Support for Arkansas Week provided by the Arkansas Democrat-Gazette, the Arkansas Times, and Little Rock Public Radio.

And hello again, everyone.

Thanks very much for being with us.

Arkansas has four congressmen signed off on the Trump administration's mammoth budget bill, and now our two senators have it on their end of the Capitol.

Nat, at a moment, the stakes for our state and the nation, with reporting fresh from Washington.

But first, if the third time was a charm, not everyone thought it was charming.

It's the royalty schedule fixed at midweek by Arkansas regulators, who approved the latest of three proposals by an energy company that aims to mine lithium from leases in South Arkansas.

That substance, lithium, is crucial to the world's economy, the world's future, experts say, with multiple applications, including especially batteries.

Billions of dollars are involved.

The 2.5% royalty approved by the state is more than the company wanted to pay, rather less than what the landowners considered fair.

In a moment, we'll speak with a legislator whose district includes a great part of that territory.

But first, some highlights from Wednesday's hearing.

We are here today to request that the Commission set a fair and equitable royalty for lithium, commercially extracted from brine within the Reynolds brine unit.

As you're all aware, this is standard lithium.

Third, attempt to establish a royalty before the commission for one of our projects in Arkansas.

Hey, where's this?

Sincerely hoping that today is third time's a charm and not three strikes.

You're out.

We've tried to listen and learn from each of these previous attempts and hope that you will see this has been reflected in the proposal we have for you today.

The feedback we received from the last hearing was that the royalty methodology proposed was overall sound, but the number was too low and more economic data was needed.

We've now raised the proposed royalty rate to 2.5%.

This represents an increase of 37% from our last proposal.

We believe this represents a number that is both generous to brine owners and fair to industry as well as clear and transparent for all parties to understand and administer.

We've been involved in a number of hearings involved in this issue that's just dragged out over the years, and I think that the experience in that is that if we're dependent on standard lithium or some of its co applicants to do the right thing and propose a fair and reasonable compensation method, we're going to be having these hearings for years to come.

During the course of all these proceedings, Senator Lithium and their co applicants haven't really shown evidence as far as I've been able to tell of profitable extraction or specific financial information, that they could very specific financial information for their projects.

And it sure looks to me like they've done that to make it harder for you to set a real and actually fair and equitable rate.

There's been a lot of consideration going into this.

We've been working on this a long time, as have you have?

Yeah, I've met with them.

I haven't made any concessions.

You know, that's what this commission wanted, was you all to work it out.

But y'all couldn't do it.

And so we got to take the information that we get from both sides, go with something to work.

And the main thing is to keep the ball moving, not take the easy thing that's in front of us.

That's that's not a fair statement to us and my and my opinion, they have demonstrated that, there is an additional economic substance to be extracted, to to take the 2.5% royalty is the is a royalty rate as presented.

For for me personally, this proposal is fair, is consistent, and it is competitive, if not show of hands.

All in favor?

Motion passes unanimously.

Nine votes to none.

And there it was, a unanimous finding with more on the situation.

Now we're joined by Senator Steve Crowell of Magnolia, who's, as we mentioned, whose district includes much of that territory.

Senator, thanks very much for coming aboard.

Is this settled now, at least as far as this particular lease with this particular company is concerned?

Are we looking at litigation?

I don't think we're going to look at litigation.

I think this has been a process that has has been through the wringer three times.

And I feel that they have both voiced their opinion.

And the Oil and Gas Commission took this very seriously and did their due diligence.

So I feel very confident that that now that we have the first first lease taken care of and another month there'll be another one come up, that one will be taken care of, and then South Arkansas will be on its way to producing lithium.

Would you expect on these other leases, Senator, that that same rate schedule or, royalty schedule would apply?

Absolutely.

I think it'll it'll mirror exactly what happened this last week.

Well, I was struck to by something that Mr. Mahoney said during the hearing.

And of course, he represents some of the leaseholders, the land, the landholders.

