Unpacking the 10-year Moratorium on U.S. State AI Laws
The U.S. Senate rejects the 10-year moratorium | Edition #21
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Yesterday, the U.S. Senate voted, by a margin of 99 to 1, to reject the proposed 10-year moratorium on U.S. state AI laws. Here’s everything you need to know about these latest developments.
This week’s overview covers:
✅ What is the 10-year moratorium?
✅ Timeline of events
✅ Why was it rejected?
✅ What happens next?
✅ Overview of U.S. state AI laws
What is the 10-year state AI law moratorium?
The ‘One Big Beautiful Bill Act’ (H.R.1), alternatively referred to as Trump’s ‘big, beautiful bill’, is the cornerstone of the U.S. federal government’s domestic policy agenda.
Spanning over 900 pages, this vast legislative proposal contains provisions on tax cuts, spending, healthcare, housing, and border security. For AI governance and policy professionals, there were two pages that stood out in a section called ‘Artificial Intelligence and Information Technology Modernization’.
Back in May, the U.S. Congress proposed adding a controversial moratorium on state AI laws to this bill. The proposed 10-year moratorium was designed to prevent U.S. states from being able to enforce “any law or regulation limiting, restricting, or otherwise regulating AI models, AI systems, or automated decision systems” for a period of 10 years.
Although this would not technically have prevented states from introducing and passing new AI laws, the broad restriction on enforcement of such laws would have rendered doing so pointless, at best.
This proposal was an attempt by the federal government to pre-empt state AI laws, by blocking states from enforcing laws they have already passed, as well as any new laws they may pass in future. The stated goal was to halt the proliferation of a complex and fragmented patchwork of state AI laws, in order to support AI development and innovation across the country.
There were some exemptions in the initial proposals. For example, the moratorium would have, for the most part, applied to targeted, AI-specific laws, rather than broader laws focused on civil rights, consumer protection, or privacy. The proposal was then updated to clarify that the moratorium would not apply to any provision of a law or regulation that carries a criminal penalty for violations. Finally, the proposal was revised to tie state compliance with the moratorium with their ability to access large amounts of federal infrastructure funding.
In response to significant pushback, the Senate Republicans unveiled a revised version of the proposed moratorium, in an (ultimately unsuccessful) attempt to allay concerns about federal overreach. Some senators proposed to reduce the moratorium to 5 years, but this was not the final proposal that was voted on by the Senate.
Timeline of events
23 January 2025: President Trump issued Executive Order 14179 on Removing Barriers to American Leadership in AI. This declared that U.S. government policy is to “enhance America’s global AI dominance”.
11 May 2025: The U.S. House Energy and Commerce Committee published the proposed moratorium as part of the draft consolidated budget bill.
22 May 2025: The U.S. House of Representatives voted to pass the state AI law moratorium. It was approved by a narrow margin, largely along party lines, with 215 in favour and 214 against.
3 June 2025: A bipartisan letter strongly opposing the moratorium, signed by 260 state lawmakers, was shared with the U.S. House of Representatives and the U.S. Senate.
20 June 2025: Senate Republicans unveiled the amended state AI law 10-year moratorium, with additional exemptions for states, to prevent a potential rebellion.
27 June 2025: 17 Republican state governors wrote a letter urging the Senate to drop the moratorium from the bill altogether.
1 July 2025: The U.S. Senate voted to remove the state AI law moratorium from the bill, after approving an amendment giving effect to this, by 99 votes to 1. This was after some early momentum for the amended moratorium collapsed.
What happens next?
The main reason this proposal proved so controversial and was ultimately defeated was due to a philosophical rejection of the federal government constraining and pre-empting the states in this way. The notion of pre-emption was viewed unfavourably in a context where there is no comprehensive AI law to take precedence. The states’ hands were being tied, without a proposed alternative on the table. The 3 June letter from 260 state lawmakers stated that:
“States are laboratories of democracy accountable to their citizens and must maintain the flexibility to respond to new digital concerns. Our deliberation over different approaches to AI and digital governance provides a stronger foundation for effective policymaking across the country.”
The AI policy ambition of Trump’s second term is to strengthen U.S. global AI leadership and dominance, promote AI innovation, and advance deregulation. However, now that the moratorium has been rejected by the Senate, it is highly unlikely that it will ever pass. The margin of victory was decisive, and Senate approval would be required for an updated version to pass.
As part of Trump’s Executive Order 14179, it was mandated that the U.S. government must formulate an ‘AI Action Plan’ by July 2025. The purpose of this Action Plan is to outline how the government will achieve its ambition to strengthen “America’s global AI dominance”. The consultation on the development of the ‘AI Action Plan’ received over 10,000 responses.
We can expect the AI Action Plan to be published later this month. Initial reporting indicates that executive orders aimed at boosting the supply of energy to AI developers will be part of this policy agenda.
What is certain is that there is no chance of any comprehensive AI legislation being passed during the current administration.
Overview of U.S. state AI laws
In lieu of comprehensive federal AI legislation, we can expect the newly empowered states to be imbued with a sense of confidence and renewed conviction that they should continue to legislate and act to protect their citizens from the potential risks and harms of AI. However, the way in which this is done will continue to vary significantly across the states.
Dozens of U.S. states have enacted AI-related laws. 131 such laws were passed between 2016 and 2024, and over 700 AI-related bills were proposed in 2024 alone.
The states with the most AI laws are California, Maryland, Utah, and Virginia. These laws are typically narrow in scope, regulating specific aspects of AI, including bias and accountability, deep fakes and media, and generative AI transparency.
For many organisations operating in the U.S., the lack of a comprehensive federal AI law elevates the importance of state-level AI laws, which will continue to proliferate.
When designing, refining, and implementing your AI governance framework, it is vital that any applicable regulatory requirements from U.S. states are also taken into account.