Gomez, Top Telecom Hill Democrats Criticize Trump's Draft AI Order on BEAD and FCC Impacts

President Donald Trump’s draft order would require NTIA to issue a policy notice within 90 days “specifying the conditions under which States may be eligible for remaining [BEAD funding] that was saved through my Administration’s ‘Benefit of the Bargain’ reforms,” more commonly known as non-deployment funds, based on proposed Trump administration evaluations of states’ AI laws. Some estimates have found that $20 billion of the BEAD program's $42.5 billion qualifies as non-deployment money.

The evaluations on which NTIA would base funding decisions include a proposed Commerce Department review of whether states’ AI statutes conflict with the administration’s goals. That would include “laws that require AI models to alter their truthful outputs, or that may compel AI developers or deployers to disclose or report information in a manner that would violate the First Amendment or any other provision of the Constitution,” the draft said. It would also direct NTIA to factor in decisions by a proposed DOJ task force that could challenge state AI laws in consultation with the White House Office of Science and Technology Policy and other agencies.

The draft said NTIA’s policy notice must render a state ineligible for non-deployment BEAD funding if its AI laws conflict with administration goals to “enhance America’s global AI dominance through a minimally burdensome, uniform national framework.” NTIA’s 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” connectivity.

In addition, the Trump proposal would direct FCC Chairman Brendan Carr to begin a proceeding within 90 days “to determine whether to adopt a Federal reporting and disclosure standard for AI models that preempts conflicting State laws.” It would also order the FTC to “issue a policy statement on the application of the FTC Act's prohibition on unfair and deceptive practices … to AI models.”

Trump appears likely to formally issue the executive order Friday, lobbyists told us. “Until officially announced by the [White House], discussion about potential executive orders is speculation,” a Trump administration official said Wednesday night. The White House didn’t comment Thursday.

'Dubious' Authority

Gomez told reporters after the FCC's Thursday meeting that she thinks the commission’s authority “is dubious at best when it comes to preempting states on AI laws and regulations,” including as Trump proposes in the draft order. “It’s a stretch to say that because telecom companies use AI in operating their networks, that somehow gives us jurisdiction to preempt states,” she said during a news conference. “Do we have authority to preempt state actions on power? Do we have authority to preempt state actions on employment practices?”

Senate Communications ranking member Ben Ray Lujan, D-N.M., and House Communications ranking member Doris Matsui, D-Calif., separately told us that they object to the draft order both as an infringement of state’s rights to regulate AI and as an additional way for the Trump administration to hinder Congress’ goals for BEAD. The proposal in some ways mirrors an unsuccessful Senate bid for the reconciliation law to allocate $500 million via BEAD in FY 2025 to construct and deploy AI infrastructure (see 2506060029). That legislation would have required governments receiving the new BEAD funding to pause enforcing state-level AI rules. Critics claimed the proposal endangered states’ entire BEAD funding eligibility. The Senate ultimately voted 99-1 in July to strip out the AI preemption proposal completely after a deal on compromise language collapsed (see 2507010070).

“If the Trump administration wants to get legislation on AI, [the president] should go tell [House Speaker Mike Johnson, R-La.] that he needs it,” Lujan said. He understands “the importance of getting strong AI legislation adopted, but [Trump], who says he supports states’ rights, is now trying to find another way to go after states.” Matsui, a strong supporter of California’s AI statutes, said it’s “egregious” that Trump is “trying to mess with states’ AI laws” in the way the draft order proposed. “The states themselves are having to take leadership on this” in the absence of leadership from Congress on AI policymaking.

Lujan and Matsui both said the draft order is the Trump administration’s latest gambit for hindering BEAD, after actions this year such as NTIA’s June 6 policy restructuring notice for the program, which required all states to resubmit their spending plans (see 2506060052). The agency approved 19 states’ final revised plans this week (see 2511200041 and 2511180007).

“This administration appears to be finding one excuse or another just not to invest in” broadband and other infrastructure by hindering spending that Congress approved in the 2021 Infrastructure Investment and Jobs Act, Lujan said. Trump “said he loves infrastructure, [but apparently] doesn't want rural America to get access to the internet. That's why he's trying to delay all this.”

Matsui similarly said the “only reason it's been slowed down is because of the Trump administration and what they've been doing,” in contrast to GOP complaints that the Biden administration’s processes delayed BEAD’s rollout. “The states are ready to go, and right now we just need to get it out there,” she said.

Sen. Thom Tillis, R-N.C., the lone Senate vote in favor of keeping the AI moratorium in the reconciliation law, appeared supportive of Trump’s draft order. “It’s bad strategy” for states to take the lead on AI policymaking, just as it is for data privacy and data breach regulations, he told us. “Those are two things that need federal preemption to get it right. Otherwise, we’re just disadvantaging ourselves against other countries. I’d rather do it through the law,” so hopefully the White House approach is “appropriate.” But as a “matter of law, I think we should pass a bill, too,” Tillis said. “I would preempt it and have rules of the road at the federal level. We need to codify” for long-term certainty.