And that's that will be we'll be hearing these having these hearings for years to come.

Sounds to me like they're not through.

Well, every single well, every single lead, you know, well has to have a royalty hearing on it.

And so yes, they're going to go through the process many times over.

So with these other fields in play now, and assuming that the royalty schedule holes, what's the next step?

When are we going to see, a progress on these.

When are they going to start to yield anyway.

Well, yield and progress are going to be probably two different things.

I believe the brine plants will start breaking ground this summer.

At this point.

The plants to pull the brine out of the the ground will start breaking ground.

We have two companies that have already committed almost $2 billion, and you'll see them start breaking ground.

By the time lithium is produced, it still could be about three years away.

It does take a while to build $1 billion plant.

Well, to that end, the, some of the landowners complained that in their view, their estimation, the companies had not been transparent.

Do you your your thoughts on that?

Well, I think what the big disconnect is this.

When you have oil and brine, they are marketable at the well.

They can be sold immediately at the well.

Lithium is a whole different process.

It is a very complicated process to get it down to its lithium hydrochloride form.

And the science that goes behind that, all the the factory you have to build and everything is very, very expensive.

So there is a difference in how they're produced.

And I think that's been the biggest disconnect.

I think I've seen as as a senator, a legislator, senator representing that district.

Do you have any environmental concerns about the process of what we're going to be looking at over the next ten, 12, 20 years after being very well educated and asking a lot of questions?

I actually don't, because brine has been pulled out of the ground for over 40 years from a local company, Albemarle, and they know how to do it.

They know how to go to the through the water table safely.

They have had very, very, very few issues ever.

And and that's what all it is, is pulling that water out and then going through the process of taking the lithium out of that water.

So, and injecting it into the it back in.

And the regulations that Arkansas has are so stringent to make sure that we do take care of the environment and that's what that's that's why the companies want to come here, is because our regulatory scheme is so advantageous to the the the industry and to nature.

So you're satisfied in that regard anyway?

Yes, sir.

In terms of the walk us through the process, if you will, sir.

When it does get underway, what do you anticipate happening in terms of the process itself?

The extraction process?

Yeah.

The well, the extraction process.

So I'm going to make it really simple because I'm not a scientist.

So what they do is they pull the brine water, the salt sea salt water out of the ground.

They pipe it into this factory and for a better lack of a better term, and I'm sorry, the people that know exactly how this works.

It essentially goes through a magnetized process, and all the lithium gets pulled on to the magnet.

Magnet.

And in.

This is very my own way of explaining it.

But that's how they do it.

And this is a long process, the way they do it, they have to clean the water, but at the very end it comes out as a white powdery form.

And and it's, it's there's not a lot in a gallon of water in a million gallons of water.

There's not a lot.

It is a lot of work to get this product.

You were the sponsor, sir, of some tax incentives for for the industry in the last session, successful legislation.

But the company is also the beneficiary of some federal grants anyway, under the previous administration, with the future of, lithium supposedly so bright, why why the incentives?

Incentives, what have we over subsidized this industry?

I think this industry, to get to where it needs to be, has to be subsidized.

It being a new industry, they're still figuring out exactly how to be, how efficient they can be.

So all these tax incentives were a were really good thing to get them into Arkansas to make Arkansas grow.

And then I also kind of included other things to keep the subsidiary companies within the borders of Arkansas, because if we can keep these companies having their subsidiary companies, whether it be battery recycling, whatever it is in this state, that's more jobs, that's more economics for this state.

Well, what do you say?

Is there any way at this point to project tax revenue to the state excise taxes, severance taxes?

I don't think there's any way to project that at this moment.

Would you would you expect they would be substantial, though?

Yes.

Well, I mean, there has been studies from many different, people, many different organizations.

And they're saying the economic, economics of lithium are going to be anywhere from 150 billion to 225 billion over the next 10 to 12 years.

And you start thinking about that.

