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The Trump administration's tax bill -- also called its "big, beautiful bill" -- which rounds up key pieces of the president's agenda, also includes a rule that would prevent states from enforcing their own AI legislation for 10 years, if passed. After an initial budget hiccup, Republican senators successfully amended the rule to comply with budgetary requirements by adding that states trying to enforce AI regulations would not receive federal broadband funding.
Here's why that matters.
How the moratorium works
Broadband Equity, Access, and Deployment (BEAD) is a $42-billion program run by the National Telecommunications and Information Administration (NTIA) that helps states build infrastructure to expand high-speed internet access. The Senate rule makes all of that money, plus $500 million in new funding, contingent on states backing off their own AI laws.
The issue is twofold: if passed, the rule would both constitutionally prohibit states from enforcing AI legislation and put often critical funding for internet access at risk.
And it wouldn't only impact in-progress legislation. Laws that states have already passed would stay intact in writing, but would effectively be rendered useless, lest states want to put their broadband funding on the line.
Also: What 'OpenAI for Government' means for US AI policy
"States like New York, Texas, and Utah would all have to choose between protecting their residents against faulty AI and billions in funding to help expand broadband access across their state," Jonathan Walter, a senior policy adviser at The Leadership Conference's Center for Civil Rights and Technology, told ZDNET.
Earlier this month, the New York State Senate passed the RAISE Act, a first-of-its-kind bill that would require larger AI companies to publish safety, security, and risk evaluations, disclose breaches and other incidents, and allow the state's attorney general to bring civil penalties against companies when they don't comply.
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