Senate Budget and Fiscal Review Subcommittee No. 4 on State Administration and General Government

Good morning. I think still, and welcome. The Senate Budget Committee. Sub Budget Committee number four on state Administration and government will be in order. Let's first establish a quorum. For purposes of establishing a quorum.

[Roll Call]

Mister Chair, you have a quorum. Thank you very much. Appreciate. Today's hearing is an informational hearing only. We will not be considering any action items, but we will be hearing from some distinguished panelists. Dealing with lithium extraction multidimensionally. Its potential, economically, environmentally, and certainly its potential on the administrative departments of government involved in that coordination or not. So I expect it to be an interesting hearing. We have some distinguished panelists.

The first panel is dealing with the transformative potential of lithium extraction in the Salton Sea in Imperial Valley. And I'd like to ask Doctor Michael McKibben, Professor, UC Riverside, Sylvia Bass, chair of the Lithium Valley Commission, and Naomi Gallardo, Commissioner of the CEC, to please be welcome and come forward. Make yourselves comfortable. And I know that we have some electronic presentation here, so please proceed when ready. And welcome.

So, good morning. Can you hear me okay? All right, so I was asked to talk about the promise of Lithium Valley and its geothermal lithium resources, and was given a list of topics to present. And so I'll go through slides for each of those. Is it better? Okay, so one topic I was asked to address is, why are the brines and the lithium there in the first place? And that has to do, of course, with the geology.

And if you're familiar with the Salton Sea and have been down there, you may have seen the bathtub ring that's around the valley, which is the remnants of older, higher lake stands. And there literally been hundreds of thousands of ancient salton seas that have formed in that valley. They're collectively known as Lake Kahia, after the Native American tribes. And these lakes have formed and evaporated in this salton trough rift since the late pliocene. So over several million years.

And on average, a lake has formed in that valley every 200 years over the past several thousand years. And that's the chart shown at the top. Some of these lakes were quite large. They were three to four times the area of the modern Salton Sea. And you can see the outline of the bathtub ring, or the high shoreline from one of the previous lakes, compared to the size of the Salton Sea. So when people talk about this lake, they need to realize it's never been stable.

It's always either filling up or drying out. That's its natural geologic condition. And every time it fills up and then evaporates, it leaves behind layers of salt. And so the next time the Colorado river floods the valley, it redissolves that previous salt and pumps it into the ground. And it's done that hundreds of times over geologic times. So it's literally called a brine pump. And it's pumped a lot of this brine into the ground. It's now very rich in lithium.

And this brine is now being brought back up to the surface where it can be extracted because of the igneous activity at the southeast edge of the Salton Sea. There's some volcanoes anecdotes there, and the heat from that igneous activity has made the brine expand and buoyant. And you can now find it as shallow as a half a kilometer beneath the surface.

And that's what the companies are drilling into it to produce brine, to make steam for geothermal power, and also to extract lithium from that brine. So it's a very unique geological situation. This geothermal field is going to have to be expanded because there's a legislative mandate that's triggered the Public Utilities Commission to order 1000 mw or a gigawatt of additional renewable baseload electricity. Renewable baseload means not just renewable, but baseload means 24/7 which wind and solar are not 24/7 so they're not considered baseload.

And that's got to help meet a 60% renewables portfolio by 2030 and 100% renewables portfolio by 2045 due to Senate Bills 350 and 100. And really, the Salton Sea geothermal field is the only major California known geothermal resource area that can expand. So this geothermal field is going to have to double or triple its current capacity, which is 400 mw over the next decade, and it's ultimately capable of producing 3000 mw total. Why is that important?

Well, we want to get off fossil fuels for our grid, and so we want to get rid of the natural gas in the tiny, tiny coal component on this chart and replace that with renewable resources like geothermal if we're going to fight climate change. So right now, this development and expansion of the field is going to take at least a decade to be fully built out. Right now, there are 11 power plants down there. They produce 400 mw total shown on the left.

There are three power plants undergoing permitting right now from the California Energy Commission. Morton Bay, Elmore North and Blackrock by Berkshire Hathaway. And those are shown in the blue squares there on the right. And recently permitted was the first phase of Hell's Kitchen for controlled thermal resources, which is 50 MW. They're going to do six more duplicates of that power plant over the next decade, eventually reaching 350. That's the large red square in the top of that figure.

So those are the current plans for expanding this geothermal field. And so one question is, how much of the lithium can we extract from the current field and the expanded field? And that's a pretty easy calculation to make. We did this for our report that was put out in November. You just need to know the mass, the brine, the lithium concentration, and the recovery efficiency.

And if you do that for the current capacity of 400 mw, you calculate, since we know the brine production history over the last 20 years, we can predict the future production history from that. And so, for the current capacity, we know we can produce about 22,000 metric tons of lithium per year. That's lithium metal. And then you convert that into the commonly used unit called lithium carbonate equivalent, or LCE, which is how most lithium is marketed around the world.

That's 115 metric tons of LCE per year, and that's enough for almost 4 million electric vehicles per year. If we double and then triple that capacity from this field, then the numbers go up accordingly. And so we could easily produce half of the current global production of lithium by tripling the expansion of this field. And that's pretty significant. There are a lot of environmental advantages to geothermal lithium extraction. It's called direct lithium extraction. One is the aerial footprint.

It's the smallest way of producing lithium in the world. It's a closed loop process because the brine is reinjected back into the reservoir after it's used. It's not dumped out on the surface. So you don't have any evaporation ponds like you have in South America. You don't have open pits like you have in Australia. You're not blasting, you're not smelting, and you're not consuming all the electricity and fossil fuel power to do all that kind of stuff.

And perhaps equally importantly, you're not emitting all the CO2 it takes to ship that lithium from South America and Australia to the rest of the world. So this shows a comparison between evaporation Pond Operation in Chile, which is about 3000 acres, an Australian open pit hard rock mine, which is about 5000 acres, and a geothermal lithium extraction facility, which is about 50 acres. And that's because you're just adding a lithium filter onto an already existing power plant.

You don't have a lot of capital expenses and a lot of infrastructure to build. The infrastructure is already there. Also, direct lithium extraction is very efficient. You can get over 90% extraction. I'll show you a more specific example in a moment. Whereas this evaporation ponds are, only 40-50% of lithium is pulled out. Other advantages are that direct lithium extraction can be self-powered with renewable geothermal energy instead of fossil fuels.

And you can actually use the steam condensate from the geothermal power plants as a source of fresh water, rather than use Colorado river water. So the companies have been testing their technology for direct lithium extraction. They're now all focused on these illuminator clay like absorbents, and they basically use these in these giant fluidized bed reactors. You can think of those as giant blenders or food processors, and that allows a lot of absorbent to contact a lot of brine very quickly.

And this technology is currently used in Argentina on some solar deposits, and they just started using it last month in the Rhine Valley in the European Union. Vulcan energy is now using GLE on their geothermal vines there. So it's new technology, but it's applied to geothermal, but it's now being used commercially. So this is controlled thermal resources study of the extraction efficiency of their pilot plant, which they ran at one 15th scale. Berkshire Hathaway is currently running in demonstration plant at one 10th scale.

They're all trying this at small scales so they can learn what they learn at that scale and then scale up to full commercial scale. But CTR is getting 95% to 97% lithium recovery, which is really outstanding and very high selectivity for lithium over other metals like sodium, calcium, and magnesium. So it's very efficient process and very high recovery. Lithium isn't the only metal that people are interested in these brines.

Brine contains most of the periodic table, including a lot of valuable critical elements like manganese, zinc, potassium, strontium, and rubidium. You think about the potash market for fertilizer, is totally upset by Russia's invasion of Ukraine, and so there's an opportunity for potash recovery to make a big dent on that market. We need rubidium for things like Quantum computers. And these are all critical minerals because they're important in technology or defense, and we have very high import reliance.

And some of the countries we get these from are not our best friends, and that's the definition of a critical mineral. So lithium is not the only metal of interest in these mines, and the companies are actually working on recovering these metals as well. So I want to point you to a new report that just came out by Benner et Al. It was a UC Santa Cruz Berkeley Energy Nexus Report that projected supply chain-related job scenarios for Lithium Valley. So, they took two scenarios.

They took the current power production in this geothermal field. Now, the amount of lithium you could produce from that, and what the battery production rate in gigawatts per year would be, and how many EV's you could produce per year. And then they made a scenario that was double that. Remember, I said we could double the power, that capacity of that field, and recalculated the scenarios accordingly. And then they calculated the number of jobs that would be generated for the current output and the doubled output.

And that's shown in that lower table. And they separated into jobs related to lithium carbonate extraction, and then jobs related to cathode manufacturing. That's CAM. Jobs related to making cell packs for electric batteries, and then jobs related to manufacturing electric vehicles. And they use several models around the nation and around the world to protect these jobs. And you can see the number of jobs per gigawatt hour, and the total number of jobs that they're forecasting are actually pretty substantial.

But what they didn't factor into this, you should think about, is recycling jobs. So, if we can get the entire supply chain down there, from pulling the lithium out to making batteries, making battery packs, and building electric vehicles, and then recycling, the job potential is actually quite amazing. According to this report, these are the kinds of jobs or occupations that would be generated, and the titles and the annual mean wages, and then the typical education requirements for entry into these positions. So, these are good jobs.

They're STEM jobs, basically. And most of the jobs that would be generated would be in cathode manufacturing and battery pack manufacturing. Lithium extraction will not generate more than a few hundred jobs. But these other types of activities would generate hundreds to thousands of jobs. So, I'll leave you with these two links, which are the report that I was a co author on that was issued in 2023 by Lawrence Berkeley Laboratory.

And that was our estimate of the lithium resources in this geothermal field and the environmental and water impacts of extracting those resources. And in this new report I just mentioned that just came out on job scenarios for the supply chain and lithium value. Thank you for your time.

Thank you very much, Doctor McKibben. We'll move to Sylvia Paz, the Chair of the Lithium Valley Commission. Welcome.

Thank you. It's a microphone. Yeah, it's on. Thank you, Senator Padilla. Thank you, Members of the Committee, for having me here. My name is Sylvia Paz, and I will be talking first a brief introduction about myself, my organization, how I ended up in the Lithium Valley Commission, background on the Commission recommendations in the report, and some reflections a couple of years after that report has been submitted. So, again, my name is Sylvia Paz.

I was raised in the Coachella Valley, in a community in very close proximity to the Salton Sea. I actually in a mobile home community, and I now lead an organization called Alianza Coachella Valley that is based in the Coachella Valley with a purpose of improving and creating real economic opportunities for the people, mostly farmworking community, that live surrounding the Salton Sea, and improving quality of life. So I was appointed by Governor Newsom to the Lithium Valley Commission, and I served as the chair.

And obviously, my perspective was to think about what we were hearing at the local level as this promise to not only transition into a green economy, but also to create jobs and to transform the lives of our residents. Right. And with some of the numbers that Doctor McKibbens mentioned and the potential there, it's really easy for us to be thinking about, well, this is going to transform our communities.

I think a lot of the conversations in the Lithium Valley Commission is yes, and only if we create the environment so that we can capture more than the extraction itself, but the supply chain, as Doctor McKibbens was talking about. So, a little bit of background on the Lithium Valley Commission. We were established through legislative Bill AB 1656 by Assemblymember Garcia, which created the Lithium Valley Commission under the California Energy Commission, composed of 14 Members, all appointed.

And we were tasked to analyze, review, and provide a set of recommendation on eight topics. The topics ranged on a variety of understanding more how we advance lithium recovery and the co benefits with GDP geothermal extraction. What does that mean for grid stability and understanding the environmental methods for extraction?

What is the difference between lithium extraction, versus lithium mining and its environmental effects, as well as any recommendations for legislative or regulatory changes that would be needed in order to encourage new lithium extraction industry out of the geothermal plants. So, with that, we met about 26 times over the duration of the Commission, engaged experts like Doctor McKibbens, people from the industry, to understand more the context of lithium extraction, as well as some community engagement.

