Republican senators on the Commerce Committee have retained a 10-year ban on state-level artificial intelligence legislation within the latest iteration of President Donald Trump’s extensive budget proposal. Concerns are mounting among legislators and advocacy groups regarding the potential implications for consumer protections due to the expansive language used in the provision.
Proponents of this measure, which passed in the House as part of the “One Big Beautiful Bill Act,” argue that it will prevent AI companies from being hindered by a complex array of state regulations. Critics, however, caution that if the provision remains intact and overcomes various congressional hurdles, major technology firms could evade state regulations for an extended period, likely without the establishment of corresponding federal standards.
Rep. Ro Khanna (D-CA), representing Silicon Valley, expressed his apprehensions in an interview with Technology News, noting, “This moratorium effectively bars every state from implementing fundamental regulations intended to protect consumers and workers.” He highlighted that the language included in the House bill could impede efforts to regulate social media platforms and address issues like algorithmic discrimination or the proliferation of misleading AI-generated content. “This would essentially allow corporations to advance AI development unchecked, undermining protections for consumers, workers, and children.”
“One thing that is pretty certain … is that it goes further than AI”
Opponents of the moratorium point out its ambiguous language, which could have unforeseen consequences. “The provision’s phrasing regarding automated decision-making is so vague that we cannot ascertain all the state laws it might impact,” stated Jonathan Walter, a senior policy advisor with the Leadership Conference on Civil and Human Rights. He further emphasized a consensus that the implications may extend beyond just AI.
According to Walter, this could encompass accuracy requirements and independent evaluations for facial recognition systems in states like Colorado and Washington, as well as provisions related to data privacy legislation across various states. An assessment by the nonprofit organization Americans for Responsible Innovation (ARI) indicated that regulations targeting social media, such as New York’s “Stop Addictive Feeds Exploitation for Kids Act,” might be inadvertently nullified by the provision. Travis Hall from the Center for Democracy and Technology stated this text would prevent “basic consumer protection laws from being applied to AI systems,” potentially even interfering with state-imposed restrictions on AI usage.
The Senate’s new draft introduces further complexities. It no longer simply bans state actions but ties funding for state broadband projects to compliance with the established 10-year moratorium. Additionally, it now includes provisions related to state criminal laws.
While supporters contend the moratorium’s scope may not be as extensive as critics suggest, J.B. Branch from Public Citizen argues that competent legal teams within large tech firms will interpret the legislation broadly, aligning with its intended message.
Khanna mentioned that some legislators might not fully grasp the extensive implications of the moratorium. He pointed out, “I don’t believe they’ve considered how far-reaching this provision is and its detrimental effects on consumer protection against automation.” Following the House’s approval of the bill, even Rep. Marjorie Taylor Greene (R-GA), a firm Trump supporter, expressed regret at not opposing the legislation because of the AI moratorium’s inclusion.
California’s SB 1047 is often cited as an example of what industry advocates deem excessive regulation. This bill aimed to set safety standards on large AI systems but was ultimately vetoed by Governor Gavin Newsom after significant lobbying by OpenAI and other stakeholders. Companies such as OpenAI, whose CEO Sam Altman previously called for industry oversight, have recently shifted focus toward dismantling regulations they argue impede their competitiveness in the global AI landscape.
“What you’re really doing with this moratorium is creating the Wild West”
Khanna acknowledged that while some state regulations may be inadequately designed, the priority should be the establishment of effective federal guidelines to maintain an edge over China in AI development. He asserted, “Instead of imposing a moratorium, the focus should be on crafting sound federal regulations.” Advocates like Branch highlight that restricting states from implementing protective measures is irresponsible, especially in a climate of swift AI advancements. Khanna cautioned that without a guaranteed framework from Congress for a decade, there is little motivation for legislators to create their own regulations. “This moratorium effectively paves the way for unregulated AI development,” he stated.
Prior to the release of the Senate Commerce text, numerous Democratic representatives from California, led by Rep. Doris Matsui, sent a letter expressing opposition to the AI moratorium. They urged Senate leadership to eliminate the provision, warning that it exposes Americans to potential risks as AI technologies proliferate across various industries. They noted the broad definition of AI contained in the bill, which “arguably encompasses all forms of computer processing.”
Over 250 legislators from across the nation have also called for Congress to reject this provision. In their letter, they emphasized the advantage of state and local governments in responding swiftly to the rapidly evolving AI technology landscape, noting, “Legislation that stifles this democratic dialogue would hinder the development of effective governance practices just when experimentation is essential.”
Khanna underscored the critical nature of timely AI regulation, warning that neglecting to act could have broader consequences than major internet policies like net neutrality. “The ramifications will extend beyond internet structure,” he stated. “It will affect jobs, the role of algorithms in social media, and touch on all aspects of daily life, allowing a select few to benefit from AI advancements without accountability to the public interest.”
