China says the US is trying to stifle its tech development via investment curbs

JOE McDONALD
Thu, August 10, 2023

BEIJING (AP) — China accused Washington on Thursday of trying to block its development after President Joe Biden stepped up a feud over technology and security by tightening controls on U.S. investments that might help Beijing develop its military.

The Foreign Ministry accused the Biden administration of pursuing “technology hegemony” and demanded Washington “immediately revoke its erroneous decision.” It warned that the latest restrictions in a spreading conflict over Beijing’s industrial development would hurt global supply chains.

An order signed by Biden on Wednesday targets advanced computer chips, micro electronics, quantum information technologies and artificial intelligence. The order says it wants to limit U.S. investment in industries that might help develop the ruling Communist Party’s military wing.

US President Joe Biden in Belen, New Mexico, on August 9, 2023. (Photo by JIM WATSON/AFP via Getty Images)

The order adds to restrictions that limit Chinese access to U.S. processor chips used in smartphones, artificial intelligence and other technology on security grounds. Dozens of Chinese companies that Washington says are linked to military modernization are barred from American financial markets.

Washington’s “true purpose is to deprive China of its development rights and maintain its own hegemony,” the Foreign Ministry said.

China will “resolutely safeguard its own rights and interests," the Ministry of Commerce said in a separate statement, but it gave no indication of possible retaliation. Beijing has made similar comments after previous U.S. trade restrictions but usually takes no action.

As it imposes restrictions, the Biden administration is trying to revive U.S.-Chinese relations that are at their lowest level in decades due to disputes over security, human rights, technology, Taiwan and Beijing’s treatment of Hong Kong.

Treasury Secretary Janet Yellen visited Beijing in July and said communication would increase but announced no agreements on disputes. Chinese leaders have demanded the United States change its policies on Taiwan and other issues but have given no indication they might change trade and other policies that irk Washington and China’s Asian neighbors.

US Treasury Secretary Janet Yellen meets China's Vice Premier He Lifeng on July 8, 2023. Pedro Pardo/Pool via REUTERS

Chinese leader Xi Jinping’s government has announced only small steps to retaliate for Western tech restrictions, possibly to avoid disrupting a multibillion-dollar campaign to create its own processor chip, artificial intelligence and other technology industries.

Chinese rules that took effect Aug. 1 require exporters of gallium and germanium, two metals used in computer chips and solar cells, to obtain government licenses. The announcement rattled Japanese and South Korean electronics manufacturers.

The conflict has prompted fears of “decoupling,” or the world splitting into separate industrial markets with conflicting standards that mean electronics, auto and other products and components from one couldn't be used in the other. That might hamper innovation and economic growth.

Yellen and other U.S. officials say they don't want “decoupling” but are pursuing “de-risking.” They say that includes developing additional sources of raw materials, industrial components and consumer goods to avoid disruptions like those during the COVID-19 pandemic.

The Ministry of Commerce accused Washington of “using the cover of ‘risk reduction’ to carry out ‘decoupling and chain-breaking.’”

At the same time, Xi's government, citing strategic risks, has pressed Chinese industries to use domestic suppliers whenever possible, even when that raises costs. Xi has called for China to become a self-reliant “technology power.”

Anxiety about China’s military has increased as Beijing sends fighter planes to intimidate Taiwan, the self-governed island claimed by the Communist Party as part of its territory, and presses claims to parts of the South and East China Seas.

U.S. officials said the new limits were tailored not to disrupt China’s economy but would complement export controls on advanced computer chips.

U.S. investors would be required to notify the government about certain transactions with China. Some would be prohibited.

Officials said the order focuses on areas such as private equity, venture capital and joint partnerships in which the investments could possibly give countries of concern such as China additional knowledge and military capabilities.

In July, the Senate approved a requirement to monitor and limit investments in countries of concern, including China.

American VCs Fought Back Strict Biden Rules on China Investments. But More May Be Coming



Sarah McBride and Lizette Chapman
Wed, August 9, 2023 

(Bloomberg) -- US investors who spent years fighting strict limits on their ability to invest in China scored a victory Wednesday when President Joe Biden released an order imposing only light curbs on the flow of money to the world’s second-largest economy.

But many of those same venture firms fret that future restrictions — whether from the Federal government or individual states — will be far less investor friendly.

The new rule would bar US investors from taking stakes in some Chinese semiconductor, quantum computing and artificial intelligence firms. It’s narrower than previous versions, and will not require the dismantling of earlier investments. Yet while the wording sparked relief in some corners of the financial world, many investors now believe the executive order is the opening salvo for the administration as it looks to ensure that American VCs don’t give China an edge in developing technology that has potential military applications.

“US investors should interpret the EO as the first chapter of a book,” said H.K. Park, managing director for Crumpton Global, a Washington-based consulting firm. “Other initiatives at the federal and state level with broader scopes may come to fruition.”

For example, he said, the special committee on the Chinese Communist Party is advocating for the audit of past investments in Chinese firms, the Senate has approved legislation that would require the disclosure of new investments, and individual states have taken their own actions. The state of Indiana recently enacted legislation requiring its pension fund to divest from investments in China.

“Don’t expect a narrowly targeted national security program to stay narrow — and plan accordingly,” said James Maloney, managing partner at Tiger Hill Partners, which advises investment firms on government policies.

The industry’s ability to stave off major disruptions so far is partly thanks to VCs’ yearslong push in Washington to maintain a version of the investing status quo. Lobbying efforts to weaken provisions of the latest executive order were effective, according to a person with familiar with the matter who asked not to be identified discussing private conversations.

One major concession included limiting the order to exclude past investments, the person said. The industry’s position was that it would be too difficult to untangle past deals, and that it was unfair to penalize investors for following the law at the time.

US tech investors often have outsize sway in politics. “They’re heavy contributors, and we have an election coming up,” said Jeff Fiedler, a former commissioner at the US-China Economic and Security Review Commission. “Both parties are hesitant to rein in private equity and venture capital.”

Long before this week’s order, the specter of legislation along with rising geopolitical tensions had prompted many firms to pull back from China. Funding to Chinese startups with participation from US investors was about $200 million in the second quarter of 2023, according to data compiled by research firm PitchBook. That’s a fraction of the $2.4 billion in investments into Chinese startups in the same period last year, and far lower still than the $19.7 billion in deals in the relatively uncomplicated days of 2018.

The dip corresponds with a broader falloff in global VC investing, but was far more severe. Global investments with participation from US investors declined 51% during the second quarter of 2023 from the year before. By comparison, investments in Chinese startups declined 92%. In addition to international friction, China’s tech sector has also suffered from government crackdown that in recent years has limited the upside for many startups in the country.

The executive order will not target every tech investment in China. The new rule applies only to sensitive technology and those that could be used in a military or surveillance context. One notable exception is space, said John Carlin, a lawyer at Paul, Weiss, Rifkind, Wharton & Garrison and a former Justice Department official. But while space-related companies are not mentioned in the executive order, Carlin said he expects the sector will be subject to future scrutiny.

