Next steps after the Senate rejected an AI regulation moratorium

As part of the “One Big Beautiful Bill Act” signed by President Donald Trump last month, Congress debated advancing a federal moratorium on state regulations of artificial intelligence to prevent a patchwork of conflicting state laws on AI. During the legislative process, the Senate voted 99-1 to remove the state AI moratorium passed by the House. But the Senate also considered a narrower moratorium that took a more conservative approach to state-level AI regulation and could offer a politically-viable path to passing a balanced federal standard in the future.

The Senate’s proposal for an AI moratorium would have barred state regulation preventing the development of advanced AI models but permitted state rules focused on malicious applications. For example, the bill would have barred states from interfering with companies like Microsoft or Google as they develop large language models (LLMs) while still allowing states to regulate deceptive political videos created with AI.

The House’s original proposal sparked a bipartisan backlash that included many Republican governors who were concerned that it appeared to override state authority to regulate AI. A joint letter from 17 Republican governors argued that a moratorium “threatens to undo all the work states have done to protect our citizens from the misuse of artificial intelligence.”

The Senate’s revised and limited version of the moratorium aimed to preserve state governments’ flexibility to regulate harmful or malicious uses of AI, such as unauthorized “deceptive acts” like non-consensual sexually explicit deepfakes, while shielding the core development of AI technologies from fragmented state-by-state or premature restrictions.

The Senate’s amendment text, which was not included in the bill, would have reduced the House’s AI moratorium from 10 years to five and allowed states to enforce specific laws applicable to AI. Among the categories of state laws that were explicitly permitted under the proposed moratorium are those dealing with “unfair or deceptive acts or practices, child online safety, child sexual abuse material, rights of publicity, protection of a person’s name, image, voice, or likeness and any necessary documentation for enforcement, or a body of common law.” These laws may still apply to AI systems—but only if they do so “without undue or disproportionate burden…to reasonably effectuate the broader underlying purposes of the law or regulation.”

In practice, the proposed moratorium would have blocked state laws that target the development or deployment of foundational AI models, especially models created by well-resourced companies like OpenAI. For example, it would have likely preempted a reintroduction of California’s Senate Bill 1047, the Safe and Secure Innovation for Frontier Artificial Intelligence Models Act, which was passed but vetoed in 2024 by Gov. Gavin Newsom. That bill would have imposed strict safety requirements and allowed civil penalties against developers of large-scale AI models if their systems caused harm.

These types of state laws focus not on specific misuse of AI, but on the underlying technology itself, often singling out firms capable of training and releasing powerful models. The federal moratorium aimed to block such direct regulation of core AI capabilities while still allowing states to enforce laws addressing harmful outcomes.

One argument advanced by supporters of the proposed moratorium is that, without federal preemption, AI companies would be forced to design their products around the most restrictive state laws. This, they argue, could stifle innovation by making a state like California’s policy choices effectively the national policy. Vice President J.D. Vance described those concerns in a recent podcast interview with comedian Theo Von.

VANCE: So the idea is you use — you basically have a federal regulation that prevent — a federal regulation that prevents like California from having a super progressive set of regulations on artificial intelligence.

VON: Okay.

VANCE: That that’s the argument for it. The argument against it is that if the feds aren’t protecting artists, then you’re not going to be able to protect artists either. And so I, honestly, I don’t think the provision, to be honest with you, I don’t think that’s going to make it in the final bill, but I usually have a pretty strong view on most things. I can kind of go both ways on this because I don’t want California’s progressive regulations to control artificial intelligence.

The proposed moratorium on state AI regulations aimed to ensure a more uniform national approach, allowing for innovation in the core development of AI systems. While members of Congress have yet to introduce another legislative approach to federal AI standards, the failed Senate proposal could be a first step toward federal legislation that is nuanced in a way that will not hinder the growth of AI and can also garner political support.

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