Since there’s no central federal oversight of AI, states are left to create their own laws, leading to a patchwork of regulations. The bill’s AI provision states that “no state or political subdivision may enforce any law or regulation regulating artificial intelligence models, artificial intelligence systems, or automated decision systems.” 

The measure would halt state-level oversight of AI for 10 years, barring enforcement of any existing or forthcoming laws. The section of the bill includes the ban alongside a $500 million funding allocation over that time period aimed at modernizing government operations with AI and automation. 

This language could block oversight of everything from widely used commercial AI like ChatGPT to algorithms that influence hiring or housing decisions. OpenAI, Alphabet Inc.’s Google, and Meta Platforms Inc. are among the companies warning that state-level AI regulations could hinder the growth of the emerging technology.

So far this year, more than 45 states plus Puerto Rico have introduced upward of 550 bills concerning AI, according to the National Conference of State Legislatures, and that total is expected to grow.

Utah, Maryland, and Florida have already passed dedicated AI oversight laws. Currently, 16 AI-related bills introduced last year remain under review in seven states and Puerto Rico, while more than a dozen new proposals have already been introduced in state legislatures across the country in 2025.

Those backing the moratorium argue that a mix of state laws can create headaches and extra hassle for tech firms trying to operate in multiple places.

“Imagine how difficult it would be for a federal agency that operates in all 50 states to have to navigate this labyrinth of regulation when we potentially have 50 different states going 50 different directions on the topic of AI regulation,” Rep. Jay Obernolte (R-CA) said during a House Energy and Commerce Committee markup. 

“This is exactly the same circumstances that we are putting private industry in as they attempt to deploy AI,” he added.

However, critics argue the provision could leave the nation without any enforceable AI regulations. Rep. Jan Schakowsky (D-IL) cautioned that it would give tech companies “free rein to take advantage of children and families.”

“This ban will allow AI companies to ignore consumer privacy protections, let deepfakes spread, and allow companies to profile and deceive customers using AI,” she said.

Dozens of state attorneys general from both parties sent a letter to Congress earlier this month to voice their opposition to the bill.

“AI brings real promise, but also real danger, and South Carolina has been doing the hard work to protect our citizens,” South Carolina Attorney General Alan Wilson, a Republican, said in a statement. “Now, instead of stepping up with real solutions, Congress wants to tie our hands and push a one-size-fits-all mandate from Washington without a clear direction. That’s not leadership, that’s federal overreach.”

The congressional resistance to state-driven AI rules reflects a wider effort spearheaded by the Trump administration to prioritize accelerating AI innovation. So far, the current administration’s approach to regulation closely mirrors that of many tech companies, which claim that regulation could hinder innovation. During President Joe Biden’s tenure, the White House rolled out an AI Bill of Rights framework that urged state agencies to assess how AI was being used, consider the risks it might pose, and invest in training staff to better understand the technology.

Although the provision would have a broad impact if passed, it faces slim chances in the Senate, where parliamentary procedures could prevent it from being included in the bill. Several lawmakers are pointing to the potential that it likely would fail to clear the Byrd Rule that bars “extraneous matters” from reconciliation bills, specifically those that do not “change outlays or revenues.” Whether the moratorium violates the Byrd Rule will be up to the Senate parliamentarian to decide.

“That sounds to me like a policy change. I’m not going to speculate what the parliamentarian is going to do but I think it is unlikely to make it,” Sen. John Cornyn (R-TX) said after the House Energy and Commerce Committee’s markup earlier this month.

While Republicans mostly backed the provision during a House subcommittee hearing on May 21, a pair of high-profile GOP senators have recently voiced opposition to the proposed ban. 

Sen. Marsha Blackburn (R-TN) pushed back on the idea of a ban during a recent hearing on the No Fakes Act, a bipartisan bill she co-sponsored that would create federal protections for artists’ voices, likenesses, and images against unauthorized AI-generated deepfakes.

“We certainly know that in Tennessee, we need those protections,” Blackburn said, discussing Tennessee’s ELVIS Act, a version of her proposal at the local level. “And until we pass something that is federally preemptive, we can’t call for a moratorium.”

Sen. Josh Hawley (R-MO) also criticized the proposed ban during a recent interview with Business Insider.

“I would think that, just as a matter of federalism, we’d want states to be able to try out different regimes that they think will work for their state,” Hawley said. “And I think in general, on AI, I do think we need some sensible oversight that will protect people’s liberties.”

While the measure may not survive in the final version of the bill, its presence underscores where key Republicans stand, just weeks after tech executives urged Congress to establish federal AI rules and prevent a fragmented system of state-level regulations.

At a Senate Judiciary subcommittee hearing on AI oversight, Sen. Ted Cruz (R-TX) appeared to be sympathetic to a decade-long pause on state-level AI rules, describing it as a potential “learning period,” while addressing a panel that included executives from several major tech firms. 

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“Would you support a 10-year learning period on states issuing comprehensive AI regulation, or some form of federal preemption to create an even playing field for AI developers and employers?” the Texas senator asked Sam Altman, the CEO of OpenAI.

Altman replied, “I’m not sure what a 10-year learning period means, but I think having one federal approach focused on light touch and an even playing field sounds great to me.”