As previously described in The Energy Law Blog, Arkansas is unlike several of its neighboring states in that it already has a robust body of law governing the extraction of minerals from brine. The Arkansas Oil and Gas Commission oversees brine production and sets the applicable royalty rates to which landowners are entitled. There is currently no set rate for extracted lithium; however, several lithium producers, including Albemarle Corporation, Saltwerx LLC, SWA Lithium LLC, LANXESS Corporation, and TETRA Technologies, Inc., have recently petitioned the Commission to set a royalty rate for lithium extracted from brine. This issue has been set for hearing on September 24, 2024.
According to the Arkansas Times, battle lines have already been drawn between producers and landowners who disagree as to whether the rate should be a 1-2% royalty rate (similar to existing brine royalties) or an 11-12% royalty rate (comparable to oil and gas royalties). While the Commission’s decision will not directly govern lithium royalties in neighboring states, it may influence what producers and landowners in those states see as a “standard” royalty for lithium and will impact royalty negotiations accordingly. Thus, anyone interested in the potential for lithium production in Louisiana will want to pay close attention to the outcome of the September 24 hearing.
For further questions regarding this topic, please contact Liskow attorneys Joe Heaton, Caleb Madere, and Jamie Rhymes and visit our Royalty Litigation practice page.
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