That's some significant tax revenue.

But the economic rollover mostly would be in terms of local employment in your estimation, anyway, local employment, local vendors, local employment, local vendors.

And I think there's going to be a lot, lot more things.

I mean, I think you're going to see battery factories come into this state recycling factories, these these factories go through millions of gallons of water a minute.

So these pumps break right now.

They have to ship them to West Texas.

West Texas factory does.

About 30 to 40 of them will be doing about 34 of them.

That's about 100 workers that are working full time on the ones that would be in Arkansas.

So what I'd like to see is somebody start that business here, keep that business here.

Most of those people are making over $100,000 working on these pumps, that those are the things that can happen.

Got it into there, Senator, because we are out of time.

Come back soon.

More on the issue.

Thank you very much.

Absolutely.

And we'll be back with more in a moment.

And we are back.

The president wanted what he and his closest allies called one big, beautiful bill.

By the time it reaches his desk, it may be somewhat smaller.

And his adversaries in and out of government have from the start considered it less than lovely Arkansas is for House members.

Helped move the bill to the Senate, where it is now.

For more on the stakes for our state, we are joined by Arkansas Democrat-Gazette Washington correspondent Alex Thomas, who's in Arkansas for a few days.

You're on furlough, Alex, thanks for coming in.

Well, thank you for having me, Steve.

It's a little bit different than being in my apartment outside of DC, but I like the setup here much better.

Yeah, well, we'll make it work somehow.

Anyway.

You know, we're where to start.

And I guess with that big, beautiful bill Arkansas is for delegates in the House said, yeah, absolutely.

And very few reservations and quite mild at that.

Absolutely.

And it's important to remember, Steve, that two of our house guys had a role in putting that together.

You have Bruce Westerman, who leads the House Natural Resources Committee, then the French Hill leads the House Financial Services Committee.

Their committees had to find a way to come up with $1 billion in deficit reductions over the next decade, and they accomplish that in more.

Bruce Westerman found 20.2 billion over the next decade, and French found 50 or 55.2 billion over the next decade.

So they exceeded their expectations.

And when you listen to Congressman Hill talk about what this one big, beautiful bill is all about, he said, we're listening to the American people.

When they sent us here in January following the November election, they wanted to see something like this.

They want to see government take control of its spending and also extend those tax cuts they passed eight years ago.

But but they did.

They really control it, though.

I mean, they found some savings.

But, every projection that we see shows the, shows the debt increasing by at a minimum of 2 trillion over a decade.

And this becomes the hard part with it.

Right?

You want to, you know, protect those tax cuts, but also how do you seriously address spending and that's where this funky math is coming into play here.

It's funny because with that estimate I mentioned from the House Natural Resources Committee, Congressman Westerman came out and said, well, that's not 100% accurate.

We actually think it's going to do more because energy projects are going to come as a result of this.

We're going to see more income come into the federal government.

So the projections there right now are saying, you know, they're underestimating what's actually going to happen, but you'd rather be conservative with estimates than expect too much.

You can always do more down the road, but you don't want to buy a big house and then go, oh, I can't afford it.

But their critics say that's exactly what we're doing with us.

Yeah, and that ends up becoming a problem, especially when you're right now dealing with tight majorities.

Two one Republicans want to do more with spending cuts.

That was a big headache for the House.

And also you have some Democrats and even some moderate Republicans who don't want to see services cut as a whole.

Concerns about Medicaid, concerns about Snap.

How do you navigate that and also try to get your financial house in order?

That's going to be something we're going to have a really tough summer and trying to understand and really figure out if this reconciliation effort is really going to be worth it and actually does what Republicans want it to do.

But by any, any accounting, any reckoning, anyway, there's just 2 or 3 places where you can get that kind of money.

Right.

And the big cuts right now, we looked at Medicaid.

We'll look at Snap.

Medicaid is one of the biggest areas when it came to reconciliation.

That had a lot of Democrats concerned.

