It appears that NTIA missed an important step when it generated the new BEAD rules in June in the BEAD Restructuring Policy Notice. That is the document that changed the scoring of BEAD grants from using a dozen different scoring criteria to choose grant winners to a new method that focused on the character of the proposed technology (priority or not) and the cost per passing.
On December 14, NTIA got a ruling from the GAO that the changes made by NTIA in the Policy Notice are outside of the scope of NTIA’s authority. According to the decision from the GAO, a major change like the one implemented by NTIA requires approval by both Congress and the Comptroller General.
Agencies like NTIA are subject to the Congressional Records Act (CRA), which defines the administrative process that government agencies must follow to change rules. The GAO says that NTIAs Policy Notice implements, interprets, and prescribes law or policy, which triggers provisions of the CRA. The Policy Notice not only affected changes within NTIA of how it administers the BEAD program, but it changed the process of how Eligible Entities (State Broadband Offices) go about seeking funding under the program.
The GAO letter lists the possible ways that NTIA could be exempt from seeking Congressional approval and concluded that none of the exemptions apply to NTIA’s Policy Notice changes. The key trigger for the GAO ruling was that the rule changes created a substantial effect on non-agency parties, meaning States and ISPs.
The conclusion of the GAO is as follows: “The Policy Notice is a rule for purposes of CRA because it meets the definition of a rule under APA and no CRA exception applies. Therefore, the Policy Notice is subject to CRA’s requirement that it be submitted to Congress and the Comptroller General before it can take effect.”
The bottom line of this ruling is that NTIA had no authority to unilaterally change the BEAD rules in such a drastic fashion. The BEAD rules in the IIJA legislation were specific, and the changes NTIA ordered with the Policy Notice were significant enough to require NTIA to seek Congressional approval before making the changes.
This is an interesting twist. In normal times, this would mean that NTIA would have to put BEAD on hold until this is resolved. NTIA would not be able to enforce the changes in the Policy Notice, and if Congress didn’t approve the NTIA changes, the BEAD program would probably reset to the status in June before the Policy Notice. It would mean that all of the changes to grant scoring and the requirements for States to determine priority technologies would be invalid. It would means all tentative grant awards made under the revised rules are invalid. States would probably have to re-score grant applications under the original BEAD rules for selecting winners.
But we don’t live in normal times, and this Administration is currently ignoring the rules of the Congressional Records Act in many other venues and programs. So what does this mean? It may mean nothing, and NTIA might just ignore this GAO decision. This might trigger action from Congress. There has been a lot of unhappiness that the amount of grant awards was trimmed so drastically. This decision certainly gives an actionable reason for anybody who wants to take NTIA to court to halt the BEAD process during litigation. Like everything associated with BEAD, awards made under the new rules are going to be under a cloud, and that makes everybody uncomfortable.