/>iThe US House of Representatives has advanced a proposal that would prohibit states from enforcing any AI-related laws for a decade. While facing significant procedural hurdles in the Senate, this represents the most aggressive federal attempt yet to preempt state-level AI regulation.
Proposed Moratorium Framework
On May 22, 2025, the House of Representatives narrowly passed a budget reconciliation bill containing a provision that would ban states from enforcing AI laws for ten years. This followed the May 14, 2025, House Energy and Commerce Committee vote of 29-24 along party lines to advance the budget reconciliation bill containing sweeping AI preemption language. The provision, titled “Moratorium,” states, with limited exceptions, that “no State or political subdivision thereof 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.”
Scope of Impact
The moratorium would effectively prohibit state enforcement of regulations addressing:
- Algorithmic bias in employment or housing decisions;
- AI-generated deepfakes in political campaigns;
- Automated decision-making in healthcare or insurance;
- AI surveillance systems;
- Transparency requirements for AI use in consumer applications; and
- Data protection measures specific to AI systems.
Limited Exceptions
The proposal includes narrow exceptions for state laws that:
- Remove legal impediments to AI deployment;
- Streamline licensing, permitting, or zoning procedures;
- Impose requirements mandated by federal law;
- Apply generally applicable standards equally to AI and non-AI systems; and
- Impose reasonable, cost-based fees treating AI systems comparably to other technologies.
State and Industry Response
A bipartisan group of 40 state attorneys general, including Republicans from Ohio, Tennessee, Arkansas, Utah and Virginia have opposed the measure, calling it "sweeping and wholly destructive of reasonable state efforts to prevent known harms associated with AI."
Affected State Legislation
The moratorium would also impact numerous existing state AI laws such as:
- Illinois Artificial Intelligence Video Interview Act requiring disclosure of AI use in hiring;
- California SB-1001 requiring disclosure of chatbots in political campaigns;
- New York City Local Law 144 addressing algorithmic accountability in employment; and
- Maryland House Bill 1202 establishing AI bias auditing requirements.
Industry Perspective
Major technology companies have advocated for unified federal approaches, with OpenAI CEO Sam Altman testifying that a "patchwork" of AI regulations "would be quite burdensome and significantly impair our ability to do what we need to do."
Procedural and Constitutional Challenges
Senate Hurdles
The moratorium faces significant obstacles in the Senate, where the “Byrd Rule” requires that budget reconciliation provisions focus primarily on budgetary rather than policy matters.
Also, some Senate Republicans are expressing skepticism about a proposed moratorium on state AI governance, arguing that states need to maintain their ability to protect consumers until Congress passes comprehensive federal legislation. Senator Marsha Blackburn (R-Tenn.) gave voice to this position by pointing to Tennessee's recent law protecting artists from unauthorized AI use of their voices and images, asserting that states cannot halt such protective measures while awaiting federal action that would preempt state laws.
Constitutional Considerations
The proposal also raises several constitutional questions regarding Commerce Clause authority, Tenth Amendment state police powers, and due process requirements for AI systems affecting citizens.
Bipartisan House Task Force
Relatedly, the Bipartisan House Task Force Report on AI published during the 118th Congress previewed challenges with preemption: “Preemption of state AI laws by federal legislation is a tool that Congress could use to accomplish various objectives. However, federal preemption presents complex legal and policy issues that should be considered.”
Business Implications
Regulatory Uncertainty
Organizations should expect continued tension between federal and state authorities over AI governance, regardless of the ultimate outcome of this specific proposal. Even without state AI laws, AI-driven decisions remain subject to existing anti-discrimination laws, including the ADA and Title VII.
Governance Recommendations
Organizations should implement comprehensive AI governance practices including:
- Bias audits across AI systems;
- Robust human oversight mechanisms;
- Documentation of AI decision-making processes; and
- Appropriate vendor contract provisions.
International Considerations
The moratorium could also affect US competitiveness by preventing regulatory innovation that might inform international standards and reducing the democratic legitimacy of US AI governance approaches.
Looking Ahead
The proposal represents fundamental tensions between federal coordination and state-level regulatory innovation during a critical period of AI development. Whether this specific measure succeeds or fails, organizations must prepare for ongoing regulatory uncertainty while implementing strong AI governance practices.
The intersection of federal preemption efforts and rapidly evolving AI capabilities suggests continued policy volatility in this area, requiring flexible compliance frameworks that can adapt to changing requirements. Organizations should monitor both federal and state AI legislative developments while maintaining robust internal governance frameworks regardless of regulatory outcomes.
“In an ideal world, Congress would be driving the conversation forward on artificial intelligence, and their failure to lead on AI and other critical technology policy issues—like data privacy and oversight of social media—is forcing states to act,” said Colorado Attorney General Paul Weiser.
