Tag Archives: Executive Order

BEAD Non-deployment Complications

The NTIA should be getting close to approving all of the state BEAD initial grant proposals. Once that has been done, one of the last big steps will be for NTIA to announce how States can receive and use the BEAD non-deployment funds. When NTIA initiated the Benefit of the Bargain rules, the amounts of BEAD allocated to infrastructure plummeted, and the non-deployment funds mushroomed to over $20 billion, almost half of the original $42.45 billion BEAD funding.

NTIA will hold a listening session soon to hear ideas from State Broadband Office on how they would like to use the funding. Most States had specific proposals for using the funds, but States may not have specific plans for the increased amounts of non-deployment created by the Benefit of the Bargain changes.

The nondeployment process got complicated when the White House issued an executive order that said that NTIA “must provide that States with onerous AI laws … are ineligible for non-deployment funds, to the maximum extent allowed by Federal law.”

A number of State Attorneys General have expressed a willingness to sue NTIA should they be denied non-deployment in general, but also specifically if they are denied because they have state AI regulations. There is a great article, written by Lawfare, on the legal issues involved if this issue is taken to court. The article concludes that States have a great argument to question if NTIA or an executive order can overcome the intent of Congress when it passed the original BEAD rules.

One interesting observation in that article is that the White House is relying on a claim that State AI regulations may harm the development and deployment of AI. The argument is that AI applications drive demand for the Internet, so any State regulations that threaten the use of AI also threaten the value of BEAD-funded infrastructure. If that line of reasoning is deemed to be valid, it would imply that NTIA could withhold funding related to any other web applications that uses a lot of broadband.

The AI issue got more interesting when 22 states and the District of Columbia filed comments with the FCC in December that ask that the agency to not preempt any State AI regulations. While many of the States in the filing are blue, the filing included Arizona, Tennessee, and Utah.

The final interesting aspect of the issue is legislation introduced by two republican Senators, Roger Wicker (R-MS) and Shelley Moore Capito (R-WV), titled the SUCCESS for BEAD Act. The legislation is viewed as a way to negate the Executive Order and would require States to receive full funding and to distribute non-deployment funds through a competitive subgrant process. This would require grantees to provide a 25% match. The non-deployment funds could be used for six purposes: infrastructure improvement in rural areas, the enhancement of public safety and/or national security, network resiliency and cybersecurity protections, federal or military facilities, improving network latency, and the advancement of AI and related technologies.

Meanwhile, NTIA is still referring to non-deployment funds as savings, although there has been an acknowledgement that some of the funds should be distributed to States. I suspect that if NTIA does anything less than full distribution of all of the funds, we’ll see some combination of legislation and lawsuits to gain access to the funds.

AI and BEAD Non-Deployment

Yesterday, President Trump signed an Executive Order that gives the federal government the sole authority to regulate AI. The EO provides three justifications for asserting federal authority.

United States AI companies must be free to innovate without cumbersome regulation.  But excessive State regulation thwarts this imperative.  First, State-by-State regulation by definition creates a patchwork of 50 different regulatory regimes that makes compliance more challenging, particularly for start-ups.  Second, State laws are increasingly responsible for requiring entities to embed ideological bias within models.  For example, a new Colorado law banning “algorithmic discrimination” may even force AI models to produce false results in order to avoid a “differential treatment or impact” on protected groups.  Third, State laws sometimes impermissibly regulate beyond State borders, impinging on interstate commerce.

Within 30 days, the U.S. Attorney General is required to establish an AI Litigation Task Force with the sole responsibility to challenge State AI Laws. It seems likely this will result in a series of federal lawsuits trying to preempt any State AI regulations.

Of concern to the broadband world is that the EO includes specific language that singles out BEAD grant funding. The EO says:

Within 90 days of the date of this order, the Secretary of Commerce, through the Assistant Secretary of Commerce for Communications and Information, shall issue a Policy Notice specifying the conditions under which States may be eligible for remaining funding under the Broadband Equity Access and Deployment (BEAD) Program that was saved through my Administration’s “Benefit of the Bargain” reforms, consistent with 47 U.S.C. 1702(e)-(f).  That Policy Notice must provide that States with onerous AI laws identified pursuant to section 4 of this order are ineligible for non-deployment funds, to the maximum extent allowed by Federal law.  The Policy Notice must also describe how a fragmented State regulatory landscape for AI threatens to undermine BEAD-funded deployments, the growth of AI applications reliant on high-speed networks, and BEAD’s mission of delivering universal, high-speed connectivity.

In case you are wondering the extent of State AI regulations, the following map comes from BCLP, which is accompanied by a description of existing and pending AI regulations, by State. As this map shows, over half of the States already have some form of AI regulation, and only three states don’t have existing or pending AI regulations.

It’s been clear that NTIA has been seeking a mechanism for denying non-deployment funds, which are the portion of the $42.5 billion in BEAD that is not being spent on infrastructure. Current estimates are that non-deployment funds will be more than $21 billion. These funds are supposed to be distributed to States under the IIJA legislation. This EO gives NTIA the grounds for denying non-deployment funds for a lot of States.

If you read through the existing AI regulations, most are of two types. Many States have enacted legislation that makes it illegal to use AI to defraud people, adding AI to laws that already forbid using emails, telephone calls, and other forms of communication. There are also States that have legislation that tries to protect citizens privacy. There are a few States with other restrictions.

State Broadband Offices in States that have AI regulations do not have the power to overturn AI regulations, and State legislatures must act if they want to cancel AI regulations to preserve non-deployment funds. That may be a futile effort, because my best guess is that we haven’t seen the end of attempts to deny non-deployment funds and that this is only the first volley. For what it’s worth, there is opposition to overturning State regulation of AI in Congress, but it would be extraordinary for this Congress to override an Executive Order with legislation.