States Stay in the Driver’s Seat — Removal of the AI Moratorium From the One Big Beautiful Bill Act

At a Glance

• With the moratorium out of the picture, states are free to enforce current and upcoming state laws regulating AI, such as the Colorado AI Act.
• For now, AI developers and users must continue to stay apprised of emerging state laws and navigate the morass of existing regulations.

On July 1, 2025, the Senate voted to strip a 10-year moratorium on state and local regulation of artificial intelligence (AI) from the Trump administration’s tax and spending package known as the One Big Beautiful Bill Act.

Since the advent of AI, states have attempted to regulate its use and development in their jurisdictions, resulting in a confusing and ever-shifting regulatory landscape for multistate companies that need to comply with each state’s unique and potentially conflicting requirements. In 2025 alone, state legislators have introduced hundreds of AI bills in dozens of sectors, and California already has 20 AI laws on the books.

Citing the patchwork regulatory approach as a “burden” on AI innovation and a concern for the United States’ AI arms race with China, the House of Representatives added a 10-year moratorium into the One Big Beautiful Bill Act, which would prevent states and local government from enforcing any AI-related regulations at the risk of losing federal funding, with very few exceptions.

However, after the bill was sent to the Senate for approval, representatives from both political parties expressed concerns over the moratorium’s sweeping nature. Some saw a states’ rights issue, arguing that the moratorium would deprive states of any ability to protect their citizens from deepfakes, copyright infringement or other harms. Others noted that the moratorium would leave AI wholly unregulated until Congress passes its own regulations, assuming it ever does. Senators attempted to reach a compromise, such as a shorter moratorium or explicit exceptions for certain state laws; but ultimately the Senate voted 99-1 to remove the moratorium entirely.

What This Means for AI Developers & Users

With the moratorium out of the picture, states are free to enforce current and upcoming state laws regulating AI, such as the Colorado AI Act.

While industry leaders remain hopeful that Congress will pass targeted, if not comprehensive, AI regulations to standardize requirements and protections across the country, Congress has been notoriously slow to pass regulations in other technology-related areas, such as data security and biometrics. In the interim, the Senate seems unwilling to preclude state-level laws until Congress passes, at a minimum, a set of baseline regulations for AI.

For now, AI developers and users must continue to stay apprised of emerging state laws and navigate the morass of existing regulations.