Texas AG Candidate Targets SpaceX Grant Deal, Putting Musk Scrutiny on November Ballot
The Democratic nominee for Texas attorney general is signaling that, if elected, he will open an investigation into the state’s $110 million grant arrangement with Elon Musk’s SpaceX — a deal he says “sure looks like” corruption, even as he stops short of formally alleging it.
State Senator Nathan Johnson, who secured the Democratic primary runoff nomination in May, told the Dallas News on Friday that the award of 99% of available rural broadband grant funds to a single company led by the world’s richest person warrants deeper legislative and legal scrutiny. The comments mark a significant escalation in a controversy that has been simmering in Texas political circles for months.
The Core Dispute
At issue is a grant program administered by the Texas comptroller’s broadband development office (BDO) designed to expand high-speed internet access across rural Texas. SpaceX’s Starlink satellite internet division received the overwhelming majority of the available funds — a concentration Johnson characterized as deeply lopsided, particularly given Musk’s high-profile alliance with Donald Trump.
“I am not declaring that corruption was at work in this instance. I am saying that it sure looks like it,” Johnson told the Dallas News. “Public confidence in the bidding process has been undermined.”
Johnson has promised to overhaul the attorney general’s office — currently held by scandal-plagued Republican Ken Paxton, who recently secured his party’s nomination for the U.S. Senate race in November — and to work closely with the state comptroller to audit how government contracts are awarded. His anti-corruption platform, already a centerpiece of his campaign, now effectively places a potential SpaceX investigation before voters.
Rule Changes and Raised Eyebrows
The controversy centers on revisions to the grant-awarding process that reportedly favored low-Earth-orbit satellite providers. According to hearing testimony, those changes came at the behest of Republican Governor Greg Abbott’s office.
During a June hearing of the state senate’s business and commerce committee, Johnson pressed BDO director Bryant Clayton on the rationale for the rule changes. Clayton told lawmakers that the governor’s office had asked the agency to examine how its proposed structure compared to other states, and that Texas was “generally out of step with other nearby states,” according to KUT News.
Eight companies offering ground-based fiber broadband submitted a letter complaining they appeared to have been sidelined in the revised application process. The committee’s chair, Republican Senator Charles Schwertner, acknowledged the concerns at the hearing.
“I’ll just say it bluntly. Favoritism and transparency are real big concerns that have been brought to my office,” Schwertner said.
Records indicate Musk has previously made campaign donations to Abbott, among many other recipients, though there is no suggestion of a direct link between those contributions and the grant awards.
Abbott’s Defense
Governor Abbott’s office has pushed back against the criticism, framing the Starlink grants as a pragmatic response to the unique challenges of rural connectivity. In a statement, Abbott’s press secretary Andrew Mahaleris said low-Earth-orbit satellite service is “essential for the most remote areas where traditional fiber is too expensive and slow to build.”
“Governor Abbott supports getting high-speed internet to rural Texans as quickly and cost-effectively as possible,” Mahaleris said. “The Broadband Development Office in the Office of the Comptroller made the decision to adjust the grant disbursement schedule to better align with other states and allow providers to access capital earlier, helping deliver service to rural communities faster.”
SpaceX, headquartered in Starbase, Texas, did not respond to the Dallas News’ request for comment. The company has also been contacted by The Guardian.
Political and Market Context
Johnson’s pledge to investigate the SpaceX grants injects a new variable into an already consequential November contest. His Republican opponent, Mayes Middleton, has publicly declared himself a Trump loyalist, and Johnson has been sharply critical of that posture. In a June post on X, Johnson wrote: “The AG is supposed to ensure that government serves the public good over private interests, not the other way around,” linking to a speech attacking Middleton.
From a markets perspective, the Texas grant arrangement underscores the increasingly tangled relationship between Musk’s sprawling business empire and public-sector funding vehicles. SpaceX’s Starlink division has positioned itself as a critical infrastructure provider for remote connectivity, and state-level broadband programs represent a growing revenue stream. Any formal investigation — particularly one led by a state attorney general with audit authority over contract awards — could introduce new compliance and reputational risks for a company that already operates under intense regulatory scrutiny from multiple federal agencies.
Johnson’s careful framing — stopping just short of an outright corruption allegation while demanding additional legislative scrutiny — suggests a deliberate legal and political strategy. Whether Texas voters view the Starlink grants as prudent policy or evidence of favoritism may well hinge on how effectively each side makes its case between now and November.