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Until now, the Trump administration's tax bill -- also called its "big, beautiful bill," which passed in the Senate on Tuesday -- included a rule that would prevent states from enforcing their own AI legislation for five years, and would withhold up to $500 million in funding for AI infrastructure if states don't comply.
On Tuesday, a day into a "vote-o-rama" that began Monday in an effort to pass Trump's tax bill before the July 4 holiday, the Senate voted 99 to one to remove the proposed moratorium on states' ability to regulate AI. The vote came just days after senators had amended the original proposal of a 10-year ban on enforcement to five years and added exemptions for state laws targeting unfair or deceptive practices and child sexual abuse material (CSAM).
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The initial version of the rule also made $42 billion in broadband internet funding dependent on states' compliance with the 10-year ban. The amended version only held $500 million in AI funding for ransom if states disobeyed.
The proposed moratorium
If passed, the rule would have prohibited states from enforcing AI legislation for five years and simultaneously put AI funding for states in limbo. It wouldn't have only affected in-progress legislation; laws that states had already passed would stay intact in writing but would effectively be rendered useless, lest states want to put their AI funding on the line.
In practice, this would create a patchwork imbalance across the country: Some states would have thorough legislation but no funding to advance AI safely, while others have no regulation but plenty of funding to keep up in the race.
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"State and local governments should have the right to protect their residents against harmful technology and hold the companies responsible to account," said Jonathan Walter, a senior policy adviser at The Leadership Conference's Center for Civil Rights and Technology.
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