Introduction
The ongoing debate over the regulation of artificial intelligence (AI) in the United States has intensified with a proposal led by House Republicans [2] [3] [4] [5] [6] to impose a 10-year moratorium on state-level AI regulations. This initiative, part of a larger funding bill, aims to centralize regulatory authority at the federal level, sparking significant controversy and opposition from various political and state leaders.
Description
House Republicans, led by Senators Josh Hawley and Ted Cruz [3], are advancing a 10-year moratorium on state regulation of AI and automated decision systems [4] [6], effectively centralizing authority at the federal level [4] [6]. This provision [2] [3] [6] [7] [8] [9], included in a significant funding bill known as Trump’s “Big Beautiful Bill,” has garnered support from some Republicans who argue that state-level legislation could hinder the AI industry and burden small entrepreneurs. However, bipartisan leaders [9], including Senators Marsha Blackburn and Maria Cantwell [9], along with Attorneys General from various states, have expressed strong opposition, arguing that the moratorium would hinder states’ ability to address the growing threats posed by AI [9]. Critics contend that using the budget reconciliation process for non-budget policies is inappropriate and suggest a shorter [7], three-year pause would allow Congress to establish a comprehensive federal framework for AI regulation [7].
The rapid growth of AI has underscored the necessity for effective regulation. In the absence of federal guidelines [7], states are enacting their own laws [7], leading to a potential patchwork of conflicting regulations that could stifle innovation and complicate compliance for businesses. This situation mirrors the recent history of privacy regulation [7], where a lack of federal action resulted in numerous state laws [7], complicating efforts to create a cohesive national policy [7]. As of the 2024 legislative session [2], at least 45 states [2], along with Puerto Rico [2], the Virgin Islands [2], and Washington [2] [3] [9], D.C. [2], have introduced AI-related bills [2], with 31 states and territories enacting resolutions or legislation addressing AI regulation. Notably, 24 states enacted regulations on AI last year in anticipation of federal action [9], while several states, including Washington and Tennessee [9], have already implemented laws to combat AI deception [9].
The proposal has faced modifications due to opposition within the party, with concerns raised by Attorneys General in 40 states and bipartisan lawmakers, including Congresswoman Marjorie Taylor Greene [1]. They argue that the moratorium could negatively impact numerous existing and proposed laws aimed at protecting citizens from AI-related issues [8], such as explicit content, deep fakes, inflated housing costs driven by AI [8], and unsolicited communications [8]. Blackburn emphasized the need for states to protect their citizens from potential AI abuses [9], warning that the moratorium would provide Big Tech companies with a decade of regulatory immunity [9]. In response to these concerns, Massachusetts Democrat Ed Markey has introduced an amendment to remove the moratorium [3], citing fears of federal overreach and the necessity for states to protect their citizens from potential AI harms [3]. Markey requires 51 votes to pass his amendment [3], needing support from four Republicans in addition to all Democrats [3].
The Senate has modified the original proposal, replacing the outright ban with a financial penalty that would deny states access to a proposed $500 million fund for broadband deployment linked to AI infrastructure if they enact new AI regulations during the moratorium. This change aims to balance state autonomy with a strong disincentive against new regulations [4] [6], although it has faced criticism from various quarters [3], including some Republicans who are concerned about the implications for states’ rights [3]. Key proponents of the moratorium [3], such as California Republican Jay Obernolte [3], argue that uniform federal regulation is necessary to prevent smaller companies from being overshadowed by larger firms [3]. The federal preemption of state AI regulation has also faced bipartisan opposition [1], as both red and blue states have shown interest in establishing their own regulatory frameworks for AI [1].
Microsoft is actively lobbying for the enactment of this federal moratorium [2], raising concerns among advocacy groups [2]. A report from the Americans for Responsible Innovation (ARI) cautioned that the broad language of the proposal could eliminate various state-level regulations on AI and algorithmic technologies [2], potentially creating a regulatory vacuum without federal alternatives [2]. Advocates for federal preemption argue that a fragmented regulatory landscape could hinder the US competitive edge in AI development, drawing on historical precedents such as the Internet Tax Freedom Act of 1998 to support their case for a federal moratorium [1].
The bill’s passage faces procedural challenges under the budget reconciliation process [6], which requires compliance with the Byrd Rule [6]. However, recent rulings have allowed the AI-related provisions to remain in the bill [6], as Republicans push for final approval before a self-imposed deadline [6]. If enacted [6], the moratorium would provide a stable regulatory environment for employers [6], reducing concerns about varying state-level compliance mandates [6]. However, the financial penalty approach introduces potential legal uncertainty [4] [6], as states may still choose to implement AI laws at the risk of losing federal funds [4] [6], leading to a fragmented regulatory landscape [1] [4] [6].
Currently, there is no comprehensive federal AI regulatory framework [4] [6], leaving employers uncertain about future federal rules [4] [6]. The provision has garnered support from the White House and some tech industry groups [6], while over 200 bipartisan state lawmakers have expressed concerns about its implications for consumer protection laws related to AI [4] [6], including those addressing data privacy and algorithmic bias [4]. Some Republican senators oppose the moratorium [4] [6], viewing it as federal overreach [4] [6], and the broader tax and spending package [6], which includes the AI provision [6], is set for Senate debate [6], where it may still be challenged [6].
Legal professionals should monitor federal developments closely [6], track existing state AI laws [4] [6], and prepare for potential dual-track compliance scenarios [4] [6], as some states may still enact new regulations despite the moratorium [6]. The growing number of state laws may create further challenges in achieving a unified federal approach to AI regulation [7], complicating the political landscape for future legislation [7].
Conclusion
The proposed 10-year moratorium on state AI regulation has sparked a complex debate, highlighting the tension between federal authority and state autonomy. While proponents argue for a unified federal framework to foster innovation and prevent regulatory fragmentation, opponents warn of the risks of federal overreach and the potential for a regulatory vacuum. The outcome of this legislative effort will have significant implications for the future of AI regulation in the United States, affecting businesses, state governments, and consumers alike. Legal and industry stakeholders must remain vigilant as the situation evolves, preparing for a landscape that may require navigating both federal and state regulatory environments.
References
[1] https://www.forbes.com/sites/patrickgleason/2025/06/19/moratorium-on-state-ai-regulation-draws-some-gop-fire-but-also-praise/
[2] https://www.eweek.com/news/state-ai-regulation-clears-senate-hurdle/
[3] https://time.com/7297580/ai-moratorium-senate-big-beautiful-bill/
[4] https://www.fisherphillips.com/en/news-insights/senate-gatekeeper-allows-congress-to-pursue-state-ai-law-pause.html
[5] https://arstechnica.com/tech-policy/2025/06/ted-cruz-cant-get-all-republicans-to-back-his-fight-against-state-ai-laws/
[6] https://www.jdsupra.com/legalnews/senate-gatekeeper-allows-congress-to-3389844/
[7] https://www.progressivepolicy.org/the-case-for-a-targeted-ai-moratorium/
[8] https://www.commerce.senate.gov/2025/6/state-attorneys-general-tell-congress-ai-moratorium-will-leave-consumers-citizens-vulnerable-to-ai-fraud-theft-other-harms
[9] https://broadbandbreakfast.com/bipartisan-senators-oppose-10-year-ban-on-state-ai-regulation/
