Proposed Federal Ban on State Regulation of AI

In this blog post, authors Stephen M. Anstey, Gregory P. Silberman, John C. F. Loving, and Michael J. Bresli (Kilpatrick Townsend) look into a surprising provision in the House Energy and Commerce Committee’s markup of the May 2025 reconciliation bill—nicknamed “One Big Beautiful Bill.” Among its sweeping measures, including tax reform and energy policy, the bill introduces a ten-year federal moratorium preventing states and local governments from enforcing most regulations on artificial intelligence (AI). The moratorium, outlined in Title IV, would preempt state-level governance of AI models and systems, with only narrow exceptions for laws that support AI deployment or infrastructure.

This provision arrives amid growing efforts by states like California, New York, and Illinois to regulate AI in areas such as transparency, data privacy, and algorithmic bias. If passed, the moratorium would significantly undermine those efforts by freezing state regulatory authority for a decade. However, its inclusion in the final legislation is uncertain. Because the bill is moving through reconciliation—a process meant for budget-related measures—the AI provision may be struck down under the Byrd Rule, which bars “extraneous” items unrelated to federal spending or revenue. Whether this sweeping preemption will remain or be ruled out by the Senate Parliamentarian remains a critical question as the bill advances…

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