There is still some glimmer of hope that states will see some of the BEAD non-deployment funds. I call it a glimmer of hope because the issue is far from settled.
In a December 21 online post, Commerce Secretary Howard Lutnick was still taking credit for having saved taxpayers about $21 billion through changes in the BEAD rules. He was responding to a Wall Street Journal editorial (Trump Unbreaks the Internet), that had praised NTIA Administrator Arielle Roth for the change in direction of the BEAD program. Secretary Lutnick said the Administration is fixing the broadband mess left behind by the Biden Administration and that Commerce has stopped funding broadband builds he characterized as “rip-off projects run by powerful lobbyists who are very good at getting grants and very bad at delivering results”.
In December, there was some movement by Congress to require NTIA to release the BEAD nondeployment funds. Senators Roger Wicker (R-MS) and Shelley Moore Capito (R-WV) introduced the Supporting U.S. Critical Connectivity and Economic Strategy and Security (SUCCESS) for BEAD Act that would require NTIA to disburse funds not used for infrastructure to the States. On December 23, Representatives Andy Barr and Hal Rogers, Republicans from Kentucky, introduced a matching bill in the House. These two laws just reinforce the rules in the original IIJA legislation that said that any of the $42.45 BEAD grants not used for infrastructure would still go to the States.
In early November, Arielle Roth characterized the nondeployment funds as savings in a speech made to the Hudson Institute, which signaled that NTIA didn’t want to send the money to States. However, in a forum at the Free State Foundation on December 2, Roth said she was “operating under the assumption that the states will get to use their BEAD savings. But again, nothing has been finalized.” She also said in that forum that “any spending must produce real, measurable value, not duplicate investment the private sector is already making.”
Obviously, none of this makes NTIA’s intention clear for non-deployment funds. The issue is further complicated by an Executive Order from the White House that said that non-deployment funds can’t be flowed to States that adopt “onerous” restrictions on artificial intelligence.
NTIA has said that it will make a decision about non-deployment funds after it finalizes all of the BEAD infrastructure grants. As I write this blog, the BEAD plans of 39 states and territories have been accepted by NTIA, and the agency said it hopes to finalize the remaining plans in January.
It’s clear that earlier in the year, Secretary Lutnick intended to cut BEAD grants to claim savings on government spending. He said so many times, and is still referring to the non-deployment funds as savings.
I assume there has been a lot of lobbying on the topic from those in Congress and Governors. The House and Senate bills that require releasing the funds have been proposed by Republicans. Perhaps the pressure the lobbying for the funds is being effective since most of the large dollar amounts of nondeployment funds are in red States, including Texas ($2.04 B), North Carolina ($1.12 B), Georgia ($1.00 B), Missouri ($946 M), Alabama ($869 M), Florida ($869 M), Louisiana ($856 M), Arkansas ($692 M), Kentucky ($623 M), Tennessee ($609 M), Ohio ($517 N), and South Carolina ($510 M).
There is no way to know what the restriction on non-deployment due to AI will mean. A sizable majority of states either have already passed AI regulations or are considering them. Florida Governor Ron DeSantis reacted to the Executive Order by saying that Florida absolutely reserves the right to regulate AI, and I suspect a lot of state legislatures feel that way. I guess it will boil down to how NTIA interprets the term “onerous” regulation in the Executive Order.
The bottom line of all of this is that it’s clear as mud about whether States will see non-deployment funds, but the issue is not dead. We’ll probably know more by the end of the first quarter.