Court of Appeals Rules Vehicle Tech Company Has Right to Pursue Relief After Unfair Treatment by DOE on Renewable Loans

Washington, D.C. – The U.S. Court of Appeals for the District of Columbia today reversed the District Court’s ruling, siding with Cause of Action Institute’s (CoA Institute) client, Limnia Inc., an advanced vehicle technology company that alleged it was unfairly passed over for a government-backed loan and loan guarantee through the Department of Energy’s (“DOE”) politically-driven  programs.

CoA Institute President and CEO John Vecchione: “We are very gratified for the Court’s decision. The Circuit saw things our client’s way. We look forward to further advancing this case upon remand. But this is an important precedent laying out the parameters of voluntary remand to an agency.”

CoA Institute filed a lawsuit in 2013 on behalf of Limnia Inc. after the Department of Energy (“DOE”) failed to give the company fair treatment and the honest opportunity to compete for a government-backed loan under the agency’s controversial loan guarantee program to build advanced technology vehicles and components.

In 2008 and 2009, Limnia submitted two loan applications for $15 million in funding through DOE’s Advanced Technology Vehicles Manufacturing (“ATVM”) program. Limnia specializes in the production of battery systems for electric cars and applied for funding to develop a new advanced vehicle energy storage system. The DOE rejected both of Limnia’s applications.

Limnia sued DOE in the District Court alleging that the rejection of its applications was unlawful under the Administrative Procedure Act. In its complaint, Limnia argued it was passed over in favor of politically-favored competitors, such as Tesla Motors Inc., which had close connections to the Obama administration. Tesla received hundreds of millions in loans from the ATVM in early 2010.

Before the District Court could decide Limnia’s case on the merits, however, DOE requested that the case be remanded back to the agency. The District Court granted DOE’s request, returning Limnia’s case to the agency and closing Limnia’s judicial action. In today’s opinion, the Court of Appeals found that the District Court’s decision functioned as a dismissal of Limnia’s claims and authorized further judicial proceedings.

Limnia Inc. Chairman and Vice President of Product Innovation Scott Douglas Redmond: “We fought this fight on behalf of everyone who is sick of cronyism and corruption in Washington DC and tired of having their tax dollars used against them by corrupt political insiders. This is part one of a victory, not only for our team, but for the average citizen who doesn’t want their tax dollars going to politically connected projects.”

The full opinion is available here
Visit our blog for analysis of the opinion and more information about the case here

For information regarding this press release, please contact Zachary Kurz, Director of Communications:

Related Documents: XP Vehicles v. Department of Energy

Cause of Action is representing XP Vehicles, a San Francisco-based electric car company  in a lawsuit against the federal government concerning the U.S. Department of Energy’s denial of XP’s loan guarantee application under the Advanced Technology Vehicles Manufacturing (AVTM) loan program.

United States Court of Federal Claims

Opposition to Motion to Dismiss (February 18, 2014)

Complaint (January 10, 2013)

United States District Court for the District of Columbia

Opposition to Defendant’s Motion to Dismiss the Official Capacity Claims (October 17, 2013)

Opposition to the Individual Capacity Defendants’ Motion to Dismiss (October 17, 2013)

Memorandum in Opposition to Defendants Motion to Dismiss Official Capacity Counts 2, 3 and 4 (July 30, 2013)

Motion to Amend Complaint (July 30, 2013)

Opposition to Individual Capacity Defendants Motion to Dismiss (July 29, 2013)

Complaint (January 10, 2013)

Cause of Action files opposing briefs in Department of Energy cronyism lawsuit

As we’ve seen over the past month the DOE is reviving its loan program, this time under new management.

Yet Cause of Action (CoA), a government accountability group, hasn’t forgotten how the DOE handled applications for the Loan Guarantee Program in the first go-round.

Today CoA took a step in a lawsuit we filed against the DOE for corrupting its lending programs to favor political insiders, and arbitrarily denying applications by failing to review applications with ‘established merit criteria’ as required by law.

