‘High on the list of items’: Ramaswamy threat to claw back Rivian loan sparks criticism of Musk’s conflict of interest

By Rene Marsh, Ella Nilsen, Tami Luhby, Chris Isidore and Phil Mattingly, CNN

(CNN) — Vivek Ramaswamy, the incoming co-chair of President-elect Donald Trump’s commission to cut government spending, has set his sights on money the Biden administration is dispersing in its final days in office, including a key loan to a rival company of his commission co-chair, Elon Musk.

Last week, the Department of Energy announced a $6.6 billion conditional loan commitment to Rivian, the electric vehicle startup that is a nascent competitor to Tesla, Musk’s $1 trillion car company.

Ramaswamy says that loan and others like it are “high on the list of items” that he will look to claw back once his cost-cutting commission, known as the Department of Government Efficiency, or DOGE, gets going next year.

“Those types of last-minute actions that are taking place in the lame duck merit particularly special scrutiny,” Ramaswamy told CNN.

Since the election, Biden officials have continued to hand out billions of dollars in government-backed loans and other federal funds, much of it to finance clean energy and domestic chip manufacturing projects.

It’s unclear whether Ramaswamy will make good on his promise to claw back that money, or what legal grounds he would use to justify it. Despite its broad mandate of cutting government waste, DOGE has no statutory authority and is essentially a presidential advisory commission that can make recommendations. Only Congress can claw back money it has previously approved.

Still, Ramaswamy’s comments are seen as a warning shot. Not only do they open another front in what promises to be a tense battle over efforts to reduce the size of the federal government, they also highlight the potential conflicts that could arise as spending cuts bump against Musk’s vast business empire, which itself has benefitted from government assistance.

For now, industry groups and lobbyists around Washington are in a wait-and-see mode, with some expressing skepticism over how seriously to take Ramaswamy’s threats.

“I would say we’re a few steps from having to even potentially deal with this,” said one auto industry source, asking incredulously, “Is he going to be in the government?”

Conflict of interest

The DOE loan to Rivian was in the works for two years and would help finance a new manufacturing plant in Georgia, which Rivian says would create some 7,500 full-time jobs. The loan is among 32 deals worth a total of nearly $55 billion that the DOE has doled out under Biden. All of that money eventually has to be repaid to the federal government, which isn’t on the hook unless companies go bankrupt.

In speaking to CNN, Ramaswamy was cynical about the chances of taxpayers getting their money back and suggested the post-election timing of the loan was political.

“There’s no way that that money will ever get paid back,” Ramaswamy said. “And If you’re seeing an uptick in the rate of expenditures going out the door in response to the election, that suggest politicization, and suggests a differential change in standard, which from the standpoint of protecting the taxpayer, we believe would be inappropriate.”

The irony is that Tesla received a similar DOE loan for $465 million in 2010, a time when Musk’s company needed cash ahead of its first public sale of stock. The loan proved to be a game-changer for Tesla, which in 2013 ended up repaying it in full, nearly 10 years ahead of schedule.

“Tesla is the bright, shining example,” said Albert Gore, executive director of the Zero Emission Transportation Association – an EV trade group that represents both Rivian and Tesla. “I think that it would be great to continue supporting that type of growth here in the US.”

Dan Ives of Wedbush Securities says while it is legitimate for DOGE to review last minute loans, singling out federal funds going to a rival company of Musk is not a “one off” and will likely “become the norm.”

“If Musk is your friend, it’s going to be a positive,” said Ives. “If he’s an enemy, it’s going to be a huge negative.”

Neither Rivian nor its lobbyists commented on their plans should the loan not go through. In a statement to CNN, the Department of Energy’s Loan Programs director Jigar Shah said it would be “irresponsible for any government to turn its back” on private companies and communities that are receiving loans from the office.

Though industry sources say they aren’t overly concerned about DOGE’s ability to claw back federal loan guarantees, Ramaswamy’s decision to single out the Rivian loan struck some as concerning.

“If you’re going to claw back money based on the perception it’s going to a competitor of your co-chair, that will end up delegitimizing your place in this whole system,” the auto industry source said.

Trump’s Energy Department could conceivably cancel the loan commitment to Rivian under certain circumstances, according to two lawyers familiar with the government loan program. The loan won’t be finalized until both the agency and Rivian satisfy certain conditions. Even still, it would be hard to cancel the deal without cause, said Mary Anne Sullivan, a former Energy Department lawyer in the Clinton Administration.

“There’s so much room for judgment in whether the terms of the conditional commitment have been satisfied and so much room for judgment to decide whether the financial assumptions underlying the loan guarantee have changed,” she said.

‘Shoveling money out the door’

The Biden White House has spent much of the past year getting money out the door from a series of domestic spending bills the president signed while in office.

As of October, there’s still about $288 billion from the 2021 bipartisan infrastructure law that won’t be available until fiscal year 2025 or later, and $14.8 billion from the 2022 Inflation Reduction Act, which contains much of the clean energy projects funded under Biden.

There are legal guardrails to ensure that money continues to be spent through the Impoundment Control Act, which limits the White House from withholding funds already appropriated by Congress.

But Trump made the use of impoundment authority – a practice where the executive branch unilaterally refuses to spend money already appropriated by Congress – a cornerstone of his presidential campaign’s pledge to impose fiscal discipline.

“All of the trillions of dollars that are sitting there not yet spent, we will redirect that money for important projects like roads, bridges, dams and we will not allow it to be spent on the meaningless green new scam ideas,” Trump said in his Republican National Convention speech.

Doing so would set up a direct confrontation with lawmakers in both parties, who closely guard their authority over federal spending. It would also almost certainly trigger a high stakes court battle.

Trump has already taken steps to make good on that pledge by nominating Russell Vought to lead the Office of Management and Budget. Vought, who served as Trump’s OMB director in his first term, drafted the 25-page chapter detailing an expansive view of executive authority in the conservative playbook Project 2025.

The White House may try to lean on Republicans in Congress, where lawmakers can claw back money that’s been previously approved, so long as it hasn’t been obligated by the White House. Last year, as part of the deal to address the debt ceiling, Democratic lawmakers agreed to rescind $20 billion of the $80 billion they provided to the Internal Revenue Service.

But they may face resistance, particularly when it comes to clean energy money included in the IRA. Even though no Republicans voted for the bill, close to 80% of announced clean energy investments are in Republican districts.

Industry and advocacy groups in the clean energy sector are already reaching out to GOP lawmakers to highlight the benefits – including funding and jobs – that the loan program, as well as the energy tax credits approved in the IRA.

“It’s a much more targeted and much more urgent effort,” said one clean energy industry insider.

At an Energy Department conference in Washington on Wednesday, White House senior adviser John Podesta talked about the need to “keep shoveling money out the door” until inauguration.

“We, by the way, plan to get more done by the end of this month. We read the papers, we know that the next four years will bring a lot more uncertainty to federal clean energy policy,” said Podesta. “No one can reverse the momentum that we’ve created together.”

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