- Commerce Secretary Lutnick told senators NTIA has rejected SpaceX’s proposed BEAD subgrantee agreement
- Lutnick added that if SpaceX does not comply with BEAD requirements, states are free to select an alternate provider
- Lutnick confirmed the Treasury will not rescind BEAD non-deployment funding, though he did not address whether Trump’s AI order will impact disbursement
States can proceed with their Broadband Equity, Access and Deployment (BEAD) plans without any say from SpaceX, Commerce Secretary Howard Lutnick told senators Tuesday.
Regarding the proposed subgrantee agreement SpaceX sent to states, Lutnick confirmed at a hearing “that rider is outside of our guidelines, it is outside the statute, and it is rejected by us.”
The document, leaked a couple of weeks ago, asked states to modify BEAD requirements such as those related to capacity reserves and network performance testing – provisions that went against NTIA’s June 6 policy notice.
NTIA later appeared to take aim at SpaceX, updating its FAQ page to note contracts between states and subgrantees “may not redefine program terms.” Lutnick also said if SpaceX doesn’t want to play by the rules, states can select another provider to take its place. However, he didn't explain how states would pay for that, given the fact that satellite connectivity is relatively cheap compared to other broadband technologies.
“If SpaceX does not want to live without the rider, then you will definitely go find an alternative means of execution so you can deliver broadband to each and every one of the people in your state,” he said.
Should SpaceX fight back against NTIA and states, it’s possible states might shift their funds to Amazon Leo, said New Street Research Policy Analyst Blair Levin in a research note. But Lutnick implied states could choose any ISP, including wireline, to serve SpaceX’s locations, which wouldn’t be surprising since Amazon is lagging on satellite deployments.
Lutnick: States will get BEAD non-deployment money
Lutnick also confirmed the roughly $21 billion in leftover BEAD funds, dubbed non-deployment money, will not be returned to the Treasury.
“That is not the plan,” he said, noting NTIA will hear from the public on how to best spend those funds in today’s online listening session, “where we have over 900 people signed up.”
“We have executed universal broadband for $21 billion and saved $21 billion in American taxpayer money. This is an excellent problem to have and we’re going to sit together and design the best use of this money,” Lutnick said.
What he left unanswered though is whether the federal government can deny non-deployment money to states with “onerous” AI laws, as stated in President Trump’s AI executive order.
“I’m not sufficiently familiar to answer, unfortunately,” Lutnick said. But NTIA Chief of Staff Brooke Donilon last week said the agency is working on guidance that she expects will impact “a handful of states.”
Furthermore, he said NTIA intends to respond to the Government Accountability Office (GAO), which in December said NTIA is required to submit a report on the changes made to the BEAD program and that the policy notice is subject to congressional review.
“My understanding is driven by our general counsel who’s instructed us how to respond, and we will respond accordingly to whatever the rules are,” Lutnick said.