So, hearing from community Members and our tribal neighbors, the report was submitted December 1, 2022 with a total of 15 recommendations. And again, thinking back, when I look at these recommendations just on themselves, they don't capture really the entire essence of the conversations. So it is, again, very important to ground us in the context. And I think these Committee hearings help us do that. But to go into the recommendations. I broke them down into some simple categories. Some are, what are the needs of the industry?

And the industry expressed a clear, a need for a clear, streamlined permitting process, both for geothermal and for the direct lithium extraction process. And again, thinking about capturing the entire supply chain. We think this streamlined permitting process also needs to apply to related manufacturing. Yeah, related manufacturing efforts. The other recommendation was investments in R&D. So the technology is new.

There have been investments from both the Federal Government and the state to test some of these methods that have been given to the industry, and the importance of continuing to invest in research and development, but again, not just in the extraction, but the battery manufacturing and recycling process. Another category was under environmental process. So we have learned that there is a difference between extraction and lithium mining.

With direct lithium extraction being a closed loop system, you can extract it directly from the brine that it's already coming out of the geothermal plants. So because it is a closed loop, it does have less environmental impacts, both in the footprint that we need in order to capture the lithium, but also in the use of water. Having said that, there was a lot of during the time unknowns, and we have a little more data now. So, there is a report that Doctor McKibbens was involved with.

It was funded through the Department of Energy, and it was recently published. But the report was looking not just at how much lithium is available in the known geothermal resource area in the Salton Sea, but also to better understand the impacts to air and water. When we're talking about air, it becomes very important because we are a rural community in the border, already exposed to bad air quality. And adding anything to it, it's just doubling the impact or the cumulative effects.

Some of the new learnings in the report, and I know Doctor McKibbens knows more on that, but my takeaway from the report was that there is some levels of ammonium, and what is it? Sulfur, hydrogen sulfide, that does come out in the process. And it's in the air, it is still within. It means the standards for the state and federal. But one of the things that we do not have right now, it's a way to capture the baseline.

So if we are looking at increasing lithium extraction and increasing the number of geothermal plants that are going to be there, it's very important that we have a way to capture a baseline, so that then we can measure and continue to moderate monitor along the way, so that we can measure any impacts with relation to water. Again, it has been said that it's minimal compared to other extraction methods.

And it's also a fraction of the water that is usually currently allowed for agriculture, and even that is positive. But there are still unknowns, and there's more need for understanding the cumulative use. Again, as we're thinking about broadening and really extracting more lithium.

And the other thing, putting it in the context of the Colorado river, if there is less water available, even though it is a fraction of what is currently used for agriculture, we need to be weighing down how this water is going to be prioritized. Is it going to be prioritized for this industry? Is it going to be prioritized for agriculture or for other related needs? The under environmental recommendations, too. There was conversation around public health impact assessments during the Commission meetings.

I mean, the state was moving their budget, and Imperial Valley did receive funding to look at environmental impacts. The northern end of the Salton Sea did not receive any funding. So we might end up with a place where we understand environmental impacts of only one side of the Salton Sea, not the other, unless there is an effort to fund the other side of the consultancy.

There was also a recommendation on the topic of water to fund IID to do a water study, taking into effect into consideration the cumulative use of future geothermal lithium extraction development, and so transitioning into another category, regional economic development and investments. There are several recommendations under this category. Recommendation three talked about economic zones.

Again, if you live in that region, you would understand how Imperial Valley, Coachella Valley, Palo Verde Valley, have so many things in common already, not just an agricultural base of workers and environmental concerns due to our environment. However, when it's come to being able to create either an economic plan that would address our situations, we are divided into the southern border region or the Inland Empire region. So the needs of the Salton Sea region are really diluted when we get separated like that.

And we felt, again, that if we're talking about creating the environment for a future lithium industry, it was important that as a region, we're investing in it so that we can become more competitive. So, and there is a Bill that Senator Padilla did co author with Assemblymember Garcia AB 2757 that is addressing that. And it moved out of Committee last week. So we're very happy about that. Infrastructure was not necessarily a topic that we were tasked with exploring, but naturally giving our context.

You couldn't have a conversation about a new industry without talking about infrastructure. We are rural communities. We lack infrastructure just for basic needs. People being able to get from their house to their jobs, to school or to the Doctor and even more, thinking about adding a whole new industry that would require a new housing or other developments. Just the infrastructure is not there.

And when we're talking about infrastructure, we're talking about not just transmission lines, which are important directly for the transition into this clean energy future. So there is recommendation number two in the report, to invest in new and upgrades for transmission lines in the Imperial Valley. But there are two other recommendations that just broadly talk about the need for resources in infrastructure overall, from roads to rail, to sometimes it's water, broadband, things of that nature that are important.

And then the last one that I'll mention is capacity development in the region. So, when we're talking about, again, workforce development, it became very important that if we're going to be capturing the benefits that we need to focus on hiring local, and so then ensuring that we had a local workforce that was ready was important. So, recommendation 11 does request for funding for stem curriculums that would prepare people to enter the workforce in this industry.

And more broadly, recommendation 13, just capacity development for our local tribes and EJ communities to be able to learn and engage and move along the process as these decisions are being made. So, I will close now with a few reflections. I mentioned there was a lot more unknowns when we started. Now, with Doctor Benner's report and the Department of Energy report, we do understand a little bit more of the impacts, things that we need to continue to track.

And I would encourage you to think of this report as, again, a place in time with what was known there. But this industry continues to change. The needs continue to change, and the advancements also might change where we need to pivot to in order to capture this. The other thing is that it will require multi agency collaboration. It's essential, again, because we're not, ideally, not just talking about extraction, we're talking about really creating this environment that is going to allow us to capture the full benefits.

And we cannot do that unless we're addressing it from the various other aspects that were captured in the recommendations. So, with that, thank you for having me here.

Thank you, Chair Paz, for your service and for that summary and reiteration of the myriad of complex recommendations. They're happy to welcome Noemi Gallardo, Commissioner for the California Energy Commission. Welcome, Commissioner.

Thank you so much. I appreciate the invitation presentation. While they're setting up the PowerPoint, I just wanted to clarify. I'm Noemí Gallardo. I am a Commissioner at the California Energy Commission, and the Lithium Valley vision is part of my policy portfolio.

All right, so I'm going to focus on where we stand today and really appreciate Chair Paz's background information there. So I'll lean on that a little bit. My Chief of Staff, Eric Stokes, just gave you some material which we thought would be helpful for you to reference. It's a little long, so you won't be able to go through it right now, but I'll speak to that in a little bit. So I did want to focus on some actions that the Energy Commission has taken.

So my focus today will be our leadership role in the lithium Valley efforts. So, from 2021 to 2022, when the Lithium Valley Commission was active, the Energy Commission was supporting the Commission. So there was legislation, as Chair Paz indicated, but there wasn't any resources allocated. So Energy Commission stepped up to provide that support to put on the meetings, to coordinate events and workshops and whatnot.

So it was a big lift, but it was a really great experience to be able to work with the Commissioners themselves on the Lithium Valley Commission. And also, you know, we worked with the community to be able to find venues and put on these various events. We also drafted material and published material that was related to the Lithium Valley Commission. And then after the Lithium Valley Commission ended, they decided to close. We didn't have any other legislation directing us or guiding us in any way.

In 2023, that's when I became Commissioner, and I decided that what would be really effective was for me to get to know the people and the place of the Salton Sea region better. And so I focused that entire year on visiting and engaging, learning, garnering more insight from all the folks that were local there.

So we met with tribes, the local governments, both the County of imperial, and the mayors and city managers of the cities that make up the Imperial Valley also, you know, also engaged with the unincorporated areas and just tried to do our best to find out as much as we could. Additionally, we would take out state representatives to the area to help them garner a better understanding of the various dynamics there so that they would be well connected.

And I do want to emphasize in these two pictures, I appreciate that two of our commissioners are there, aside from myself, our Vice Chair, Siva Gunda, and also our other Commissioner, Patricia Monahan. And I'm really proud of myself. I got all of the commissioners out there at least once, and so I wanted to make sure that they had a full understanding of if they had to make any decisions on Lithium Valley related items, that they would understand what it meant.

We also took them out there during the summer, which is extremely hot, because I wanted them to get the full experience of what the residents go through as well. So that was part of my focus that year. And then also we were developing relationships with the Federal Government.

So we did a delegation out there with the Department of Defense and also Department of Energy, and they found it really helpful, because I think, you know, being in Washington, DC, it's hard for them to fully grasp the potential of this area and the industry and the people as well. And so that was helpful to them. And we've developed relationships with some of the departments that work on grants for manufacturing, for battery supply chains. We also are developing a relationship with the Department of Defense.

It's like a community grants office. And so we're thinking that that has potential for additional funding and investment in the area. And then in 2024, we also don't have any legislation guiding or directing us, but we thought it was really important to start taking action. And so we have been focused on convening the state entities that are involved already with Lithium Valley efforts or are interested in getting more involved. And so we've been, Energy Commission has taken the lead on convening those state entities.

So we started that late 2023, and we're continuing now in 2024 to do that. And that's been really helpful as well, because we've been able to find out from them what are the recommendations that the Lithium Valley Commission adopted that are being addressed by the state entities. And so we're trying to also do that. That's a big focus. And then, in order to help organize us as well and keep the attention on Lithium Valley, we established an informational proceeding on the Lithium Valley Vision.

So that's moving along now, and I'll talk a little bit more about those in a little bit. So we'll go to the next slide. So we did a big event, the Lithium Valley Symposium, out at Imperial Valley College. That was on March 29, and that was kind of like our launch to get folks interested in informed about our informational proceeding and all the other efforts that we're working on.

We also used that as a way to be able to find out what was happening in the area on Lithium Valley and get as many different perspectives and people involved. So we co hosted that symposium with Gobiz, who we've been working on Lithium Valley really closely since the beginning, and also Imperial Valley College. We had over 130 people in attendance.

As you can see from the top image there, we had representatives from all the local governments, cbos, some tribes, industry, trades and unions, academic institutions, research labs. So tons of interests from all different angles, and it's hard to see in that image. But Senator Alex Padilla isn't able to attend, but he's very interested in the Lithium Valley succeeding. And so he did a recording for us expressing that message to the audience.

And also note there that we had 17 representatives from the state go out in person to be there for the symposium. So that also indicates the support we have from our state entities. The picture at the bottom shows some of those folks in an array of different state entities, including from the governor's office, and, of course, Assembly Member Garcia was there as well, representing the Legislature. All right, so we'll talk a little bit more about the Lithium Valley vision informational proceeding that we have going.

So it is a little nerdy, right, and bureaucratic, but that's one of the mechanisms that we use for state entities to be able to get together, to be able to dialogue, get the information we need, establish a record, etcetera. So we thought it was important to do this, and we thought it'd be a better way to also have a coordinated approach to the lithium Valley vision instead of just having the Energy Commission trying to do everything, because we wouldn't be able to do that very well.

We have a process. We're going to do a series of workshops where we invite experts and, you know, people interested to participate and give information. So we had a workshop on April 19 to launch. We invited the County of Imperial to come talk to us about their specific efforts on Lithium Valley, which was really helpful to hear and also garnered a lot of interest. We had over 100 attendees via Zoom, and we had about 20 people in the room, 11 people making comments.

And so there's still a lot of excitement around this. We don't have the second workshop set up yet. What we wanted to do is gather information from the audience and other folks who are interested in Lithium Valley to determine what would be the next topics that we should cover. So we're trying to gather that input now. And you also have in the material, I believe, a list of the various topics that we were thinking to put forward.

And we will give you an updated list as well, if you're interested of what we gather from the public. Let's see. I think we can move forward. So, on the Lithium Valley Commission recommendations, as I mentioned, we don't have any legislation telling us you need to follow up or you need to do X, Y, and Z. We thought it was important for us to do the follow up on the recommendations, to identify and determine what is being addressed.

Given that we were the support for the Lithium Valley Commission. They did a tremendous job. Chair Paz did an excellent job leading, and that was a really difficult job, too, given all the diverse perspectives that were on that Commission. So we thought it was our duty to follow up. So that's. We've been working on that.

