Lutnick Says Use of BEAD 'Savings' Will Follow Law, Condemns SpaceX Bullying
Spending plans for BEAD non-deployment funds haven’t yet been determined but will “hew to the law,” and additional BEAD program demands from states by ISPs like Starlink “will not be accepted,” Commerce Secretary Howard Lutnick told the Senate Appropriations Commerce Subcommittee during a hearing Tuesday.
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Senators repeatedly pressed Lutnick on his plans for BEAD savings, the possibility of withholding funds over state AI laws, White House policy on AI chips and repeated mentions of him in the DOJ-released correspondence of deceased sex offender Jeffrey Epstein. Lutnick said the administration has approved BEAD funding plans for 50 of 56 states and territories and is “at the very, very end” of the approval process. “We expect things to go rather smoothly from here.”
Numerous senators -- including Appropriations Commerce Chairman Jerry Moran, R-Kan., Shelley Moore Capito, R-W.Va., and Deb Fischer, R-Neb. -- pushed Lutnick to commit to spending BEAD “savings” on broadband deployment. He responded each time by touting NTIA’s “listening tour” (see 2601260054) and promising to follow the law. Lutnick also said there's no plan to rescind funding, and it won’t return to the Treasury, as some have urged (see 2510140027).
“You have used the phrase ‘allowed by law’ sufficiently a number of times that it caused me to look to see what the law says when talking about how the unspent money will be spent,” Moran told Lutnick late in the hearing. The law’s text includes a provision that allows “any use determined necessary by the assistant secretary to facilitate the goals of the program,” Moran said. “Is that what you refer to when you say 'anything allowed by law'? Is it that discretion?”
“I think the idea is to meet with the constituencies and yourselves and try to come up with the smartest use of the funds,” Lutnick replied. “We have proven, I think, to this committee, that we are good stewards of the American taxpayer’s dollar.”
Pushed for examples of possible uses, Lutnick said he expects to get ideas from the listening tour but suggested that funds could be put toward improving police and fire communications or adding poles in areas that lack them. Subcommittee ranking member Chris Van Hollen, D-Md., said lawmakers would scrutinize spending of non-deployment funds “very closely.” He opened the hearing by questioning Lutnick's credibility due to discrepancies in his past characterization of his relationship with Epstein and recent revelations from the DOJ’s Epstein files. “It goes to the heart of the credibility and honesty of our witness,” Van Hollen said. Questioned by multiple senators about the matter, Lutnick repeated that he had met Epstein only a few times and maintained that he had done nothing wrong.
Lutnick also condemned a recent letter from SpaceX to many states requesting guarantees that it would receive grant money without reserving network capacity for BEAD and that payments wouldn’t be tied to users actually subscribing to Starlink (see 2601280063). “We have seen providers try to bully the states with riders that are outside of our guidelines,” Lutnick said. “They will not be accepted.”
Sen. Jeanne Shaheen, D-N.H., Capito and others asked Lutnick whether states could turn to alternative ISPs in the event of one refusing to abide by the program. “If a provider cannot live up to their promise to you, we will work together. You will replace that provider, and we will make sure you can do that,” he said. SpaceX didn’t respond to a request for comment.
AI Policy Questions
Lutnick dodged several questions related to U.S. AI policy. He declined to talk about the White House AI executive order that calls for the Commerce Department to study whether broadband funds can be withheld from states over their AI policies. “Is there anyplace in the law that you've seen that that could be a condition of providing the funds that we're talking about here today?” Van Hollen asked. But Lutnick responded that he's “not sufficiently familiar to answer.”
Several lawmakers, including Sen. Jack Reed, D-R.I., also questioned Lutnick about restrictions on Nvidia selling chips used for AI processing to foreign governments, such as China, and a White House deal to allow the United Arab Emirates to import Nvidia chips. “The complex relationship between the United States and China is in the hands of the United States and secretary of State, and they help us, instruct us, and we follow their lead,” Lutnick said.