BEAD changes broke the law, federal watchdog finds

The federal government’s changes to the Broadband Equity, Access and Development program broke the law because they were not first submitted to Congress, a federal watchdog found late last month.

The Government Accountability Office said the National Telecommunications and Information Administration violated the Congressional Review Act when it unveiled various changes to the $42 billion BEAD program last year. Those changes, talked up at the time by Commerce Secretary Howard Lutnick as “critical reforms,” included removing the preference for fiber projects in favor of being technologically neutral, as well as relaxing various rules around workforce, climate and the environment.

But in response to an inquiry by U.S. Sen. Michael Bennet, a Colorado Democrat, GAO found that the policy changes should have been submitted to Congress and the comptroller general for review before being rolled out to the states. GAO determined that the changes constituted a rule, subject to the CRA, as they came from a federal agency in its official capacity, those changes will have a future impact, and it “implements, interprets, and prescribes law or policy.”

“By changing the manner in which the BEAD Program is administered, these actions substantially affect the rights or obligations of non-agency parties participating in the BEAD Program,” the GAO’s report says.

The NTIA’s changes to the BEAD program had thrown states for a loop, as after the three-month program review at the federal level they were forced to revamp their plans for how they would spend their allocation of federal dollars. Meanwhile, lawmakers in Congress said the program’s various rules and requirements had stopped money getting out the door quickly to get more people connected, having originally been appropriated by the 2021 bipartisan infrastructure law.

Once Lutnick unveiled the changes to the program and got states to change their plans, new NTIA Administrator Arielle Roth said she was “pleasantly surprised” at the progress they had made. NTIA approved a first round of proposals in November, and it had targeted getting every state and territory approved by the end of last year but fell short of that goal.

But GAO ruled that the changes NTIA had made were too great to be pushed through without congressional approval.

“Among other things, the Policy Notice eliminates certain requirements previously imposed on Eligible Entities and subgrantees through the BEAD NOFO; alters the criteria by which NTIA will evaluate applications; requires Eligible Entities to conduct an additional round of subgrantee selection after rescinding all preliminary and provisional subaward selections; and modifies the agency's interpretation of statutory terms, such as “‘priority broadband project,’” theGAO report says.

After states have undertaken months of work to amend their plans to comply with the administration’s new rules, the GAO findings create new concerns about whether BEAD money will ever flow down to the states, even as several have talked up the possibilities of what they can do with that cash.

Louisiana Gov. Jeff Landry, whose state was among the first to be approved by NTIA, called BEAD a “generational investment,” while Veneeth Iyengar, executive director of state broadband office ConnectLA, said in November it meant the state could “shift from planning to putting shovels in the ground in the next several weeks.”

“By failing to follow the proper process to ensure Congressional oversight, NTIA has again created additional uncertainty and delay for states,” Revati Prasad, executive director of the nonprofit Benton Institute for Broadband & Society, said in a statement. “The Benton Institute urges Members of Congress to review the June 6 changes as soon as they are submitted and to continue providing meaningful oversight of this critical broadband deployment program, which aims to finally close our access divide.”

Experts said the impact of this GAO decision is unclear. The CRA gives Congress 60 days to review and reject rules issued by federal agencies, and if Congress were to enact a resolution of disapproval, those rules would be struck down. Whether that would happen and Congress responds remains to be seen. 

Jade Piros de Carvalho, a former Kansas state broadband chief, said in a LinkedIn post it “all seems a little too late.”