“This is narrower than people expected,” Carlin said. “This is a cautious first step.”

Some industry players celebrated the executive order. “It makes good strategic sense to slow down capital flow to a foreign adversary and makes even more sense to speed up domestic investment in cutting-edge science,” said Josh Wolfe, co-founder of Lux Capital. “Overall this is a net-positive decision, and implementation will be nuanced.”

Global tech trade association the Information Technology Industry Council said in a statement it appreciated the administration’s “risk-based approach” to overseas investing. And Mike Brown, partner at Shield Capital, said the rule was “a good idea and it’s far overdue.” Brown added that the executive order was likely the first in a series of steps the US would take to maintain its technological edge over China. “There will be more to come because the relationship is complex,” he said. “It goes beyond the money.”

Other VCs have raised concerns that if the US steps back from investing in Chinese startups, other countries will simply step in to fill the void. “We hope that the administration will make more progress with US allies and partners to advance common interests and prevent an otherwise unilateral US policy from disadvantaging American companies vis-a-vis foreign competitors,” the US-China Business Council, which includes VC firms as members, said in a statement. Lux’s Wolfe said the possibility that US investors would simply be replaced by VCs from other countries is the “main downside” of the legislation.

--With assistance from Dawn Lim.

Bloomberg Businessweek

China's internet giants order $5 billion of Nvidia chips to power AI ambitions -FT

Wed, August 9, 2023 
By Kanjyik Ghosh and Stephen Nellis

(Reuters) -China's internet giants are rushing to acquire high-performance Nvidia chips vital for building generative artificial intelligence systems, making orders worth $5 billion, the Financial Times reported on Wednesday.

Baidu, TikTok-owner ByteDance, Tencent and Alibaba have made orders worth $1 billion to acquire about 100,000 A800 processors from the U.S. chipmaker to be delivered this year, the FT reported, citing multiple people familiar with the matter.

The Chinese groups had also purchased a further $4 billion worth of graphics processing units to be delivered in 2024, according to the report.

A Nvidia spokesperson would not elaborate on the report but said that "consumer internet companies and cloud providers invest billions of dollars on data center components every year, often placing orders many months in advance."

The Biden administration last October issued a sweeping set of rules designed to freeze China's semiconductor industry in place while the U.S. pours billions of dollars in subsidies into its chip industry.

Nvidia offers the A800 processor in China to meet export control rules after U.S. officials asked the company to stop exporting its two top computing chips to the country for AI-related work.

The FT report comes as President Biden on Wednesday signed an executive order that would narrowly prohibit certain U.S. investments in sensitive technology in China and require government notification of funding in other tech sectors.

Nvidia's finance chief said in June that restrictions on exports of AI chips to China "would result in a permanent loss of opportunities for the U.S. industry", though the company expected no immediate material impact.

Baidu, ByteDance, Tencent and Alibaba did not immediately respond to Reuters' requests for comment.

(Reporting by Kanjyik Ghosh in Bengaluru and Stephen Nellis in San Francisco; Editing by Anil D'Silva and Diane Craft)

Utah's multibillion dollar oil train proposal chugs along amid environment and derailment concerns

Oil Railroad
A train transports freight on a common carrier line near Price, Utah on Thursday, July 13, 2023. Uinta Basin Railway, which would connect to common carrier lines, could be an 88-mile line in Utah that would run through tribal lands and national forest to move oil and gas to the national rail network. Critics question investing billions in oil and gas infrastructure as the country seeks to use less of the fossil fuels that worsen climate change. 

Pumpjacks dip their heads to extract oil in a basin south of Duchesne, Utah on Thursday, July 13, 2023. 

SAM METZ
Thu, August 10, 2023

DUCHESNE, Utah (AP) — On plateaus overlooking the Uinta Basin's hills of sandstone and sagebrush, pumpjacks bob their heads as they lift viscous black and yellow oil from the earth that will eventually make everything from fuel to polyester fabric.

To move fossil fuels from the Uinta Basin's massive reserve to refineries around the country, officials in Utah and oil and gas companies are chugging along with a plan to invest billions to build an 88-mile (142-kilometer) rail line through national forest and tribal land that could quadruple production.

The Uinta Basin Railway would let producers, currently limited to tanker trucks, ship an additional 350,000 barrels of crude daily on trains up to 2 miles long. Backers say it would buoy the local economy and lessen American dependence on oil imports.

“We still have a huge need for fuel and we’re not creating more capacity in the Gulf or anywhere in the United States,” said Duchesne County Commissioner Greg Miles, who co-chairs a seven-county board spearheading the project.

The rail link has the support of the local Ute Indian Tribe of the Uintah & Ouray Reservation and Utah lawmakers. The state has allocated more than $28 million to help launch the proposal and clear early permitting hurdles.

It's won key approvals from the federal Surface Transportation Board and U.S. Forest Service. But much like Alaska's Willow oil project, its progression through the permitting process could complicate President Joe Biden's standing among environmentally minded voters. As the president addresses heat and climate change on a trip to Utah, Arizona and New Mexico this week, they say the country cannot afford to double down on fossil fuels.

“They’re not following their own policies,” said Deeda Seed of the Center for Biological Diversity, one of several groups that has sued over the project. “The world’s on fire. The Biden administration says they want to stop the harm. So far they’re enabling a project that makes the fire even bigger.”

The year ahead will likely be critical for the railroad as it seeks additional approvals from the Forest Service, Department of Transportation and Bureau of Indian Affairs. Completion could be years away and will require fending off fiscal, environmental and safety concerns.

Since an Ohio freight train's fiery derailment in February forced thousands to evacuate from the threat of hazardous chemicals, the specter of similar catastrophes has sown fear in neighboring Colorado, where Uinta Basin trains would eventually pass to reach refining hubs near the Gulf of Mexico. Worried about oil trains traversing their narrow canyons, Eagle County has joined environmentalists in suing over the preliminary federal approvals, and the state's congressional delegation has pushed the Biden administration to stop the project.

“These trains would run directly alongside the headwaters of the Colorado River — a vital water supply,” U.S. Sen. Michael Bennet and U.S. Rep. Joe Neguse wrote in a letter last month about the route the trains would take when the new track connects to broader rail lines. “An oil spill in the Colorado River headwaters would be catastrophic.”

Most of the crude produced in the Uinta Basin currently makes its way to refineries via heated tanker trucks that traverse mountains on a two-lane highway. Transportation costs force producers to mainly sell their barrels to the five Salt Lake City-area refineries for significantly less than they could get bigger markets in Gulf states like Texas, Louisiana and Mississippi.

The railroad would start in the northern end of the Uinta Basin and run south to connect producers in Utah’s Duchesne and Uintah counties — combined population 55,000 — to the broader railroad network.

“We’re in a high basin, we’re surrounded by mountains, and trucking has its risks and costs. It’s a lot more labor-intensive and you can’t realistically truck a large amount of oil — 50,000 or 100,000 barrels a day — all the way to east Texas," Reed Page, director of gas marketing operations for Summit Energy, said at a meeting this month of the state's oil and mining department. “But you can do that economically by rail."