And when you go back and watch the House Energy and Commerce committees markup, which I don't recommend, because it was two days and I'm sure our audience has better things to do than spend two days watching a congressional markup.

It was a long markup, Steve, but one of the biggest things that House Democrats raised concerns about was Arkansas and how it handled Medicaid work requirements years ago, and that's been a big linchpin in this reconciliation effort.

Democrats raised concerns about how people were removed from that, from expansion.

We're cut from the program.

And the chair of that committee, Bret Guthrie of Kentucky, had put his hands up and said, look, we studied the Arkansas model.

We understand what went wrong.

The state didn't plan out correctly.

They checked into frequently with people.

They weren't ready for something like that.

So what we're going to do is we're going to states a little bit more flexibility than when Arkansas had.

And we really want people who need Medicaid to be on Medicaid.

But we also don't want people to be on Medicaid long term.

Well, what's the thing that, Alex, in terms of work requirements, though, I mean, cannot survive legal tests, that's the that's always the fun part with this administration, this Congress, isn't it?

I mean, you're always hearing about court cases and judges said, no, you can't do this.

No, you can't do that.

But at the same time, though, I talked to Governor Hutchinson last week and when we talked about what happened in Arkansas back in 2018, he recognized, look, we messed up and how we planned this originally, and we weren't as smooth as we wanted to be.

But and he added that this is a good starting point for what could happen down the road.

States can get more flexibility.

They can understand what's right and what's wrong, and really have a plan that best suits their needs to make sure Medicaid services go to the right people, and make sure that states have programs that fit, that don't end up getting into a situation like Arkansas had back in 2018 and 19.

Well, in terms of further on the work requirement, there have been numerous study critics will say it just simply isn't working.

You don't get that much savings out of a work requirement, right?

It's there.

They are.

In essence, they are the wholly ineffective.

Exactly.

And that's going to be something that's really interesting in this argument as well.

You're going to remove people from coverage.

And the CBO, which is nonpartisan, estimates that 7.6 million Americans will end up losing Medicaid coverage as a result.

But at the same time, are we really saving money in the process?

And that's going to be something that you're really going to have to sell people on during the summer of reconciliation?

Okay, the action shifts now out of the Senate.

We've got two men over there.

I mean, every state does.

But their outlook where where are they right now?

Do we know?

Well, let's focus on Synder Bozeman, because Synder Bozeman has a big part in this.

He is the chair of the Senate Agriculture Committee, as we've discussed in the past.

Yeah.

And he's going to have to face same kind of reconciliation questions that his counterparts on the House Agriculture Committee faced when I talked to him about what he wants done in reconciliation, because there could be a ton done.

And keep in mind, those two committees have influence over Snap.

They have jurisdiction over food stamps.

One thing he mentioned was let's try to do something involving the farm bill, specifically risk management programs.

If you recall, the farm bill hasn't been addressed in almost three years.

On waivers now.

Exactly.

They're supposed to pass a new one back in September 2023.

It is not September 2023.

And so we're in a situation now where farmers are facing more and more pressure financially, socially, socially, mentally to produce.

And so one way that we can solve the farm bill problem and try to get something done through reconciliation in terms of savings and government action, is address risk management programs.

We can try to find a way to make sure farmers have the right resources from the sender's perspective, and also take that off the farm bill checklist.

And that's not a big check, because the farm bill, most of that is Snap and nutrition funding, but it is a check nonetheless.

So next step is double.

They want to try to get something done by July 4th.

But time up there is kind of in a vacuum.

That's kind of the fun part about being in DC.

You think it's Monday and it's actually the Monday prior.

So they are shooting for July 4th to have their work done, but at the same time, that's just over a month away.

That's the challenging aspect is where do you find the time to get that done and also get your normal business done?

There's going to be a lot of long hours and a lot of coffee brewed during the next few weeks.

Yeah.

Very interesting.

