Trump's Bill: AI Regulation Ban?

AI Regulation Ban in Trump's Bill

A federal measure in the United States could remove individual states' power to regulate artificial intelligence (AI). This has faced opposition from lawmakers, civil society groups, and some in the tech industry.

The proposed ten-year state ban on AI regulation is part of US President Donald Trump’s ‘One Big Beautiful Bill Act (OBBBA) 2025,’ which the House of Representatives passed with a 215-214 vote. Known as HR.1, the Bill is a budget reconciliation bill covering taxes, immigration, and healthcare, supporting President Trump’s domestic policy plans. If the US Senate approves it and Trump signs it into law, the AI moratorium would significantly change US tech policy and potentially influence AI regulation in countries such as India.

Details of the AI Moratorium

The AI moratorium is in Section 43201 of the OBBBA, directing the Commerce Department to use funds to “modernize and secure Federal information technology systems through the deployment of commercial artificial intelligence” and require adoption to “increase operational efficiency and service delivery, automation, and cybersecurity.”

The 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 during the 10-year period beginning on the date of the enactment of this Act.” This would prevent US states from enforcing AI and ‘automated decision systems’ laws for 10 years.

According to the National Conference of State Legislatures (NCSL), the AI regulation pause by state legislatures could impact over 60 AI-related state laws already enacted. These laws address algorithmic discrimination and government AI use. The Verge reports that states are considering hundreds of other AI-related bills. Experts suggest the Bill's definition of ‘automated decision systems’ might also pause regulation on computing systems beyond AI.

Support and Opposition

Republican lawmakers, tech companies, business groups like the US Chamber of Commerce, and free-market think tanks like R Street Institute support the measure. They argue that a temporary pause on state-level AI regulation would boost innovation among US companies and help them compete with Chinese competitors in AI. OpenAI, the company behind ChatGPT, echoed these points in its submission to Trump’s AI Action Plan. It also advocated banning models from Chinese AI lab DeepSeek due to privacy and security concerns. Proponents add that the moratorium would address the complex mix of state AI laws, giving the US Congress time to create federal AI legislation.

Democrats and some Republicans, along with state lawmakers, attorneys general, AI experts, and civil society organizations focused on tech policy and consumer rights, oppose the AI moratorium. A concern is that the pause could give AI firms more freedom and expose consumers, especially vulnerable communities and children, to AI-related risks. Detractors also claim the loose definition of ‘automated decision systems’ could reverse state laws protecting people from deepfakes and hiring discrimination by automated systems. Marsha Blackburn, a Republican Senator, stated to The Washington Post, “We certainly know that in Tennessee we need those protections.”

Others, including Republican Senator Josh Hawley from Missouri, US, have opposed the AI moratorium on the grounds of federal overreach, telling 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. And I think in general, on AI, I do think we need some sensible oversight that will protect people’s liberties.”

An open letter by state lawmakers and AI expert Gary Marcus stated the moratorium might violate the Tenth Amendment of the US Constitution, which divides powers between federal and state governments. According to a Politico report, the letter read, “The federal government should not get to control literally every aspect of how states regulate AI — particularly when they themselves have fallen down on the job — and the Constitution makes pretty clear that the Bill as written is far, far too broad.”

OpenAI CEO Sam Altman told a US Senate Commerce Committee earlier this month that copying the European Union’s regulatory system would harm the tech industry. He supported a unified approach to AI regulation, saying, “It is very difficult to imagine us figuring out how to comply with 50 different sets of regulations. One federal framework that is light touch, that we can understand, and it lets us move with the speed that this moment calls for, seems important and fine.”

Scale AI founder and CEO Alexandr Wang also opposed state AI laws, stating in his testimony to a US House Committee, “We need, as an industry and as a country, one clear federal standard, whatever it may be. But we need one, we need clarity as to one federal standard and have pre-emption to prevent this outcome where you have 50 different standards.”

Anthropic’s CEO Dario Amodei has suggested he opposes the AI moratorium. As quoted by Wired during the Amazon-backed startup’s first developer conference last week, Amodei said, “If you’re driving the car, it’s one thing to say ‘we don’t have to drive with the steering wheel now.’ It’s another thing to say ‘we’re going to rip out the steering wheel, and we can’t put it back in for 10 years.’”

The OBBBA's future is uncertain as it moves to the US Senate, where Democrats and some Republicans may challenge the AI moratorium's inclusion in the budget package based on the Byrd Rule, which prohibits adding “extraneous” provisions in the budget reconciliation Bill.

Besides the pause on state AI laws, OBBBA also plans to phase out green energy tax credits for electric vehicle purchases and renewable energy projects like home refuelling infrastructure. The budget package also allocates billions of dollars to secure US borders using “ground detection sensors, integrated surveillance towers, tunnel detection capability, unmanned aircraft systems (UAS), and enhanced communications equipment.”