‘Total Control' To AI Firms: U.S. House Bill Barring State Oversight Draws Ire

Forbes

22-05-2025

US President Trump gestures as CEO of Open AI Sam Altman speaks in the Roosevelt Room at the White ... More House on January 21, 2025, in Washington, DC. (Photo by Jim WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images)
A provision tucked into a sweeping U.S. House Republican budget bill is igniting a contentious fight over artificial intelligence regulation in the United States.
The measure would ban states from enforcing or enacting AI-related legislation for ten years, effectively overriding a wave of new and pending state-level laws protecting consumers, mitigating algorithmic bias and setting guardrails on emerging technologies.
Introduced by the House Energy and Commerce Committee under Chairman Brett Guthrie, the proposal has incited swift condemnation from state attorneys general, children's advocacy organizations and civil society groups. Advocates warn it would hand expansive leeway to AI companies at a time when oversight is urgently needed and when federal rules remain vague or largely absent.
Earlier this month, a bipartisan group of state attorneys general, including officials from California, New York and Ohio, wrote a letter to Congress urging lawmakers to scrap the provision. 'Imposing a broad moratorium on all state action while Congress fails to act in this area is irresponsible and deprives consumers of reasonable protections,' they wrote.
Separately, a coalition of 77 advocacy groups argued in a letter on Wednesday that the bill would silence states without offering federal protections in return.
'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 coalition wrote. 'It ties lawmakers' hands for a decade, sidelining policymakers and leaving families on their own.'
The bill's language is noticeably broad: It defines AI as any computational process using machine learning, statistical modeling, or data analytics that influences human decision-making, and it would prohibit states from legislating around AI design, documentation, liability and performance. That scope, legal experts say, could derail a wide range of initiatives, from whistleblower protections to rules for algorithmic social media feeds and AI-generated deepfakes.
The legislative push comes as Congress faces mounting pressure to regulate AI, but, critics argue, has failed to pass any meaningful legislation governing AI systems to date.
California, Colorado and Utah have already passed laws governing cross-sectoral use of AI, and at least 15 other states are considering similar measures. Many states have also launched AI task forces or issued executive orders in the absence of federal leadership.
'States have not had the luxury of waiting for federal action on AI policy,' said the National Association of State Chief Information Officers in a statement opposing the bill, adding that the language in the measure undermines states' efforts to protect citizens.
The proposal is a 'short-sighted and ill-conceived plan,' contend Marc Rotenberg, Merve Hickok and Christabel Randolph from the Center for AI and Digital Policy.
'States have established critical new safeguards to protect creators, promote accountability, safeguard children and ensure the reliability of AI,' they said. 'Now, some members of Congress are proposing a ten-year moratorium that would prohibit state legislators from protecting the public.'
The issue, advocates warn, becomes all the more burgeoning as AI develops a deeper entrenchment into everyday life — concerns about disinformation, data harvesting and automated decision-making continue to mount, yet federal action remains elusive.
Daniel Rodriguez, a professor at Northwestern University's Pritzker School of Law, said the situation reflects a legally dubious overreach and a broader attempt to shut down state-level momentum, calling the bill 'a shot across the bow'.
'What's bizarre about it is that it paints with this incredibly broad brush a declaration that states should just stay the heck out of this area,' Rodriguez told StateScoop, adding that that's not how preemption generally works.
'What is the federal government doing at the legislative level to promote innovation in the responsible use of AI? What exactly is it doing?'
While some industry groups have encouraged the federal move as a way to avoid a patchwork of rules across states, others argue it erodes federalism and hurts innovation by limiting local experimentation.
The National Conference of State Legislatures issued its own strong rebuke, warning that the bill would undermine efforts to tailor solutions to local concerns. 'A federally imposed moratorium would not only stifle innovation but potentially leave communities vulnerable in the face of rapidly advancing technologies,' the group stated.
Per NCSL's analysis, 48 states and Puerto Rico have introduced AI legislation, and 26 states adopted or enacted at least 75 new AI measures. The bill could stall momentum towards meaningful oversight while offering no viable federal alternative just as states begin to confront critical challenges.
Furthermore, the bill could also leave consumers and small businesses vulnerable in the absence of clear standards.
'[The moratorium on state AI-related bills] could severely disadvantage consumers, innovators, small and mid-sized businesses and other stakeholders interested in ethical and fair AI design and deployment,' warn Nicol Turner Lee and Josie Stewart at Brookings Institution.
At large, federal preemption of stronger state privacy laws hurts everyone, Hayley Tsukayama, associate director of legislative activism at the Electronic Frontier Foundation, wrote in a blog post earlier this month.
'It risks freezing any regulation on the issue for the next decade — a considerable problem given the pace at which companies are developing the technology. Congress does not react quickly and, particularly when addressing harms from emerging technologies, has been far slower to act than states.'
If enacted, the bill could undermine existing state privacy laws. The California Privacy Protection Agency and Colorado's attorney general could be prevented from enforcing AI-specific rules already passed or under development.
Advocates argue that delaying regulation for a decade is effectively a deregulation agenda.
'The future of AI governance should be built on democratic principles, shared responsibility and a commitment to the public interest,' said Rotenberg, Hickok, and Randolph. 'Not a decade-long silence imposed from above.'
In Colorado, for example, several AI companies recently lobbied to delay and weaken the state's landmark AI accountability legislation — a preview of what unchecked industry influence could look like under a regulatory freeze.
Tsukayama warned that the moratorium could paralyze AI oversight at a time when vigilance is most needed.
'Even if Congress does nothing on AI for the next ten years, this would still prevent states from stepping into the breach.'