Producers also argue it will eventually allow them to develop oil shale and tar sands oil that are currently too costly to pursue. Environmentalists have decried the potential impact of both, arguing they are more energy-intensive and dirtier than traditional crude.

The proposal has already won key federal agency approvals, including from the Department of Transportation’s Surface Transportation Board. The U.S. Forest Service granted a 12-mile (19-kilometer) right-of-way through the Ashley National Forest, where three of the project’s five tunnels would be dug into mountainsides.

One of those tunnels would be near where Darrell Fordham, founder of the Argyle Wilderness Preservation Alliance, owns a family cabin. Fordham is concerned about oil spills, but he's also unhappy that public money has gone to support the project.

“This is our land, but the very same thing or something very similar could happen to anyone. We think that, because we own land, we have certain rights but they want to run this railroad right over the top of us with no consideration for us whatsoever,” Fordham said.

Neither the Forest Service nor the Department of Transportation responded to questions from The Associated Press about the proposed railway. In their approvals, they said the project complies with federal laws to protect the environment as well as Biden executive orders on tribal consultation and environmental justice.

The Ute Indian Tribe of the Uintah & Ouray Reservation also did not respond to questions. Though tribes throughout the United States have become some of the most vocal opponents of fossil fuels, the tribe's business committee chairman said in a statement last year that the “economic well-being of our membership depends on energy mineral production on our Reservation."

Financing for the project is being spearheaded by the Seven County Infrastructure Coalition, a body formed by eastern Utah officials. They used state grants throughout the permitting process and want the Department of Transportation to approve an application to issue $2 billion in tax-free bonds to fund the project. The infrastructure bill that Biden signed in 2021 doubled the Department's ability to approve private activity bonds to $30 billion; the railroad would be the largest project they've approved to date.

Supporters say investors will save substantially if developers can finance the project with tax-exempt bonds rather than traditional debt, which is taxed by state and federal authorities like other income. Both supporters and opponents acknowledged that the rail line is years away even if financing is assured and all permits are obtained.

“Once this rail is built, it will be there for 100 or 200 years. Whether or not oil will still be the major commodity in the basin, no one has a crystal ball. But that rail will still be there and can be utilized to ship whatever is needed,” said Keith Heaton, the Seven County Infrastructure Coalition’s Executive Director.

___

Associated Press climate and environmental coverage receives support from several private foundations. See more about AP’s climate initiative here. The AP is solely responsible for all content.

Pumpjacks dip their heads to extract oil in a basin south of Duchesne, Utah on Thursday, July 13, 2023. 

Keith Heaton, the executive director of the Seven County Infrastructure Coalition, discusses the Uinta Basin Railway proposal on Tuesday, July 18, 2023, in Salt Lake City. He and the coalition of rural conservative counties see the rail as an economic development opportunity but face pushback amid growing questions about the future of oil and gas.

Workers from eastern Utah's oil and gas industry and others attend a Utah Division of Oil, Gas and Mining meeting on July 13, 2023, in Duchesne, Utah. The department convenes regular public meetings to update community members on industry-related news, including the Uinta Basin Railway.

Darrell Fordham, of the Argyle Wilderness Preservation Alliance, discusses his worries about the proposed Uinta Basin Railway at his home Tuesday, July 18, 2023, in Lehi, Utah. The proposed railway would traverse a narrow, wooded canyon in the wilderness near where the family owns a cabin. 


A tanker truck transports oil through the Uinta Basin basin south of Duchesne, Utah on Thursday, July 13, 2023. Local politicians and oil and gas businesses want to construct a multi-billion dollar railroad to transport more barrels out of remote eastern Utah but face safety, environmental and cost concerns. 


A pumpjack dips its head to extract oil in a basin south of Duchesne, Utah on Thursday, July 13, 2023. 

Well pads used for horizontal drilling stand in the Uinta Basin near Duchesne, Utah on Thursday, July 13, 2023. 

A tanker truck transports crude oil on a highway near Duchesne, Utah on Thursday, July 13, 2023.Oil sits in containers at a facility on public lands south of Duchesne, Utah on Thursday, July 13, 2023. 

A train transports freight on a common carrier line near Price, Utah on Thursday, July 13, 2023. 

A pumpjack dips its head to extract oil in a basin north of Helper, Utah on Thursday, July 13, 2023. 

AP Photo/Rick Bowmer

GREEN CAPITALI$M

Blackstone Raises Record $7 Billion to Finance Clean-Energy Push

"WE DON'T CALL IT ESG"

Dawn Lim
Thu, August 10, 2023 



(Bloomberg) -- Blackstone Inc. raised $7.1 billion for a fund to finance solar companies, electric car parts makers and technology to cut carbon emissions.

The Blackstone Green Private Credit Fund III surpassed its $6 billion goal. This marks the firm’s biggest stockpile for a bet that the economy will rely less on oil and gas — and that companies behind the shift to lower-carbon sources will need financing.

Blackstone’s clean-energy arsenal also broadcasts its ambitions to build up its lending business as banks retreat under new regulations.

While the firm under Chief Executive Officer Steve Schwarzman is best known for buyouts, it’s evolved into a major source of financing. Nearly a third of its $1 trillion of assets are dedicated to credit.

President and CEO-heir apparent Jon Gray has asked dealmakers to mobilize around big themes and fast-growing parts of the economy to keep that money machine going. The fund is Blackstone’s first lending pool with the formal mandate to profit from a shift to alternative energy sources.

Key Blackstone funds swore off backing oil and gas exploration and production in 2022, capping off a yearslong retreat after returns for some energy bets see-sawed.

Read More: Blackstone Retreats From Oil-Patch Investing, Widening Private Equity’s Exit

Blackstone has readied a target to invest $100 billion on a wide-ranging category of companies poised to grow with the rise of alternative energy sources.

The world’s largest alternative asset manager is taking the opposite view from rivals and hedge funds wagering that they can keep making money from oil in the long term. Blackstone’s growing presence in green energy threatens to put it in the crosshairs of ESG critics that accuse money managers of advancing “woke” capitalism.

“The capital needs for the energy transition are immense,” said Robert Horn, who oversees the credit arm focused on renewable companies and related plays. “This is an opportunity to use our capital and resources to try to transform big areas of the economy and make attractive returns for our investors.”

The Blackstone veteran personifies that transformation. Horn, 41, was formerly the co-head of the firm’s energy lending arm, which Blackstone rebranded last year as a “sustainable resources platform” to reflect that focus.

He said the platform has the capacity to pair Blackstone’s borrowers with other portfolio companies, which include everything from operators of power-hungry data centers to urban warehouses.

In recent years, the firm provided Altus Power with investment-grade debt and preferred equity and connected the solar power company to a Blackstone-backed warehouse operator. The pair kickstarted solar projects across New Jersey.

