After months of debate, a plan in Congress to block states from regulating artificial intelligence was pulled from the big federal budget bill this week. The proposed 10-year moratorium would have prevented states from enforcing rules and laws on AI if the state accepted federal funding for broadband access.
The issue exposed divides among technology experts and politicians, with some Senate Republicans joining Democrats in opposing the move. The Senate eventually voted 99-1 to remove the proposal from the bill, which also includes the extension of the 2017 federal tax cuts and cuts to services like Medicaid and SNAP. Congressional Republican leaders have said they want to have the measure on President Donald Trump's desk by July 4.
Tech companies and many Congressional Republicans supported the moratorium, saying it would prevent a "patchwork" of rules and regulations across states and local governments that could hinder the development of AI -- especially in the context of competition with China. Critics, including consumer advocates, said states should have a free hand to protect people from potential issues with the fast-growing technology.
"The Senate came together tonight to say that we can't just run over good state consumer protection laws," Sen. Maria Cantwell, a Washington Democrat, said in a statement. "States can fight robocalls, deepfakes and provide safe autonomous vehicle laws. This also allows us to work together nationally to provide a new federal framework on artificial intelligence that accelerates US leadership in AI while still protecting consumers."
Despite the moratorium being pulled from this bill, the debate over how the government can appropriately balance consumer protection and supporting technology innovation will likely continue. "There have been a lot of discussions at the state level, and I would think that it's important for us to approach this problem at multiple levels," said Anjana Susarla, a professor at Michigan State University who studies AI. "We could approach it at the national level. We can approach it at the state level, too. I think we need both."
Several states have already started regulating AI
The proposed moratorium would have barred states from enforcing any regulation, including those already on the books. The exceptions are rules and laws that make things easier for AI development and those that apply the same standards to non-AI models and systems that do similar things. These kinds of regulations are already starting to pop up. The biggest focus is not in the US, but in Europe, where the European Union has already implemented standards for AI. But states are starting to get in on the action.
Colorado passed a set of consumer protections last year, set to go into effect in 2026. California adopted more than a dozen AI-related laws last year. Other states have laws and regulations that often deal with specific issues such as deepfakes or require AI developers to publish information about their training data. At the local level, some regulations also address potential employment discrimination if AI systems are used in hiring.
"States are all over the map when it comes to what they want to regulate in AI," said Arsen Kourinian, a partner at the law firm Mayer Brown. So far in 2025, state lawmakers have introduced at least 550 proposals around AI, according to the National Conference of State Legislatures. In the House committee hearing last month, Rep. Jay Obernolte, a Republican from California, signaled a desire to get ahead of more state-level regulation. "We have a limited amount of legislative runway to be able to get that problem solved before the states get too far ahead," he said.
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