Senate advances 10-year moratorium on state AI regulations

In the United States, states have increasingly sought to regulate artificial intelligence (AI) as its influence has grown in recent years. By June 2024, approximately 635 AI-related bills were considered across various states, with nearly 100 of these bills signed into law. As part of the response to this legislative trend, a federal law aimed at restraining the spread of local AI regulations is making its way through the legislative process. The U.S. Senate Committee on Commerce, Science, and Transportation unveiled budget reconciliation text on June 5 that includes a moratorium on state legislation concerning AI. The Senate parliamentarian, an impartial figure responsible for interpreting the Senate's rules, has determined that this proposed moratorium does not infringe upon the Byrd rule, which prohibits the inclusion of non-budgetary matters in reconciliation bills. Consequently, the provision can be approved with a simple majority vote. Importantly, the moratorium is tied to the stipulation that states must comply with it in order to receive funding from the Broadband Equity, Access, and Deployment (BEAD) program, established to ensure broader access to high-speed internet. However, despite the budget being authorized to allocate over $42 billion, widespread criticisms have arisen regarding BEAD's effectiveness, particularly as it had reportedly not connected anyone by mid-2024. The essence of the moratorium is to temporarily halt any state laws designed to limit or regulate AI in the context of interstate commerce for a decade following the enactment of the One Big Beautiful Bill Act. This has significant implications for states that already have stringent AI regulations, like New York's Responsible AI Safety and Education (RAISE) Act, which aims to ensure safety and education related to AI usage, and Colorado's Consumer Protections for Artificial Intelligence, both of which may face scrutiny or be undermined by the federal moratorium. Critics assert that such a moratorium could ultimately prevent states from implementing even basic consumer protections or anti-fraud measures tied to AI systems. While some opinions emphasize that existing laws around privacy and consumer protection will remain applicable, the moratorium raises questions about the extent to which states can enforce regulations on emerging AI challenges. The controversial nature of the provision has raised concerns regarding the potential removal of the moratorium from the reconciliation bill, threatening to create a fragmented regulatory environment for the AI industry. Should the provision be eliminated, it could lead to a complex landscape of varying local laws that could stifle innovation and impose significant costs on the burgeoning AI sector.