US policies will work in Blackstone’s favor as it doles out $7.1 billion for a new round of lending. The Inflation Reduction Act that President Joe Biden signed last year will provide incentives for electric carmakers and other renewable energy companies over the next decade.

The programs provide “10 years of certainty,” Horn said. “The underlying favorable economics are allowing the sectors to win.”

Bloomberg Businessweek

Biden-Backed Bus Maker Got Millions in Aid Before Bankruptcy

Ari Natter
Wed, August 9, 2023 


(Bloomberg) -- Proterra Inc., the electric bus maker touted by President Joe Biden that filed for bankruptcy this week, was the recipient of millions of dollars in US Covid-relief government aid.

The Burlingame, California-based company was awarded a $10 million loan from the Paycheck Protection Program by the Trump administration in 2020 that was forgiven in May 2022, according to a company filing Wednesday. Proterra reported it as a net gain of $10.2 million after interest payments were refunded by the Small Business Administration, the Securities and Exchange Commission filing said.

The Covid-relief aid came on top of other federal government incentives and support for the electric bus industry more broadly, as well as repeated shout-outs for the company from Biden. Proterra was also widely expected to benefit from new demand for electric buses fostered by last year’s infrastructure and climate laws, including more than $5 billion earmarked for replacing existing buses with zero-emission models and new tax credits for battery and clean-vehicle manufacturing.

The White House and the Small Business Administration didn’t immediately respond to a request for comment. An administration official said policies championed by Biden and other Democrats were responsible for an increase in electric-vehicle demand and pointed to a Cox Automotive study that said EV sales hit a record high last quarter. Some 96% of Paycheck Protection Plan loans were forgiven, according to an October report by the SBA.

The nearly 20-year-old manufacturer of electric buses and batteries was valued at $1.6 billion when it went public in June 2021 and has drawn praise from Biden who went on a virtual tour of a company facility earlier that year amid White House plans to electrify the nation’s fleet of transit and school buses.

In February, Biden appointed Proterra Chief Executive Officer Gareth Joyce to the President’s Export Council. Energy Secretary Jennifer Granholm served on Proterra’s board from 2017 until she became secretary and sold her stock in the company in May 2021, providing her with a net capital gain of $1.6 million following criticism from the GOP.

The company filed for Chapter 11 bankruptcy protection in Delaware Monday, saying in a statement it was facing “market and macroeconomic headwinds.” The company, which said it plans to either recapitalize its businesses or sell them off, has seen its shares plunge 90% since the announcement.

A spokesman for Proterra said the loan “supported our ability to maintain a full workforce as we navigated the uncertainty caused by the Covid-19 pandemic.”

In its SEC filing, Proterra said it expected the billions of dollars in funding for electric buses would “remain an important factor in our company’s growth prospects,” but didn’t note receiving any funding from either the infrastructure or climate laws directly.

--With assistance from Jennifer A. Dlouhy.


What led to EV darling Proterra's bankruptcy

Kirsten Korosec
Wed, August 9, 2023 

Image Credits: Proterra


Proterra, a company that develops battery systems for buses and other heavy duty EVs, filed for bankruptcy earlier this week, making it the latest in a string of failures in the EV sector.

While some parallels can be drawn between Proterra and other failing or defunct EV companies, this company faces specific headwinds that took it down a rocky financial path.

The bankruptcy filing came as a surprise for many. After all, Proterra was a company that was well-established — certainly no pre-revenue upstart — and a darling in the EV sector. It launched in 2004 as an electric transit bus company, a sector that seemed open for the taking and well positioned for growth. It raised millions from high-profile backers like Daimler and locked in deals with numerous cities. (As of August 2023, the company had delivered more than 1,000 electric transit buses, including 199 new transit buses and 14 pre-owned buses in 2022.)

In 2015, Proterra diversified its business and decided to develop its own battery technology and powertrains. It eventually became a company with three business lines: battery systems called Powered, the Transit unit and a charging infrastructure business called Energy. Software services rounded out the mix. The company's battery system business unit helped it expand beyond buses and into cargo vans, off-highway equipment that's used in construction and mining, and even Class 8 semi-trucks. It has since installed more than 100 megawatts of heavy-duty EV charging infrastructure to support commercial vehicle fleets across North America.

Things were going well enough that it went public in 2021 via a merger with special purpose acquisition company, in a deal was valued at $1.6 billion.

So, how did Proterra wind up filing for Chapter 11 bankruptcy protection?

A tightening capital market didn't help. Proterra burned through capital as it tried to scale its three businesses simultaneously.

And then there are the special problems associated with companies that try to make a profit through sales to cities, and specifically transit agencies.

Deals with transit agencies, which rely on federal and state funding, are slow to finalize and budgets are tight, which can mean reducing the price of a product to win a bid. That doesn't help margins.

On top of that pressure, Proterra doesn't recognize revenue until it delivers those buses. Inflation rose in the meantime, further cutting into its margins. Contracts are typically signed 12 to 18 months prior to bus manufacturing, Proterra said in a day one declaration filing with the U.S. Bankruptcy Code in the District of Delaware. "Contracts signed in 2021 proved to be priced below where the manufacturing costs were ultimately realized in 2022," the company noted.

Making the situation even worse? Supply chain constraints, which led to delays significant enough that Proterra ended up paying penalties to contract supplier TPI Composites. Proterra said in the filing it was able to renegotiate the TPI contract to lessen the penalties to some degree, but it still faced liabilities from an inability to accept the agreed-upon bus body minimums. Proterra and TPI also faced penalties for delivering buses late to its customers.

Atop all of these challenges, one of the bigger issues -- and one that existed long before the economic conditions changed -- are the special needs of transit agency customers. Every transit agency has different requirements for its buses, meaning every bus contract can have vastly different manufacturing requirements than the one before.

"These transit agencies demand highly customized buses that align with the other buses in their respective fleets," Proterra wrote in the filing. "Therefore, the manufacturing process requires much customization, which makes scaling the business difficult and requires an extensive amount of working capital."

Proterra still intends to continue as a business. Its hope — stated when it voluntarily filed for protection under Chapter 11 — is that the move will "strengthen its financial position" through a recapitalization or going-concern sale.

"The reorganization is intended to maximize the value of each independent business line," said Proterra spokesperson Shane Levy told TechCrunch, noting that it's in progress and the end result is unclear.

The company said it will continue operations and will make a request to the bankruptcy court to use existing capital to pay employee salaries and compensating vendors and suppliers.

In the meantime, Proterra has canceled its earnings call scheduled for August.

The company said that Moelis & Company LLC is acting as Proterra's investment banker, FTI Consulting as financial advisor, and Paul, Weiss, Rifkind, Wharton & Garrison LLP as legal advisor.

Proterra won’t fight Nasdaq delisting following bankruptcy filing

Alan Adler
Wed, August 9, 2023 

Proterra Inc. said it won't fight its Aug. 17 delisting from the Nasdaq following its filing for bankruptcy protection. (Photo: Proterra Inc.)