CoA has been investigating the DOE’s loan guarantee program for  more than a year and has uncovered that the agency failed to give XP Vehicles and Limnia, Inc., two qualified applicants under the DOE’s loan guarantee program fair treatment and the honest opportunity to compete for Government loan funds to build advanced technology vehicles and components.

Click here to see the Opposition to Defendant’s Motion to Dismiss the Official Capacity Claims

Click here to see the Opposition to the Individual Capacity Defendants’ Motion to Dismiss

5 Ways the DOE Loan Program and Fisker Automative Failed American Taxpayers

The House Oversight Committee is holding a hearing today on “Green Energy Oversight: Examining the Department of Energy’s Bad Bet on Fisker Automotive.

We’ll be live tweeting beginning at 2pm.

1. According to the DOE Loan Program Office, $34.5 billion of loans have created about 60,000 jobs, which is $575,000 per job.


Via Tumblr

2. Cause of Action analysis determined that 95% of those who received a loan gave political contributions, while only 31% of those who were not chosen gave contributions.


3. Fisker Automotive continued to receive money for almost a year after the Obama administration found out it was failing to meet conditions set in the loan.

 In 2010, the Obama administration gave a $529 million loan to Fisker. Fisker would only receive $192 million before it was cut off.

Via Gifrific

4. Fisker never finished construction on its factory or produced any cars backed by the government loan.

 Via togif

5. Taxpayers are looking at a potential loss of $171 million. The largest loan failure since Solyndra.





Buying an Energy Loan

The introduction of government influence into the market places an incentive for businesses to use the government’s power in order to garnish a larger share of the market. Perhaps better known as cronyism, this attempt to use politics in favor of private business is often characterized by campaign contributions for politicians who can then use political power to steer government funding and prowess to private firms.

Could the Department of Energy Loan Guarantee Program  be characterized as a breeding ground for cronyism in the distribution of loans through the 1703, 1705, and Advanced Technology Vehicle Manufacturing Loan Guarantee Programs?

Cause of Action was able to determine, through publicly available data combined with a FOIA production[1], that for corporations[2] who have received a loan guarantee of any amount, the likelihood that it made campaign contributions increases significantly. Of the data available, 95% (.95) of DOE loan recipients with less than $1 billion in annual revenue documented political contributions by the organization or senior level staff. Comparatively, only 31% (.319489) of similarly sized organizations that did not receive loans made political contributions in one way or another.

To date, ATVM, 1703, and 1705 loans have awarded guarantees in the amount of $34.5 billion. [3]

The Department of Energy defines each of these programs as follows:

  • Section 1703 of Title XVII of the Energy Policy Act of 2005 authorizes the U.S. Department of Energy to support innovative clean energy technologies that are typically unable to obtain conventional private financing due to high technology risks. [4]
  • Advanced Technology Vehicles Manufacturing (ATVM) loans support the development of advanced technology vehicles (ATV) and associated components in the United States. They also meet higher efficiency standards.[5]
  • The Section 1705 Loan Program authorizes loan guarantees for U.S.-based projects that commenced construction no later than September 30, 2011 and involve certain renewable energy systems, electric power transmission systems, and leading edge biofuels.[6]

With that amount of money at stake, it is easy to see why Loan Guarantee Programs (LGP) have attracted a large number of applicants during the course of the program. This could potentially lead private corporations, who stand to significantly benefit from receiving a DOE Loan Guarantee, to make attempts to better the chances of being a recipient through means of political persuasion.

The program itself, while touting its ability to create jobs, has proven riddled with pitfalls and failures and may in fact be taking away jobs from other areas of industry—ones that may prove more valuable to the citizens who fund DOE LGPs with their tax dollars[7].


[1] FOIA Production available here

[2] ‘Corporations’ refers to privately owned business who was given a loan guarantee through the DOE LGP that also had less than $1 billion in annual revenue. In the cases of subsidiaries, organizations whose parent corporations made political contributions were considered to have made political contributions by proxy.

