Senate Budget Bill Attempts to Tie BEAD Funds to AI Regulation

WASHINGTON, June 6, 2025 – The Senate Commerce Committee’s budget bill language would allow the Commerce Department to claw back Broadband Equity, Access, and Deployment funding if states regulate artificial intelligence companies.

The $42.45 billion in BEAD funding has already been obligated to states, with some of it spent already on administrative costs or things like workforce development programs.

But the bill would allow Commerce’s National Telecommunications and Information Administration to “deobligate grant funds awarded to an eligible entity,” meaning a state or territory, if it “is not in compliance with” the moratorium, or if the state or territory “demonstrates an insufficient level of performance, or wasteful or fraudulent spending, as defined in advance by” the head of NTIA.

The bill would also make an extra $500 million available through the program, bringing it to $42.5 billion, and states would also not be able to access that if they enforced AI regulations. It would also allow that and other BEAD funds to be used for “the construction and deployment of infrastructure for the provision of artificial intelligence models, artificial intelligence systems, or automated decision systems.”

Laws that are designed to assist AI companies are exempted from the moratorium, which would last for 10 years. States like California and Colorado have laws on the books that the nonprofit Americans for Responsible Innovation flagged as likely to violate the moratorium if states enforced them.

It's still not clear if the AI moratorium will pass muster under the Byrd rule, which requires provisions in budget reconciliation bills like this one to be directly related to spending or revenue.

Commerce Secretary Howard Lutnick confirmed Thursday rumors that the agency was planning to release new BEAD rules Friday. Those had not been released Friday morning. He said states would have 90 days to submit spending plans and suggested states would have to redo their bidding processes under the program.

“What we’ve asked all the states to do is rebid, just with reasonable technology,” he said. “Then we’ll get the money out the door in the calendar year 2025.”

Current program rules prioritize fiber but allow for funding other technologies when fiber would be too expensive. The new rules are expected to force more spending on fixed wireless or satellite than states would have done otherwise.

Spectrum

The bill, sponsor by Senate Commerce Committee Chairman Ted Cruz, R-Texas, would also restore the Federal Communications Commission’s ability to auction off spectrum, which expired in 2023, through September 2034. It would require the agency to sell off a total of 800 megahertz, more than the 600 megahertz included in the House-passed version of President Donald Trump’s One Big Beautiful Bill Act.

The Senate Commerce Committee said the auction was estimated to bring in a net of $85 billion to help pay for tax cuts, $3 billion less than the Congressional Budget Office estimate for the House pipeline.

Cruz had previously introduced a bill that sought 1,250 megahertz for auction.

The Senate bill would direct the FCC to “ensure that spectrum is put to its most economically productive use,” including through “the use of options for spectrum licensing such as a variety of requirements for licenses, sharing models, and auction designs to ensure the most efficient use of spectrum.” The House language would have mandated the airwaves be put to use for fixed or mobile broadband via exclusive, high-power licenses.

The Senate language would prevent any auction in two military bands the Defense Department had sought protection for: the lower 3 GHz band and the 7/8 GHz band. The House bill would have blocked the lower 3GHz from counting toward its pipeline goal, but still technically allowed for a sale. The Senate bill would exempt it and the 7/8 GHz band from FCC auction authority entirely.

The bill would direct the NTIA, which handles federal spectrum use, to identify 500 megahertz of federal spectrum to be auctioned for full-power licenses, the kind the carriers use for mobile and fixed broadband. 

As they were with the House language, the mobile industry was pleased.

“Sen. Cruz’s inclusion of a robust spectrum pipeline alongside renewal of FCC spectrum auction authority is critical to restoring America’s leadership in wireless and innovation,” CTIA CEO Ajit Pai said in a statement. “I urge Congress to move swiftly to pass this legislation and ensure all Americans benefit from world-leading wireless connectivity.”

AT&T called the bill “a reasonable compromise” between lawmakers looking to get more airwaves in the hands of the major mobile carriers and those who wanted stronger protections for military spectrum.

The Senate bill would also allow the president to veto any of the bands identified by NTIA, “if the President determines that such modification or withdrawal is necessary to protect the national security of the United States.”

Wireless broadband providers, a wireless industry trade group, the cable industry and consumer advocates had asked lawmakers to protect the Citizens Broadband Radio Service from being auctioned, something that didn’t make it into the Senate language. AT&T and DoD have suggested auctioning some of the band for 5G use, something the current users strongly oppose.