OMB Rescinds Federal Funding Freeze Memo; Lutnick Admits 'Pause' Includes BEAD

Lutnick also refused to commit not to withhold BEAD funding if President Donald Trump asks him to, despite expected questions on the program’s future from panel Democrats. Meanwhile, Senate Commerce Chairman Ted Cruz, R-Texas, and other panel members mentioned DOD's resistance to proposals that would repurpose some military-controlled airwaves for 5G use, which has become a major hurdle in Republicans’ bid to include spectrum legislation in an upcoming budget reconciliation package (see 2501290057).

Wednesday's memo from acting OMB Director Matthew Vaeth, which the office distributed to all federal agencies, said the Monday directive “is rescinded” entirely. The Trump administration faced an array of legal challenges Tuesday as confusion mounted over its implications, leading U.S. District Court for the District of Columbia Judge Loren AliKhan to delay the directive from going into effect until Monday, allowing more time for judicial review. White House Press Secretary Karoline Leavitt countered that OMB’s withdrawn memo was “NOT a rescission of the federal funding freeze” and that Trump’s earlier executive order pausing some spending remains “in full force.”

After Leavitt’s comment, Judge John McConnell of the U.S. District Court in Providence said Wednesday that he’s “inclined to grant” a restraining order to block the action. Leavitt’s comment indicates the OMB memo's withdrawal was a “distinction without a difference,” McConnell said during a Wednesday virtual hearing on a legal challenge to the spending freeze from New York Attorney General Letitia James and other Democratic state AGs. “While the piece of paper may not exist, there’s sufficient evidence that the defendants collectively are acting consistent with that directive.”

Senate Commerce ranking member Maria Cantwell, D-Wash., hailed the memo’s withdrawal amid the Wednesday hearing as “good news.” Senate Appropriations Committee Chair Susan Collins, R-Maine, said she was “pleased that OMB is rescinding the memo imposing sweeping pauses in federal programs. While it is not unusual for incoming administrations to review federal programs and policies, this memo was overreaching and created unnecessary confusion and consternation.”

Lutnick told Senate Commerce member Sen. Amy Klobuchar, D-Minn., before the OMB memo’s rescission Wednesday that the funding “pause … gives me time” to progress through the Senate confirmation process and “get the team working on” reviewing BEAD. Conversely, OMB said Tuesday the memo would freeze funding only for programs Trump addressed in executive orders, including a Jan. 21 directive pausing spending on several Infrastructure Investment and Jobs Act (IIJA) initiatives. That order was limited to energy and “Green New Deal” aspects of IIJA, not its $65 billion in connectivity spending, including BEAD.

Lutnick said NTIA would ensure BEAD funding goes “out the door” and will implement it after the “pause” ends. “Nobody's gotten broadband” yet via BEAD, “so it's time for a new commerce secretary to get broadband out to people and give … Congress the benefit of the bargain, which is [that] you appropriated money for broadband. Let's get it in their hands, and let's do it." Lutnick told Senate Majority Leader John Thune, R-S.D., that he wants BEAD funding for satellites and wireless along with fiber, “and let's do it the cheapest, most efficient way we can.”

Lujan Testy

Likely Senate Communications Subcommittee ranking member Ben Ray Lujan, D-N.M., had a particularly testy exchange with Lutnick over BEAD. The senator repeatedly pressed Lutnick on whether he would “cut broadband infrastructure funding” at Trump’s behest. “I work for” Trump, “and I’m here to execute his policies,” Lutnick responded. “I think he agrees that broadband internet to America is important,” but “wasted money and abuse of our resources has got to end. But I think we can achieve your goals” of universal connectivity.

Lujan said he agreed "there should be efficiency” in BEAD implementation “and that we should stand up to fraud,” but he found Lutnick’s opaque answer unacceptable. “I came into this hearing with an open mind” about the nominee but now will “say no” to his advancement, Lujan said. “I’m beside myself with this little exchange.” Lutnick said if Trump “has other objectives” concerning broadband funding that run counter to Congress’ mandate in IIJA, “I will sit down and talk to him about it. But my objective” is to “execute what has been appropriated.”

Lutnick later wouldn't commit to Sen. Jacky Rosen, D-Nev., that NTIA would maintain its approval of Nevada's BEAD plans. “If it has been rigorously done and deeply efficient, and it’s the most efficient use to get broadband to your constituents, then it’s easy for me to commit to it,” he said: “But if there’s been errors or mistakes, you wouldn’t mind if we made it better.” The “project has already been approved,” Rosen said. “We are about to build out. Allocations and appropriations from Congress are not suggestions, it is the law.”

Cruz defended Lutnick, saying he couldn’t recall Cabinet nominees in past administrations agreeing in confirmation hearings to “defy” the president’s orders, so “it’s unsurprising that [Trump’s] Cabinet nominees are not interested in testifying that they intend to defy orders." Cruz previously urged states to return unused BEAD money if they have adequate funding from other federal broadband programs (see 2309150069).

Thune urged Lutnick to “commit to working with states to remove” BEAD requirements from NTIA that Congress didn’t mandate in IIJA, “including climate change mandates, rate regulation, onerous labor requirements and other” rules that Republicans claim have delayed the program’s implementation. Thune also wants NTIA “to ensure that this BEAD funding is only used for actual broadband infrastructure builds.” Thune is among Republican leaders who have been open to clawing back BEAD money (see 2412270035).