Did reusing previously mined phosphate-industry waste to produce phosphoric acid create a new Florida phosphate severance-tax liability?

Plain-English summary

Florida ruled that using previously mined phosphate-industry waste in the Improved Hard Process to produce phosphoric acid did not trigger a new phosphate severance-tax liability.

The company proposed a dry-kiln production process using five waste streams from conventional wet-rock beneficiation: Feed Delta, High Magnesium Rejected Pebble, Trommel Clay Reject, Tailings, and Clay. Those materials would come from third-party sites.

Florida explained that the waste had been severed at the same time as the phosphate rock. It was part of total production and the severance tax had already been levied on the original severance, even though the waste was removed before taxable bone-dry tons were measured at the wet rock bin.

Reusing that already severed material as feedstock therefore did not create another Chapter 211 phosphate severance tax.

What this means for you

The ruling distinguishes reuse of already mined waste from a new severance of minerals. The conclusion depends on the feedstock's mining and beneficiation history.

Common questions

What process did the company propose? A dry-kiln Improved Hard Process for making phosphoric acid.

Why was there no new tax? The waste materials were part of a prior severance on which the tax had already been levied.

Did removal before the wet rock bin change that? No. It affected measurement but did not make later reuse a new severance.

Citations and references

• Fla. Stat. §§ 211.30 and 211.3103, as quoted and discussed in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 10B7-001

Original ruling text

TAX: Severance Tax
TAA NUMBER: 10B7-001
ISSUE: phosphate industry waste materials for Improve Hard Process (IHP)
STATUTE CITE(S) Sections 211.30, 211.3103(1), (7), F.S.
QUESTION: Whether utilization of phosphate industry waste materials trigger a phosphate
severance tax liability.
ANSWER: The utilization of the phosphate waste materials used in the Improved Hard Process
(IHP) will not trigger a severance tax liability.
April 27, 2010
XXX
XXX
XXX
XXX
Re:

Technical Assistance Advisement No. 10B7-001
Severance Tax-Utilization of Waste Products to Produce Phosphoric Acid
Sections 211.30, 211.3103(1), (7), F.S.
XXX ( hereinafter Company)

Dear XXX:
Your letter dated XXX, requests a Technical Assistance Advisement concerning whether the use of
phosphate waste material will trigger severance tax. This response to your request constitutes a
Technical Assistance Advisement under Chapter 12-11, Florida Administrative Code, and is issued
to your under the authority of section 213.22, Florida Statutes.
Facts as Presented by Petitioner
The Company is a research and development company which is utilizing “Improved Hard
Process” (“IHP”) for producing phosphoric acid, as contrasted with the wet acid process that is
traditionally used.
IHP is a dry kiln phosphoric acid production process that utilizes previously mined phosphate
ore waste materials that are unsuitable or difficult to process using conventional wet acid
methods. These materials are severed at the same time as phosphate rock that ultimately
composes the bone-dry tons of phosphate rock subject to tax. However, the waste materials are
removed from the phosphate rock during the beneficiation process before the bone-dry tons are
measured for tax at the wet rock bin.
The Company proposes to use five potential waste streams resulting from the current phosphate
wet rock beneficiation process as raw materials for the IHP process. The waste products (Feed
Delta, High Magnesium Rejected Pebble, Trommel Clay Reject, Tailings, and Clay) will be
obtained from third parties who own the sites where the waste materials are located. The site
owners may or may not be phosphate producers.

Technical Assistance Advisement 10B7-001
Page 2

Question
Will the proposed utilization of phosphate industry waste materials trigger a phosphate severance
tax liability for the Company?
Provisions of Law and Discussion
Section 211.3103(1), F.S., levies an excise tax on every person engaging in the business of
severing phosphate rock from Florida soils or waters for commercial use. This tax applies to the
“total production of the producer during the taxable year, measured on the basis of bone-dry tons
produced at the point of severance.” (e.s.) Section 211.3103(7), F.S.
Section 211.30, F.S., provides the definitions pertaining to tax on severance of solid mineral. The
term “production” means “the total gross amount severed from the soils and waters of this state.”
“Point of severance” is defined as “that point at which the solid mineral being severed is
identifiable as to kind and quality and is capable of being transported for use or further
processing.” The definition further provides that the “point of severance” for phosphate rock is
the wet rock bin. Subsections (4) and (6).
Here, the waste materials are part of the total gross amount initially severed and part of the total
production. The severance tax was already levied on the severance of these waste materials,
even though the waste materials are not part of the tax measurement in the wet rock bin.
Position of the Department
The Company’s utilization in the Improved Hard Process of the phosphate industry’s waste
materials, as described above, will not trigger a Chapter 211, F.S., phosphate severance tax
liability.
This response constitutes a Technical Assistance Advisement under s. 213.22, F.S., which is
binding on the Department only under the facts and circumstances described in the request for
this advice as specified in s. 213.22, F.S. Our response is predicated on those facts and the
specific situation summarized above.
You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the statutes or rules upon which this
advice is based may subject similar future transactions to a different treatment than expressed in
this response.
You are further advised that this response, your request and related backup documents are public
records under Chapter 119, F.S., and are subject to disclosure to the public under the conditions
of s. 213.22, F.S. Confidential information must be deleted before public disclosure. In an effort
to protect confidentiality, we request you provide the undersigned with an edited copy of your
request for Technical Assistance Advisement, the backup material and this response, deleting

Technical Assistance Advisement 10B7-001
Page 3

names, addresses and any other details which might lead to identification of the taxpayer. Your
response should be received by the Department within 15 days of the date of this letter.
Sincerely,

Celestine Grantham Turner
Tax Law Specialist
Technical Assistance and Dispute Resolution

CG/tlg
Record ID#: 78494