Senate Greenlights 10-Year AI Law Freeze for States, Sparking Bipartisan Blowback

In a quietly seismic moment for U.S. artificial intelligence policy, the Senate parliamentarian late Saturday gave the green light to a controversial provision tucked inside a sprawling Republican-backed megabill: a 10-year moratorium on enforcing state and local AI regulations.

The unexpected ruling clears the way for Republicans to attach sweeping AI preemption language to federal broadband expansion funds—essentially forcing states to choose between AI oversight and billions in digital infrastructure dollars.

While the measure was initially met with internal GOP division, the parliamentarian’s decision marks a major procedural win for Senator Ted Cruz (R-Texas), who revised a more aggressive House version of the moratorium to comply with Senate budgetary rules. Cruz’s rewrite hinges state eligibility for broadband funds on compliance with a decade-long freeze on enforcing AI-related laws.

Cruz: “It’s Good Policy”

“It’s good policy,” Cruz said in a recent interview, defending the moratorium as a way to prevent what he and other supporters call a regulatory patchwork that could choke innovation.

Backing him is Rep. Jay Obernolte (R-Calif.), the only AI-trained computer scientist in Congress, who’s long warned against “50 different states going 50 different directions” on the issue.

But the proposal has ignited rare intra-party friction. Senators Josh Hawley (R-Mo.) and Marsha Blackburn (R-Tenn.) are publicly opposed, with Hawley pledging to collaborate with Democrats to strip the language from the bill once it hits the floor. On the House side, Rep. Marjorie Taylor Greene (R-Ga.) and the Freedom Caucus have also raised alarms, with Greene threatening to tank the entire megabill—H.R. 1 (119)—if the moratorium remains intact.

Federal Strategy vs. State Sovereignty

Kevin Kirkwood, Chief Information Security Officer at Exabeam, says the Cruz-backed measure highlights an essential tension in AI governance: balancing federal leadership with state autonomy.

“The approach by Ted Cruz brings up an interesting set of arguments in the case for AI regulation,” Kirkwood said. “Over-regulation of AI could drive smaller players out of the business and minimize the potential for innovation. Having a variety of state laws without the framework to follow… represents the potential for making it harder to do business.”

Kirkwood added that while a federal framework could provide cohesion, it must not come at the cost of democratic safeguards. “A true balance must be achieved,” he said. “States must be able to maintain their sovereignty, and the federal government should provide the strategy and framework for them to follow.”

The Regulatory Crossroads

The debate lands at a pivotal moment for the AI sector, as Congress struggles to keep pace with fast-evolving generative technologies while tech companies push for clear and stable rules. Critics of the moratorium argue it effectively handcuffs local governments from responding to immediate harms—ranging from algorithmic discrimination to AI-enabled surveillance—while leaving meaningful federal regulation still largely theoretical.

The AI moratorium now heads to the Senate floor as part of the broader budget reconciliation process, where it will face amendment battles from both sides of the aisle. If left intact, it could fundamentally shift the balance of AI oversight in the U.S.—not by legislation, but through a conditional funding lever buried in a broader federal spending deal.

For now, the future of local AI governance may hang less on democratic debate than on broadband dollars—and who’s willing to trade them for regulatory restraint.