So just a little bit about what we're finding is, you know, the county is working on a lot of things, and we didn't want to duplicate their efforts or, you know, throw them off track in any way. So it's been really good to have the dialogue with the county. So they're one of the key players in Lithium Valley. So we're doing a lot to stay aligned, to continue communicating and continue collaborating.

And they actually have been able to address six of the 15 recommendations, and our agencies have also been addressing some of those. So now we're trying to ensure that we're supporting their efforts, reinforcing their efforts, et cetera. And then the state entities have also been addressing others. So, total, there's about 12 of the 15 that are being actively addressed. Chair Paz, excuse me, mentioned the Assembly Bill 2757. That's directly addressing one of the recommendations to establish that economic zone.

And then two of the recommendations have not been addressed. One of them on the health impacts on the Coachella side of the Salton Sea region. Chair Paz mentioned that earlier, too, that the entire region needs to have an assessment on health, and the county is doing a health assessment for the County of Imperial, that area. But there isn't anything that the state is doing right now. On the other side, however, we have heard that there are academic institutions actively involved in doing some health studies.

So we're thinking one of our next steps will be to find out which universities are doing that, what are they focused on, and what's missing, and then can the state play a role there? The other one, the other recommendation that hasn't been addressed is to require and Fund the imperial irrigation district to conduct a water study. And so none of the state entities are doing that. The county isn't active on that.

However, during our workshop, we did hear from Members of the public who mentioned that the water is really important to them. Chair Paz also mentioned that earlier. So we're not sure what we'll do there, but just noting it for you, that that is something that's important. And here I also included a link to the detailed summary of how we're addressing the Lithium Valley Commission recommendations, and we provided that to you in the material as well, for you to review but that mostly covers it. I'm happy to answer any questions if you have, if you have them.

Thank you very much, Commissioner, and thanks.

Absolutely.

I know that some of this is dense, and I think for those that are concerned, rightly so, because the potential benefit is substantial. And that's under. That's an understatement. But a couple things I'll take. I have some questions for each of you. First, Professor, thank you. Again, you mentioned a couple of things. We talked about the status of understanding the unique methodology given the existing geothermal infrastructure out there on extraction and separation.

And you mentioned that, I think in your prior work in the presentation that the scaling of that to massive production demand is one of the key challenges, shall we say, or opportunities. But because given the fact that a lot of the byproduct there on site is also a lot of other byproducts, but one of which is water, it doesn't take a lot to treat that to a certain standard. And there are a lot of different potential applications, as the chair mentioned earlier and you mentioned.

So first, what do you think are you envisioning, because you also mentioned on site and downstream economic potential. One of the things that's always been discussed in this conversation that's unique and has global impacts, frankly, is that if this were approached correctly, you have the opportunity for onsite extraction, separation and co production. Right?

Do you think we are looking at this through the lens of separated geographic model, a traditional model of the chain production, or are we thinking about this in terms of dealing with the infrastructure challenges? Do you envision something that takes advantage of the opportunity to extract separate co produce on site and thus reduce downstream economic costs? So are we envisioning a model that's traditional and extended because California, and just to preface it, has some always disadvantages when looking at the global competitive picture for this resource.

Other states do not have the land use, environmental or workforce standard and standards that we proudly embrace in California, but on a purely economic model, that can be a disadvantage. So we have to look to our advantages, and that is we have the supply of the raw material. We're literally sitting on it. We have existing infrastructure that does it in a superior way. And we have opportunities. We're smart to find a way for California to compete in that.

Against folks who say, you want us to build a plant in a burial ground tomorrow? Sure. What's environmental review? We'll have it done in a week. And that's what we're competing against. Right. So if you could just address that in terms of are we thinking about this as a downstream distributed production model? Have we thought about this, about on site advantages? What do those look like? And what is the real risk that the extraction and separation model can't be scaled up? I mean, it's scary, but I imagine we ought to address it. So, I know it's loaded, but I thought I'd give you a chance to.

Loaded question. So there is some risk in scaling up. There have been efforts to extract metals down there before that didn't scale up. There was a zinc extraction effort in the mid about 2005 where they made some technical mistakes, but they're pretty confident that they've overcome those technical barriers.

Now, at least one of the companies has a tremendous vision for our lithium campus down there, where they are making plans to not only do lithium extraction, and then conversion of that extracted lithium chloride to lithium carbonate equivalent, which is what the battery manufacturers want. And then they've struck an agreement with Statevolt. It was a battery manufacturer to develop battery manufacturing capabilities down there, and they're also envisioning additional facilities down there that would cover the recycling of battery components, which is a very complicated process.

And our big competition, I think, looming in the future is the Nevada. I don't know if you're aware of Thacker Pass and some of the other very large, hard rock lithium deposits that have been discovered there, but the whole area around Reno and that production area, potential for lithium is now looking at things like battery manufacturing and establishing an entire supply chain there. So I think that will be our economic competition within our own borders in the very near future.

So I think there's ideas about doing all of that and establishing the entire supply chain. It's not without risk for the reasons that Sylvia mentioned, which are infrastructure. So there's a lot of unpaid roads down there, a lot of old bridges that need to be strengthened so trucks can pass over them, more highway use down there, and so you need infrastructure to drive all this. Manufacturing and rail lines are really important transmission lines. They've all been mentioned here.

And so that's why this collaboration among different agencies and stimulation of funding for those kinds of activities, I think will be so important if we're going to be competitive.

I appreciate it. And to that end, in order to address that in effective and competitive coordination is a theme among all your presentations to that, to Chair Paz, you know, the recommendations pointed that out in many different aspects. Continuously is an important common thread. Couldn't agree more. Can you give us an assessment now? Because it's been a little bit of time since the initial release. But how would you assess the lack of or still the continuing need? Because I'd love to get your thoughts on the degree of coordination that you see either occurring or not occurring.

So referring back to the work that the Energy Commission has been doing and the leadership of Commissioner Gallardo, it is reassuring that we have the agencies talking to each other. And that's how in the hearing or proceeding you had last week, we're able to understand, okay, where under these recommendations is there an effort, right. To advance? Who's working on it? I think that is the beginning one of the challenges that I have seen, and it's probably just how government and systems are naturally created.

And that's going to be our challenge, is that we think about our funding and mandates in a very siloed approach. And where we need to get at is to thinking where are the opportunities for these sources of funding? Because the state as a whole, the different agencies involved do have some resources. Where are the potentials for these resources to start supplementing each other versus saying, well, air resources is here and this is our mandate and we're going to do this.

And they never talk to whatever transportation is doing and they use their funding. So that level of how do we get through maybe some of the structural things around how agencies are using their funding and how they can leverage each other's funding, I don't see that happening a lot, and I think that's going to be key moving forward.

I agree to our challenge. And Commissioner, to that point, you touched on it in your presentation. I appreciate it. And I know that you, at your age, he's aware of 1309 that I introduced to establish a production council. And the thinking here, it's sort of that point. Right. Like what's the organizing template that takes this stuff and looks for coordinating complementary alignments or gaps and then actually has some ability in a concrete way to direct outputs. Right.

I mean, at the end of the day, it can't be an academic exercise. So with that in mind, Commissioner, talk to me because I don't know that it necessarily requires statute. Right, right. Because you described some good collaborating work that you're doing and love to know. So what we're preparing to do and your thoughts about whether there is that structural element that's missing, comprehensively missing, because I think that's fundamentally the challenge here.

Right. So let me see how I tackle this. So we are, you're correct, we don't need a legislation or statute to act. And that's, you know what I've been doing since I became commissioners, trying to take action. But it has to be very thoughtful, cautious, careful, and meaningful.

And so that's why I wanted to start with meeting more people better, understanding the dynamics out there, fully understanding the needs and the priorities, and not stepping on toes and respecting the leadership there, and that the history in the past, and that I am an outsider. So I think, in General, I've done well in establishing various relationships and being able to obtain that information.

And so now what I'm doing is sharing that with the state entities that I have, and I'm trying to develop a partnership among the state entities. Some of them are extremely excited to work on Lithium Valley. Cal Recycle, for example, is one of those. They're really interested in the full life cycle of the lithium and, you know, trying to do, you know, like the campus that Doctor Timmons described, you know, is there possible to do recycling there, and what different types of recycling can be done?

So I think there is a lot of interest. I think there's a lot of enthusiasm for it. It's a matter of being able to coordinate. So one of the difficulties in not having, like, you know, in statute.

Or. Funding that's allocated is that we don't have a ton of resources. So when we did the Lithium Valley Commission, when we supported that, we weren't allocated resources. So we needed to take staff that was working on other projects and programs and move them over to help us fulfill the Lithium Valley Commission requirements. So that's difficult, but we are always going to do the best job possible to fulfill the statutory mandates with whatever resources we have. We don't have those resources. So, really, it's in my office.

You know, I've taken it on as my duty. It's an area I lead, but I'm very passionate about it and want to make sure that the community there thrives. And so it's myself and my Chief of Staff, Eric Stokes, who's working on Lithium Valley. So we don't have other staff Members that are allocated to it because of how we have to balance the resources. So that's just one of the challenges that we have to work on.

And then in terms of kind of what you're talking about, the idea of the council, I won't comment about it or give my opinion, but those are the types of mechanisms that can help bring more cohesion. I mean, that's why the Lithium Valley Commission was also established, to have that cohesion, to be able to have that form for dialogue.

So we're trying to do that right now, through the informational proceeding where we can continue having that dialogue, and we're hoping that we can get to a place where we have enough information that we can develop an assessment to potentially have some strategic next steps from it or some recommendations for the Legislature, the governor's office on how to continue moving forward and in an effective way.

But those things, again, they require a lot of thought, investment strategy and partnership and collaboration, you know, being the key thing there. So we have to continue doing that. So I won't say that we're perfect. We've done it. As chair Paz mentioned, it is the beginning. So we see that, as, you know, our start point, that we have to coordinate.

Many of us see that, Chair Paz.

Yes, if I may. So we're talking whether there is a need for legislative action or not, what's going to get our agencies to allocate funding for this region? And I don't know how we do that without directing them to do so. I know that there are models and I can share some information. There was a task force for the San Joaquin Valley at some point that directed different agencies to say, you're going to invest in this region.

So it didn't require them to come up with additional funds, but it was the model, if I understand it correctly, was around looking at the money that's available for the agencies and how they invested collectively in a coordinated way into the region. So I do think how we get there, I'm not sure. But they're, does need to be some direction because at the end of the day, investing in the infrastructure is expensive. And with the existing dollar allocations that exist right now, it's a competitive process.

So our region, because we faced a lot of disinvestment, a lot of times we're not even ready to be as competitive as we would like. So I would, yes, some direction for the agencies to invest in that area.

I appreciate it. And I know I want to go to Senator Niello for questions for this panel, but I'll just say that point, I think that's the great irony here, isn't it?

I mean, if, in fact, this is a priority for the state from the Governor on down and priority for the nation from the President and the White House and others, because, you know, the irony is that this has such tremendous potential economic impact that it is truly national and global in scale, but yet it is cited and located in a community that is often overlooked, ignored, intentionally disinvested, misunderstood for a variety of social and economic factors. That's the great irony, isn't it?

And I think the challenge is that we have to stop thinking about this as some kind of a local district thing. It's not. The potential of this in Lithium Valley is truly national and global in scope. And it's long past time that the state coordinate and figure out what our role here is, because the irony is if we get this wrong, we will just not be playing at the table, the global table.

And there are national security, public health, resource, economic infrastructure, and on and on impacts here. And I think what's always been frustrating to me is representing parts of my district that are poor, exploited, underinvested communities of color.

It is for those reasons, frankly, that we continue to struggle to make this understood and to make it a priority and to get it coordinated, because I will promise you, if we were sitting on almost a third potential of global demand for lithium in other parts of this state, this would be the number one priority in the State of California, full stop, period, because of the potential on California's economy and the north American export economy and national security implications and on and on.

