Introduction
On May 22, 2025 [1], the US House of Representatives passed the One Big Beautiful Bill Act (OBBBA), which proposes a significant shift in the regulatory landscape for artificial intelligence (AI) systems in the United States. The bill includes a 10-year moratorium on state and local regulation of AI, centralizing oversight at the federal level [1]. This move aims to create national consistency and address the fragmented regulatory environment currently in place.
Description
On May 22, 2025 [1], the US House of Representatives passed the One Big Beautiful Bill Act (OBBBA), which includes a proposed 10-year moratorium on state and local regulation of artificial intelligence (AI) systems [1], centralizing oversight at the federal level [1]. This initiative aims to create national consistency amid a growing patchwork of regulations [3], potentially affecting over 60 existing state laws that address critical issues such as algorithmic discrimination and the government’s use of AI [4]. Proponents [1] [3], including Republican lawmakers and tech companies [4], argue that the moratorium is essential for fostering innovation and maintaining competitiveness against foreign firms [4], particularly in China [4]. They believe it will simplify the fragmented regulatory landscape and provide Congress with the necessary time to develop comprehensive federal legislation [4].
However, the moratorium has faced significant opposition from various stakeholders, including Democrats [4], some Republicans [2] [4], state lawmakers [1] [3] [4], and civil society organizations [4]. Critics express concerns that the pause could expose consumers [4], especially vulnerable populations [4], to AI-related risks and undermine state protections against issues like deepfakes and discrimination [4]. For instance [1], California’s “Physicians Make Decisions Act” prohibits health insurers from using AI to deny coverage without human oversight [1], while Connecticut and Maryland have proposed similar measures to regulate AI’s role in healthcare decisions [1]. Massachusetts has also introduced legislation requiring disclosure of AI use in patient care [1]. The absence of state regulations could eliminate existing protections [2], raising fears that companies might exploit AI technologies without accountability [2], thereby harming consumers [2].
A bipartisan group of California lawmakers and state attorneys general has urged Congress to reject the moratorium, emphasizing the need for state-level protections in the face of inadequate federal action [2]. Additionally, the National Conference of State Legislatures has criticized the proposal for undermining states’ abilities to protect their residents [1]. The inclusion of the moratorium in a budget reconciliation bill raises procedural concerns under the Senate’s Byrd Rule [1], as it may be deemed extraneous to budgetary matters [1], given that it does not directly impact federal spending or revenues [1]. The bill’s passage in the House marks a significant step [2], but it still faces challenges in the Senate [2], where factions within the Republican party are debating its contents and the potential for the AI regulation clause to be removed. Ongoing discussions highlight the contentious nature of AI regulation and its implications for both the industry and consumers if the bill becomes law [2].
Conclusion
The passage of the OBBBA in the House represents a pivotal moment in the regulation of AI in the United States, with potential far-reaching impacts on both innovation and consumer protection. While the bill aims to streamline AI oversight and foster competitiveness, it also raises significant concerns about the erosion of state-level protections and the risks posed to consumers. The ongoing debate in the Senate and among various stakeholders underscores the complexity and contentiousness of AI regulation, highlighting the need for a balanced approach that considers both national interests and individual rights.
References
[1] https://www.jdsupra.com/legalnews/locked-out-how-a-federal-moratorium-on-9294511/
[2] https://builtin.com/articles/trump-big-beautiful-bill-ai-regulation
[3] https://www.ciodive.com/news/trump-AI-regulation-moratorium-one-big-beautiful-bill/749358/
[4] https://indianexpress.com/article/technology/artificial-intelligence/trump-one-big-beautiful-bill-10-year-ban-state-ai-regulation-10030092/
