A federal proposal that would ban states and local governments from regulating AI for five years could soon be signed into law, as Sen. Ted Cruz (R-TX) and other lawmakers work to secure its inclusion into a GOP megabill — which the Senate is voting on Monday — ahead of a key July 4 deadline.
Those in favor — including OpenAI’s Sam Altman, Anduril’s Palmer Luckey, and a16z’s Marc Andreessen — argue that a “patchwork” of AI regulation among states would stifle American innovation at a time when the race to beat China is heating up.
Critics include most Democrats, many Republicans, Anthropic’s CEO Dario Amodei, labor groups, AI safety nonprofits, and consumer rights advocates. They warn that this provision would block states from passing laws that protect consumers from AI harms and would effectively allow powerful AI firms to operate without much oversight or accountability.
On Friday, a group of 17 Republican governors wrote to Senate Majority Leader John Thune, who has advocated for a “light touch” approach to AI regulation, and House Speaker Mike Johnson calling for the so-called “AI moratorium” to be stripped from the budget reconciliation bill, per Axios.
The provision was squeezed into the bill, nicknamed the “Big Beautiful Bill,” in May. It was initially designed to prohibit states from “[enforcing] any law or regulation regulating [AI] models, [AI] systems, or automated decision systems” for a decade.
However, over the weekend, Cruz and Sen. Marsha Blackburn (R-TN), who has also criticized the bill, agreed to shorten the pause on state-based AI regulation to five years. The new language also attempts to exempt laws addressing child sexual abuse materials, children’s online safety, and an individual’s rights to their name, likeness, voice, and image. However, the amendment says the laws must not place an “undue or disproportionate burden” on AI systems — legal experts are unsure how this would impact state AI laws.
Such a measure could preempt state AI laws that have already passed, such as California’s AB 2013, which requires companies to reveal the data used to train AI systems, and Tennessee’s ELVIS Act, which protects musicians and creators from AI-generated impersonations.
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But the moratorium’s reach extends far beyond these examples. Public Citizen has compiled a database of AI-related laws that could be affected by the moratorium. The database reveals that many states have passed laws that overlap, which could actually make it easier for AI companies to navigate the “patchwork.” For example, Alabama, Arizona, California, Delaware, Hawaii, Indiana, Montana, and Texas have criminalized or created civil liability for distributing deceptive AI-generated media meant to influence elections.
The AI moratorium also threatens several noteworthy AI safety bills awaiting signature, including New York’s RAISE Act, which would require large AI labs nationwide to publish thorough safety reports.
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