But because it's what it is, it somehow is second and third fiddle. And I just can't express enough in words how frustrating that is for someone who not just represents this area, but has grown up with these dynamics. And I want you to be brief, Professor, if you could, because I want to turn it over to Senator Niello.

Yeah, I just want to express another concern I have, which is the health issue. As you may know, we now know that it's a bacterial component in the playa dust that's triggering asthma. And we can't expect to bring in a large workforce to run an entire supply chain if they're all going to get asthma. So we've got to solve that health problem in parallel with developing the economics down there.

We can do a whole other set of panels on that. I'll go to Senator Niello if he has questions for this panelist. Panel. Senator Niello.

Not many anymore. To your last point, there are lots of regions in California that have the same sort of self perception, as you indicated. I call it the Rodney Dangerfield complex. Rodney Dangerfield, I don't get no respect. Right. And so don't feel like the Lone Ranger on that. But I certainly understand what you say, and I gather what the potential is for the entire state as well as the country.

But if we pursue it, hopefully it won't be like the Silicon Valley, which is concentrated in the Silicon Valley, benefits the Silicon Valley and has very little impact on areas outside of the Silicon Valley. But if I. You mentioned a third of world production, and the one slide struck me in Doctor McKibben's presentation, how much dissolved lithium brine might be recovered each year, and tripling capacity is fully 50% of current global, global production. Do I have that right? Well, that sort of gives you.

That's why you use the term a third of global production. But the question that I had in reading the material is, there'll be a significant increase in the production of energy as a result of ramping up to get more lithium. So that currently we have a process where lithium is a byproduct. What we're going to have is a process to extract lithium, and power is the byproduct.

My understanding is that currently the energy is consumed locally, and with a significant increase, there'll be potentially the need to transfer energy to other areas, to the users. However, you spoke to a rather elaborate horizontal production industry in the local area, taking lithium, having battery manufacturing facility there. And once you make the battery, have an actual automobile manufacturing entity there. That is certainly a grand idea. Possible, but obviously quite a grand idea.

I don't know what the concentration of lithium is in the final product of a battery. I know it's significant, but other materials would have to be brought in. And as far as vehicle manufacturing is concerned, certainly a battery is a major component, but a car takes significant other raw material. So that essentially, conceptually, what you're talking about is, no, we're not going to transfer the energy to other users. We're going to bring the users here and continue to use the energy locally.

That's an oversimplification, but it's certainly possible. However, Senator Padilla talked to the issue of the regulatory burden in the State of California, and this is an editorial on my part. In order for us to attract that level of private business manufacturing to the state, given that most manufacturing, large manufacturing, has left the state, that we have to begin to look at the regulatory.

If we're really going to be aggressive about this, we have to begin to look at the regulatory process, where the cost of the burden of the regulation has to be compared to and equated to the benefit of the regulation, and to the extent that the benefit of the regulation, the cost of the regulation, exceeds the benefit, which in many cases is the circumstance we have now, which is why many people like myself, are critical of the regulatory burden, that it will be very difficult to recruit that type of industry to the state.

As I said, that's kind of an editorial on my part. But we have to make sure, and I'm not saying we can't have regulations. Regulations serve a good purpose, but to the extent that we pay more attention to the protected class of the benefit than we do the payer of the benefit, it will make it very difficult to achieve what is a grand but potentially possible a goal for this area.

And in the meantime, though, there would be significantly greater power generated out of there than would be used locally. So I'm wondering if you have thoughts on how that might be utilized, because it could be sold, obviously, but there's got to be transmission in order to get it elsewhere, for people to pay for it, for it to come back to economic development and help to Fund a lot of the things that need to be funded to get to that lofty goal.

Yeah. So getting the power to the rest of the grid, whether it goes into the California grid or into Arizona, as some of it does, is a big challenge. Getting right away for the transmission lines. And Naomi could address all that better than me. But I think there's precedent for states and communities trying to ramp up these kinds of lofty ideas about electric vehicle manufacturing.

You look at the State of Arkansas and their plans with the Smackover Formation to produce lithium out of the oil filled brines there. Look at states like Kentucky and Georgia, which have given a lot of incentives to auto manufacturers to come in or battery manufacturers to come in. So I think there's models and precedent that California could use. And you're right that our regulatory framework is not always to our advantage.

But, again, coordinating amongst all the interested parties and getting the legislation involved is the way to approach that. And, you know, the job benefits and the tax revenue benefits should be the argument to the Governor and the Legislature for doing these kinds of things. So there's examples around the US as to how to do this and how we could do it.

Well, I have to say the lofty idea truly does appeal to me. But given, given the magnitude of the effort and the magnitude of the benefit, we really need to think long and hard about how we regulate private industry in this state.

Thank you, Senator. Welcome, Senator Smallwood-Cuevas. And just want to give you an opportunity, if you had any questions for panel one, we went through it or ready to move to the next one, it is a. Thank you, ma'am. It's a crazy time for all of us, as you well know. We'd like to thank you for your patience and for your presentation and the Q and A very much. I'd like to invite panel two, which focuses on investing in this vision.

Economic support of the lithium extraction industry and surrounding communities. Eric Stokes, who've been referenced many times, the Chief of Staff to the Commissioner. Tyson Eckerley, senior advisor to clean infrastructure mobility in the Governor's Office of Business and Economic Development. Please come forward and welcome. Make yourselves comfortable. I'm told we need a minute to switch out presentations, possibly. So we'll give you a Sec to do that. And please proceed when ready. Welcome, Chief..

Thank you, Senator Padilla, for inviting me to come speak today. My name is Erik Stokes. I'm the Chief of Staff to Commissioner Gallardo, who spoke just a second ago. I also serve as our lead advisor for Lithium Valley. My presentation today will provide an overview of the Energy Commission's investments into Lithium Valley, as well as the broader statewide lithium economy.

And if we need a minute to get that sorted, that's perfectly fine

So, I think we have the slides up. So I wanted to start off by quickly going over the figure on the right. This is from the Department of Energy's national blueprint on lithium batteries.

Doctor McKibben went into this a little bit in his presentation, but it kind, kind of of shows the key stages in the overall lithium battery supply chain, starting with the extraction or the mining of the raw materials, going through all the stages into EV and stationary storage, manufacturing, and then finally the end of life. And the reason I kind of bring that up is the CC. We've really framed our investment strategy around kind of these key stages in the lithium value supply chain.

The bullets on the left show the investments we've made at some of these key stages. There's a number of reasons why this is important. One of those is if we're extracting, if we're recovering the lithium out of the Salton Sea, only to have that shipped overseas and then shipped back to California in the form of battery packs, we've missed a real opportunity to realize the full vision, or the full benefits of the Lithium Valley vision, including some of the security benefits that you hit on earlier.

Senator Padilla, funding sources. We don't have a dedicated funding source for Lithium Valley and lithium related activities. Instead, it comes from three of our existing programs, one of those programs being the electric program investment charge. This is one of our research and development programs. And through this program, we've supported a lot of technology innovation and a lot of startups that are working on and commercializing new technologies in the Lithium Valley, as well as the broader lithium related space.

The other funding source for a lot of our work here is the clean transportation program. This program is mostly associated with funding a lot of the infrastructure, refueling infrastructure for zero emission vehicles. But they have had a large focus on manufacturing, including electric vehicle manufacturing, as well as recently battery manufacturing as well. And then the last funding source is a small program. It's the Geothermal grant and loan program.

Revenue for this program comes on royalties and lease payments from geothermal developers, and the activities then support funding for activities to support new geothermal development in the state. Part of our investment strategy is to think about how we use our state funds to secure federal investment. Several years ago, we created a process where California companies and organizations, they can apply to us.

It goes through a short application period in review, and then, if it meets our requirements, we provide a letter of cost share commitment for these applicants to include in their federal proposals. So if they are selected by the Federal Government. We provide, you know, a certain amount of funding to help them meet those cost share requirements, which can be a challenge for a lot of these California companies to meet today.

We provided a little over $5 million from our EPIC program, and that's helped us secure $26 million in funding for lithium related activities. So, moving on quickly to some of our active funding opportunities. One of the active funding opportunities we have is from our epic program. It's got a long title, so we've shortened it to GOI. And this solicitation is focused on some of the new technology innovations to address some of the technical challenges to recovering lithium from the geothermal brine.

One of those challenges around scaling and corrosion. One of the good things about the brine is it is very mineral rich. One of the challenges, it does cause a lot of corrosion and scaling. That's a major pain point for the geothermal developers. So we're looking at potential new technology solutions that can overcome some of those challenges. We also have a recent funding opportunity out from our clean transportation program. It's called Power Forward. It will provide funding for domestic battery manufacturing in California.

There is a kind of a focus on the cathode and the cathode active materials. There's a couple reasons for this. The cathode is kind of that next stage after lithium is mined and processed, and it's also the biggest cost component in lithium batteries. It also happens to be a significant gap in the lithium battery supply chain, both in the US as well as California. I might have outdated information on this, but to the best of my knowledge, there's no active cam manufacturing currently in the US.

I think there are several planned, but nothing actually active. And then the third funding opportunity comes from our geothermal grant loan program. I think one of the things that's unique about this program is that we're providing technical assistance to local jurisdictions and tribes, and this will help them be able to plan and kind of prepare for lithium and geothermal development.

As Commissioner Gallardo mentioned when we were having a lot of our discussions with the community Members, the local jurisdictions, they do have a lot of capacity limitations just to be able to plan for kind of this emerging. And so part of this funding will help them with some of the activities for that. And just kind of an update on the federal cost share front. The Department of Energy, in March, they concluded their second round of these big battery manufacturing awards.

I think there's about $3 billion that they're looking to award in this next round. We had one company apply for our federal cost share program. This is Sparks. They're partnering with one of the local tribes down the Salton Sea region, the Torres Martinez tribe. And so we were able to provide $5 million in cost share if they're selected by the Department of Energy.

And then just lastly, I just wanted to hit on a couple of our efforts to better disseminate information on Lithium Valley, including some of the investments. One of these efforts is a Lithium Valley dashboard that will show the investment going into Lithium Valley, as well as kind of the broader state lithium economy. We're planning to start with state investments, and then eventually move on to federal investments, and then private sector investments, such as nonprofits, where that information is publicly available.

So, you see, it's just kind of one slice of the overall funding pie for this. I know Tyler's going to get into a couple of the others. And so, through the dashboard, hoping to be able to paint a more complete picture of the type of investment California, as well as other entities, are making into Lithium Valley. The second effort we have is our Lithium Valley subscription page. This was created as part of the Lithium Valley Vision webpage we did back in February 2024.

Having the subscription page, people can sign up, and we can push out information on Lithium Valley, including state funding opportunities, as well as federal funding opportunities. Just as an example of this, the Department of Energy last week announced a new funding opportunity, and two of the funding groups are specifically targeted towards the Salton Sea region. And so this provides a mechanism, like I said, just to make sure we disseminate these opportunities to kind of a broader audience. And that concludes my presentation. I'm happy to answer any questions.

Thank you very much, Mister Stokes. Appreciate your work. We'll now move over to Mister Eckerle, welcome.

Well, thank you. It's great to be here. Thank you, chair. And thank you, Committee Members. And just before I jump in, I think the dashboards that CEC do are incredible. Right? I think a lot of times, finding information on state government websites is very difficult. These dashboards are great consolidation. So I go there all the time for, like, zero emission vehicle stats and the energy storage stats, and it's so. Anyhow, it's really, really helpful. So commend the Energy Commission for everything they're doing.

But I'm Tyson Eckerle. I'm a senior advisor for clean infrastructure and mobility at Gobiz. And normally, we'd have Trey Bradley, our Deputy Director for Sustainable Freight and Supply Chain Development, here to testify. But he sends his regrets that he couldn't be here because he has an out of state engagement and wants to express his deep appreciation for the staff and stakeholders involved in working with them. But I really want to showcase it is a team effort across Gobiz, and we're really excited about Lithium Valley.

