House budget bill would put 10-year pause on state AI regulation

States would be barred from enforcing new laws or regulations on artificial intelligence for 10 years under bill text pending in the U.S. House, although it’s unclear if the measure can survive.

As part of the budget reconciliation process — described by President Donald Trump as a “big, beautiful bill” that contains many of his and Republicans’ legislative priorities — the House Energy and Commerce Committee has included language in its section that would impose the 10-year state AI moratorium.

Per the bill text, released late Sunday night and marked up on Tuesday afternoon by the committee, “no State or political subdivision thereof may enforce any law or regulation regulating artificial intelligence models, artificial intelligence systems, or automated decision systems during the 10- year period beginning” after its passage. Committee Democrats quickly slammed the provision.

“This ban will allow AI companies to ignore consumer privacy protections, let deepfakes spread, and allow companies to profile and deceive consumers using AI,” Rep. Jan Schakowsky, an Illinois Democrat who is ranking member of the committee’s subcommittee on commerce, manufacturing and trade, said in a statement. “After stopping comprehensive national privacy from passing last year, Republicans are going after states and leaving consumers unprotected online.”

It is unclear if the language would pass muster with the Senate, which could find that it violates the Byrd Rule, a procedural rule that limits the number of extraneous provisions included in reconciliation legislation.

But its inclusion in the reconciliation package comes as states have increasingly looked to regulate AI themselves in the absence of Congressional action. Those regulatory efforts have taken different forms, with some states looking to have strong guardrails while others have sought to be more hands-off, fearing that too much regulation could stifle innovation and economic development. Some leaders in Congress have warned of a “patchwork” of AI regulation, and want to take the issue on, but state officials want to keep working themselves.

"States have not had the luxury of waiting on federal action on AI policy over the last few years,” Alex Whitaker, director of government affairs at the National Association of State Chief Information Officers, said in an email. “As a result, they have forged ahead in creating their own AI standards that meet their unique needs. Language preventing them enforcing these provisions undermines their efforts to deliver services to their citizens and ensure responsible data protections.”

Others warned of dire consequences if a 10-year moratorium on AI regulation is enacted. Some state lawmakers have already looked to mitigate potential harms like deepfakes and misinformation, and preventing that work could be catastrophic.

“In the absence of federal protections, the proposal to block state and local action on AI for the next ten years places the development, deployment, and use of AI into a lawless and unaccountable zone,” Travis Hall, director for state engagement at the Center for Democracy and Technology, said in an email. “We can’t allow the race against China on AI to be a race to the bottom, and if Congress is unable or unwilling to step up it should not stand in the way of state or local lawmakers.”

And several outsiders compared the current AI quandary with social media and data privacy, both of which have gone largely unregulated at the federal level and so been allowed to forge its own norms while leaving lawmaking up to the states.

“Lawmakers stalled on social media safeguards for a decade and we are still dealing with the fallout,” Brad Carson, president of nonprofit Americans for Responsible Innovation, said in a statement. “Now apply those same harms to technology moving as fast as AI. Without first passing significant federal rules for AI, banning state lawmakers from taking action just doesn’t make sense. Ultimately, the move to ban AI safeguards is a giveaway to Big Tech that will come back to bite us.”

Proponents of the House plan argued that it is precisely because there is no national AI framework that a pause is necessary. Adam Thierer, a senior research fellow at the center-right think tank R Street Institute noted that over 1,000 AI-related bills are now pending in statehouses across the country. The time is right, he said, for Congress to step in.

“This represents a bold and much-needed move by Congress to protect the free flow of algorithmic commerce and speech,” Thierer said in an email. “A moratorium on new AI regulations will give this market time to grow and ensure American AI innovators can invest and compete against China and the rest of the world.  A patchwork of 50 different AI regulations would crush homegrown innovation. A national framework is desperately needed.”