Trump’s One Big Beautiful Bill: Implications of a 10-Year Ban on State AI Regulation
The United States is on the verge of implementing a significant federal measure that would eliminate the authority of individual states to regulate artificial intelligence (AI). This proposal has sparked considerable debate, garnering opposition not only from lawmakers and civil society groups but also from several leaders within the tech industry.
The OBBBA and Its Contentious AI Moratorium
The contentious ten-year state ban on AI regulation has been incorporated into President Trump’s expansive legislative initiative, dubbed the One Big Beautiful Bill Act (OBBBA) 2025. This bill, which spans over 1,000 pages, narrowly passed the House of Representatives with a 215-214 vote.
As a budget reconciliation bill, OBBBA encompasses various legislative topics, including taxes, immigration, and healthcare, aimed at advancing President Trump’s domestic policy goals and campaign promises.
If ratified by the US Senate and signed into law, this proposed moratorium on state AI regulations would represent a significant transformation in US tech policy, potentially influencing AI regulatory frameworks in other nations, such as India.
Details of the AI Regulation Moratorium
The AI moratorium is outlined in Section 43201 of the OBBBA, which directs the Commerce Department to allocate funds for the modernization and security of federal information technology systems via the deployment of commercial AI. It mandates adoption to enhance operational efficiency, service delivery, automation, and cybersecurity.
The provision explicitly states: “…that no state or political subdivision may enforce any law or regulation regulating artificial intelligence models, artificial intelligence systems, or automated decision systems during the 10-year period beginning on the date of the enactment of this Act.” This effectively prevents US states from enforcing regulations on AI and automated decision systems for a decade.
Impact on Existing State Laws
The proposed pause on state AI regulations could have far-reaching effects on more than 60 AI-related state laws that have been enacted to date, as reported by the National Conference of State Legislatures (NCSL). These laws address critical issues ranging from algorithmic discrimination to the government’s use of AI.
Additionally, hundreds of other AI-related bills are currently under consideration in various states, highlighting the urgent need for a coherent regulatory framework.
Support and Opposition
Who Backs the Moratorium?
Proponents of the moratorium include Republican lawmakers, tech companies, business groups like the US Chamber of Commerce, and free-market think tanks such as the R Street Institute. They argue that a temporary halt on state-level AI regulations is essential for promoting innovation among US companies, helping them maintain a competitive edge over China in the rapidly evolving AI landscape.
Leading AI firms, such as OpenAI, have echoed these sentiments, advocating for a unified federal approach to AI regulations to streamline compliance and enhance operational efficiency.
Who Opposes the Measure?
Opposition comes from Democrats, some Republicans, and a coalition of state lawmakers, attorneys general, AI experts, and civil society organizations focused on tech policy and consumer rights. Their primary concern is that the moratorium may grant AI companies greater leeway, thereby exposing consumers, particularly vulnerable communities and children, to potential risks associated with AI technologies.
Critics argue that the vague definition of automated decision systems may undermine existing protections against issues such as deepfakes and discriminatory hiring practices.
Future Implications
The future of the OBBBA and its AI moratorium remains uncertain as it moves to the US Senate, where it is anticipated that both Democrats and some Republicans will challenge the inclusion of the AI moratorium based on the Byrd Rule, which prohibits the addition of “extraneous” provisions in budget reconciliation bills.
In addition to the AI regulation moratorium, OBBBA proposes to phase out green energy tax credits for buyers of eligible electric vehicles and funding for renewable energy projects.
As discussions continue, the balance between fostering innovation and protecting consumers will be critical in shaping the future of AI regulation in the United States.
