House-passed budget bill includes state AI moratorium
halbergman via Getty Images
By
Chris Teale
Lawmakers passed the package under reconciliation just before Memorial Day, with the 10-year ban on state AI regulation intact. Its future remains uncertain in the Senate.
The House of Representatives passed its budget bill through the reconciliation process just before Memorial Day, with the 10-year block on states regulating or enforcing new laws on artificial intelligence intact.
The measure scraped through the House by a 215-214 vote, hailed by President Donald Trump on his Truth Social platform as “arguably the most significant piece of Legislation that will ever be signed in the History of our Country.” It contains many of Republicans’ legislative priorities across a variety of policy areas.
But the moratorium has received plenty of criticism from across the political spectrum, even as supporters argue it will level the playing field and prevent what Georgia Republican Rep. Rich McCormick called “cross-contamination of law” at the state level. Opponents, however, noted that federal inaction so far on the topic necessitates state-level action in arguing against the moratorium.
“The arguments in favor of this provision only work if you believe that the federal government will soon pass broad guardrails to protect the public, or that AI will be a completely benign technology developed by companies that need no regulatory constraints,” Brad Carson, president of the nonprofit Americans for Responsible Innovation, said in a statement. “Given the federal government’s lack of action on other emerging tech issues in the past, and the emergence of new harms from this technology that we’re already seeing, it’s very difficult to justify this blanket state-level AI regulation moratorium.”
And the Senate could pose a major obstacle to the bill’s passage, and not just because it may violate the Byrd Rule, a procedural rule that limits the number of extraneous provisions included in reconciliation legislation. U.S. Sen. Josh Hawley, a Republican from Missouri, reportedly called the moratorium “terrible policy” that he pledged to “do everything I can” to remove.
U.S. Sen. Marsha Blackburn, a Tennessee Republican, noted that her state has passed legislation to protect recording artists from AI-generated likenesses and deepfakes. And she said during a recent subcommittee hearing in the Senate Judiciary Committee that “until we pass something that is federally preemptive, we can’t call for a moratorium.”
State officials are similarly opposed to any federally imposed moratorium on AI regulations. A bipartisan group of 40 state attorneys general sent a letter to Congress before the bill passed opposing the initiative and saying that, in the absence of federal action, Americans need protections now from the harms that the technology can bring.
“The impact of such a broad moratorium would be sweeping and wholly destructive of reasonable state efforts to prevent known harms associated with AI,” the letter says. “This bill will affect hundreds of existing and pending state laws passed and considered by both Republican and Democratic state legislatures. Some existing laws have been on the books for many years.”
Similarly, Tim Storey, CEO of the National Conference of State Legislatures, sent a letter to leaders on the House Energy and Commerce Committee expressing his organization’s “strong opposition” to the measure. Storey said it “is an infringement on states' authority to effectively legislate in this rapidly evolving and consequential policy domain,” and said it violates Senate procedure.
“States have historically served as vital laboratories of democracy, crafting policies that reflect the unique needs, values and priorities of their constituents,” Storey wrote. “In the realm of AI — where implications for privacy, cybersecurity, fraud, workforce, education and public safety remain profound and continually evolving — legislative flexibility is essential. A federally imposed moratorium would not only stifle innovation but potentially leave communities vulnerable in the face of rapidly advancing technologies.”
Supporters of the provision, however, have held firm. In an Energy and Commerce subcommittee hearing just before the bill’s passage, lawmakers stood behind the moratorium.
“A patchwork of various state laws is not good for innovation, for business or consumers, and that is what we’re trying to avoid,” Indiana Republican Rep. Russ Fulcher said during the hearing.
And California Rep. Jay Obernolte, a Republican who has expressed similar warnings about a “patchwork” of state AI laws and wants to see strong federal regulations, bemoaned how it is being “painted as such a divisive, partisan issue.”
“Costly, contradictory regulation is a surefire recipe for destroying a technological revolution and decimating little tech innovators,” Adam Thierer, a senior fellow at the R Street Institute, testified during the hearing. “An AI moratorium offers a smart way to address this problem by granting innovators some breathing space and helping ensure a robust national AI marketplace develops.”