We all fill in where we can, and I wanted to. You know, there are a lot of reasons to be excited about Lithium Valley. I think you've heard about a bunch of them. Jobs, economic development, creating sustainable supply chains. But I think central to all of that, as we know, we need a lot of lithium. And I personally focus on zero emission vehicle market development and hydrogen market development. In both cases, the need for lithium is clear.

I was just, right before the pandemic in 2019, our zero emission vehicle market penetration, we were at about 6.8% of new car sales, and now we're at 25%. So, one in four cars sold in California, our zero emission, and we've had about 1.8 million sold to date, exceeding our 2025 target of 1.5 million, 2 years ahead of time. And this number will continue to grow through 2035 as you work towards that 100%.

And then, especially when you add heavy duty vehicles, will increase this demand through all drive trains, not just battery electric, but also hydrogen fuel cell electric, which includes lithium batteries as well. And then the stationary side. There's another great database on the Energy Commission. We have 66,000 battery stationary storage, and it's not all lithium, but a lot of it is. And we're projecting a need for 52,000 mw by 2045.

So this is gigantic just in California, and you figure that's just a slice of the global economy. So it's really kind of a win win win thing. Cleaner supply chains, families supporting jobs, cleaner air, climate change, and more. And so just a little bit about go biz and how we fit into this. So, we're an active Member of the Lithium Valley State work group that's being coordinated by CEC, and we're very grateful for CEC's leadership in this.

And since the establishment of the Lithium Valley Commission, we've been actively working with CEC and other agency teams to suggest recommendations and identify ways to better support the region. At Gobiz, we're organized into many teams that have touch points on lithium value, and I'll just go through a few of those. We have our California business investment services, CalBIZ, and community place based solution teams.

We have specialists dedicated to the southern border region who are actively engaged with the Imperial county and Imperial Valley Economic Development Corporation to provide incentive and resource program navigation support. These programs can assist businesses in locating within the Lithium Valley and provide support to the community to develop the infrastructure support needed to attract more business and development projects within the larger regions. That's one.

And then our supply chain team, which is led by Trey, focuses on supporting the supply chain development of new markets such as critical materials, critical minerals. Along with other reshoring efforts, this team has led statewide engagements on all critical minerals necessary for zero emission vehicles, including lithium, but also rare earths, boron, nickel, et cetera.

This team also assists on goods movement, infrastructure and the development of the resource within the county so we can transition all the stuff from Imperial Valley to the markets that it needs to get to. Then we have the Gobiz Zero emission vehicle market development team that scopes the future of the zev market in California and facilitates programs on permitting getting infrastructure into the ground.

Equity we do a lot of interagency coordination and we work on matching various developers and providers in the broader market, really just building confidence in the marketplace and this is a huge opportunity. With Lithium Valley. We have an energy unit that supports transmission efforts and discussions with asset holders of renewable energy infrastructure in imperial and working such as geothermal to facilitate infrastructure development. Gobiz is ibank or infrastructure bank.

We supported transmission financing, so you talk about getting energy to and from out of the region and has also engaged with individual companies in the region on infrastructure bonds, small business loans, and new and emerging climate financing tools. And then finally our California competes. The program has both tax credit and grant programs that are able to support businesses that want to locate, stay, and grow in California.

The applicants are analyzed based on a number of different factors of evaluation, including a number of the number of full time jobs being created, amount of investment, and strategic importance to the state or region. The California Competes program has already made awards to existing lithium ion battery manufacturing companies looking to locate or expand in California. And so in addition to Cal competes and CEC programs, which Eric talked about, the treasurer's office has the California Alternative Energy and Advanced Transportation Financing Authority.

We very rarely say that full thing out loud. Our CAEATFA program and this program has been really instrumental in supporting the industry to develop in California. Specifically, this CAPA program office offers a sales and use tax exclusion to manufacturers that promote alternative energy and advanced transportation. These manufacturers create permanent jobs that bolster the state's economy.

Eligible businesses planning to construct a new facility in California or expand or upgrade an existing facility can apply for CAEATFA for the sales and use tax exclusion award, and if approved purchases of qualified property for the project are not subject to state and local sales tax. So CAEATFA receives about 115. Well, not about. They receive $115 million in sales and use tax exclusion authority a year, which is available to award applicants.

But there's also a $15 million set aside just for lithium extraction or recovery projects in there. And then, you know, programs like these not only assist with targeted business development operations in Lithium Valley, but support the larger advanced lithium ion battery manufacturing industry in California. In addition, many of these companies are also pursuing R&D tax credits, partial sales and use tax exemptions, utility discount savings, and workforce training grant programs to support their overall expansion efforts.

We're finding a need for these companies to be able to package all of these incentives together to provide stronger financing structure capable of supporting the overall costs of operating in California. And then just wanted to hit a little bit on workforce.

So we've been working with employment training panel to help the region access funds to set up locally driven training program that will ensure that there's a pipeline of talent for the industry and to access within the region and for quality jobs and the establishment of stable long term employment pathways for the residents of Lithium Valley.

We have our California Jobs first initiative, which was previously known as CERF, which supports the inclusive regional planning and development of high priority economic development projects that benefit disadvantaged communities, create high road jobs, and transition the region to a net zero emission economy. The 2021 State Budget act had about 600 million for that program. And then just quickly, for, to date, there's about 53 million has been awarded through the CAEATFA program, 41 million through CalCompetes grant program, and 5 million through the CalCompetes tax credit program.

And then today, 58 million, actually later today is going to be discussed at the calcompetes tax credit meeting. All told, this is expected to create over 6000 jobs and $2.6 billion in investment. And so there's a lot of work that's been done, a lot more to do to get there. And Erik touched just briefly on the federal funding. So we're supporting all sorts of programs, letters of support, cost share, all that type of stuff. There's a litany of programs.

We're happy to share the list down there. And then many of the programs are still in process of the Federal Government. So we have high hopes for this. There's been some great awards already secured, and with that, I'll conclude my remarks here. I know, sorry, I went through a lot of different things, but there's a lot of things happening all at once. And we're very excited about it.

Thank you very much, Mister Eckerle. And I just say, I think that I want to be careful how I choose my words here. I think that's tremendously valuable and positive and appropriate and good to hear. At the same time, there are challenges with that. I mean, it's the old saying, right? It's like everybody's in the room, and that's the wonderful asset. And the problem is everybody's in the room, right? At the same time, there's just. That's the challenge, right? And so I want to just briefly, certainly to Mister Stokes. Dashboard is amazing. You're juggling a lot. I'm still. And I beat this like a dead horse.

And I apologize, but I'm always looking for, because of the scale and potential and risks and the urgency of the scenario out there, and all the implications for California, the nation beyond. It's substantial. So a strategic frame, a collaborative framework, that's not theoretical, you know, on the financing side. Right.

Because how is that look between what we're looking at, on leveraging potential outside resources, funding, helping investment, what is the level of strategic framework specificity with that around where resources are allocated, where they're not, and when and why, right? Because to be honest, I mean, sometimes a fresh parent buys is a good thing, right? It's an honor to represent this part of the state, but it's very unique in the challenge.

And my observation is not everyone may know there's substantial and even international investment occurring out here. People are buying up infrastructure like it's candy in a candy store, and they're not doing that because they think it's fun. They're doing it for a reason, because they're looking ahead. But it seems to me to be very siloed programmatically, you know, their set of tax credits or grant funding. Everybody and their uncle wants a piece of the action, everybody wants a piece of the money. Where's the strategic framework? Collaboration on the investment side. So Mister Stokes and I'll let you both take a shot at that.

Yeah, so I think, Senator, part of that, maybe that's one of the outcomes I think we're hoping to get out of our information proceeding. What is that framework? How do all these different funding pots come together at the safest side to really move this thing forward? And then I think the missing piece is the federal investment. There is a lot of large federal investment. We haven't had the greatest success in bringing that to California, especially around some of these big battery manufacturing awards.

So I think a lot of our efforts have really lended themselves to try to make the Department of Energy, make the Department of Defense understand the opportunity, be able to see it, be able to meet the people, and hopefully, they'll take a lot of that information back with them when they're making some of these larger federal funding decisions at their end. Just one of the challenges is, as I mentioned in my presentation, there's not a dedicated funding source.

Instead, we try to find these, I don't say carve outs, but these buckets within these existing funding programs, all that have their own specific requirements, have their specific processes on how they come up with how they're going to allocate funds for a specific period.

So there's a lot of internal coordination that goes on, at least at the Commission, through these programs, making sure that the staff, the teams that are working on these are aware of some of the challenges, some of the opportunities with Lithium Valley and the lithium economy, and that they're thinking through that as they're developing some of these funding opportunities.

On the regulatory side. Before I switch it over, I just want to plant it for you, so I don't want to keep going back and forth on the regulatory side. Imperial County, of course, is pushing always for greater latitude and authority and site permitting for this infrastructure.

And it'd be good at some point, you know, if you want to touch on that, about what the challenges around that are and what the opportunities possibly are, and I imagine would take statute, but would take a statutory change. But it's something I hear.

Yeah, I'm not sure I can comment, because I know there is a legal challenge to their programmatic EIR they did present last week at our informational workshop. I think they'd probably be better able to kind of respond to some of those regulatory challenges that they're seeing through their process.

I figured you'd say that, but I just had to try. Please.

Yeah. Just in terms of funding, I think that's one of the great ongoing challenges. Not for this, but not just this, but every silo within the state. In terms of things, what Gobiz is, it's kind of like we look through all the different funding menus. It's almost like having a cheesecake factory menu, and then Gobiz serves as the waiter or waitress.

But they also know your taste preferences, and so they try to make it easy and look like one type of state thing, and aligning all these programs together, knowing the ins and outs, kind of. Of without other higher level strategic investments, that's kind of what we're left with, it's like, okay, let's make sure you're getting the Cait file. Let's support you on the federal funding. Let's make sure if there's a CEC program now, and that's kind of how we piece it all together.

But there are certain, I think, part of the work of the CEC and the Commission and the working group is, what are those no regrets things like upgrading the bridges, for example, and the transmission, those types of things that benefits everybody. I think a lot of the work can come out of the interagency work there.

Appreciate that very much. Okay. I want to bring it back to the Members. I see the Commissioner jumping up and down you. If you want to add something, feel free or take advantage of you while we have you here, the whole point.

So I wanted to clarify a couple things. One, on the prioritizing the, you know, what to finance, what to invest in, et cetera, being really respectful of the County of imperial. They are going through a process right now called the Lithium Valley Strategic Plan, where they will be gathering a lot of community input, using their own expertise, applying all these things to determine what of the infrastructure should be prioritized, you know, what investments are needed.

And this is where we're excited to hear what they'll have to say, because that can also help us at the state determine where we can best support supplement. Where are there gaps where maybe we have to go after other types of funding possibilities like the Federal Government? And so we are trying to explore all those things, but again, being respectful and collaborative at the same time, really thoughtful about how we go about that approach. And then I also want to talk about the permitting really quickly.

The Energy Commission does have a new permitting process called opt in that is specifically meant to enable more clean energy to come through and faster. Faster. So the, and it also includes possibility for battery manufacturing, Assembly lines, things of that sort. So that could be a way for faster permitting that's, you know, done diligently. We have the CEQA process.

We have also requirements for community benefits agreement, project labor agreements, or prevailing wage, and also economic benefits to the local government that would have otherwise done the permitting. So there are those possibilities as well. So we're grateful that we have this opportunity of opt in to be able to move things along faster as well.

I appreciate that. You're probably well aware that I'm working deeply in that space and on that statute, actually. So we'll come back to that another time. Thank you, Commissioner. I want to bring it to an opportunity for my colleagues on the Subcommitee to ask questions of this panel. Senator Niello.

I'm going to revisit the issue that I talked about at the previous panel because I am quite intrigued by the grand vision that we have as far as this becoming a manufacturing center. And it would be entirely appropriate for Gobiz to look at the regulations that would impact manufacturing. To convene representatives of relevant business groups like the Manufacturers Association and the manufacturers themselves, both battery as well as automobile. Perhaps ask why Tesla established their battery manufacturing facility in Nevada as of so close to California.

