A significant shift in the approach to AI governance in the United States is taking shape as Republican Senators Ted Cruz and Marsha Blackburn have agreed to a revised federal moratorium on state regulation of artificial intelligence.
The compromise, announced on Sunday, June 30, would reduce the originally proposed 10-year ban to five years and create exceptions allowing states to adopt rules on child online safety and protecting artists' image or likeness. However, these state regulations must not impose what the amendment describes as an "undue or disproportionate burden" on AI development.
The provision is part of the broader Republican budget reconciliation bill, commonly referred to as the "One Big, Beautiful Bill." Senate Commerce Committee Chair Ted Cruz initially proposed securing compliance by blocking states that regulate AI from accessing a $42 billion broadband infrastructure fund. A revised version would instead only restrict states regulating AI from tapping a new $500 million fund specifically designated for AI infrastructure.
U.S. Commerce Secretary Howard Lutnick has voiced support for the revised measure, calling it a "pragmatic compromise" and urging Congress to "keep America First in AI." Proponents argue that preventing a patchwork of state regulations is essential for American innovation and competitiveness against countries like China.
However, the compromise faces significant opposition. Senate Commerce Committee Ranking Member Maria Cantwell criticized the amendment, stating it "does nothing to protect kids or consumers" and is "just another giveaway to tech companies." She and Senator Edward Markey have filed an amendment to strip the entire provision from the bill. Critics argue the vague standard of "undue or disproportionate burden" would allow tech companies to challenge nearly any consumer protection law in court.
The debate highlights the ongoing tension between fostering AI innovation and establishing appropriate safeguards. With Congress having failed for years to pass meaningful federal AI regulations, states have begun filling the void with their own laws, such as Tennessee's ELVIS Act, which protects songwriters and performers from unauthorized AI-generated imitations. The Senate is expected to vote on the measure as part of the budget reconciliation process in early July.