A controversial federal proposal could prevent U.S. states and local governments from regulating artificial intelligence for the next decade. Senator Ted Cruz and a group of influential legislators are working to ensure the measure stays included in a comprehensive Republican-led budget bill, known as the “Big Beautiful Bill,” which faces a critical deadline ahead of the July 4 holiday.
Supporters, including tech industry figures such as OpenAI’s Sam Altman, Anduril’s Palmer Luckey, and venture capitalist Marc Andreessen, argue that state-level regulations create a confusing “patchwork” that would hinder American innovation, particularly as global competition with China intensifies.
Opponents span a broad coalition of Democratic lawmakers, numerous Republicans, consumer protection activists, labor unions, AI safety advocates, and influential industry leaders such as Anthropic CEO Dario Amodei. Critics warn that blocking states from legislating AI safety would embolden powerful tech companies to operate with minimal oversight, potentially exposing consumers to exploitation and harm.
Arguing against the provision, a coalition of 17 Republican governors recently addressed Senate Majority Leader John Thune and House Speaker Mike Johnson, urging the removal of what has been termed the “AI moratorium” from the forthcoming budget reconciliation bill. They contend that the measure infringes on states’ rights and effectively ties their hands in protecting residents.
The proposal aims specifically to prohibit states and communities from enacting or enforcing any regulations governing AI models or automated decision systems for ten years. If passed, it would nullify existing progressive state laws, notably California’s AB 2013, which mandates transparency around AI training data, and Tennessee’s ELVIS Act, designed to guard artists against AI-generated impersonations. It could also derail laws in other states related to deepfake media aimed at election interference among other targeted protections.
Moreover, the moratorium could halt important pending AI restrictions, notably New York’s RAISE Act, which compels large AI companies to publish thorough safety evaluations before deploying systems commercially.
To integrate the AI moratorium into the budget measure, Cruz deftly associated it with federal funding conditions, specifically tying state compliance to the $42 billion Broadband Equity Access and Deployment (BEAD) program. Despite assurances from Cruz about limiting this requirement only to new, additional funding, critics like Sen. Maria Cantwell argue the language is crafted so ambiguously it could threaten already committed broadband investments.
OpenAI’s Global Affairs Chief Chris Lehane argued publicly that the scattered approach to AI laws weakens U.S. global competitiveness. Sam Altman echoed similar concerns, highlighting the difficulty for businesses attempting to comply with fragmented state legislation. Altman also voiced skepticism about lawmakers’ ability to keep pace with rapidly advancing AI technology.
However, AI consumer advocates like Emily Peterson-Cassin from Demand Progress reject those arguments, stating powerful multinational tech companies manage complex regulatory environments all the time, making claims about state law complexity a false excuse for avoiding oversight.
Industry figures opposing the moratorium, such as Anthropic’s Amodei, have openly criticized the bluntness of the federal provision. He argues that the rapid progression of AI makes a decade-long moratorium inappropriate. Instead, he has urged collaboration between government and companies on meaningful, realistic safety and transparency standards.
Significant bipartisan opposition has emerged against the moratorium as several Republicans, including Sen. Josh Hawley, Sen. Marsha Blackburn, and Rep. Marjorie Taylor Greene, have spoken out citing concerns over states’ rights and consumer protection.
Polling reveals that a clear majority of Americans favor stronger federal oversight of AI, underscoring public anxiety about inadequate governance of powerful technology.
The proposal now faces renewed uncertainty. Reports indicate Senate members are preparing for heated debates and amendment votes, including one expected to challenge the AI moratorium directly. A preliminary Senate vote on the entire “Big Beautiful Bill” is reportedly scheduled imminently.
