AI Regulation Moratorium Collapses as Senate Sides With States, Not Silicon Valley

The US Senate voted 99-1 early Tuesday morning to eliminate a proposed federal moratorium that would have blocked states from regulating artificial intelligence for up to 10 years. The last-minute reversal dealt a significant blow to Big Tech lobbyists and marked a decisive win for state rights and consumer advocates.

The vote came during a marathon “vote-a-rama” session held in the early hours of Tuesday as lawmakers rushed through a pile of amendments to President Donald Trump’s massive tax and spending package, dubbed the “One Big Beautiful Bill Act.“

The controversial provision would have barred states from passing or enforcing AI-related laws for a decade. The idea, initially pushed by Sen. Ted Cruz (R-TX), was designed to prevent what supporters called a “patchwork” of conflicting regulations that, in their view, could stifle innovation and competitiveness, especially against global rivals like China.

But after weeks of mounting pressure, the Senate moved decisively to strike it.

Sen. Marsha Blackburn (R-TN), who had helped craft a last-minute compromise to shorten the ban to five years and allow some exemptions, ended up leading the charge to remove the provision entirely.

“While I appreciate Chairman Cruz’s efforts … the current language is not acceptable to those who need these protections the most,” Blackburn said in a statement to The Washington Post. “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.”

Her amendment to delete the moratorium was co-sponsored by Sen. Maria Cantwell (D-WA) and ultimately received support from every senator except Thom Tillis (R-NC), who voted to retain the ban.

Tech industry’s hopes crushed

The AI moratorium had gained significant backing from major tech figures and firms. OpenAI CEO Sam Altman, speaking to Cruz at a Senate hearing in May, said, “It is very difficult to imagine us figuring out how to comply with 50 different sets of regulation.”

Executives such as Palmer Luckey and Marc Andreessen also supported the federal ban, warning that state-by-state rules could hinder AI innovation and give China a competitive edge. However, their arguments didn’t sway the Senate.

The collapse of the moratorium has energized efforts to create a federal AI regulatory framework, but with more input from states and consumer advocates.

“The Senate came together tonight to say that we can’t just run over good state consumer protection laws,” said Cantwell, as quoted in The Washington Post. “This also allows us to work together nationally to provide a new federal framework on artificial intelligence that accelerates US leadership in AI while still protecting consumers.”

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