Senate May Force States to Choose Between AI Oversight and Universal Broadband

Stephanie Weiner is a Federal Alumni Fellow at the Georgetown Law Institute for Technology Law & Policy and former Chief Counsel at the National Telecommunications and Information Administration (NTIA).

Much has already been written about the provisions within the House and Senate Budget Reconciliation bills that would impose a 10-year moratorium on state enforcement of AI-related laws and regulations. The House version that passed in May as part of H.R.1 - One Big Beautiful Bill Act would impose the moratorium broadly on any state or political subdivision. However, the current Senate provision has linked it to the Broadband Equity Access and Deployment (or “BEAD”) Program, in part to pass muster with the Senate’s rules for reconciliation bills.

As a result, states may well be faced with a stark choice. States that have spent years working hard to develop and implement BEAD plans may now have to choose: universal broadband for their residents or ensuring trustworthy AI.

In the wake of the COVID-19 pandemic, Congress established BEAD as part of the 2021 bipartisan Infrastructure Investment and Jobs Act (IIJA). Overseen by the National Telecommunications and Information Administration (NTIA) at the US Department of Commerce, BEAD is a historic $42.45 billion broadband investment to finally connect the millions of rural and hard-to-reach communities and households.

Millions of Americans still lack access to modern internet services. Congress designed BEAD as a state formula grant program and directed NTIA to allocate BEAD funds to 56 states and territories (‘States’). Relying on the statutory formula and the Federal Communications Commission’s newly developed maps, NTIA did just that, with allocations ranging from $27 million for the US Virgin Islands to $3.3 billion for the state of Texas. Congress then tasked the States, subject to certain NTIA approvals, to use these funds to ensure all of their residents have reliable, affordable access to high-speed internet service.

States have been hard at work for years to make progress on BEAD’s promise of universal broadband. Early on, all of the States made the decision to participate in BEAD. NTIA made grant awards to each of them and, by the end of 2024, NTIA had approved all of the States’ initial proposals and obligated all of their IIJA appropriated funding. However, States cannot access the bulk of that funding without further NTIA approvals.

The new Senate amendment comes as states are grappling with recent NTIA changes to BEAD. On June 9, NTIA issued a Restructuring Policy Notice, which, among other things, outlined new requirements for subgranting funds to broadband providers for network deployment. While the impact of the Restructuring Notice is still unfolding, the new guidance will likely shift at least some subgrants to broadband networks and services that are less expensive to deploy, reducing BEAD funds spent on broadband deployment and leaving more funds for other eligible uses. All of the States are currently working at a furious pace to restructure their plans to align with the new BEAD guidance on a tight NTIA-imposed timeline.

Amid this restructuring, the Senate amendment introduces more changes, with significant implications. First, the amendment provides an additional $500 million in BEAD appropriations, and it adds AI infrastructure and deployment to the list of eligible uses for all BEAD funding (including any funds not used for broadband deployment). Second, it requires States to certify compliance with the AI moratorium under the threat of NTIA stripping them of BEAD funding. As a result, if enacted, States may well need to choose between the funds needed to deploy high-speed internet to hard-to-reach places on the one hand and the authority to prevent AI harms on the other.

Proponents of the Senate amendment claim that the moratorium is voluntary and only applies to the newly appropriated $500 million. They point out that the moratorium provision expressly conditions funds obligated after its adoption, and NTIA has already obligated all of the originally appropriated BEAD funding to the States. But if the intent is to condition only the new $500 million, it would have been simple to draft the condition language with a cross-reference to the subsection appropriating the new funds.

Instead, the moratorium conditions BEAD “amounts made available to carry out this section … obligated for expenditures of an eligible entity … or any other subgrantee,” which suggests a much broader application to all BEAD funding. Moreover, the amendment separately requires States to certify compliance with the moratorium in all of their BEAD reporting. If a State fails to so certify, NTIA has the authority to de-obligate the State’s BEAD funding. Finally, NTIA has the authority to divert those de-obligated BEAD funds to new or existing applicants consistent with the revised BEAD program, presumably including States certifying compliance with the AI moratorium.

Today, all of the States have existing and active grant agreements, and no BEAD funding was conditioned on an AI moratorium. So, at a minimum, the Senate amendment would (once again) change funding rules midstream, and—if enacted—will have implications for the BEAD program.

States cannot access the bulk of their originally appropriated BEAD funds until they get NTIA’s approval. When it grants approvals, NTIA can—and does—impose new terms and conditions, which could include compliance with the AI moratorium, especially if the agency wants to prioritize funding for AI deployment and embraces a broader reading of the amendment. The recent June 9 guidance makes clear that NTIA believes it has the authority to modify the program and amend existing awards mid-flight. And NTIA’s BEAD decisions—including statutory interpretations, new grant conditions, and any de-obligation findings—are exempt from the APA and face a heightened standard of judicial review, making them particularly difficult to challenge.

In short, the stakes are high. Right now, States are working diligently to restructure their BEAD programs. If the Senate language passes, they may well be faced with a critical new—and unexpected—choice. Do they stay the course and continue the work to connect those rural and other families that have for too long been without modern internet access, but do so at the risk of being powerless to protect them and all state residents from unforeseen AI harms over the next decade? Or do they retain their authority to ensure trustworthy AI and put their BEAD funding at risk, potentially depriving rural communities of the very connectivity necessary to reap AI’s benefits? No matter which path States take, they risk harming rural and underserved communities, leaving them either without internet access or without AI safeguards.