Senators Reject 10-Year Ban on State-Level AI Regulation, In Blow to Big Tech

Senators voted early Tuesday to remove a controversial 10-year moratorium on state regulation of artificial intelligence from President Trump’s “One Big Beautiful Bill,” marking a significant defeat for a tech industry that had lobbied hard to keep the provision in the sweeping tax and spending package.

Lawmakers voted 99-1 in an overnight session to remove the provision by adopting an amendment tabled by Marsha Blackburn, Republican of Tennessee, who had earlier broken with her party over the issue. 

Companies such as OpenAI and Google had previously argued in support of blocking states from regulating AI — so as to avoid what they said would be a patchwork of rules that could hamper innovation.

But critics on both the left and the right said the AI moratorium, which had earlier been approved by the House, was an attempt to forestall any attempt to regulate new AI systems. Many also noted that Congress has not passed any significant new tech rules in decades — meaning that a ban on state AI regulations might effectively mean no AI regulation at all.

Read More: Why AI Regulation Has Become a ‘States’ Rights’ Issue

The version rejected by the Senate had earlier been reworded to meet budgetary rules, by making acceptance of funding from a $500 million infrastructure program conditional on accepting the moratorium.

Because most Democrats opposed the moratorium, the Republicans could not afford to lose many members of their party on the issue. But they faced resistance from Missouri Senator Josh Hawley, Kentucky Senator Rand Paul, and particularly Blackburn, who has been very vocal about AI protections both for children online and the music industry, given her Nashville base. 

Earlier in the week, Blackburn attempted to forge a compromise with Ted Cruz, who led the provision. Together, they produced a new version that reduced the ten-year ban to a five-year one, and carved out exceptions for laws related to kids' online safety and personal publicity rights. 

But this version of the bill was promptly excoriated by vocal coalitions in both parties. A group of 140 mostly left-leaning advocacy organizations, including Encode AI and Common Sense Media, penned an open letter arguing that this new version actually shielded tech companies from the state regulation that Blackburn was attempting to protect. “The vague standards set out in the moratorium will provide Big Tech a clear path to challenge nearly any state law in court,” the letter read. 

Blackburn received equally unhappy calls from power players on the right. Steven Bannon said on his WarRoom podcast that he called Blackburn himself about striking the moratorium, which he viewed as endangering state’s rights. Angela Paxton, a Texas state senator and influential member of the MAGA movement, fiercely went to bat against the provision, as did the lawyer Mike Davis, the founder of the conservative judicial advocacy group Article III Project.

Ultimately, Blackburn decided to abandon the moratorium altogether. And when it became clear that it did not have the numbers, the Republican wing dropped the idea entirely. Republican Senator Thom Tillis was the only lawmaker who voted to keep the moratorium in the bill, and his vote—which happened after 4 a.m.—may have been a mistake, says someone with knowledge of the matter.

“This provision could allow Big Tech to continue to exploit kids, creators, and conservatives,” Blackburn told Wired. “Until Congress passes federally preemptive legislation like the Kids Online Safety Act and an online privacy framework, we can’t block states from making laws that protect their citizens.” A representative for the senator did not immediately respond to a request for comment.

Democrats also welcomed the result of the vote. “This 99-1 vote sent a clear message that Congress will not sell out our kids and local communities in order to pad the pockets of Big Tech billionaires,” Ed Markey, Democrat of Massachusetts, said in a statement. “I look forward to working with my colleagues to develop responsible guardrails for AI.”

The removal of the AI moratorium from the budget bill was welcomed by AI safety experts. “The Senate’s overwhelming rejection of this Big Tech power grab underscores the massive bipartisan opposition to letting AI companies run amok,” Max Tegmark, President of the non-profit Future of Life Institute, which campaigns on AI safety, said in a statement. “The CEOs of these corporations have admitted they cannot control the very systems they’re building, and yet they demand immunity from any meaningful oversight. This threatens families and jobs across America, and the Senate was wise to reject it.”

On Tuesday afternoon, the larger budget bill narrowly passed and was sent back to the House. House Republicans could try to resurface the AI provision, but it seems many of them are focused on other issues, notably the deficit and cuts to Medicaid.

Update, July 2, 2025:

The original version of this story misspelled the last name of a Massachusetts Senator. It is Markey, not Marey.

Update, July 1, 2025:

This story was updated to reflect breaking news.