Ban on State AI Regulations Can Remain in ‘Big Beautiful Bill’

A proposed ban on state-level artificial intelligence (AI) regulation will remain in President Donald Trump’s tax and spending bill.

As Bloomberg News reported Friday (June 20), the Senate parliamentarian has ruled the provision is in line with the special budgetary process Republicans are using to consider the legislation, marking a win for tech companies hoping to curb AI rules.

The Senate version of the AI moratorium, the report noted, would keep federal broadband funding from states if they enforce AI regulations.

According to Bloomberg, the provision will likely face a challenge on the Senate floor, with both Democrats and some Republicans pushing back on the proposal. The vote on the bill — known as the “One Big Beautiful Bill” — is expected to come by July 4.

“We do not need a moratorium that would prohibit our states from stepping up and protecting citizens in their state,” Sen. Marsha Blackburn, R-Tenn., said earlier this month.

As covered here last week, the ban on state AI regulations has the support of some of the country’s biggest tech companies.

“This is the right policy at the right time for American leadership,” Chip Pickering, a lobbyist for a trade association representing firms like Meta and Google, told the Financial Times. “But it’s equally important in the race against China.”

And Steve Schmidt, chief security officer for Amazon and AWS, told Bloomberg News last week that government involvement in AI could limit his company’s work in the sector.

“The tension with regulation of any kind is that it tends to retard progress,” Schmidt said. “So the way we tend to focus on standards is to let the industry figure out what the right standards are, and that will be driven by our customers.”

But critics say this effort is Big Tech’s way of holding onto its dominant place in the race for artificial general intelligence (AGI), or AI models that meet or exceed human abilities.

Last month, a group of 140 organizations wrote to the leaders of both parties in the House of Representatives, asking them to reject the 10-year ban.

“This moratorium would mean that even if a company deliberately designs an algorithm that causes foreseeable harm — regardless of how intentional or egregious the misconduct or how devastating the consequences — the company making that bad tech would be unaccountable to lawmakers and the public,” the letter read.

Also Friday, the parliamentarian ruled that a Republican provision of the bill that would have eliminated funding for the Consumer Financial Protection Bureau (CFPB) could not be included in the legislation.