Natcast, a Violation of Federal Law

Natcast, a nonprofit created under the Biden Administration in a manner to advance US semiconductor production, has been found to be in violation of federal law by the US Commerce Department.

In a letter addressed to Natcast CEO Deirdre Hanford, Commerce Secretary, Howard Lutnick claimed that the nonprofits’ existance was a violation as it disbursed around $7.4 billion in taxpayer funds that were meant to advance semiconductor research and development.

As a result, the Commerce Department, along with the Department of Justice’s Office of Legal Counsel, resolved to deeming the agreement that Natcast had under the Biden Administration as void and without power. The Trump administration will not abide by it.

Upon consultation with the department of Justice Office of Legal Counsel, the Department of Commerce (“Department”) has determined that, because Natcast was established in violation of federal law, the agreement it purported to enter doing the final week of the Biden administration is void ab initio and therefore has no legal force or effect.

Violation of federal law(s)

According to Lutnick, Natcast did not follow proper regulations pertaining to the use of taxpayers’ funds and the legal framework. He mentioned that Natcast violated the CHIPS and Science Act of 2022 (15 U.S.C. § 4651 et seq), a law that set aside billions for America’s semiconductor industry The law doesn’t grant the government permission to create a new nonprofit to oversee the program, making Natcast’s setup potentially unlawful.

Also, the Government Corporation Control Act (31 U.S.C. § 9102), phohibits federal agencies from establishing corporations unless approved by Congress. Natcast’s creation allegedly did not have this approval, resulting in an agreement that restricted government oversight and intervention. Lutnick criticised these actions, stating they “ nor only give the appearance of impropriety, but they flout federal law.”

The Commerce Department’s decision nullifies the Natcast authority of managing the $7.4 billion fund. The semiconductor industry could face uncertainties in the flow of progress, potentially causing delays or restructuring of projects that were set to receive funding through Natcast.

With the agreement voided, federal agencies will reassume full oversight, which could affect project timelines and execution. This case may also influence future industrial policy approaches, prioritizing accountability and strict adherence to federal law.