Moratorium On State AI Regulations Clears Key Procedural Hurdle in Senate

The Byrd Rule generally limits reconciliation bills to measures that directly affect federal spending or revenue, although there are many nuances. The Parliamentarian’s ruling means the moratorium provision can stay in the bill, at least for now.

The ruling does not guarantee that the provision ultimately will be approved, however. At least three Republican senators have expressed opposition to the provision. With a narrow three-vote majority in the chamber the loss of those members’ votes could endanger the overall bill.

The Senate version of the moratorium also differs from the version approved by the House. Even if the Senate version stays in the bill, therefore, it would still need to be approved by the House, where it, too, faces opposition within GOP ranks. State legislators and attorneys general also have lobbied heavily against the measure.

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That Parliamentarian also struck several other key provisions from the Senate bill, meaning anything that comes out of the Senate could differ significantly from the House-passed version. Were that to happen, it could trigger potentially long and difficult negotiations to reconcile the House and Senate versions.

Among the provisions struck down was a measure requiring states to share the cost of federal food benefits, known as the Supplemental Nutritional Assistant Program, or SNAP. The measure comprised a significant portion of the purported cost savings intended to offset the cost of extending the first Trump administration’s tax cuts. The bill was already projected by the non-partisan Congressional Budget Office to add as much as $3.1 trillion to the federal deficit over 10 years. Stripping out a major cost-savings measure could cause the deficit to balloon still further, drawing fire from budget hawks on both sides of Capitol Hill already concerned over the CBO score.

Related: As Congress Considers a Ban On State AI Regs, California and NY Forge Ahead

Also struck down was a provision to cut $6.4 billion in spending from the Consumer Financial Protection Bureau (CFPB), effectively shutting down the agency. The CFPB was created as part of the Dodd-Frank bill passed in the wake of the 2008 financial crisis, but has been a target of Republicans ever since.

The loss of major cost-savings measures could endanger the entire Big Beautiful Bill project, a centerpiece of President Trump’s economic agenda. Its goal is to make significant structural changes to federal spending, agency operations, and the federal government’s relationship with the states. Many of the bill’s individual provisions are highly controversial or unpopular, however, including those targeting SNAP and Medicaid with benefit cuts, which polling shows a majority of voters oppose. They would be very difficult politically to pass as standalone measures if stripped from the larger bill.

Senate Majority Leader John Thune (R-SD) has the authority to override the Parliamentarian’s ruling. As recently as May, he used that authority to force procedural changes that cleared the way for the Senate to vacate waivers granted by the Environmental Protection Agency under the previous administration that allowed California to set stricter vehicle emission standards than the federal levels.

As of Sunday, Thune’s office had not indicated whether he would seek to override any or all of the Parliamentarian’s rulings on the budget bill. That leaves the fate of the 10-year ban on state AI regulations up in the air for now, and likely to be left at the mercy of bi-cameral, intra-party wrangling over the cost-savings measures in the Big Beautiful Bill.