Electric bus and battery maker Proterra Inc. won’t fight its Aug. 17 delisting from the Nasdaq as it works on a bankruptcy reorganization plan.

Proterra filed for Chapter 11 bankruptcy protection on Monday. On Tuesday, shareholders exited the company in droves. Shares fell 88% to close at 17 cents. They fell an additional 10.29% Wednesday to 15 cents. Proterra warned what could happen in its second-quarter 10-Q filed with the Securities and Exchange Commission.

“Our post-bankruptcy capital structure is yet to be determined, and any changes to our capital structure may have a material adverse effect on existing debt and security holders, including holders of our common stock,” Proterra said.

In other words, a wipeout.

Shareholders on June 23 approved the doubling of authorized shares from 500 million to 1 billion, intended to give Proterra flexibility to raise capital by selling new shares. As of June 30, about 227.8 million shares of common stock were outstanding.
Q2 loss narrows while revenue rises

According to the 10-Q, Proterra’s revenue rose to $77.1 million from $70.3 million a year ago. The quarterly loss was $31 million, or 14 cents a share, compared to $42 million, or 19 cents, a year ago.

Massive debt — $175.9 including $22.4 million of interest — was a catalyst that drove the Burlingame, California-based company to seek bankruptcy protection. The filing shields Proterra from having to pay the loan, which became due immediately when Proterra filed its bankruptcy petition.

Proterra plans to keep operating and will ask the bankruptcy court to allow it to use its $62.4 million in cash and equivalents to pay employee salaries and suppliers while blocking collection of debt.

“We are subject to the risks and uncertainties associated with Chapter 11 proceedings, including the approval by the bankruptcy court of our use of cash collateral,” the 10-Q filing said. “Operating under bankruptcy court protection for a long period of time may harm our business.”

Customers wait for battery packs

Battery pack production is especially important to Nikola Corp., which said it was relying on Proterra to provide packs for its fuel cell electric trucks going into production this quarter.

Nikola’s issues with its main battery supplier, Romeo Power, have cost the company tens of millions after it purchased Romeo for $144 million in stock a year ago. Nikola is liquidating Romeo’s assets after pulling back on production of battery-electric trucks. If Proterra cannot deliver packs for the trucks, Nikola could face another challenge to its survival.

Proterra also supplies battery packs to Daimler Truck North America for its Freightliner Custom Chassis Corp. and Thomas Built Bus subsidiaries. DTNA invested in the special purpose acquisition company that took Proterra public in 2021. Former DTNA CEO Roger Nielsen became Proterra’s chairman in May.

Proterra wants to separate its three business units and is looking for buyers for one or more of them.

Based on Q2 results, the strongest candidate to go appears to be the bus business, which is the legacy operation started 19 years ago. Revenue fell to $21.1 million from $50.8 million a year ago. Proterra Powered & Energy booked $64.6 million in revenue compared to $23.7 million a year ago.

Related articles:

EV battery maker Proterra files for Chapter 11 bankruptcy protection

Former Daimler Truck CEO becomes chairman of Proterra

Why Biden is struggling to sell his climate change record

Ben Adler
·Senior Editor
Wed, August 9, 2023

President Biden announced he is putting the brakes on uranium mining around the Grand Canyon while speaking at Red Butte Airfield in Arizona on Tuesday. 

(Jim Watson/AFP via Getty Images)

President Biden is trying to sell his record on climate change and the environment with a series of speeches and media appearances this week.

Standing in front of the Grand Canyon in Arizona on Tuesday, Biden touted his environmental record while signing into existence a new national monument surrounding the area to protect it from uranium mining. In a state that’s currently baking under a historic heat wave, during the hottest summer on record, Biden connected the recent extreme weather with the climate change that, studies show, has made it much more likely.

“There is more work ahead to combat the existential threat of climate change,” the president said during his speech, in which he also announced a $44 million investment to “strengthen climate resilience across our national park system,” paid for with funds from his signature legislative achievement, the Inflation Reduction Act (IRA) of 2022.

In a Wednesday morning TV interview with the Weather Channel, Biden said he had “in practice” declared climate change a national emergency, as many climate activists are demanding, with his robust climate agenda. And on Wednesday afternoon, he will speak in Albuquerque at the groundbreaking of a wind tower manufacturing facility expansion, to claim credit for the clean energy and manufacturing boom the IRA helped create.

The president’s latest messaging blitz is likely an attempt to boost the popularity of his climate change record, which has been frequently criticized by both Republicans seeking to dismantle it and climate activists who think it does not go far enough. On Monday, a Washington Post-University of Maryland poll found 57% of Americans disapprove of his climate change record (40% approve).

These are the key points to understanding why Biden finds himself in this predicament.

The most ambitious climate change policies of any president in history

Wind turbines generate electricity at the San Gorgonio Pass Wind Farm near Palm Springs, Calif. 

Robert Alexander/Getty Images

When Biden signed the IRA one year ago, it included $369 billion in climate-related spending over 10 years — by far the biggest U.S. investment in combating climate change — with an array of subsidies for clean energy and clean car production, consumption and manufacturing.

An all-of-government approach

The Biden administration isn’t just pushing for spending bills to address climate change; it’s writing new regulations to require increased energy efficiency in everything from vehicles to gas stoves, tightening air pollution rules and creating the first rules limiting carbon dioxide emissions from power plants. After rejoining the Paris climate agreement upon Biden’s inauguration, the U.S. has taken an active role in leading global climate change negotiations, including coaxing other large climate polluters such as China to pledge to reduce emissions of methane, a powerful planet-warming gas.
Some climate activists are still disappointed

Environmentalists have blasted the administration for approving some proposals to drill for oil or gas offshore, and in sensitive areas like the controversial Willow project on Alaska’s North Slope, in spite of Biden’s campaign pledge to end fossil fuel leasing on federal land and water.

A part of the Trans Alaska Pipeline system near Delta Junction, Alaska. 

(Mario Tama/Getty Images)

The White House contends that its hands have been tied on fossil fuel leasing by court rulings, but some legal experts say it could have fought back harder in some of those cases.

Biden has also backed increasing exports of natural gas to help Europe stop buying Russian gas, frustrating climate activists.

Conservatives are angry too

When Biden took office, he temporarily paused selling new federal oil and gas leases, and he canceled the Keystone XL Pipeline, which would have brought Canadian tar sands oil to U.S. refineries. Republican congressional leaders and the oil and gas industry responded by blaming him when oil prices rose during the economic recovery from the COVID-19 pandemic. (Prices are not affected by recent lease sales, which take many years to bring oil to market.)
The IRA is working as intended, with renewable investment skyrocketing

On Monday, a report from the American Clean Power Association stated that in the year since the IRA passed, there was more than $270 billion in capital investments in renewable energy — more investment than in the previous eight years combined. That represents over 200 clean energy projects and more than 100,000 new jobs.

The more people know about the IRA, the more they like it

Biden speaks with Ed Keable, superintendent of Grand Canyon National Park.

