IP Law Daily, STRATEGIC PERSPECTIVES: Massive spending bill’s restriction on state regulation of tech spurs debate, (Jun 6, 2025)
Senators on both sides of the aisle have signaled their reluctance to support the “One Big Beautiful Bill” while it includes a 10-year moratorium on enforcement of state laws regulating AI. A Strategic Perspectives article explores the legislative conflict.
Among the many topics addressed by the vast budget reconciliation bill known as the “One Big Beautiful Bill Act,” a relatively small provision in the subtitle on communications is sparking controversy over the conflict between federal policy encouraging development of artificial intelligence, on one hand, and states’ rights, on the other. Deep inside the 1,110-page House version of the measure (H.R. 1)—passed by the House on May 22—Section 43201 of the bill contains a subsection that would prohibit states from enforcing their own laws regulating AI for a period of 10 years. Proponents of the “moratorium” argue that it is needed to facilitate innovation and American superiority in this emerging field, and that it will prevent a “patchwork” of state laws from standing in the way of progress. Opponents argue that it will eliminate protections for consumers provided by hundreds of state statutes, during a time when the federal government has not (yet) stepped in to regulate AI tech.
The legislation has moved to the Senate, and committees there have begun making changes. Some senators in both parties have spoken out against the moratorium and have threatened to withhold their support for the bill unless the bar is removed, while others are maintaining their support for the Big Tech–friendly provision. Additionally, procedural concerns have been raised, in particular the prospect that the Senate Parliamentarian could flag the moratorium as violative of the “Byrd Rule,” which prevents the inclusion of non-budgetary and “extraneous” provisions in budget reconciliation packages.
A Strategic Perspectives article titled “Big Beautiful Bill’s moratorium on state AI laws faces foes as measure goes to Senate” examines the controversy and considers what may lie ahead in the coming weeks. The article is available here.
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