House Democrat Slams $1.58 Billion CHIPS Deal Granting Commerce 8–16% Stake in USA Rare Earth
Rep. Zoe Lofgren criticized a $1.58 billion CHIPS deal for USA Rare Earth, saying it grants the Commerce Department an 8–16% stake even if funding is clawed back, raising conflict risks. It pairs a $277 million grant with a $1.3 billion loan for Texas and Oklahoma facilities tied to financing and technical milestones.
1. Conflict-of-Interest Allegations
Rep. Zoe Lofgren accused Commerce Secretary Howard Lutnick of structuring the $1.58 billion CHIPS Act investment to give the department a lasting 8–16% equity stake while boosting Cantor Fitzgerald’s private capital raise, calling the arrangement a significant personal conflict.
2. Funding and Equity Terms
A non-binding CHIPS Act letter of intent outlines a $277 million grant and $1.3 billion loan in exchange for an 8–16% government stake, including provisions that allow equity retention even if financing is withdrawn or clawed back.
3. Project Milestones and Facilities
USA Rare Earth must secure additional private capital, complete technical studies and demonstrate market demand to receive funding for its Sierra Blanca, Texas mine set for 2028 opening and its Stillwater, Oklahoma magnet plant planned this year.