Why not California? Specific things that Nevada offers that made that attractive, a comprehensive look at that would give a much better chance for success of that very grand vision.

Yeah, I think on the regular, we're interacting with business groups and business communities and trying to feed that in. And so I think your point's well taken.

Thank you so much for the presentation and information. And I feel like I want to get more into the weeds on some of the points. One, I want to say it's exciting to be looking at the future and really positioning California as a leader in this space. And I really want to thank the chair for bringing this to all of us and building our capacity to understand these issues better.

I think about the Imperial Valley area and I think about south central Los Angeles. And though topographic, was it topographically, geographically, very different. But when we think about the socio and economic conditions and who lives there and those most impacted by environmental injustice, you know, and I heard the Commissioner speak about, you know, the local community going through a plan. But I'm curious, how are those communities being centered in the conversation that the state is having, particularly through the Gobiz work. Right.

Because it's, it's not a small business. It's not the green tech companies that are exploring how to turn this into a manufacturing center. It's the folks who live in the community. And I'm co author on a Bill, SB 150. I don't know if you all are familiar with it. It is looking at ways for us to embed labor and community benefits standards inside of our green infrastructure funding, particularly the federal funding that comes down and whatever state matching funds are involved.

And, you know, the reason for that Bill was just our experience of historically recognizing who has not been a part of the infrastructure sector, whether it's, you know, on the manufacturing side, whether it's on the construction side. You know, women are severely absent, black community Members, severely underrepresented immigrants, undocumented folks, severely underrepresented in those spaces, but they also happen to be the most vulnerable communities. So I'm curious if you could share more about how this can. How are you all in these conversations?

And I appreciate how you talked about the different silos. How are you all sort of seeing the intersection of sort of, this is an anti poverty effort. What is happening now for, you know, going back to the similarities of south central, once a redlined community, no investment, very little development now is exploding with international, you know, corporations like Blackstone buying up homes, local folks displaced, and the opportunity of what South LA will become. It's questionable whether these communities will even be there to participate.

So I think it's really important that that piece is centered in how we, how we engage folks who are coming into the region as a state to understand we have a responsibility for the most vulnerable who are in the region now and who lived there and protected communities. So I'm curious, how are those communities being centered, particularly when it comes to workforce? And have you thought about how SB 150 can be applied to this work?

Just to start, and I don't have much depth to go into because it's not my area, but I think what you just described is the thinking behind the California Jobs first initiative. Right. Really regional led, making sure that we're integrating across and working at every level, you know, high school, community college, state college, UC apprenticeships, training, and all that type of stuff. One thing that Commissioner Gallardo mentioned was the idea of project labor agreements. Right.

And so I think those are kind of the unsung heroes a lot of times. Right. Because within those plas, you can put provisions for local hire and training and like with partnership with organized labor when that, when that's appropriate. There's a lot of benefit there because you can start to draw in and target the communities we're really trying to reach. And so we're seeing that through a lot of the federal programs. Like I'm working on the hydrogen hub.

That's exactly what we're doing, you know, and focusing in on that local provisions for local hire and making sure that those folks have the priority when the jobs come up.

Yeah. And I think that.

I'll just add one thing. Commissioner Gallardo mentioned the opt in program. One of the tenets of that program is developers have to have a community benefits agreement. So that's a mechanism to bring benefits to the community from these projects. The other thing the Commissioner mentioned in her presentation, we spent most of 2023 just on the ground, talking to people, hearing what their concerns were, what some of the challenges they face. And so we really tried to bring that information back into our thinking.

And then a few weeks ago, when we had our Lithium Valley symposium, you know, a couple of the panels were really to try to make sure their voices were heard in this. We had representatives from a lot of the local community based organizations, a lot of the municipalities in the region, just so that they can communicate kind of what they want out of Lithium Valley, what. What their concerns, and what the challenges they see going forward are.

Great. I'm glad to hear that. And how these businesses that are coming. And this is a question, because I think when we talked about the CEC funding and the ways in which these grant funds are being brought in, I'm curious, what are these all? Where are these companies from? Are they California? Are they international? I'm trying to get a sense of who's in this ecosystem, and how is California prioritized in that process. So, are we giving priority to California firms in this space?

Or is it a situation where the technologies are so advanced that there's only certain countries or companies that may not be California based that we have to bring in substance to those kinds of firms? Most often, yeah.

So, I mean, just on the lithium kind of geothermal, there's only three companies that are currently active in that space. Two of those companies have a pretty. Pretty long history in Imperial Valley, just around the geothermal development, that's Berkshire, and energy source minerals. The third company controlled thermal resources. They come from Australia, where there is a lot of lithium production. So I think they're bringing a lot of their expertise and their know how to kind of the specific Salton Sea opportunity.

Got it. Got it. I have more questions, but maybe we'll follow up later and learn more about this amazing work as we figure out ways to ensure that we keep growing this sector and growing opportunities. So thank you for the presentation.

Thank you very much. Thanks to the panel for your patience, your presentation, your participation, very much. And now I'd like to invite up the third panel to participate to focus on challenges and opportunities. John Gay, Director of Imperial County, Department of Public Works. Sylvia Priscilla Lopez, Director, Imperial County Workforce and Economic Development Department, and Genti Droboniku, research manager, California Department of Tax and fee Administration. Please come forward. Make yourselves comfortable. If we have a take a minute to switch over presentations, we'll do that. Appreciate you being here. It will start with Mister Gay and, you know, proceed when ready.

Thank you. It's an honor to be here today before this Committee. A little bit about myself. I was raised in the Imperial Valley. I grew up in Brawley, and I also had childhood asthma. oh, sorry about that. Listening to the comments here, and I really appreciate Chairman Paz's as well as Naomi's comments, it's been refreshing to be able to see a lot of activity in our community from different state and federal agencies coming to visit and seeing our wonderful valley.

There's a lot of conversation around infrastructure, and for those of us that have lived there, for those of you that have been able to see our area, it is very rural in nature. We are primarily an ag community. If you look there on the map, that's a zone. That's our specific plan area that we're studying. Studying right now. If you look at that, what you'll see, you'll see primarily a lot of green.

We have roughly, it's a 50,000 square acre area that we're studying at this point in time. It's up and against the Salton Sea. And you can see kind of a grid pattern. If you look at that grid pattern, those are essentially roads, roads in the area. Many of those roads are dirt roads. They are mostly two lane roads. And we have a townsite community of Niland. And so it's up in the corner, the northeasterly corner. It's kind of carved out there.

But that community has been under extreme stress. Back in 2019, the county had its major fire. Actually, it was its largest fire, destroyed 40 homes. And then in September, we had massive flooding in that community. As we moved into this process, we are very thankful that SB 125 provided for monies to undertake this specific plan and programmatic eir for Lithium Valley.

It's important to note that as part of that Fund, there was a significant source of public outreach I've been developing in this community for more than 20 years. Develops a lot of farmland into commercial and industrial space and residential space. And this is the first time that I've been developing that. There's been a significant level of outreach to different stakeholder groups, and it's been a challenge, but it's also been refreshing and rewarding.

Part of the monies that came through SB 125 not only paid for this process we're in right now, this programmatic EIR which we've just filed, I think we're in our process of our notice of preparation. And so it's a very good step for us because we've done a lot of public outreach. We also, as part of that funding, had an infrastructure assessment that was done. And so that's playing into this as well.

And it tells us a lot of what we already know about our community, that it's lacking a lot of infrastructure to develop. To develop this valley, it's going to need a significant amount of road improvement, a significant amount of bridge improvement, probably in the future, centralized water and sewer treatment plants, drainage. There was a mention of conveyance of power that'll be required as well. And then, of course, broadband.

And so all those different elements are being looked at as we speak, and there's pathways to get that done. It will take a lot of collaboration with not only our local entities, which we're familiar with, and I think we have a good base of communication. I think, at least at a local public agency level, there's a lot of movement in the same General direction. But we also are looking forward to state and federal collaboration as well.

I can tell you, honestly, without a dime coming to our agency, there can still be just dealing with having to develop in the past, just from the regulatory standpoint and the permitting standpoint, with interest outside of our area, particularly at a state and federal level. Having some better form of prioritization would help our valley. Most certainly.

We have an area that I view as similar to this, that's smaller in size and scope, and it's near our border, and it's a second, it's a border crossing the gateways of America. And that started in the late 1990s as a result, really, of NAFTA. And so what's transpired from that at this time? We see a lot of development that's ongoing there, but it's taken 20 years to get to that point, and a lot of that funding was really generated locally.

What do I mean by that? How do we get to the point where we can develop a new border crossing, really, with local funding? And we did it through different means. We did public private partnerships for our infrastructure. So when I came on board with the county, we had to expand the water and sewer treatment plant there. So working with the developers, we ended up partnering so we can actually expand that treatment.

We used our own source of taxes, so we have a self help tax for our roads. We call it our local transportation authority tax. And so we actually put monies into the road program there to help build out roads grants. So our local COG, Imperial County Transportation Commission, they were able to bring in federal dollars. So grants are always something that we work towards. And they were able to widen the main access into the gateway from Mexicali from Mexico. And that's ongoing right now.

That was, I believe they call it tiger funding. I think now it's raise funding, and so that's an ongoing project. Those are going to be some of the tools we look at here in Lithium Valley. Those are more really kind of locally based, with the exception of grants. But to your point, in terms of collaboration, there needs to be a focus and a priority around that. I'd be remiss to say that as part of our infrastructure assessment, we didn't consider quality of life.

It's important, particularly with regards to communities in and around Lithium Valley. They need very basic amenities. One of the more rewarding projects that we do in my Department are very simple. The sidewalk, curb and gutter projects just for areas that don't have any pathways. Our children have to walk to school in areas that are in dirt. Some of them walk in the street after it rains because they don't want to get their shoes muddy. It's a very real situation for our communities here.

And so when we are able to land those grants for sidewalk, curb and gutter, it changes the community. I can tell you firsthand the 617 money that we receive. We're doing the largest sidewalk program in Heber. It's part of a zone for that funding that's available, and it transforms the community as part of this, we've looked at that as well. The lack of parkland is another, you know, is another issue. But as part of this specific plan.

There's a lot of different uses within that area. And some of those different land uses we're looking at, there's going to be synergy between the different uses, I think listening to some of the questions. So, of course, green industry is what we're looking at. And as part of that green industry, we'll have manufacturing.

We're looking right now to make sure there's a lot of flexibility in our specific plan to where we can have not only lithium extraction and battery manufacturing, but all the way to end of life, to recycling. So it's all in one place that'll help reduce some of the infrastructure stress that we receive by co locating these different uses in the same space. I think there's been a lot of conversation around water, and it's an important conversation.

I think it's important, just in terms of scale, to understand how much water is used in our valley with regards to agricultural versus every other use. And so when you're looking at the 2.6 million acre feet that we get a year, 97% of that goes towards AG. We are AG centric, and 3% goes towards everything else. So it gives you kind of a scale. It gives you a picture of what we have today.

The Imperial Irrigation District is an important partner with us in this as well. We have active and ongoing conversations as we're going through this process with our EIR. And they have set aside already. This was before Lithium Valley was even on the radar. They have 25,000 acre feet for industrial use. At this point in time, we're looking, and this is generally. These numbers can change because we are still in this process with our EIR.

And I do want to pause and just note there was, I think, concern and a comment made with regards to litigation. It is not with regards to the process that the county is going through already. It was a project level eir for one of the developments. So it has nothing to do with what we're here today for, but.

The build out, in terms of what we're looking at, phasing our growth. And so while we're looking at 50,000 acres on that footprint right now, the first phase, which we think is probably going to be closer to maybe a 20 year build out, maybe 30, is about a third of that. So 12 to 15,000 acres. And I apologize, I didn't show that shape, but it's a shape that's moving based upon some of the inputs that were receiving from our community.