 (Jonathan Ernst/Reuters)

While Biden’s climate change record is underwater in the Post-UMD poll, the IRA gets 39% approval with just 20% disapproving and the rest unsure. That high rate of uncertainty is due to the fact that only 27% said they have heard a “great deal” or a “good amount” about the law, with 71% saying they've heard little or nothing about it.

While only a third, or less, of the public is familiar with the IRA’s individual provisions, each of those provisions is very popular. Expanded tax credits for buying solar panels, electric vehicles and heat pumps, and for manufacturing solar panels and wind turbines, all enjoy the support of at least 50% of the public, while none Is opposed by more than 22%.

So Biden is betting that talking up his record will raise awareness of its popular components and boost his climate change approval ahead of his reelection campaign.

Even Now, Still Downplaying Climate Change

Leah McGrath Goodman

August 9, 2023


Where money, power and politics collide

If there has ever been a summer of such oppressive heat that Americans are finally forced to confront the reality of climate change, it would be this one.

And yet some groups are doubling down on the notion that climate change continues to reside not in scientific data or fact, but political talking points and hyperinflated rhetoric.

Alongside the increasingly politicized ESG movement (an acronym that stands for “environmental, social and governance”), some conservative organizations, such as the Heritage Foundation, are working to dismantle efforts and programs that seek to mitigate the impact of climate change.

In a wide-ranging strategy called Project 2025, the Washington think tank makes a series of propositions intended for the next Republican administration, bringing together dozens of right-of-center organizations that “are ready to get into the business of restoring this country.”

Among some of the plan’s biggest changes would be to rewrite federal policy on energy and climate, if a Republican should retake the White House in 2024. The plan aims to scrap regulations to rein in greenhouse gas emissions for power plants, oil and gas wells and automobiles, while upending most federal clean energy programs and increasing fossil fuel production and consumption, which directly contributes to global warming.

Speaking favorably of the plan this week, Mandy Gunasekara, the U.S. Environmental Protection Agency’s chief of staff under Trump, backed the idea of slashing the size and scope of the EPA.

“A lot of the rhetoric that the public sees and experiences is based on a picture that’s not consistent with what we’ve seen with observed climate data and that the forecasts actually suggest a mild and manageable climate change in the future,” Gunasekara told NPR, citing scientific research. When pressed for the names of the scientists on which she based her conclusions, she declined to provide them.

KOO KOO FOR COCO PUFFS

Florida schools ‘hijacked by the left’ turn to anti-climate cartoons


Scott Waldman
Wed, August 9, 2023 

Wind and solar power pollute the Earth and make life miserable. Recent global and local heat records reflect natural temperature cycles. And people who champion those beliefs are fighting oppression.

These are some of the themes of children’s videos produced by an influential conservative advocacy group. Now, the videos could soon be used in Florida’s classrooms.

Florida’s Department of Education has approved the classroom use of material from the Prager University Foundation, which produces videos education experts say distort science, history, gender and other topics. And those researchers fear that the nation’s third-largest state has opened a door that will help spread the videos to classrooms in other states.

Florida is the first state to allow PragerU materials in public schools, where teachers will have the option of showing the five- to 10-minute videos in their classrooms.

PragerU CEO Marissa Streit says the videos will rebalance schools that have been “hijacked by the left.”

“Young kids are being taught climate hysteria," Streit said in an interview. "They’re hearing that the world is coming to an end, and we think that there needs to be a healthy balance.

“The climate is always changing,” Streit added, repeating a climate-denial motto that rejects fossil fuel burning as the cause of continuing record-high temperatures.

For now, Florida has approved using PragerU videos only in civics and government for younger children. Some PragerU climate denial videos are classified under non-climate categories, which could enable their use in Florida.

Florida’s approval is alarming because children will watch the videos when they are at their most impressionable stage, in kindergarten through 5th grade, said Adrienne McCarthy, a researcher at Kansas State University who tracks PragerU. Extreme ideas are presented as common beliefs in many videos, she said.

“They can take these right-wing, controversial ideas and cloak them in seemingly harmless and friendly rhetoric,” McCarthy said. “Then they create this kind of facade of normal conservative beliefs, and they use authoritative figures [in the videos] in order to convince the audience.”

“It’s also targeted at the parents themselves, saying that if you want to be a good parent, you should be teaching your kids this,” McCarthy added.

Glenn Branch, deputy director of the National Center for Science Education, said Florida is effectively supporting parents and teachers who want to tear down accurate climate science lessons.

Florida’s approval “may be telling climate change-denier teachers about the availability of these materials,” Branch said. Teachers who want to teach climate change accurately could feel coerced to do otherwise “by hinting that there are resources out there with the opposite view, and people are going to be pressuring you into using them.”
Climate-denial talking points, verbatim

Florida Department of Education spokesperson Cassie Palelis said in a statement that the PragerU material “aligns to Florida’s revised civics and government standards” and “is no different than many other resources, which can be used as supplemental materials in Florida schools at district discretion.”

PragerU’s videos use talking points common among global warming skeptics to frame climate science and policy. Many of the videos attack renewable energy sources such as solar and wind.

An eight-minute video, “Poland: Ania’s Energy Crisis,” exemplifies how PragerU introduces climate denialism to children by subtly attacking established science and the people concerned about global warming.

In the video, teenager Ania is concerned about climate change because of what she learned at school. Climate-denial talking points are introduced almost verbatim in the trusted voice of Ania’s mother and father.

Ania’s parents tell her that the climate has always cooled and warmed — “long before carbon emissions were a factor” — and that climate action is pointless until China and India cut their emissions. Ania also hears that renewable energy is unreliable and too expensive.

Ania repeats her parents' claims in class and is shunned by her teacher and classmates. Her sadness lifts, however, when her grandfather tells her about life under Nazism in World War II. Ania feels empowered because her grandfather says “fighting oppression always takes courage.”

A PragerU video about a child in Africa features a narrator calmly attacking solar and wind because “their batteries break down and become hazardous waste” and because it's risky “to rely on things like wind and sunlight, which are not constant.”

Streit, the PragerU CEO, said she wants to ensure schools frame climate science as a debate. A goal of her organization is to reach children when they are at their most impressionable. That’s why Florida approved the PragerU Kids channel content, she said.


“The science is actually contrary to what most educational institutions that have been really controlled by one ideology are saying,” Streit said, rejecting decades of peer-reviewed research by some of the world’s top science agencies showing that humanity is warming the planet at a dangerous rate. “There is debate about the severity of the changing of the climate as well as the pragmatic solutions.”

PragerU’s goal is to develop a “turnkey curriculum” that can be expanded to as many states as possible, Streit said. She expects to announce soon that more states have approved PragerU content and will use it for classrooms in all grades. PragerU is developing a curriculum module that could be used for course credit in high school, Streit said.
DeSantis leads the way

PragerU’s foray into approved classroom use comes as conservative states and politicians aggressively seek to dismantle curriculum in African-American history and LGBTQ issues.