That is some of the most conservative members in the Senate, have got their backs up over, over the, the budget bill.

Yeah, right.

They want the tax cuts, but they they said, wait a minute, this is way too much debt, right?

Everyone, you know, for the most part does not like paying taxes.

But we have to pay taxes.

If you can find a way to reduce taxes.

You know, people for the most part are going to be happy with that.

But the problem with that is you're also going to find a way to reduce spending.

And this is a very complicated way to do this.

Keep in mind Senate the Senate wanted to do this on two different tracks.

And the House came together and said, you know what?

We're going to do this one big thing that the president wants us to do, we can do this, but it makes it very complicated process even more complicated, because you're not just addressing tax cuts, you're also addressing spending in hopes of stabilizing your financial well-being.

Yeah.

One of the things that's bringing you back to Arkansas is there is a meeting, of the Democratic Party's executive committee, significant meeting.

And it comes at a time when the the party is trying to figure out what is right.

Where are we?

Who are we?

Well, also brings up the question, and I hate to be that person here, Steve, but why on earth are all these state Democratic leaders meeting in Arkansas?

I think it's fair to say that Arkansas is a little bit more red than some other states that could possibly have Democrats win seats, but the story with that is Ken Martin, who's the current DNC chair.

He formerly led the Minnesota version of their Democratic Party.

When Grant O'Neill took over the Arkansas Democratic Party and the party was in financial straits, he reached out to Martin for advice and Martin gave him plenty of advice.

Don't declare bankruptcy.

We're going to help you get through this now.

The state Democratic Party's in great position.

Can Martin's now the chair.

And I think they really see an opportunity following what happened last November to find their footing and figure out, okay, how can we win in places that may not support a Democrat in the past?

Maybe not places like, you know, little Rock, Arkansas or Hot Springs, Arkansas, but maybe places that used to be, you know, more recently blue that have now shifted, red places like eastern North Carolina, for instance, where my mom grew up, similar to the Mississippi Delta of Arkansas, but at the same time, places where they see opportunities that they can just just, you know, reach out and take a seat in the next midterm elections.

Yeah.

Well, what's the thinking there?

Because even some of the precincts in Arkansas counties in Arkansas that have traditionally blue are, trending purple, particularly in the Delta.

And keep in mind, the state Democratic Party in the last election cycle didn't do bad.

And I say that in the sense that it wasn't a train wreck.

They didn't, you know, lose seats.

But at the same time, though, a lot to be desired because you're the minority party.

Yeah.

So what do you do?

Well, you've tried to find a guy who understands how state politics works, someone like Ken Martin, and work with him on developing a strategy and developing a game plan here.

How can the National Party back you up and support you and get people not just to run into the doors, but also on Election Day, get them into office and in a position to have a positive impact in office.

Yeah.

And still this identity crisis, though, I mean, where are we on the spectrum?

We're right.

That's the fun part too.

Nationally, of course, is a bigger issue than state politics.

But at the same time, you know, but they get painted every single run.

Our aldermen, it gets trickled down all the time.

You know, when I was covering local politics, I can't tell you how many local meetings I would go to, and there would be a national story, and you'd have to pull a, you know, council member, a mayor and go, okay, well, what do you think about this?

Because it does have a local impact.

So the challenge is now, how do you separate yourself from, you know, the noise that happens in DC and the national storylines?

And how do you connect with people at a local level?

Because let's face it, local politics at your, you know, your city, your county, your state capital in little Rock that has a big impact on your day in, day out lives.

And hopefully, fingers crossed it doesn't have as much of the drama and high school levels of, relationships that we see in DC.

Yeah.

Alex Thomas, be well.

Be safe.

Yes or no.

We'll see you again soon, either here or remotely.

It sounds like a plan.

All right.

And that does it for us for this week.

As always, we thank you for watching and see you next time.

Support for Arkansas Week, provided by the Arkansas Democrat-Gazette, the Arkansas Times and Little Rock public Radio.