IP Law Daily, TECHNOLOGY/INTERNET NEWS: Back to the drawing board for ‘temporary pause’ on state AI laws?, (Jun 27, 2025)
Parliamentarian has reportedly asked for a rewrite to clarify 10-year moratorium’s impact on broadband funding program.
The Senate Parliamentarian has asked the Commerce Committee to rewrite the ten-year moratorium on state AI laws in the latest markup of the “One Big Beautiful Bill Act,” according to ranking committee member Maria Cantwell (D-Wash.). Online news outlet Politico reported on June 26 that Cantwell told a Politico reporter that Parliamentarian Elizabeth MacDonough is requesting another rewrite of the provision containing the moratorium to make clear that compliance with the “temporary pause” on state laws regulating AI would not affect the $42 billion allocated for broadband funding and would only implicate a new $500 program included in the most recent Commerce Committee version of the text. “That’s what was a last night request from the parliamentarian,” Politico reported that Cantwell said. “Yeah, that’s what’s going on.”
Although it was reported in a June 21 press release by Budget Committee ranking member Jeff Merkley (D-Or.) that the Parliamentarian had determined that the moratorium is not subject to the Senate’s “Byrd Rule,” the Commerce Committee, in text released by committee chair Ted Cruz (R-Tex.) on June 25, made changes aimed at avoiding the rule’s reach. The Byrd Rule (Congressional Budget Act of 1974, Section 313; 2 U.S.C. § 644) prohibits including non-budgetary provisions deemed “extraneous” in budget reconciliation legislation. Provisions flagged under the rule can still be passed, but they would require 60 votes rather than a bare majority.
Section 43201(e) of the bill (H.R. 1; version passed by the House on May 22) contained a provision that would restrict 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. Legislators from both parties have criticized this provision, with some signaling that they would withhold their vote for the budget package unless it is removed.
The version of the provision released by the Senate Commerce Committee on June 5 limited the reach of the moratorium by tying states’ compliance with it to their eligibility to receive funding under the Broadband Equity, Access, and Deployment (BEAD) program. BEAD is a federal initiative that provides $42.45 billion to expand high-speed Internet access across the United States. According to a June 21 press release by the Senate Budget Committee’s ranking Democrat, Jeff Merkley (D-Or.), the Senate Parliamentarian determined that the moratorium is not subject to the Senate’s “Byrd Rule,” which means it can be passed by a bare majority.
The June 25 updated text contains an additional $500 million of funding for BEAD to support development and deployment of AI models or systems or automated decision systems and underlying infrastructure. States would only be able to receive a portion of that funding if they “[t]emporarily pause the enforcement of any law or regulation of that entity or political subdivision that limits, restricts, or otherwise regulates AI models, AI systems, or automated decision systems entered into interstate commerce over the next 10 years.” Previous versions—including the House-passed version of the bill—used the term “moratorium” instead of “temporary pause.”
A one-pager on the text’s provisions regarding AI deployment says that the 10-year pause is “consistent with the budget window to spend the new federal AI investment” and “ensures a state that voluntarily receives federal AI funding is not hindering AI deployment through needless state regulation.” The one-pager explains that a state choosing not to receive some of the $500 million funding would not have to adhere to the “temporary pause” requirements. “In other words, this pause in AI regulation is voluntary and not a federal mandate on states,” the document says.
A “Talking Points & Messaging” page released along with the June 5 draft characterized the requirement as “forbid[ding] states collecting BEAD money from strangling AI deployment with EU-style regulation.” A new page makes a slight change in wording, stating that the revised text “[f]orbids states collecting new BEAD money from strangling AI deployment with EU-style regulation” (emphasis added).
However, some Democrats, including Senator Cantwell, assert that the amended moratorium provision would still affect the entire $42 billion BEAD program and therefore violate the Byrd Rule. A June 25 press release contends that the redrafted text is “the same as” the earlier text. “The newly released language by Chair Cruz continues to hold $42 billion in BEAD funding hostage, forcing states to choose between protecting consumers and expanding critical broadband infrastructure to rural communities,” Senator Cantwell said. “Forty State Attorneys General oppose the AI moratorium that would leave every American vulnerable to AI-assisted fraud, theft and abuse at a time when we should be strengthening consumer protections.”
According to Cantwell, a social media post by Secretary of Commerce Howard Lutnick indicates the intention to condition the full $42 billion of BEAD money on compliance with the moratorium. In this post, Lutnick said, “By creating a national standard for AI, the bill ends the chaos of 50 different state laws and makes sure Americans can develop cutting-edge tech for our military, infrastructure, and critical industries—without interference from anti-innovation politicians.”
MainStory: TopStory AINews TechnologyInternet FedTracker IP GCNNews