A federal proposal could ban states from regulating AI for 10 years. Sen. Ted Cruz (R-TX) and GOP lawmakers are pushing to include it in a megabill before the July 4 deadline.
The ban would stop states and local governments from enforcing AI laws, halting state-level AI regulations like California’s data transparency rules and Tennessee’s protections against AI-generated impersonations.
OpenAI’s Sam Altman, Anduril’s Palmer Luckey, and a16z’s Marc Andreessen back the idea. They say a “patchwork” of state rules would kill U.S. innovation and weaken the race against China. 
Critics include Democrats, some Republicans, Anthropic CEO Dario Amodei, labor groups, and AI safety advocates. They warn the moratorium gives AI companies free rein without accountability and stops states from protecting consumers.
The provision was sneaked into the “Big Beautiful Bill” in May. To pass budget rules, Cruz tied the moratorium to $42 billion in broadband funds via the BEAD program. A recent update tries to limit this to new $500 million in funding but might also pull existing broadband money if states don’t comply.
Sen. Maria Cantwell (D-WA) slammed the move:
“Forces states receiving BEAD funding to choose between expanding broadband or protecting consumers from AI harms for ten years.”
The moratorium currently faces roadblocks. Cruz’s initial draft passed procedural review, but recent reports say talks reopened and changes are being debated. The Senate plans heavy amendments this week and a rapid “vote-a-rama” before an initial megabill vote Saturday.
OpenAI’s Chris Lehane issued a warning on LinkedIn:
“The current patchwork approach to regulating AI isn’t working and will continue to worsen if we stay on this path.”
“While not someone I’d typically quote, Vladimir Putin has said that whoever prevails will determine the direction of the world going forward.”
Altman echoed this on the podcast Hard Fork:
“A patchwork across the states would probably be a real mess and very difficult to offer services under.”
“I worry that if…we kick off a three-year process to write something that’s very detailed and covers a lot of cases, the technology will just move very quickly.”
But most existing state AI laws focus on consumer protections against deepfakes, fraud, bias, and privacy violations. They cover hiring, housing, credit, healthcare, and elections.
OpenAI hasn’t cited any state law blocking its work, nor have Meta, Google, Amazon, or Apple responded to such questions from TechCrunch.
Opponents say the moratorium sidesteps real oversight. Emily Peterson-Cassin of Demand Progress stated:
“The patchwork argument is something that we have heard since the beginning of consumer advocacy time.”
“But the fact is that companies comply with different state regulations all the time. The most powerful companies in the world? Yes. Yes, you can.”
Anthropic CEO Dario Amodei called the 10-year moratorium “far too blunt an instrument” in a New York Times opinion:
“AI is advancing too head-spinningly fast.”
“Without a clear plan for a federal response, a moratorium would give us the worst of both worlds — no ability for states to act, and no national policy as a backstop.”
Several Republicans also oppose the ban, citing states’ rights. Senator Josh Hawley (R-MO), Senator Marsha Blackburn (R-TN), and Rep. Marjorie Taylor Greene (R-GA) have voiced strong criticism, with Greene threatening to oppose the entire budget if the moratorium sticks.
Republicans like Cruz and Senate Majority Leader John Thune favor a “light touch” on AI governance but face backlash from voters. A recent Pew Research survey shows 60% of U.S. adults and 56% of AI experts want stronger AI regulation, fearing government inaction more than overreach.
Sam Altman at Berlin, February 2025
Altman predicts AI’s usefulness will accelerate suddenly over the next two years.
Image credits: Sean Gallup/Getty Images
The Senate’s AI moratorium showdown is imminent. Watch this space.