The leader has been Florida Gov. Ron DeSantis, a Republican running for president. DeSantis recently faced loud, bipartisan condemnation after education officials in his government released new curriculum standards that say enslaved people gained “personal benefits” from a lifetime of forced labor.

Less documented are the conservative efforts to tear down climate science and to promote in classrooms the use of fossil fuels.

Florida is just the latest state to open the door to climate disinformation. Texas changed its science curriculum to require that schools teach positive lessons about fossil fuels. It’s an effort to downplay accurate climate science and to influence the national textbook market, since Texas is one of the biggest consumers of educational materials in the U.S.

Climate scientists long ago determined that fossil fuel use is driving rapid global warming and pushing the planet toward dangerous tipping points. Most states center their climate change curriculum around that consensus. Only a small number of researchers with legitimate academic credentials doubt the consensus science, and PragerU videos feature many of them.

PragerU’s website contains thousands of videos, which have a variety of classification tags to help users find its videos on topics such as civics, financial literacy or government. Climate denial videos, including some pushing conspiracy theories like the “Great Reset," are classified with tags other than climate change, such as “government,” “global issues,” “life lessons” and “freedom,” which lets them qualify for approved use outside of science classes.

PragerU also has materials that avoid partisan slants, including videos explaining the Electoral College and the offices of the president and vice president.

In Florida, DeSantis has long assailed what he says is liberal “indoctrination” in education. PragerU co-founder Dennis Prager, a nationally syndicated conservative radio host, has proclaimed that his PragerU materials are specifically designed for “our indoctrination.”

“It’s true we bring doctrines to children,”Prager told the conservative group Moms for Liberty at a conference in Philadelphia in July. “But what is bad about our indoctrination?”

PragerU has produced anti-climate policy videos since shortly after it began in 2009. The Prager foundation has received millions of dollars from the billionaire brothers, Farris and Dan Wilks of Texas, who made their fortune in fracking. Wilks funding also was essential to the growth of The Daily Wire, a popular website and media company that routinely pushes climate disinformation.

PragerU has received additional funding from foundations that oppose climate regulations such as the Lynde and Harry Bradley Foundation.

PragerU’s video library goes far beyond climate change and introduces viewers to a worldview framed around the belief system of the far right.

PragerU CEO Streit said her group has tapped into angry parents who want their politics reflected more in classrooms.

“Many of us, as parents, don’t feel like we’re being heard,” Streit said. “We feel like we’re being gaslit, so we’re hoping that this product will better explain to everyone what we want to see in our children’s schools.

Biden stuck between 2 priorities as UAW confronts EVs


Patrick Semansky/AP Photo

Olivia Olander, Tanya Snyder and James Bikales
Thu, August 10, 2023 

Autoworkers are threatening to strike unless they get major concessions to ensure they aren’t left behind in the transition to electric vehicles, leaving Democrats stuck between competing priorities that the Biden administration admits won’t be easy to solve.

The dispute comes just as President Joe Biden is seeking reelection with an emphasis on his handling of the economy, a message that would be muddied by a strike representing 150,000 workers. And the unrest complicates another Biden priority: shifting the country away from gas guzzlers in favor of electric vehicles.

Democrats are counting on the United Auto Workers to join other unions in providing crucial organizational muscle and get-out-the-vote efforts in 2024. A backlash against Biden’s EV push could discourage that involvement — a threat underlined by the UAW’s refusal so far to endorse Biden’s reelection, despite the larger AFL-CIO throwing its weight behind Biden in its earliest-ever endorsement of a presidential candidate.

What’s happening in the auto plants is just one example of labor’s summer of unrest, with strikes occurring across the country and workers in some instances extracting big concessions from employers. Teamsters union members at UPS, for example, recently reached an agreement on a major pay boost, while striking writers and actors in Hollywood have held out for weeks to receive higher payouts from streaming.


Biden is concerned enough about the UAW unrest to appoint a liaison — veteran Democratic adviser Gene Sperling — to the unions and the automakers.

A central issue in the auto contract talks is the status of workers in plants that are producing batteries, many of which are jointly owned with battery companies. But resolving that won’t be an easy task, considering it would mean wrangling battery makers to the bargaining table along with General Motors, Ford and Stellantis.

A senior administration official, granted anonymity to speak frankly about the White House’s perspective, said in an interview that there’s no magic solution in the administration’s back pocket on the joint venture facility question.

The issue throws a new, complicated dynamic into contract talks that are usually centered on traditional economic asks, such as higher wages, the senior administration official said.

“We agree completely that battery factory workers deserve every right to organize and negotiate for jobs that provide the pay and protections needed for economic security and economic dignity,” the official said.

Aggressive new leadership atop the UAW has insisted that those battery plant workers must be brought up to the same wage and safety standards as union workers at traditional plants.

Officials in Washington "need to tie these federal incentives in the EV industry to wage and safety standards that generations of auto workers have fought for,” UAW President Shawn Fain said in a video address last week. “They’re going to have to choose because we’re going to ask them, ‘Which side are you on?’”

Some union-watchers say the likelihood of a strike is still low, but that’s not a foregone conclusion. As it plays out, the union could cause headaches for an administration that’s worked hard to bill itself as the most pro-labor in history.

Rep. Debbie Dingell (D-Mich.) said she’s been warning whoever will listen that a strike, which could happen as soon as Sept. 14, is a serious possibility.

“We’ve got to figure out these joint ventures,” Dingell said. “People are being paid more at McDonald's in Ohio than they are at the battery plant there.”
Labor seizes the moment

More than 200,000 workers at large companies participated in work stoppages last month, easily topping the 126,500 that were involved in strikes in the entirety of 2022, according to Bureau of Labor Statistics data.

Auto workers have a lot of bargaining power right now, said Harry Katz, a professor on collective bargaining at Cornell University. They’re armed with low unemployment, high worker skill levels and a sense of solidarity, he said.

The 2024 election gives them even more leverage.

“Labor knows that President Biden knows that he will not be reelected unless he gets their strong support,” said Erik Gordon, a University of Michigan business professor. “They’re going to make Biden dance to get the votes.”

The UAW wants Biden to remind auto executives how much they’ve benefited from the government in the past, and “how much they will need the continuing support of the government as the car companies try to survive the switch to EVs,” Gordon said. “So that'll be behind closed doors.”

Hanging over the negotiations is the lack of presidential endorsement from the UAW. Fain’s explicit citing of concerns over the EV transition makes clear that Biden’s signature priority — the transition to a clean energy economy — could put him at odds with a key ally.

There’s no expectation that Biden would publicly discuss specific demands, and the president won’t be knocking heads at the bargaining table, the senior administration official said.

Still, the union wants the administration to hear its concerns about the implementation of electric vehicle policy, and would like to see the president’s support of their perspective, the official said.

A spokesperson for Rep. Dan Kildee (D-Mich.), who has been closely following the negotiations, said the elimination of the two-tiered wage system for package handlers at UPS in its recent contract deal with the Teamsters could be a good sign for UAW.

“The battery plants have to be part of the national agreement, and there can’t be a two-tier [system] where some workers are paid less,” the Kildee spokesperson said.

