Senate Strips AI Moratorium Amid Sharp Bipartisan Opposition

The U.S. Senate passed Tuesday its version of President Donald Trump’s domestic tax and spending bill after stripping out a controversial 10-year federal ban on state regulations for artificial intelligence that faced bipartisan opposition.

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Inclusion of the AI moratorium in the so-called “One Big Beautiful Bill Act” triggered pushback from even the president’s loyal allies, including Rep. Marjorie Taylor Greene, R-Ga., who admitted she hadn’t read the bill before voting “yes” on a version with the ban and said she would have opposed it had she’d known. The Senate tried to soften the measure by cutting the moratorium to five years with exceptions, but it still faced sharp criticism from technology and security experts.

The move to drop the moratorium “shows just how unpopular it is among voters and state leaders of both parties,” said Alexandra Reeve Givens, president and CEO of the nonprofit Center for Democracy and Technology. In a statement sent to Information Security Media Group, Givens said Congress has failed “to step up to the plate” on regulating artificial intelligence and “shouldn’t prevent states from addressing the challenge” themselves.

“We hope that after such a resounding rebuke, Congressional leaders understand that it’s time for them to start treating AI harms with the seriousness they deserve,” she added.

Sen. Ted Cruz, R-Tex., first added the provision to the bill by tying the AI regulation moratorium to a $500 million federal investment fund for deploying AI. The bill can only include measures tied to spending or revenue to qualify for fast-track consideration, which the Republican Senate is using to meet Trump’s self-imposed July 4th deadline (see: AI Moratorium Stays in US Senate Budget Reconciliation Bill).

Sen. Marsha Blackburn, R-Tenn., and others shifted between supporting and opposing the revised measure. Blackburn eventually offered an amendment to remove the state ban on AI regulations. The Senate voted 99-1 to strike the provision. The bill now returns to the House after barely passing the Senate in a vote that required Vice President JD Vance to travel to the Capitol to cast a tie-breaking ballot.

While AI and Silicon Valley giants like OpenAI’s Sam Altman and Netscape co-founder Marc Andreessen expressed support for the moratorium, opposition came from a chorus of security analysts, consumer rights advocates, AI safety nonprofits and Republican senators like Josh Hawley, who called the provision “terrible policy” and “a huge giveaway to some of the worst corporate actors out there.” Senate Majority Leader John Thune expressed support for the provision just days before it was removed from the bill, suggesting in an interview with Axios that Congress take a “light touch” when it comes to regulating AI.

“We want to be the leaders in AI and quantum and all these new technologies,” Thune said. “And the way to do that is not to come in with a heavy hand of government, it’s to come in with a light touch.”

Without the provision, the president’s key domestic spending bill – which sets the stage for sweeping federal cuts to major U.S. programs – has no mandates stopping states or local governments from crafting their own AI policies. Congress still has not proposed a federal framework that could streamline enforcement and help ensure technology firms and Americans have access to safe, secure AI tools.

Despite worries that the moratorium would block states from putting AI safeguards in place, analysts say its collapse leaves companies facing the prospect of more than 1,000 state-level AI bills. “Having each state set its own AI rules creates a fragmented landscape, drives up compliance costs and leaves businesses in legal limbo,” said Darren Kimura, CEO and president of the analytics platform AI Squared. A moratorium wouldn’t have pushed smarter regulation, just more delays while risks kept growing, similar to the path cryptocurrency regulations have taken, he said.

Analysts said the House could, in theory, insert a new version of the AI moratorium, but it’s uncertain if any federal ban on state AI rules would get the backing needed to pass.