The land use within the specific plan is not only going to be driven by, say, green industry, there's going to be conservation land there. There's already conservation land in that footprint, in and around the sea. There's going to be playa restoration land. So it's part of the specific plan. We're looking also at making sure we're setting aside a mechanism to rehabilitate and to mitigate the playa. The playa being exposed is one of the key considerations in terms of air quality. And then I think, really interesting.

In terms of our land use plan, we're also doing community opportunity zones. And those zones we really want a lot of public engagement in, because they can be a lot of different things that would help the communities. We want to have their voice in terms of hearing what they would like to see in the development. Is our community opportunity zone going to be a park? Is it going to be something that's a specific need to that community? Maybe it's a lack of a food market.

I want to bring the focus back. To the lithium related stuff. I appreciate the comprehensive overview of the General planning activities of the County. It's important. It's an important partnership. But in the interest of time, I want to make sure I give every panelist an opportunity to present. If we could just wrap up real quick. And then I will go to Miss Lopez and then Mister Zurobalinko.

Sure. I think from a. From a stand up planning standpoint with regards to moving forward, I think the funding is a key consideration with regards to the infrastructure. So we're looking also at enhanced infrastructure facility districts. We've already started that process at a local level, as well as the lithium tax is going to be very important for our community. So we see those as being tools to help us grow that community.

Thank you very much. Mister Gay. Miss Lopez, welcome.

Thank you. Good afternoon. My name is Priscilla Lopez. I'm the Director for Imperial County Workforce and Economic Development. I want to thank you, Chairman Padilla and Members of the Committee, for allowing me this opportunity to talk to you about workforce. It is a topic that we've heard on every single panel. It is of key importance for Lithium Valley and for our area in General. So, just for some background, all of our programs currently under the workforce are funded through workforce innovation and Opportunity grant funds.

So the qualifications for the different programs just kind of depend on what program we're looking at. So, for this, I'm going to concentrate on our business services, because that's what we're looking to expand to address some of the needs that are coming into the county for businesses that will develop our workforce wise. Some of those business services that we provide are various training services or training components. So, just to give you an example, we have an incumbent worker training.

That training allows for upskilling of current employees. So let's say a company comes in and has an employee that wants. That needs to be upskilled. We can pay for that training. We also have work experience and on the job training. These are going to be very important because we can offer that to the business coming in, and it will help with build their own job bank. And that's kind of what we want to do. We want, want to make sure we're building that foundation up.

We encourage local hiring at every level. We support it. Recruitment events, job fairs, postings, whatever it is we need for business needs, they can come to us and we can address it within our funding source and within our services. Also, we recently did expand our business and services with Lithium Valley in mind. We procured a mobile unit. So if you've been to the County of Imperial, we're widely rural. And like Director Gay mentioned, our infrastructure needs assistance, our transportation needs assistance.

So we at the workforce have three co located job centers. One in El Centro, one in Calexico, one in Brawley, and a few satellite sites, one in the of Calipatria, another in the community of Winter Haven, and then another a second job site, a satellite site in El Centro. If somebody in, for example, the Salton Sea area, wants to go into a job center to apply for a job or to a recruitment event, they need to have transportation, and it's not an easy task.

They would need to drive, have 45 minutes to indio or 45 minutes to Bali. So with that in mind, plus the non geothermal resource area and lithium Valley, the development where it's located is up in the north end. So with that in mind, we procured a mobile unit that has eight workstations, one ADA compliant station, and some workspace for staff, you know, Internet capabilities, a training capability to go out to the work site.

So let's say a recruit, a job needs, or an employer needs recruitment event. We can take the mobile unit out to them. We can take the mobile unit out to an outlying community. We wanted to make sure that we were addressing the equity issue. We wanted to make it easier for the community to use our services as apply to Lithium Valley and to any training that's coming in. So that's one of the ways that we're making it easier for the community to participate.

We also developed a business center. Some of the organizations coming in, they're being established, so they needed a workspace. We have job centers for job seekers, but we didn't have a business Center for businesses. We established a business center with multipurpose room, fully capable for training and recruitment events. There's conference rooms, office room availability, and there's also an incubator space. We also procured, or not procured.

We were lucky enough to host the Imperial Valley Small Business Development center recently, and they're housed under our business development center. So they also provide these entrepreneurship services. Small but mighty SBDC. In within a year, their assistance has. The local SBDC has provided services that have resulted in over $630,000 in capital infusion, which have resulted in an impact of over $8 million in economic impact. That's a big number for. For a small business development center.

We have used it for some of the companies coming in for meeting spaces, recruitment events. And it's a great hub for these businesses to use while they're getting established. We also assist in guiding businesses on certain tax credits. For example, one of the topics that I was asked to present on was the new employee, new employment tax credit, as you know, replacement in the former enterprise zone, our area.

Currently, if you look at the Franchise Tax Board, our businesses don't really qualify for it, so they're not making use of it. However, with the new SB 131, which amends it to include semiconductor, electric, airplane, and lithium industry, that will be a big. A big plus to the industries coming into the county. So that's something that we're looking at for the companies to look at as an opportunity for them. Those numbers really don't come through our Department, but we do help assist push these through.

We have worked quite a bit in creating jobs, training for this industry coming in. It's important that we're ready for whatever's coming into the county. That's what they're looking for when they're looking to us to establish an industry. So one of the steps that we took was to procure, or not procure, to look for funding for a lithium needs assessment, lithium workforce and economic needs assessment. So our leadership wanted to kind of create a template to roadmap to success.

We wanted to make sure we were doing things right. So we applied to the EDD for their 25% additional assistance funds. We were awarded $750,000 for what we've titled the Valley Works needs assessment. So, it's Lithium Valley workforce and economic needs assessment. What this will tell us is, this is where you're at today, and this is where you want to be in 10 years. What are those gaps, and how can you fill them?

And what are other industries that you need to be looking at so that you're prepared, with a trained workforce to be able to receive this industry and to be able to address those needs? We have 178,000, approximately people living in the county. Our area is surrounded by Mexico to the south, Arizona 45 minutes to the east, San Diego to the west, and then, of course, Riverside, an hour and a half up north. So the community is surrounded by larger areas.

We have a workforce that comes in from all over the place, so we can train a prepared workforce from wherever we need. And we put together a Steering Committee.

We brought together stakeholders from across the county, and we wanted to make sure it was transparent and open to everyone so we could receive feedback and be able to build this RFP and this report ultimately, with the community in mind, and with not just Lithium Valley, but also any other industry that might be coming in as a result of this economic development. We built a steering Committee of 12 people, including local government, education trainers, cbos, and they developed an RFP. We released it.

We got 13 submissions, very, very nationally recognized think tanks. And we selected Rand Corporation. And so that is underway starting May 7. And we are very excited to bring that to you and bring that to publication as soon as it's done. So you will be hearing a lot more of that in the coming months. We also want to let you know that we have addressed the trades training.

We are in discussions currently with IVC, Imperial Valley College, who's actually in the audience, and the San Diego workforce partnership to bring in the MC3 curriculum to the county. So that allows for apprenticeships and it allows for pre apprenticeships to start training within our area. Industry has always been at the table. So anything that was built to train for them was with industry at the table. We addressed workforce when this started about.

Well, as far as our participation in the development about three years ago, a little more maybe by bringing together k 12 higher ed vocational trainers, Imperial Valley College, government and industry to see what we could do to develop training that was specific to the industry, that was fast tracked because people want jobs today, not in four years, and they want sustainable jobs.

So after the discussion, Imperial Valley College, which took the information and built three classes, three curriculum that was specifically focused on training for the workforce that lithium Valley will need. These are fast track classes. Plant operator class was opened and started in the fall of last year. 2023 cohort of 60 individuals, two classes of 30 each. And it was filled within 2 hours of opening. So that gives you an idea of how much people want to get trained for this industry.

This class was built with the skills needed to enter into manufacturing. So it's not just plant operator. The skills are matched across the industry to be able to just kind of, you know, get you in a job today. The other two classes are chemical lab technician and panel operator. Those were will open in the fall of this year. And again, they're 12 month classes. So in 12 months, you'll get an industry recognized certificate and industry will be waiting to get you into the door.

So we're really excited about the Lyft program and want to also bring to you the trainings that we have traditionally under WIOF. Those are logistics. We talked about it quite a bit. Truck drivers, security guards, cnas construction. All of these are already happening in the County of Imperial. We have about 800 people registered today on our caseload. And that includes our youth program. It includes our adults and our adult dislocated. And that's only in training or service that's registered on our caseload.

That's not to count the numbers that we have on a daily basis coming in to use our job center. With that said, I don't want to take up any more of your time, but I thank you for the opportunity and I'm available for any questions.

Appreciate the work you do and thank you Miss Lopez. And we'll bring it to Mister Droboniku. Welcome. Thank you for your patience.

Of course. Thank you Mister Chairman, Members of the Committee, thank you so much for inviting me today. And I'll talk about taxation consideration related to lithium extraction. As we know, Senate Bill 125 established a three tier tax based on cumulative metric tons of lithium carbonate, and this tax was effective in 2023. January 12023 the first year the first year established a $400 per metric ton for up to 20,000 metric tons.

That amount increases to $600 between 20,030 thousand metric tons and the third tier established a tax rate of $800 per metric ton over 30,000 metric tons. Beginning in January 2025, the rates will be adjusted according to California Consumer Price Index. In addition, the law required California Department of Tax and fee Administrations to prepare a study of replacing the volume based tax, the current excise tax, with the gross received tax.

Specifically, the law required CDTFA to evaluate the the administrative feasibility of both of these tax structures, the revenue stability, the tax burden, reliability of gross receipts data in terms of determining lithium pricing, as well as evaluating alternatives to volume, other alternatives or volume based taxes. I'll briefly share some of the findings relating to each of these specific areas with you today.

In terms of administrative feasibility, our study found that when volume based tax would be likely easier to administer than a gross receipt tax, the reason, the main reason for that is because it does not would not require us to evaluate prices. However, in terms of administrative costs, the difference between both of these taxes terms of costs are not significant. Revenue Stability again, the volume based tax system could be slightly more stable than a gross receipt tax system.

The main reason for that is that what we have experienced, we have seen is that prices, lithium prices, have been quite volatile over the last couple of years, and the gross receipt tax system would reflect that. Volatility. Volatility in prices. On the other hand, the volume based tax structure, the current excise tax, would not be as prone to those fluctuations in prices. However, as we all know, prices are ultimately related to volumes.

So any volume based tax would not be immune to any price fluctuations, but the frequency of those fluctuations would be less frequent. In addition, the current tier tax system provides benefit because the entry level is at $400, which provides some tax benefits to, especially as those producers start the production process and have a lot of upfront costs. Reliability of gross receipts. So, gross receipt tax could be more reliable measure of prices as it would accurately reflect the lithium price trends.

However, what we found is the actual production price of lithium can be quite opaque. One of the reasons for this is that battery manufacturers could enter into joint venture or purchase producers of lithium, and then there would not necessarily be a market transaction, arms leg transaction, but we have one arm of the same entity selling to the other arm of this entity.

Another reason for this, we found that the current spot prices, which are based in China, are the best public available lithium prices that we could find. And those prices have been quite volatile over the last couple of years. The average, they have varied as high as $80,000 per metric ton in late 2022, and dropped to almost $15,000 in November 2023, when we were ramping up our report. And then currently there are $15,000.

We also learned that typically, prices are typically negotiated contracts, and they tend to be slightly lower or different than spot prices. So it's a little bit hard for us to evaluate the exact price of lithium considering all of these factors. The tax burner. Now, we don't have any lithium taxes thus far. So we have to come out. We have to come come up with some scenarios and evaluate, compare both the current excise tax and compare that to gross receipt tax. So we created some hypothetical scenarios.

I will not bore you at this lunch time with those specific scenarios. They are in our report. But what we found is the summary of final one we found was that at the lower tier, when the tax rate is about dollar 400 per metric tons, both the impact of both of these tax of structures is negligible. They do not differ a lot, however, as the production increases and producers reach the top tier, $800 per metric ton, then we do see price become detrimental not detrimental, important.

