- As expected, Trump’s AI Executive Order wants to restrict BEAD non-deployment funds from states with too much AI regulation
- States will likely pressure the federal government to define “onerous” AI laws, said New Street’s Blair Levin
- But they could also choose not to fight to receive the funds ASAP
As suspected, President Donald Trump signed an executive order (EO) to combat state AI regulations, putting the remaining Broadband Equity, Access and Deployment (BEAD) money in a precarious spot.
The order, similar to the draft circulated last month, directs the Department of Commerce and NTIA to issue a policy notice within 90 days specifying how states will be eligible for BEAD non-deployment funds.
States found to have “onerous AI laws” would be ineligible for non-deployment money. 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.”
Overall, the EO section related to BEAD didn’t change from the draft. Much of what the draft called for, such as a national “minimally burdensome” AI framework and an AI Litigation Task Force to challenge state laws, carried over to the final version – albeit with some toned down language.
For instance, the EO removed its mention of California as an example of a state that already passed restrictions on AI. It still notes a new Colorado law would ban “algorithmic discrimination” but took out the draft language suggesting this law could make AI models “embed DEI in their programming.”
Notably, not all state laws will be restricted under federal AI legislation. The EO stated it does not plan to pre-empt laws related to child safety protections, state government procurement and use of AI as well as AI compute and data center infrastructure, “other than generally applicable permitting reforms.”
What does this all mean for BEAD?
NTIA has now greenlit more than half of state BEAD plans, but the status of up to $20 billion in non-deployment money is still shaky.
For what it’s worth, NTIA doesn’t seem entirely opposed to giving states access to non-deployment funds. Administrator Arielle Roth said in October the money “could be a powerful way to advance BEAD’s goals,” using permitting reform as an example.
She later said NTIA will provide an update on BEAD savings in early 2026. “First and foremost, these dollars belong to the American people, and they should reap the benefit,” Roth stated this month.
Given that all 50 states have introduced some kind of AI-related legislation this past year, it’s possible states choose not to fight back so they can receive the money on an earlier timeframe, said New Street Research Policy Analyst Blair Levin.
On the other hand, the federal government will likely face “considerable pressure” from states – both red and blue – to define “onerous” laws, Levin said in a note to investors Thursday.
Furthermore, he thinks the EO – and clawing back non-deployment funds – could be costly to the overall AI industry.
Louisiana Governor Jeff Landry has proposed the money be used for AI infrastructure and AI workforce training at the state level. Other states were probably considering a similar approach, Levin said, so any state backlash could “slow, rather than accelerate, the deployment of facilities the AI industry says it needs.”
There’s also the question of whether the EO’s BEAD requirement is actually legal, but Levin noted the language of the Infrastructure, Investment and Jobs Act (IIJA) makes it “difficult to bring challenges to decisions made by NTIA.”
The legality issue also arose when Trump earlier this year announced the termination of Digital Equity Act funding, a key component of the IIJA. The administration is currently facing a lawsuit over that decision.