Senate Rejects Proposed AI Regulatory Moratorium

Action: On July 1, the Senate voted 99-1 to remove a moratorium on state regulation of artificial intelligence (AI) from the One Big Beautiful Bill Act (OBBBA). The differences between the House and Senate versions of the bill on this and other issues will need to be addressed before a final version of the reconciliation bill can be adopted.

Trusted Insights for What's Ahead^®

• Policymakers have been debating the roles of Federal and state lawmakers in regulating AI. While Congress has yet to pass a law establishing a regulatory framework for AI, a number of states, including California, Colorado, New York, Utah, Tennessee, and Texas have enacted AI governance and safety laws, and more are considering action.
• Tennessee’s ELVIS Act (“Ensuring Likeness Voice Image and Security Act”), for instance, which went into effect July 1, 2024, prohibits unauthorized use or deepfakes of artists’ voices and likenesses, updating Tennessee’s “right of publicity” statute.
• Some argue that a patchwork of differing regulatory standards across states will hinder innovation, while others contend that, in the absence of Federal regulations, states must act to protect their residents and businesses from potential harm from AI models.
• The House version of OBBBA passed on May 22 included a provision that would have established a 10-year moratorium on states and localities “limiting, restricting, or otherwise regulating artificial intelligence models.” Under the provision, only states that did not regulate AI would be eligible for Federal funding for broadband internet or AI infrastructure.
• In the Senate, a compromise that would have reduced the moratorium to five years and permitted exceptions for certain types of statutes including the ELVIS Act fell apart after bipartisan concerns that the language was overly broad and might have covered state regulations that Senators wished to exempt.
• Senator Marsha Blackburn (R-TN) stated that while she appreciated the efforts of Senate Commerce Committee Chair Ted Cruz (R-TX) “to find acceptable language that allows states to protect their citizens from the abuses of AI, the current language is not acceptable to those who need these protections the most.” (Blackburn has also supported legislation such as the proposed Kids Online Safety Act). The Senate ultimately voted 99-1 to remove the provision.