-batch sand rulings, which is worth noting for any producer using similar equipment.

Like its companion 201901046L, this ruling was requested anonymously, so it carries no detrimental reliance relief even for the taxpayer that requested it.

What this means for you

Frac sand and industrial sand producers using scrubbers/washers

The Comptroller's analysis here is more nuanced than a blanket "washing is never processing" rule — it acknowledges attrition scrubbers COULD constitute processing equipment if they actually change sand size/shape, and only rules the specific equipment here exempt because the facts showed no such change. If you use similar equipment, be ready to document that your specific machine doesn't alter grain size or shape, not just that it's generically a "washer."

Anyone considering an anonymous ruling request

A second example (with 201901046L) in this same discovery batch of a sand producer choosing not to disclose its identity, again losing the detrimental-reliance protection under Rule 3.1(c)(1)(A) — a pattern worth flagging to any client weighing that tradeoff.

Common questions

Q: Can an attrition scrubber ever make sand taxable as "processed"?
A: Yes, potentially — the Comptroller explicitly noted attrition scrubbers "have the capacity to change the size and shape of sand," which would constitute processing. This ruling only reaches the unprocessed conclusion because the specific scrubbers here were shown not to change the sand.

Q: Does drying sand in stages (de-watering screens, air-drying, mechanical dryers) make it processed?
A: No — multi-stage drying alone doesn't change the outcome as long as it doesn't alter grain size/shape and the final sorted sizes aren't remixed.

Q: Can other sand producers rely on this ruling?
A: No. It binds the Comptroller only as to the taxpayer and facts in this specific request — and here, no taxpayer was ever named at all, given the anonymous request.

Citations and references

Statutes and rules:

• Tex. Tax Code § 151.051 (sales tax imposed)
• Tex. Tax Code § 151.010 (taxable item)
• Tex. Tax Code § 151.009 (tangible personal property)
• Tex. Tax Code § 151.318 (property used in manufacturing — scrubber size/shape test)
• 34 Tex. Admin. Code Rule 3.1(c)(1)(A) (anonymous requests)
• Comptroller Decision No. 27,940 (1992); Nos. 29,862 (1994), 44,432 (2005)
• STAR Accession Nos. 8810L0904F07 (1988), 9212L1233B12 (1992)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/201901047L

Original ruling text

January 25, 2019

RE: Private Letter Ruling No. 20181213101647

Anonymous Taxpayer

Dear **:

We issue this private letter ruling in accordance with Rule 3.1, Private Letter Rulings and General Information Letters,[1] in response to your request dated Sept. 14, 2018. The identity of the entity to which this request relates was not disclosed. As noted in Rule 3.1(c)(1)(A), detrimental reliance relief is not provided if the identity of the entity to which the request relates is not revealed.

You requested guidance on whether your client, a sand mining business, sells processed or unprocessed sand.

Facts Presented

The relevant facts are based on the information provided by COMPANY, on behalf of its undisclosed client (Taxpayer).

Taxpayer mines and sells sand in Texas for use in oil and gas well fracturing purposes. Taxpayer extracts the sand with an excavator by scooping the sand out of its natural environment. To prepare the sand for sale, Taxpayer first screens it to remove tree roots and large debris. Taxpayer adds water to the sand and pumps it to the wet plant. Sand is separated by size or grade through a separator system that uses water and the weight of the sand to separate one grade from another. At no time is the sand resized during separation; rather, separation sifts the material to locate the correct size.

The slurry is transported to washers called "attrition cell scrubbers." No chemicals are added and the size of the sand particle is not reduced or otherwise changed. The washing and agitating removes clay and other foreign particles. The removal of clay, other organics and surface contaminants is the primary effect of washing in the attrition cell scrubbers. The waste materials are then transported back to the mine.

Drying occurs in three stages. First, the slurry is pumped onto de-watering screens, which vibrate the slurry to remove water. Second, conveyor belts send the sand to dry naturally in large buildings. Lastly, dryers further dry the sand. Using a mesh screen and vibration, the sand separates into two precise sizes that travel by conveyor belt into silos for storage. From the silos, trucks ship the sand to its various destinations.

At no time during any of the activities described above is any of the sand crushed, cut, chipped, or mixed with another aggregate, even other sand.

Question, Ruling, and Analysis

Our restatement of your question is shown below, followed by our response and analysis.

Question: Is Taxpayer’s sand unprocessed sand and not subject to Texas sales tax?

Ruling: The sale of Taxpayer’s unprocessed sand is not taxable.

Analysis: Texas imposes a sales tax on each sale of a taxable item in this state. Section 151.051 (Sales Tax Imposed). The term “taxable item” includes tangible personal property and taxable services. Section 151.010 (Taxable Item). The term “tangible personal property” means personal property that can be seen, weighed, measured, felt, or touched or that is perceptible to the senses in any other manner and includes a computer program and a telephone prepaid calling card. Section 151.009 (Tangible Personal Property).

The sale of unprocessed sand, gravel, and similar materials is not taxable. However, the sale and transportation of processed materials is taxable. See Comptroller Decision No. 27,940 (1992); STAR Accession No. 8810L0904F07 (Oct. 4, 1988). The Comptroller has provided examples of processing. Processed materials are materials that are crushed, mixed, or subject to any other process other than basic washing and sorting. Comptroller Decision Nos. 29,862 (1994) and 44,432 (2005).

Attrition scrubbers have the capacity to change the size and shape of sand, which constitutes processing under Section 151.318 (Property Used in Manufacturing). Based on the facts presented, the attrition scrubbers used in Taxpayer’s process do not change the size or shape of the sand.

The Comptroller guidance has also given guidance of what is not considered processing. “The washing, drying, screening for size, and sorting of sand, gravel and similar materials is not processing.” STAR Accession No. 9212L1233B12 (Dec. 7, 1992).

Here, Taxpayer does not remix the sand after the sand has been washed, dried, screened and sorted. Taxpayer’s sand is unprocessed sand, and is not subject to sales and use tax.

Comptroller’s Decisions and STAR documents cited can be found on the Comptroller’s State Tax Automated Research (STAR) system. The Texas Tax Code, Texas Administrative Code, and the STAR system are accessible at www.comptroller.texas.gov/taxes/.

If you have questions about this private letter ruling, please email us through our website at https://comptroller.texas.gov/web-forms/tax-help/ and reference Private Letter Ruling No. 20181213101647.

Sincerely,

Tax Policy Division –Indirect Taxes

Texas Comptroller of Public Accounts

ENDNOTE:

[1] Unless otherwise indicated, all references to “Section” are to the Texas Tax Code, and all references to “Rule” are to Title 34 of the Texas Administrative Code.