A recent letter led by Sen. Sherrod Brown (D-Ohio) to automakers urged them to come to an agreement that includes all joint-venture EV battery facilities in the national contracts. Fain quoted from the letter in his video address last week, but the UAW hasn’t explicitly made a demand to fold those facilities into the master agreements.

Winning that concession would be difficult, said Katz and Marick Masters, a professor of business at Wayne State University. However, the auto companies could agree to some kind of compromise on the issue, they said.

The UAW’s “full court press” to win higher wages and safety standards is likely an effort to boost unionization efforts at the joint ventures, Masters said.

He said the union is responding to “a lot of pent-up frustrations and fears” from rank-and-file members about their jobs amid the EV transition. That includes frustration at Biden, he said.

“What they’re saying is that they expect more than the typical bargain they’ve gotten from Democrats,” Masters said. “And they’re raising the stakes as much as they possibly can.”

A year ago, an Iranian woman's death sparked hijab protests. Now businesses are a new battleground

Iranian women walk in Tehran, Iran, Saturday, Aug. 5, 2023. These days, with uncovered women a common sight on Tehran streets, authorities have begun raiding companies where women employees or customers have been seen without the headscarf or hijab. Iran's parliament is discussing a law that would increase punishments on uncovered women and the businesses they frequent. 

(AP Photo/Vahid Salemi)

NASSER KARIMI and JON GAMBRELL
Wed, August 9, 2023 

TEHRAN, Iran (AP) — For months, Iranian authorities did little to enforce the law on women covering their hair but now the country’s theocracy is pushing to make businesses the new battleground over the mandatory headscarf.

The effort comes ahead of the first anniversary of nationwide protests that erupted after the Sept. 16 death of Mahsa Amini in the custody of the country's morality police. A crackdown by security forces that followed saw more than 530 people killed and over 22,000 arrested.

These days, with uncovered women a common sight on Tehran streets, authorities have begun raiding companies where women employees or customers have been seen without the headscarf, or hijab. Iran's parliament is discussing a law that would increase punishments on uncovered women and the businesses they frequent.

The developments could foment new unrest as parliamentary elections loom next year and the country's economy struggles under the weight of international sanctions imposed over Iran's nuclear program.


“If I face penalties and punishment, I will wear the headscarf since I am in a ... prominent position,” said Parvaneh, a doctor who treated protesters injured during demonstrations last year. Like several other women who spoke to The Associated Press, she asked that only her first name be used for fear of reprisals.

“But the young people I treated during the protests will not pull back,” she added.

For observant Muslim women, the head covering is a sign of piety before God and modesty in front of men outside their families. In Iran, the hijab — and the all-encompassing black chador worn by some — has long been a political symbol as well, particularly after becoming mandatory in the years following the 1979 Islamic Revolution.

After the death of Amini, who was picked up for her allegedly loose headscarf, police were hesitant to strictly enforce the Islamic dress code — possibly to avoid even wider demonstrations and displays of defiance. But in recent weeks, the tone has changed.

“I’m telling you that this lack of hijab will be definitely put an end to,“ hard-line President Ebrahim Raisi said Wednesday.

Authorities have started sending warning text messages to women seen without the veil in cars: around 1 million messages were sent. In time, some 2,000 cars were confiscated and over 4,000 women referred to prosecutors.

Next, security forces scoured social media for companies with images of uncovered women in the workplace. One of the offices of Digikala, a hugely popular digital retail websites with more than 40 million active monthly users, was closed. Also briefly shut were the online bookstore Taghcheh and insurance marketplace Azki.

The crackdown extended beyond the capital of Tehran. In the northern city of Lahaijan, local health officials ordered hospitals and clinics to stop providing services to uncovered woman. In Damavand, a town some 60 kilometers (40 miles) east of Tehran, prosecutors ordered the arrest of a bank manager and a teller over serving a woman not wearing the hijab.

Outdoor café seating is now banned in the northeastern city of Mashhad and hard-liners in Isfahan want to ban the mixed working of men and women in shops.

The entertainment industry is also being watched. Police have threatened to shut down film productions that have women without headscarves working behind cameras.

Judges also have also sentenced female celebrities convicted of not wearing the veil to work in morgues as a public service, in lieu of prison time. They also have to obtain a mental health certificate from a psychologist before they can go back to their regular jobs.

“Instead of addressing people’s legitimate grievances, the regime continues to obsess over the hijab and act as if its very survival depends on whether women dress modestly,” said Haleh Esfandiari, a fellow at the Washington-based Wilson Center and an Iranian-American dual national who was held by Tehran in 2007.

A new bill before Iran's parliament could make penalties for women even more serious. It calls for fines of up to 360 million Iranian rials ($720) and prison sentences for women without the headscarf. The draft legislation also calls for more strictly segregating the sexes in schools, parks, hospitals and other locations.

It also envisages fines on businesses with female staff and customers who do not wear the hijab with up to three months of their income, while offending celebrities can be banned from leaving the country and performing.

The bill would also empower intelligence agencies and the Basij — the all-volunteer force of Iran's paramilitary Revolutionary Guard that has violently suppressed nationwide protests in the past — to confront women without hijabs.

Hard-liners have long demanded that the Basij enter the fight over the hijab, with some chanting at at Friday prayers in Tehran, “Guard, come to the street, put an end to hijab removal!”

“This is what Islam orders,” said Rahele Kargarnejad, 29, a firm supporter of wearing the hijab. Her two daughters, ages 9 and 11, wear the chador, she added.

But criticism of the proposed bill is already simmering.

Ezzeatollah Zarghami, a hard-line former Guard commander and the current minister for cultural heritage, warned that harsh sentences such as the mandatory morgue work “will cause more and significant problems instead of solving the hijab problem.”

Iran's Supreme Court overturned a court order impounding an uncovered woman's car for a year and revoking her license, setting a precedent.

Even if it passes, prominent lawyer Mahmoud Alizadeh Tabatabei described the draft law as meaningless since “the majority of women do not believe in it.”

“They will find out that the law is not enforceable,” Tabatabaei said.

Meanwhile, politicians known in Iran as reformists have seized on the hijab dispute as they seek to changes Iran's theocracy from within the system. Former President Mohammad Khatami, one of the country's most prominent reformists, has questioned whether enforcing the hijab was “wise and productive.”

With hard-liners dominating the parliament and elections coming up in March, the hijab could become a contested topic ahead of the polls.

But anti-hijab comments may not be enough as reformists have seen their popularity wane following the collapse of the 2015 nuclear deal under then-President Hassan Rouhani, also considered a moderate.

On the streets, many Iranian women and girls still forgo the headscarf despite possible consequences.

“After hearing about the bill I made my decision — I will go to my school with the full hijab but I encourage my students to remove it whenever it is possible,” said Mojgan, a 37-year-old secondary school teacher.

“My students are already ahead of me on that,” she added.

___

Gambrell reported from Dubai, United Arab Emirates.