The debate over state-level AI regulation and the Big Beautiful Bill has reached a fever pitch, promising drama as the future of AI governance hangs in the balance.
At a Glance
- Republican Senators Marsha Blackburn and Ted Cruz’s proposal to restrict state regulation of AI has collapsed.
- The bill was part of President Trump’s One Big Beautiful Bill Act, including $500 million in AI infrastructure funding.
- The proposal suggested a five-year moratorium on state AI regulations addressing child sexual abuse material and deceptive practices.
- Senator Blackburn withdrew support, advocating for additional protections through federal legislation.
The Collapse of a Deal
Republican Senators Marsha Blackburn and Ted Cruz initially reached a deal to limit state-level AI regulation, proposing a ten-year moratorium accompanied by enticing BEAD funding for states, aiming to streamline AI governance. The provision was part of President Trump’s One Big Beautiful Bill Act intended to unify AI regulation, support innovation, and distribute $500 million in AI infrastructure funding. Yet the plan unraveled as criticism flared from both sides of the aisle, and Blackburn herself withdrew support.
Watch: Blackburn, Cruz find potential truce on state AI moratorium, child online safety
Blackburn’s main concern revolved around potential exploitation by Big Tech, despite carveouts in the moratorium designed to protect children, creators, and vulnerable individuals. “This provision could allow Big Tech to continue to exploit kids, creators, and conservatives,” Blackburn argued.
Senators and Supporters Divide
The contention within Senate ranks highlights differences in how AI regulation should evolve. Blackburn’s co-sponsorship with Sen. Maria Cantwell for an amendment to remove the AI moratorium entirely signals a growing resistance. The initial 10-year moratorium, seen as heavy-handed by some, informed debates about how best to balance innovation with protective measures.
“While I appreciate Chairman Cruz’s efforts to find acceptable language that allows states to protect their citizens from the abuses of AI, the current language is not acceptable to those who need these protections the most,” the senator said.”
Supporters like David Sacks, the White House AI and crypto czar, touted a federal approach under the Commerce Clause as a way to avoid a patchwork of conflicting state regulations. Sacks pushed for a moderate, innovation-friendly federal regulatory regime to advance U.S. interests in the AI race. Meanwhile, detractors, including an array of state governors, argued for state autonomy in addressing AI safety concerns. The debate presents a multifaceted challenge to consensus-building around technological governance.
Earlier this year, our office joined a bipartisan group of 40 state attorneys including @AGTennessee in opposition to the harmful moratorium on AI regulation included in earlier versions of the congressional Republican budget bill. The new language proposed by Sens Cruz and…
— Attorney General Nick Brown (@AGOWA) June 30, 2025
A Legislative Tug-of-War
As the dust settles, the legislative calendar anticipates a Senate vote on the bill, with the House to follow, ensuring its fate decides before the independence celebration on July 4th. Democrats are staunchly opposing the AI provision and are likely plotting a vote for its removal, sustaining the tension amidst Republican divisions. Big Tech, aligned with Sacks, continues to support the moratorium, lobbying for uniform AI policymaking.
“Full transparency, I did not know about this,” Greene admitted on X a few days after she voted for the One Big Beautiful Bill Act. “I am adamantly OPPOSED to this and it is a violation of state rights and I would have voted NO if I had known this was in there.”
The enduring debate underscores the core struggle of achieving a balance between federal oversight and state control over emerging technologies like AI. Lawmakers and political leaders must weigh how best to advance innovation while safeguarding public interests—a precarious equilibrium as AI continues to reshape society.
