WASHINGTON, D.C. — On June 8, 2025, Senate Republicans introduced revisions to a sweeping tax bill that includes a contentious provision aimed at preventing states from regulating artificial intelligence (AI). This move seeks to establish a unified national framework for AI governance but has ignited debates over federal versus state oversight.
A Decade-Long Moratorium on State AI Laws
The provision in question proposes a 10-year moratorium on state and local governments enforcing any laws or regulations pertaining to AI models, systems, or automated decision-making tools. Initially passed by the House as part of the “One Big Beautiful Bill Act,” the measure aims to preempt a patchwork of state-level AI regulations that proponents argue could hinder innovation and create compliance challenges for businesses operating across state lines.
Senator Ted Cruz (R-TX), a vocal supporter, likened the proposal to the 1998 Internet Tax Freedom Act, which temporarily barred state and local taxation of internet access. “We need a consistent national policy to foster AI development and prevent regulatory fragmentation,” Cruz stated.
Bipartisan Opposition and Concerns Over Federal Overreach
Despite support from some Republicans, the provision has faced significant bipartisan opposition. Critics argue that it undermines states’ rights and hampers their ability to address AI-related issues such as algorithmic discrimination, privacy violations, and the spread of deepfakes.
Senator Edward Markey (D-MA) condemned the moratorium, stating, “This is a sledgehammer approach that prevents states from protecting their citizens against the potential harms of AI.” He has pledged to challenge the provision under the Senate’s Byrd Rule, which prohibits non-budgetary items in reconciliation bills.
Notably, Representative Marjorie Taylor Greene (R-GA) admitted she was unaware of the AI provision when she voted for the bill in the House. She has since expressed regret and vowed to oppose the bill if the moratorium remains, citing concerns over federal overreach and the erosion of states’ rights.
Industry Perspectives and Lobbying Efforts
The tech industry has shown mixed reactions to the proposed moratorium. While some companies favor a unified federal approach to avoid a complex regulatory landscape, others have raised concerns about the lack of accountability and oversight.
Dario Amodei, CEO of AI startup Anthropic, criticized the blanket ban as “too blunt” and advocated for a federal transparency standard requiring AI developers to disclose testing methods and risk mitigation strategies. He emphasized the importance of holding AI companies accountable for ensuring model safety before public deployment.
Additionally, scrutiny has intensified over potential lobbying efforts by companies like RealPage, a software firm accused of manipulating rent prices through algorithmic tools. Democratic senators are investigating whether RealPage lobbied for the AI regulation ban to avoid state-level scrutiny of its practices.
Procedural Hurdles and the Path Forward
The inclusion of the AI moratorium in the reconciliation bill faces procedural challenges in the Senate. The Byrd Rule could lead to the removal of the provision if it’s deemed extraneous to the federal budget. Given the narrow Republican majority in the Senate, any dissent within the party could jeopardize the bill’s passage.
Senator Marsha Blackburn (R-TN) expressed reservations, stating that state regulation of AI is necessary to protect consumers until comprehensive federal legislation is enacted. She highlighted Tennessee’s recent law protecting artists from unauthorized AI use as an example of effective state-level action.
As debates continue, the future of the AI regulation ban remains uncertain. Lawmakers from both parties are calling for a more nuanced approach that balances innovation with the need for oversight and accountability.
