Issue 15: Imperial Valley is split on how to tax lithium in California
As California legislators weigh how to tax lithium production in the state, the Imperial Valley has shown to be divided.
Fresh this Week
Imperial County Supports Proposed Lithium Flat Tax
This week the county of Imperial went on the record to say it supports a state-proposed flat tax on each ton of lithium produced in California. My story for the Calexico Chronicle has more details, but here’s the most important things to take away from it:
State legislators could vote on whether to approve such a tax on lithium as early as next week, so stay tuned.
EnergySource, one of the companies seeking to extract lithium in the region, is mailing and calling Imperial Valley residents to round up opposition to the flat tax.
At least one other executive, Rod Colwell of Controlled Thermal Resources, says the flat tax will be devastating for his company’s lithium extraction project.
One lithium-focused coalition made up of grassroots groups and labor unions have come out in support of the flat tax, so far as even sending a letter to key legislators this week.
IID Board Members Appalled at Flat Tax
At its Tuesday meeting, some board directors of the Imperial Irrigation District — the public agency that oversees water and power in the Imperial Valley — were publicly appalled at the state’s proposed flat tax on lithium.
Though the board as a whole did not officially take a position on the tax, at least two members publicly voiced their opposition and even went as far as suggesting that the IID would never support such a tax. Here’s a quick excerpt of that meeting:
Norma Galindo, Division 5 Director: “This is not the time for taxes.”
James Hanks, Division 3 Director: “This is how you kill the golden goose.”
Galindo: “Exactly.”
Hanks: “You know, the jobs could be gone.”
Antonio Ortega, IID government affairs officer: “So far we have not had any direction from the board to engage on this.”
Hanks: “I think some people are going to wake up to find out that they’ve chased off jobs.”
Galindo: “I’m very, very troubled by this, director Hanks.”
Galindo: “Director Hanks, may I suggest that whomever is representing us as the board in relationship to this matter, please do not speak in behalf of the board in any way, shape or form supporting this move unless the board has so decided. I would not want the constituency to think that we are in favor of something that is as monstrous like this, especially without us having discussed this and taken a position on that.”
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Calexico Weighs in on Lithium
Calexico last week became the final stop for Imperial County officials seeking support for a lithium economic plan, and it was a scene. For months, officials had been asking individual cities for their support of a county plan to oversee the lithium industry in the Imperial Valley. And for the most part, they got it.
In Calexico’s case, councilmember Raul Ureña was against supporting the county’s plan and accused the county of not doing enough community outreach, according to the Calexico Chronicle.
The council ultimately voted to continue discussing the matter at its upcoming meeting on July 6.
A New Lithium Valley Group Emerges
The Lithium Valley Community Coalition made its grand debut this week with its public appeal to California legislators in support of a proposed state flat tax on lithium.
The coalition, according to sources, has been the product of meetings between labor unions, social and environmental justice groups as well as other grassroots organizations in the Imperial Valley. In total, there are about 34 organizations that are part of the coalition.
Though it remains unclear who is at the helm of the group, or whether a set of individuals are representing it, sources tell me that the LVCC is under the fiscal sponsorship of Comite Civico del Valle. Comite is a nonprofit environmental justice group based in Brawley.
According to its website, the coalition’s mission is to meet the needs of of the communities located in the Lithium Valley in an equitable, environmentally friendly, and community-conscious manner.
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Between the Lines
CTR’s Rod Colwell on Lithium Flat Tax, His Critics and Backing Gina Dockstader
When Rod Colwell first arrived in the Imperial Valley more than seven years ago, his goal was to build a geothermal power plant. After all, the John Featherstone plant owned by San Diego-based company EnergySource had just been built a few years prior in 2012.
And so, Colwell, along with his Australian company Controlled Thermal Resources, made Imperial County his second home and began hiring and building relationships in the region to accomplish his goal. And then the price of lithium went up.
Colwell is still set on building yet another geothermal power plant in the Imperial Valley, but this time his long-envisioned project now includes a lithium extraction facility. The facility, named Hell's Kitchen Lithium and Power project, would extract battery-grade lithium from the geothermal brine that is pumped to the surface to create steam-generated power.
The project is ambitious and it is meeting its most difficult hurdles yet: an environmental impact review as required by California regulators and a proposed flat tax that the state could impose on every ton of lithium his company produces in the near future.
Colwell spoke with me on the record on a wide range of issues affecting his project. This is a condensed version of that interview:
Lithium Valle: Where does CTR stand on the state’s proposed flat tax on lithium at this moment right now?
Colwell: It puts the United States in a competitive global market. And the market’s gonna buy wherever it’s most competitive. So it just pust us, unfortunately … just way out of the competitive market. So, in other words, the real simple way would be [to] build a battery facility here; import Chinese lithium would be cheaper. At the end of the day, the intent would be to do it all here.
I think the most annoying part is knowing the governor’s office hasn’t been able to back up with any evidence to say, well this is how they come up with it. It’s been a secret, so they want to just push it through, then put a number in there which is not the right way to do business.
LV: What happens if the state approves the flat tax? What happens then?
Colwell: It’ll stall the industry. Maybe we can do the battery [facility] if our friends at Statevolt, if we can convince Statevolt. We’ll do power production. We can build our power plant, which will sell the power and keep moving that way.
LV: So you'll still move forward with the geothermal plant, but what about the lithium part of it? Will it just kind of stall or stop it?
Colwell: It’ll damage it. I mean, it just won’t be viable. And, again, a commodity like anything else, globally, it puts China back in the box seat.
LV: What happens to the environmental impact review process? If, say, the flat tax passes, then what?
Colwell: Well, it’s a good question. I mean, it’s a power plant and lithium combined, so it would have to finish. We build a power plant but maybe not the lithium plant.
LV: Your biggest critic in the area of lithium is Joe Lowry. He says he doesn’t think you’re going to produce 20,000 or even 10,000 metric tons of lithium within the first year. What do you say to that?
Colwell: He’s wrong. Joe is sponsored by the Chinese producers. And so, he’s kind of gotta be careful what he’s saying here. I think, you know, EnergySource, Berkshire [Hathaway Energies’] work, and our work will produce 25,000 tons, for stage one, of lithium hydroxide with the work we’ve done so far.
So, no, Joe’s wrong. I have a lot of respect for Joe.
LV: I’m curious more about your relationship to Gina Dockstader, the candidate who ran and won the most votes in the district 3 seat of the Imperial Irrigation District board. You gave her campaign almost $10,000. What was the reasoning behind that?
Colwell: It’s really important to us whoever ends up taking over this area, Division 3. You know, you got to understand business and farming and Gina is from a farming family, a great family of great farmers. She understand everything, the whole production, all those sorts of things including water use and she understand the business of geothermal model.
So, we don’t really back a few horses here and there. But this time we did, right or wrong, but she’s smart and balanced.
Movements to Watch
The Lithium Valley Commission will have its next meeting on Thursday, June 30, from 1 p.m. to 5 p.m. in person at the Calipatria High School Library in Calipatria and via Zoom. At this meeting, the state-appointed commission will discuss the state’s budget proposal — possibly the flat tax proposal. The commission also plans to discuss other lithium-related topics like extraction challenges, processing and production. It also plans to discuss the potential of community engagement meetings in the future.
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