A sweeping provision buried deep in the Republican-led budget bill, the Opportunity and Balanced Budget Blueprint (OBBB), has ignited backlash across party lines after it was revealed that it would prohibit all U.S. states from enacting or enforcing any laws regulating artificial intelligence for the next ten years.
The measure, largely unnoticed during the bill’s initial passage, has triggered concern from lawmakers, civil rights organizations, and policy experts who say it effectively guts state-level authority, granting tech companies a decade-long free pass to develop and deploy AI systems without local oversight — even as their use grows in sensitive areas like hiring, education, law enforcement, and child safety.
Even some Republicans who voted in favor of the bill have now expressed regret, saying the AI moratorium was not adequately disclosed.
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“Full transparency, I did not know about this section on pages 278–279 of the OBBB that strips states of the right to make laws or regulate AI for 10 years,” said Rep. Marjorie Taylor Greene, in a statement on Thursday.
“I am adamantly OPPOSED to this and it is a violation of states’ rights, and I would have voted NO if I had known this was in there… We have no idea what AI will be capable of in the next 10 years, and giving it free rein and tying states’ hands is potentially dangerous.”
Greene added that she expects the Senate to strip the clause during its revision process and warned she would not support the final version of the bill if the language remains.
“We should be reducing federal power and preserving state power — not the other way around. Especially with rapidly developing AI that even the experts warn they have no idea what it may be capable of.”
A Decade Without Guardrails
The AI moratorium provision, described in just a few paragraphs toward the back of the nearly 300-page bill, bars states from introducing, enforcing, or maintaining any existing or future legislation aimed at regulating artificial intelligence.
The measure’s defenders, led by the U.S. Chamber of Commerce and supported by several leading AI firms, argue the move is necessary to prevent a chaotic “patchwork” of conflicting rules across the 50 states. They say the AI sector needs regulatory clarity and freedom from compliance burdens in order to maintain U.S. global leadership.
But critics say the provision is an overreach of federal power, and dangerously shortsighted.
The coalition of 77 advocacy organizations, including Common Sense Media, the Center for Humane Technology, and Fairplay, issued a scathing letter to congressional leadership this week demanding the clause be removed.
“By wiping out all existing and future state AI laws without putting new federal protections in place, AI companies would get exactly what they want: no rules, no accountability, and total control,” the letter reads.
At present, no comprehensive federal legislation exists to address AI risks — and none is expected anytime soon. If the moratorium passes, Americans would be left without AI-specific protections until 2035, aside from the costly option of suing companies for harm after the fact.
States on the Frontlines — and Now Sidelined
Over the last year, several states have moved quickly to address immediate and emerging risks posed by artificial intelligence. Tennessee passed the ELVIS Act to outlaw unauthorized AI voice impersonations, especially those affecting musicians. In California, two proposed bills would regulate AI chatbot platforms targeting teens, with one banning “anthropomorphic AI companions” designed to foster emotional dependence or manipulate children.
Lawmakers in New York, Massachusetts, and Illinois are also weighing AI-related bills covering areas from employment discrimination to facial recognition surveillance.
All of those state-level initiatives would be nullified under the federal moratorium.
A Familiar Pattern of Corporate Influence
Advocates like Camille Carlton, policy director at the Center for Humane Technology, say the federal AI moratorium fits into a long-standing pattern in tech policy: corporations oppose regulation at the state level, call for federal rules instead, then turn around and lobby Congress to stall or weaken those very laws.
“What we’re seeing is déjà vu. This is exactly how Big Tech delayed and diluted every major effort to protect consumers — from digital privacy to kids’ safety,” said Carlton. “Now the same playbook is being used for AI.”
Carlton said the idea that local AI laws are stifling innovation is a mischaracterization. Most of the proposed laws focus on narrow and urgent safety issues and often provide exemptions for small businesses or tiered obligations based on company size and use cases.
“These aren’t sweeping bans on AI,” she added. “They’re common-sense protections against fraud, deepfakes, and predatory chatbots aimed at children. But with this bill, even those guardrails vanish.”
Lessons from Social Media’s Free Rein
Legal scholars warn the moratorium risks repeating the same errors that allowed social media platforms to operate with near-total impunity for over a decade — leading to today’s mental health crisis among teens, rampant misinformation, and the rise of algorithmic manipulation.
Gaia Bernstein, professor at Seton Hall University School of Law, says states became the primary drivers of tech accountability precisely because Congress has failed to act — and may do so again with AI.
“If you’re saying states cannot do anything, then it’s very alarming,” Bernstein said. “Most of the effective protections we have today — for youth safety, for online privacy — came from state laws. Now we’re about to shut that down.”
Bernstein emphasized that AI is already embedded in algorithms that shape what children see online, govern how people are scored and hired, and determine what health information individuals receive.
“This is not some distant threat. AI is already shaping lives. And without oversight, it will do so with zero accountability.”
Tech Industry Wins Big — Again
Though few in Congress have acknowledged it directly, several of the companies positioned to benefit from a decade of AI deregulation are also major donors to President Donald Trump, raising questions about whether the provision serves public interest or corporate influence.
A former House staffer who helped analyze the bill called it “one of the most extreme handouts to Big Tech” he’s ever seen tucked into budget legislation.
“It’s a blank check,” the staffer said. “And if you know the history of how the tech industry operates, you know exactly what they’ll do with it.”
The bill now moves to the Senate, where Democrats and a growing number of Republicans are expected to push back against the AI moratorium clause. Senate staff have confirmed that discussions are underway to remove or amend the provision.
If the Senate returns a revised version, the bill must go back to the House for final approval — setting up a potential showdown over tech regulation, state rights, and federal power.
Rep. Marjorie Taylor Greene, said, having known better, she will oppose the bill.
“I will not vote for the final bill if this language is still in there,” she said. “Congress must not hand over ten years of unchecked power to tech companies while tying the hands of our states. That’s not leadership. That’s surrender.”