Senate Strikes AI Moratorium: What It Means For State Regulation

On July 1, the U.S. Senate voted to fully remove the previously proposed ten-year moratorium on regulation of Artificial Intelligence by states ("AI Moratorium"), after the provision's passage by the House. Despite a number of suggested compromises, including a reduction in the time period from ten to five years and exceptions for children's online safety and personal publicity rights, ultimately, Senators voted 99-1 to remove the provision from President Trump's "One Big Beautiful Bill." Though a number of large technology companies had reportedly lobbied in support of the AI Moratorium, the provision faced criticism across the political spectrum. The removal, which was contained within an amendment to the bill introduced by Senator Marsha Blackburn, will allow states to continue their push for AI regulation, at least until (and if) the federal government adopts preemptive legislation.

The practical impact of the "failure" of the AI Moratorium is that (1) a collection of state and local AI regulations will continue or go into effect over the next 12 months, and (2) states and localities will continue to apply more generally applicable existing laws in the AI context. For example, California's Assembly Bill 2013 (Generative Artificial Intelligence: Training Data Transparency Act) is set to take effect January 1, 2026, and seeks to provide transparency regarding AI models' training, testing, and validation methods. California also has a number of pending legislation that would apply to AI and "automated decision systems" in order to identify situations in which AI may pose a heightened risk and seeking to require human oversight to the use of AI. Other states have passed, or are in the process of passing, similar laws. These include the New York "RAISE" Act, which is awaiting Governor Hochul's signature; the Texas "TRAIGA" act, which takes effect January 1, 2026; and Colorado S.B. 25-205, which will become effective February 1, 2026, and regulates financial institutes' use of AI. Other states are actively studying the effect AI may have, both on consumers and in the legal profession generally, such as the Judicial Council of Georgia's Ad Hoc Committee on Artificial Intelligence and the Courts, which submitted a report suggesting the Georgia court system adopt certain generative AI practices.

At the federal level, various agencies within the government continue to address AI-related issues. The FTC has brought (and will likely continue to bring) enforcement actions against companies utilizing AI models as part of its general powers to prevent unfair and deceptive practices against consumers. Additionally, the U.S. National Science Foundation is continuing various research prerogatives related to the development and use of AI, which may further inform federal policy on this issue.

In short, the the primary impact of the AI Moratorium's failure is that a number of AI regulations will continue to take root at the state and local level. We expect the result likely to be similar to the patchwork of data privacy laws that have been, and continue to be, passed at the state level: an often shifting landscape that depends heavily on a business's location, customers, and operations. Our team is keeping tracks of all these shifting signals, and will continue to address these regulatory issues as they progress.

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