US House Committee Advances 10-Year Moratorium on State AI Regulation

Early Wednesday, at a markup hearing to consider legislative recommendations for budget reconciliation, House Energy & Commerce Committee Republicans advanced a 10-year moratorium on enforcing state legislation on artificial intelligence. After an amendment to remove the moratorium failed, it will advance with the legislative package.

On Sunday, the House Energy and Commerce Committee’s Chairman, Rep. Brett Guthrie (R-KY), released budget reconciliation text containing the 10-year moratorium.

Under “Section 43201: Artificial intelligence and information technology modernization initiative,” the text includes provisions to modernize federal IT systems with commercial AI technologies and mandate their adoption to “increase operational efficiency and service delivery,” automation, and cybersecurity. The moratorium is in Subsection (c), which 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.

“No one believes that AI should be unregulated,” said Rep. Jay Obernolte (R-CA), during the hearing. But, he said, it should be the job of Congress, not the states. “Congress needs to get its act together,” he said, and enact AI legislation to back up federal regulators with a comprehensive AI framework. “No one wants this to go on for ten years.”

Rep. Doris Matsui (D-CA) called the moratorium a “slap in the face to American consumers.” She pointed to various laws California has passed against harms for which there are no clear federal protections.

Rep. Kathy Castor (D-FL) called the measure a “shocking surprise addition to the billionaire tax giveaway.” She read letters from civil society groups, including Encode AI, Common Sense Media, Consumer Reports, and Issue One, opposing the moratorium. “Boy, this one takes the cake!”

The legislation will now be packaged for a floor vote in the House before it heads to the Senate, where it has at least one prominent supporter. In his opening statement during last week’s Senate Committee on Commerce, Science, and Transportation hearing titled “Winning the AI Race: Strengthening US Capabilities in Computing and Innovation,” the committee’s chairman, Sen. Ted Cruz (R-TX), pointed to an “internet tax moratorium” that he says was crucial to the success of the early web, suggesting such a measure is needed to advance AI innovation.

Further, in 1998, Congress enacted a ten-year internet tax moratorium so that State laws wouldn’t balkanize and stymie the promise of e-commerce. The results of these decisions were extraordinary. By 2000, the United States had recorded five straight years of historic highs in productivity gains and investment growth. Hundreds of thousands of new jobs were created, and the US became a top tech exporter, with massive sums of private investment pouring into the US digital economy.

At the end of the three-hour hearing, Cruz posed a question to the witnesses, who included OpenAI CEO Sam Altman, Microsoft President Brad Smith, AMD CEO Dr. Lisa Su, and CoreWeave CEO Michael Intrator.

“Final question for each of you,” Cruz said. “Would you support a 10-year learning period on states issuing comprehensive AI regulation or some form of federal preemption to create an even playing field for AI developers and deployers?”

OpenAI’s Altman replied, “I'm not sure what a 10-year learning period means, but I think having one federal approach focused on light touch and even playing field sounds great to me.” The other executives agreed.

Where did the idea for a moratorium come from?

As IAPP managing director Cobun Zweifel-Keegan pointed out in a detailed blog post on the proposed moratorium, Cruz’s “learning period” language resembled a Washington, DC, think tank proposal introduced last year. The R Street Institute’s Adam Thierer first proposed the idea in May 2024, citing the Internet Tax Freedom Act of 1998:

With over 700 federal and state AI legislative proposals threatening to drown AI innovators in a tsunami of red tape, Congress should consider adopting a “learning period” moratorium that would limit burdensome new federal AI mandates as well as the looming patchwork of inconsistent state and local laws.

In a piece with Kevin Frazier in Lawfare last Friday and in a post on X on Tuesday, Thierer argued a moratorium would not mean that the developers of AI technologies would be unfettered.

…an AI moratorium on NEW state regulatory enactments does not stop governments from applying the many different EXISTING laws and regulations that already cover any harms that might come about. Some of those remedies include unfair and deceptive practices law, civil rights laws, product recall authority, product defects law, court-based common law remedies, and a wide variety of other consumer protections.

Tech watchdogs and Democrats oppose the moratorium

Ahead of the markup hearing, tech accountability and consumer watchdogs joined Democratic lawmakers in Congress and state legislatures in crying foul.

• Pointing to laws under consideration or recently enacted across the states on AI-related issues such as deepfakes, election disinformation, AI companions, and algorithmic harms, Public Citizen called the prospect of a provision pre-empting state law “an outrageous abdication of Congressional responsibility and a gift-wrapped favor to Big Tech that leaves consumers vulnerable to exploitation and abuse.”
• “Lawmakers stalled on social media safeguards for a decade, and we are still dealing with the fallout. Now apply those same harms to technology moving as fast as AI,” Americans for Responsible Innovation President Brad Carson said in an emailed statement.
• In comments to the Washington Post, California Assemblymember Rebecca Bauer-Kahan (D) said, “Congress has repeatedly failed to regulate the internet, social media, and privacy—they won’t meaningfully regulate AI either, creating a decade-long regulatory vacuum for Big Tech to exploit.”
• Senator Edward Markey (D-MA) posted to X that “The Republican 10-year moratorium on state AI regulation won’t lead to an AI Golden Age. It will lead to a Dark Age for the environment, our children, and marginalized communities.”

Not everyone who identifies as a Democrat opposes the idea. Colorado Governor Jared Polis, who signed a comprehensive AI law passed in his state only a year ago, has indicated his support for the moratorium. However, a spokesman said he’d prefer it to last only two to four years.

What happens next

The House measure could die in the Senate under the Byrd rule, a procedural mechanism that allows Senators to strike language deemed extraneous to legislation. The IAPP’s Zweifel-Keegan noted that while the moratorium may be challenged under the Byrd rule, it would appear that House Republicans are setting up an argument to evade it.

Here, though not explicit in the text itself, the committee appears to be setting up the argument that a moratorium on the enforcement of complex and diverging state AI laws will facilitate the Department of Commerce’s acquisition of AI systems. Though critics will see this as contrived, the logical connection here seems to be that the federal government is unable to modernize systems effectively and efficiently if the spread of commercially available AI is slowed by a patchwork of state AI laws.

Rep. Obernolte made a similar argument during the hearing.

If the moratorium were to pass in both the full House and the Senate and ultimately become law, it may face legal challenges, including from attorneys general from states where AI laws have been enacted. But it is unclear whether such a challenge would succeed.