California is harming the environment and supply chain through new taxes and regulations

California is harming the environment and supply chain through new taxes and regulations
California Governor Gavin Newsom. Axios on HBO video clip, YouTube

California’s government claims to support a clean environment. But it is taxing the lithium needed for electric cars, while giving some people $1,050 handouts they can waste on burning fossil fuels. Seeking Alpha reports:

California Governor Gavin Newsom on Thursday approved a tax on lithium … despite industry concerns that the tax will harm the sector and delay shipments to automakers.

The tax, part of a must-pass state budget, is structured as a flat-rate per ton and will go into effect in January.

Two of three lithium companies that are seeking to extract lithium from California’s Salton Sea warned the tax would scare off investors and customers, and threatened to leave the state for lithium-rich brine deposits in Utah or Arkansas.

Privately-held Controlled Thermal Resources said the tax will force it to miss deadlines to deliver lithium to General Motors (GM) by 2024 and Stellantis (STLA) by 2025.

“Supporting a tax that ensures lithium imports from China are less expensive for auto manufacturers to secure will devastate this promising Californian industry before it has begun,” Controlled Thermal CEO Rod Colwell said.

GM and Stellantis have signed lithium supply deals with Controlled Thermal Resources to support their electric vehicle ambitions.

So California is damaging the electric car industry through these taxes — making it harder to produce low-emission vehicles.

Meanwhile, it is harming the trucking industry, and aggravating the national supply chain crisis, through new environmental regulations that will take thousands of trucks off the road. The Daily Caller reports:

California issued sweeping environmental regulations to reduce fossil fuel emissions throughout the state that will worsen the national supply chain crisis and cripple the trucking industry, industry leaders told the Daily Caller News Foundation.

The California Air Resources Board (CARB) issued a set of revised regulations called the Air Resources Board Truck and Bus Regulation, which required trucking companies in the state to upgrade their trucks with 2010 or newer engines by Jan. 1, 2023. The provision will add additional pressure to the supply chain crisis and cause many small trucking businesses to close or significantly reduce their workforce, industry leaders told the DCNF.

“We in the industry know that if you think there was a supply chain problem over the last year, wait until you take this many trucks out of the marketplace that are not replaceable,” Joe Rajkovacz, director of governmental affairs and communications at the Western States Trucking Association, told the DCNF. “You can be talking about something we as a country have never seen before.”

The rule will take roughly 80,000 commercial trucks, or roughly 17% of the trucking fleet, off the road, adding significant pressure to the supply chain crisis, Rajkovacz said.

The provision would hit smaller trucking operations the hardest, Rajkovacz added. Like the auto industry, the trucking industry has experienced extensive supply shortages, making it expensive and difficult to buy used trucks and find additional parts.

“The way the industry works is that large operators turn over their fleets in a three-year or four-year cycle,” Rajkovacz said. “The used trucks end up in the marketplace and are absorbed by the small business community, but that is all upset right now.”

California is also damaging the trucking industry, and driving independent truckers out of the market, with its AB 5 law aimed at restricting independent contractors. This, too, is aggravating the national supply chain crisis. The National Review reports:

The Supreme Court yesterday denied an appeal from the California Trucking Association about AB5, the new employment law in California governing independent-contract work. That means the law goes into effect today, and the trucking industry in the most important state for supply chains will face major upheaval.

It is going to be a radically new world in California’s trucking sector with the imposition of AB5, and it isn’t clear what parts of the industry — if any — are ready for it,” writes John Kingston at FreightWaves. The law was enjoined by a lower court on New Year’s Eve in 2019, preventing it from going into effect for the trucking industry. In April 2021, the Ninth Circuit Court of Appeals, in a 2–1 decision, overturned the injunction, allowing the law to apply to trucking, but it was still not in effect while the CTA appealed the decision to the Supreme Court. Now that the Supreme Court has denied the appeal, the law goes into effect today….

The law could not have come at a worse time for the trucking industry, which now must reorganize itself on the fly while also dealing with backed up deliveries and a looming freight recession.

“Gasoline has been poured on the fire that is our ongoing supply chain crisis,” said the California Trucking Association in a statement after the Supreme Court declined to hear its case. California’s 70,000 independent owner-operators have seven days to restructure their entire business, it says.

Hans Bader

Hans Bader

Hans Bader practices law in Washington, D.C. After studying economics and history at the University of Virginia and law at Harvard, he practiced civil-rights, international-trade, and constitutional law. He also once worked in the Education Department. Hans writes for and has appeared on C-SPAN’s “Washington Journal.” Contact him at


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