Issue 16: A timeline of California’s lithium tax, from pitch to reality
Read the blow-by-blow summary of California’s tax on lithium, a decision that will likely be analyzed for years to come.
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A Bumpy Road to a Lithium Tax in California
Over the course of five days, political forces in California took a lithium tax proposal from pitch to reality. It all started Sunday, June 26, with a set of twin bills that spelled out, in specific terms, how the state wanted to tax lithium production. By the end of the day Thursday, June 30, the state’s top official made it law.
Here’s a blow-by-blow summary of what happened in the days leading up to June 30.
Thursday, June 9: Two lithium industry executives break their silence on a potential lithium tax that they say endanger their projects in the Imperial Valley. Controlled Thermal Resources CEO Rod Colwell and EnergySource CEO Eric Spomer tell The Desert Sun for the first time that California state legislators are considering proposing a “flat tax” that “really kills the lithium industry in the U.S.”
*On this date, no specific terms on a lithium tax had been officially spelled out just yet. Over the next several days, a narrative begins to form around a so-called “flat tax” versus a percentage-based tax that lithium industry executives favor.
EnergySource Minerals engages in an aggressive public relations campaign involving mailed letters, postcards and phone calls to influence residents in Imperial County and as far as Riverside County.
Tuesday, June 14: Colwell speaks to Lithium Valle on the record for the first time, offering his best argument against a “flat tax.” He emphasizes that adding a flat tax on each ton of lithium produced in California will make the mineral cheaper to buy from China — something he says goes against President Joe Biden’s clean energy and supply chain agenda.
Thursday, June 16: A newly formed coalition of environmental and social justice groups, as well as labor unions, hold an emergency meeting early in the morning to draft a letter expressing their support for the proposed lithium “flat tax.”
Sunday, June 19: Sources hint at a possibility of seeing a finalized bill proposing a lithium “flat tax” by the end of the week and a possibility of an Assembly vote by the end of the following week.
Monday, June 20: The coalition, known as the Lithium Valley Community Coalition, makes public a letter of support for a lithium “flat tax” and delivers it to key legislators in Sacramento.
Tuesday, June 21: Salton Sea-area Imperial County Supervisor Ryan Kelley makes public his support for a lithium “flat tax” and expresses doubt over the industry’s dire warnings that it could halt their projects.
Later in the afternoon, two members of the Imperial Irrigation District board, James Hanks and Norma Galindo, publicly vocalize their opposition to the “flat tax” for the first time. “This is how you kill the golden goose,” says Hanks, who is retiring by the end of the year. The IID board, however, does not give an official opinion on the “flat tax.”
Friday, June 24: Imperial County Board Chairman Jesus Escobar emails state legislators in support of a lithium “flat recovery fee” and calls it a “fair, consistent, equitable and measurable” way to levy the mineral that’s to be locally extracted.
Sunday, June 26: After negotiating late into the weekend, California state legislators in both chambers ink a twin set of bills that — in their most blunt terms — propose to impose a tax levy on each ton of lithium produced in the state, specifically the so-called Lithium Valley.
Ultimately, the bills do not propose a “flat tax” but rather a three-tier tax on each ton of lithium carbonate produced in the state. Sources hint at a possible vote on Thursday, June 30.
Tuesday, June 28: IID’s board of directors hold a special emergency meeting to discuss the lithium “flat tax” on the heels of a state Legislature vote on the proposal. With one board director absent, the remaining four directors split 2-2 on whether to give the proposal a seal of approval from the IID. The meeting becomes a parlor of insults, accusations and profanity.
Wednesday, June 29: By morning, the California state Assembly publicizes its agenda for the day, putting Senate Bill 125 — a twin bill to Assembly Bill 208 — on the floor for a vote.
Lithium industry executives make a last-ditch effort to appeal to state legislators in a Reuters story saying the proposed lithium tax will delay deliveries to their buyers. BHE Renewables, a division of Warren Buffett's Berkshire Hathaway, publicly comes out in support of the tax proposal for the first time.
By 8 p.m., the state Assembly approves SB 125 with 55 yes votes, meeting the legally required two-thirds threshold for it to pass to the next stage of the process. It then goes to the state Senate for a final vote.
By 10:13 p.m., the state Senate approves it with 31 yes votes. The bill then goes to Gov. Gavin Newsom for a signature.
Thursday, June 30: By 5 p.m., Newsom signs his 2022-2023 budget and, effectively, the lithium tax into law.
Lithium Tax Adds “Uncertainty” to Projects, Executives Say
Executives for two lithium extraction companies pursuing the mineral near the Salton Sea offered fresh remarks on the state’s tax on lithium as it was being signed into law by Gov. Gavin Newsom on Thursday.
The executives made these public remarks at Thursday’s Lithium Valley Commission.
Derek Benson, Chief Operating Officer for EnergySource, said the lithium tax has “introduced a bit of uncertainty.”
His CEO, Eric Spomer, had previously said the lithium tax could kill the company’s lithium extraction project. Benson instead told the commission that “we’ve got to build the project” but that, for the sake of candor, “we have uncertainty we didn’t have a few days ago.”
Jim Turner, Chief Operating Officer at Controlled Thermal Resources, echoed Benson’s assessment of the lithium tax, saying it adds “uncertainty that we hadn’t planned for in the early stages of our development.”
Like Benson, Turner also suggested that CTR is moving forward with its Hell’s Kitchen Geothermal and Lithium project, albeit a bit behind on schedule.
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