I'm sorry, I take that, but price becomes very important when we compare those two different tax structures. Just to give you a very quick example, let's illustrate. That point is, if a producer were to produce 300,000 metric ton of lithium carbonate a year, and some of them had indicated they would ramp up production at those levels, then currently, under the current tax structure, we would collect $240 million in tax revenue.

If the price of lithium were $80,000 per metric ton, in terms of gross receipt tax, that would be about 1% of the gross receipt. Now, if for the same production volume, if the price of lithium were to drop to $10,000, the equivalent gross receipt tax would be 8%.

So both of these kind of a little extreme values, but both of these, what we found, fall within the same, generally in the same ballpark than what we have seen some other states and entities when they've used gross receipts tax for extraction other hardcore minerals. In terms of alternative to volume based taxes, we looked at a lot of alternatives and we came back with as the only practical alternative that would be for us is either gross receipt tax or a net receipt tax.

However, a gross receipt tax would be easier to administer because it avoids us. The complexity of looking at deductions, exclusions, exemptions, etcetera.

So, currently, the current lithium environment, no tax taxable lithium has been extracted in California. We have not collected any tax dollars from lithium. We are not aware of any contract prices that is publicly available. So we can look at some of those prices and compare them with spot market prices. As I mentioned, typically, we have found that the contract prices in lithium are different and often a bit lower than spot market prices.

But currently, the Chinese spot market prices is the best publicly available data that we could find. And we have where you look extensively, and as I mentioned, those spot markets prices have been quite volatile, have changed quite a lot over the last couple of years. Currently they stand at around $15,000 per metric ton.

And here, just to illustrate basically, where the Chinese lithium spot market prices has been over the last two or three years, I mentioned they're very, quite a lot, close to $10,000 in 2021, as high as over $80,000 in late December of 2022, and seem to have dropped around $15,000 at a current rate. My last slide is a recap, but being sensitive to the lunch hour, I'll just skip that recap and then open up for any questions that you might have for me.

I appreciate that in all the panel's presentations, so bring it to some Subcommitee for questions. Mister Droboniku, you largely answered most of my questions. I was going to focus on the obvious fact that we don't have a lot of basis for volume based assessment as yet, and that's a different issue. And you've laid out pretty clearly the relative advantages and different advantages of the different structures. And then I was going to ask you if there's any example of transition anywhere.

That's relative here, but I don't think there is. And you addressed it a little bit in your comment, but that would be the only question I had. Away from volume into once you had production.

Transitioning from volume We have, we have not been aware of it. Anyway, we do know the last year, South Dakota, there was a proposal for a gross receipt tax there, and the Legislature voted that down because of the opaque price being opaque, and they could not deteriorate, determine the exact pricing of lithium. Unlike a lot of other mature metal markets, when there is a lot of buyers and sellers and arms length transactions, we haven't seen that in the lithium market. So that's a challenge. So we'll take around.

Thank you very much to the Subcommitee Members. Any questions? Senator Niello?

Excuse me. With regard to the tax, the price has been fluctuating significantly. Almost looks like bitcoin but not quite. However, given the potential increase in volume, the first presentation showed that the potential increase in volume from this area could increase worldwide production by half. That's significant increase in supply, which would contribute obviously to the price, presumably to lower the price somewhat and perhaps make it more stable. So maybe the market might be headed in that direction.

But having said that, I always believe that the best tax or the least worst tax is something that's based actually on a transaction. And that would point to a net as opposed to a gross, and a value tax as opposed to a production tax, because the taxing on the gross or taxing on the production doesn't take into account the actual ability to pay the tax, which is the amount of money you end up after all of your expenses.

So that would seem to make more sense to me. You can comment on that, but I just want to make a comment with regard to economic development. You're taking a look at what jobs you're going to need to have available for potential companies coming in out into the future, and I compliment you for that. The success of local economic development efforts are going to be the local company's capability to provide what they need. And typically that's mostly workers and facilities.

And obviously facilities isn't in your bailiwick, but the workers are. So I compliment you for looking out. As Wayne Gretzky said, you passed the puck to where the player is going to be, not where he is. But if you have any comments on what I said with regard to the tax.

Being the best State Department in California, I would collect any tax, any form that Legislature passed. But my Boss is behind me. So that to the one point thing that we found in terms of is the pricing, the transaction pricing that it seems to be a little bit opaque in terms of what the transactions are and how we get those transactions. Knowing the arm's length transactions, in terms of pricing, that has been a little challenging. It doesn't mean that's not going to change, but it's not.

Lithium markets are not as mature as deep as some other precious other markets out there, metal markets, when it's easy to validate and verify pricing.

In other words, net is harder to value than gross. Is that what you're saying?

Yes, I would say, at least on the current conditions, net value, and I would grant that.

But the ability to pay a tax becomes very difficult if it's not based as much as possible on the money that you're going to end up with after all of your expenses. Expenses. We tax businesses usually based upon their net profit, not based upon their gross sales for that very reason. So I just, I'm throwing that out as a sort of a caution relative to the desire to make it more simple in terms of collecting the tax. One has to make sure that we're making it affordable for the entity that's going to pay the tax. Complications of definition notwithstanding.

Senator Smallwood Cuevas.

Thank you, Mister chair. And I wanted to echo Senator Niello's point about the workforce. That was the assessment that you all are in the midst of is such an important one. And I think it's a model for what we have to do across our climate resilient economy that we're building together. You mentioned WIOA funds and having served on the workforce development Board for many years, it's a set of funding that kind of ties the hands. You can't be very flexible and creative with those funds.

And I'm curious if you all have looked at our high road training partnership models where it's not sort of a General training, but it really is specializing in bringing the employers who have very particular needs and workers and building it together. So there's a planning piece of it in terms of the curriculum, and then it's the actual implementation and it's a model that I've seen work in some places and it just gives more flexibility to workforce development agencies to build those partnerships.

And it's also about the relationships that get built through the process. So I'm curious about how you're thinking about once that assessment comes in, what are some of the tools that you will need from the state to sort of think about putting that plan into practice? And then I have a question too, and you are right, it's so complex.

But I just want to say your presentation is, from a state perspective, is the most important one of the day, because at the end of all of this, we've got to regulate, we've got to monitor, we've got to make sure that our workforce is being trained, we've got to make sure that external forces are not speculating and exploiting our California resources. And all of that takes money that the state currently does not have.

And so this is going to be how the state actually funds our ability to grow and create standards in this space so that we don't create some of the harms of the past. And that's where I wanted to go to.

And my question, I know this is a very technical process of looking at, you know, volumes versus receipts, but I'm also curious, have you looked at our existing energy source where last year we had the windfall tax penalty conversation, where the state wasn't allowed to look under the hood of the fossil fuel industry to understand how they set their prices, where their revenues went and how could we ensure that what we were taxing to cover all that it takes to regulate that industry, that we had enough of the understanding of the profits to make sure that we were having a fair and real taxation structure.

So I just am curious how much you're looking at the fossil fuel industry and what are the challenges California has had in really trying to make sure that at the end of all of this, we aren't here 40 years from now talking about windfall tax and price gouging and the inability to have the revenues generated from an industry come back into our community so that the government can benefit and not have to be chasing the sector.

So I'm curious what sort of in this study and assessment, what was learned from the existing energy sector and taxation and pricing and how we apply it.

Here for this specific project. We did not look at that. We certainly can go back and look at that, but we are coming up with a report to Department in collaboration with the Energy Commission about gas prices. So I think that would be public sometime in the near future and that discusses some of those issues and questions that you have.

Yeah, I just hope that in that study it's not too separate, but it is helping to inform how we don't commit some of the same mistakes in the process and what guardrails. And I'm thinking more from a policy perspective that would be helpful for us. What are the policies we need to be thinking about to put in place so that, you know, we aren't repeating. Right.

I hope that's something that the study can continue to expand and that there are some lessons learned that can be documented and reported back to us as the Legislature so that, you know, we are doing this in a way so we can Fund long term. Right. Our workforce that we can Fund long term. Sort of the issues that you're talking about, about broadband and making sure communities that are in and around this resource have the basic needs that is going to rely on the taxation system.

So I just want to make sure that we look back and that we come out with lessons learned that will inform the Legislature on that. So thank you for all your work.

If I may address your question just very quickly. Yes, WIOA does tie our hands a lot. We do have a healthy WIOA Fund right now, but as you know, it's currently being reauthorized at the federal level, and it's being reworked into the stronger workforce for America act.

And although right now the State of California does have a training component, that we have to meet 30% of the training requirements federally, they're looking at a 50% training, which they didn't have before, that might put that funding at risk. Not totally, but if you're looking at 50% of people sitting in chairs doing class training, you're not looking at supportive services. People might need a supportive service.

So although right now, currently we probably spend about $3 million on training yearly, that additional 1 million that we have, that would take us up to that 50% that goes to supportive services that would be wiped out. So that's something that maybe we can address with our federal congressmen and Senators, and we're doing that through our associations. But because of that, we are diversifying our funds. We're looking at HRTP, we're looking at MC3.

We're trying to figure out how we're going to get these trainings paid for. And that's always something that we need to make sure that we keep all of our network open and informed so that we can address those gaps and figure out where that funding is going to come from. Locally, we've been very good about our stakeholders and making sure that we involve them.

We have a quarterly meeting where we open the floor to stakeholders across the county, cbos, nonprofits, local government, and it's very well attended. So everybody can say, this is what we need, this is what we can do, and this is how we can bring that together so we can help our community, because that's what we're here for at the end of the day.

Well, thank you for that. And reminding us that sometimes the training funding is so narrow, it doesn't address the things that people need to actually be successful in the training, like child care, like transportation. And I just want to say thank you for including that in your assessment and making sure that whatever resources come down really help folks be successful in this opportunity. So thank you for what you're doing.

Thank you to all the panelists for your participation, your input, being patient. I appreciate it very, very much and appreciate it a lot. We will move quickly to see if there's any public comment, anyone that wants to address the Subcommitee on any of the panels today. If so, come forward. State your name for the record and provide your comments. If you have any. Please, in the interest of time, limit your comments to about 1 minute. Ah, hello again.

I just wanted to clarify one of my responses. I said that the lawsuit was against the county's programmatic EIR. It's actually against a separate project that the company approved back in January. So just wanted to clarify that it's all right. Thank you.

Hi. Welcome.

I thank you, Mister chair Members of the Committee, Jeremy Smith. Here on behalf of the State Building and Construction Trades Council. We are working quite hard through our Imperial county building and Construction Trades Council to get at a lot of what was talked about today. Job quality, local hire. We're also working with our friends at GoBiz and the Workforce Development Board down there. It's important to remember that this is a new industry out here and a place that needs industry, that needs jobs.

And if we can shape this at the front end to make sure that those jobs are not just jobs, but careers, I think will do a service to the folks in that area of the state who are in desperate need of an industry down there to be founded and to start.

We do have a project labor agreement with one of the companies, controlled thermal resources, and we are working on the other industry, the other company, Berkshire Hathaway, to do the same so that the construction of these facilities is done with local workers and they're paid living wages through the prevailing wage. Thank you. Thank you.

Good afternoon. My name is Vince Signorotti. I'm with Energysource Minerals. And I would just like to thank you, Chairman Padilla, for holding this hearing. And to the esteemed Committee Members, thank you very much. We encourage you to continue to stay engaged in this process and to make this vision a reality that's ultimately what we all want to see happen.

I would also like to just take the opportunity to thank the California Energy Commission and specifically Commissioner Gallardo, who has been deeply involved in what energy source is doing at the Salton Sea. And we are grateful for that support. And likewise, someone just mentioned Gobiz. Gobiz has been very supportive, and we're grateful for that support. And Kafka, we received a Kafka award, so thank you very much. And as I said, I urge you to continue to stay engaged and to make this vision a reality. So thank you.

Thank you. Anyone else like to address the Subcommitee on the panels today? Seeing no one come forward, I want to give my thanks again. Anyone who observed would like to provide comment, can do so through the website or with the staff at this time. The Budget Subcommitee number four will be adjourned.