Labor & Employment Law Daily Wrap Up, SENATE NEWS—Moratorium on state AI laws stripped from budget bill before passage, (Jul 8, 2025)
Senators vote 99-1 to remove controversial provision that would have barred enforcement of state laws regulating AI for 10 years.
A controversial provision of the budget reconciliation package known as the “One Big Beautiful Bill Act” was removed from the legislation before its passage last week, due to a bipartisan amendment to strip the provision, which passed by a vote of 99-1. Section 43201(e) of the House version of the bill (H.R. 1; passed by the House on May 22) contained a provision that would have restricted states or political subdivisions from enforcing any law or regulation limiting, restricting, or otherwise regulating AI models, AI systems, or automated decision systems entered into interstate commerce for a period of 10 years beginning on the date of the enactment of the Act. The version of the provision released by the Senate Commerce Committee on June 5 changed the moratorium by tying states’ compliance with it to their eligibility to receive funding under the Broadband Equity, Access, and Deployment (BEAD) program.
Further changes to the provision were floated by Senate Committee on Commerce, Science and Transportation Chair Ted Cruz (R-Tex.) before it was finally removed. The budget reconciliation measure passed the Senate on July 1, after a long series of votes on changes to the package, by a vote of 51-50, with Vice President JD Vance breaking the tie. The House agreed to the Senate’s amendment on July 3 by a 218-214 vote, and President Trump signed the legislation on July 4. Although the House-passed bill provided at Section one that “This Act may be cited as the ‘One Big Beautiful Bill Act,’” the short title was taken out of the Senate-passed version. On social media, Senate Democratic Leader Chuck Schumer (D-N.Y.) touted that he had “forced Republicans to delete their ridiculous bill name.” The measure is still widely referred to by its nickname, however.
During the flurry of votes on amendments to the massive bill on July 1, Senators Maria Cantwell (D-Wash.), ranking member of the Commerce Committee, and Senator Marsha Blackburn (R–Tenn.), a vociferous opponent of the moratorium from the beginning, co-sponsored an amendment to strip the provision. The amendment passed easily.
“The Senate came together tonight to say that we can't just run over good state consumer protection laws,” Senator Cantwell said. “States can fight robocalls, deepfakes and provide safe autonomous vehicle laws. This also allows us to work together nationally to provide a new federal framework on Artificial Intelligence that accelerates U.S. leadership in AI while still protecting consumers.”
Senator Blackburn said in a media release that she was pleased the moratorium had been stripped from the legislation. “Until Congress passes federally preemptive legislation like the Kids Online Safety Act and an online privacy framework, we can’t block states from standing in the gap to protect vulnerable Americans from harm – including Tennessee creators and precious children,” she said.
The moratorium had been strongly criticized by senators from both parties. At a May 21 hearing held by the Judiciary Committee Subcommittee on Privacy, Technology, and the Law, titled “The Good, the Bad, and the Ugly: AI-Generated Deepfakes in 2025,” Senator Blackburn brought up a law in her home state that is aimed at protecting artists and musicians from the exploitation and theft of their identity from the use of AI technology. “Speaking to the states and their actions, I do want to mention that Tennessee passed the ELVIS Act [the “Ensuring Likeness, Voice, and Image Security Act of 2024,” Tenn. Code. Ann. Title 47, Chapter 25, Part 11], which is like our first generation of the NO FAKES Act [S. 1367, a proposed federal publicity rights law co-sponsored by Blackburn],” Blackburn said, “And we certainly know that, in Tennessee, we need those protections, and until we pass something that is federally preemptive, we can't call for a moratorium on those things.”
In a June 6 press release, Senator Cantwell said that the moratorium, in combination with reforms to the BEAD program proposed by Commerce Secretary Howard Lutnick, was a “one-two punch that ensures the broadband Americans desperately need will remain out of reach.” Cantwell’s July 1 press release on the amendment also says, “On June 27 and June 28, Sen. Cantwell’s office released statements and letters signed by hundreds of organizations and elected officials expressing their opposition to the AI moratorium.”
Senator Josh Hawley (R-Mo.) reportedly told Punchbowl News that he thinks the moratorium is a “bad idea.” Vice President JD Vance told podcaster Theo Von on June 7 that he thought the moratorium would not make it into the final version of the bill, and that he agreed with Senator Blackburn that the provision could negatively affect musicians and other creators.
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