[3] United States Department of Energy, accessed 27 February 2013,

[4] United States Department of Energy, accessed 27 February 2013,

[5] United States Department of Energy, accessed 27 February 2013,

[6] United States Department of Energy, accessed 27 February 2013,

[7] Mercatus Center, accessed 27 February 2013

Related Documents: Department of Energy Loan Guarantee Program

FOIA Request

FOIA Request (May 17, 2012)

FOIA Productions

Combined Data

Energy Efficiency and Renewable Energy

Energy Efficiency and Renewable Energy 2

Energy Efficiency and Renewable Energy 3

Energy Efficiency and Renewable Energy 4

Nuclear Power

Nuclear Power 2

Financial Institution Partnership Program (FIPP)

Financial Institution Partnership Program (FIPP) 2

Energy Transmission


Fossil Fuels




E&E Publishing: 2 companies sue, alleging politics steered green energy loans

2 companies sue, alleging politics steered green energy loans


John McArdle, E&E reporter, Published: Friday, January 11, 2013

Two electric-vehicle companies sued the Department of Energy yesterday for allegedly doling out billions of dollars in green energy loans to companies with political connections to the Obama administration.

XP Vehicles Inc. and Limnia Inc., which sought and didn’t receive funding through DOE’s Advanced Technology Vehicles Manufacturing (ATVM) loan program, also charged in U.S. District Court and Federal Claims Court filings yesterday that DOE leaked patented intellectual property to favored companies.

The companies are seeking a combined $675 million in damages through the suits, which also name as defendants Energy Secretary Steven Chu and the head of DOE’s ATVM program.

The filings come after nearly two years of congressional inquiries into DOE’s loan program. Those investigations focused primarily on the now-bankrupt Solyndra LLC solar energy company but also looked into the agency’s Loan Program Office and billions of dollars in other loans.

In response to the lawsuits, DOE maintained the stance taken through the congressional probes, which were led by Republicans on the House Energy and Commerce and House Oversight and Government Reform committees.

“While the Department does not comment on pending or potential litigation, multiple investigations spanning almost two years and involving millions of pages of documents show that decisions made on the Department’s loan program were made solely on the merits after careful review by the Department’s technical experts,” DOE spokesman Damien LaVera said in an email.

In 2008 and 2009, Limnia and XP Vehicles applied for $55 million in funding through the ATVM program for two projects. Limnia sought $15 million to develop a new advanced vehicle energy storage system, and XP Vehicles sought $40 million to help produce a new gasless SUV-style vehicle that cost less than $20,000 and replaced metal doors and body panels with polymer plastics and a lightweight alloy frame.

But the companies say they were passed over in favor of competitors, including Tesla Motors Inc. and Fisker Automotive Inc., companies with deep-pocketed investors, some of which have connections to the Obama administration. Combined, Fisker and Tesla received nearly a billion dollars in ATVM loans in early 2010.

“Because DOE’s ‘merit review’ criteria and process were so opaque, the taxpayer-funded ATVM Loan Program and [loan guarantee program] became cash cows for government cronies,” the companies argued in one filing. “Politics and political pressure infected these programs, shaping, in whole or in part, the judgment of DOE’s ultimate decision makers.”

In addition, the companies argued that some of their legally protected trade secrets ended up in the hands of other ATVM loan applicants.

An attorney representing the companies in the case is Dan Epstein, a former congressional staffer who now works as executive director of the watchdog group Cause of Action.

Epstein, who had worked for House Oversight and Government Reform Chairman Darrell Issa (R-Calif.), has been involved in a number of efforts to combat what he decries as government overreach in his current endeavor.

Last year, Epstein’s group took on the Interior Department in a long-standing controversy over whether the agency should allow a California oyster farm to continue operating in a potential wilderness area. The group has also battled the Department of Energy’s energy efficiency standards, questioned political campaigning by government official and taken the Food and Drug Administration to task for ordering a man to stop the “manufacture” of his own sperm (Greenwire, Nov. 14, 2012).