House Budget Bill’s Moratorium on State AI Laws Could Undo A Range of Tech Regs, Critics Say

The budget reconciliation bill drafted by the House Energy & Commerce Committee includes a provision barring states from passing or enforcing AI regulations for a full decade following enactment. But critics say the measure, as written, would strip states of the ability to regulate a broad swath of technologies and automated systems beyond AI and could have “catastrophic consequences” for the public.

The AI provision would bar states from placing “legal impediments” — including on the design, performance, liability, and documentation – on AI and “automated decision systems.” The bill defines the latter category as “any computational process derived from machine learning, statistical modeling, data analytics, or artificial intelligence that issues a simplified output, including a score, classification, or recommendation, to materially influence or replace human decision making.”

According to Travis Hall, director for state engagement at the Center for Democracy & Technology, that language would “permeate digital services, from search results and mapping directions, to health diagnoses and risk analyses for sentencing decisions,” The Verge reported. By Hall’s count, states have proposed more than 500 technology-related laws, covering everything from chatbot safety for minors to deepfake restrictions to disclosures for the use of AI in political ads, that the budget bill would “unequivocally block.”

The proposal has drawn sharp criticism from Democrats in Washington and in state houses, as well as from consumer advocates.

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“This ban will allow AI companies to ignore consumer privacy protections, let deepfakes spread, and allow companies to profile and deceive consumers using AI,” Rep. Jan Schakowsky (D-Ill.), the top Democrat on the subcommittee on commerce, manufacturing, and trade, said in a statement provided to the Washington Post. It “once again shows that Republicans care more about profits than people.”

California assemblymember Rebecca Bauer-Kahane called the proposal “utterly unacceptable,” She added, “Congress has repeatedly failed to regulate the internet, social media, and privacy—they won’t meaningfully regulate AI either, creating a decade-long regulatory vacuum for Big Tech to exploit.”

That sentiment was echoed by Grace Geyde, AI policy analyst for Consumer Report’s. “Congress has long abdicated its responsibility to pass laws to address emerging consumer protection harms,” she said in a statement. “Under this bill, it would also prohibit the states from taking actions to protect their residents.”

Democratic resistance to the measure has also been stiffened by President Trump’s recent effort to take control of the Library of Congress and the U.S. Copyright Office following the release of the Copyright Office’s report on AI.

The budget bill’s prospects are uncertain. Under reconciliation rules, bills related to government spending can pass the Senate with a simple majority, rather than the 60 votes needed to break a filibuster. But other parts of the bill have drawn opposition even among House Republicans, including measures calling for steep cuts to Medicaid and the SNAP supplemental nourish program. With only a bare majority in the House, Republican leaders can only afford to lose two votes from their own party, assuming, as expected, all Democrats vote against the measure.

Some Republicans in the Senate, particularly those from rural states where many residents rely on Medicaid and SNAP, have also been lukewarm toward the House bill.

With time running out before Congress’s summer recess, and the end of the fiscal year looming in the fall, GOP leaders in the House and Senate can ill-afford to let the budget bill fail. So, changes are expected. Whether those changes reach the proposed state-level moratorium on technology regulations is an open question.