Trump’s 10-Year Ban on State AI Laws: What It Means for Tech, States, and Global Regulation

Trump’s One Big Beautiful Bill: The Impact of a 10-Year Ban on State AI Regulation

The United States is on the brink of passing a federal law that would prevent states from regulating artificial intelligence (AI) for a decade. This shift, embedded in President Trump’s sprawling "One Big Beautiful Bill Act (OBBBA) 2025," could redefine how AI is governed across the country and influence regulatory approaches worldwide, including in India.

The bill, known as HR.1, is a budget reconciliation package covering taxes, immigration, healthcare, and more. It narrowly passed the House last week with a 215-214 vote and awaits Senate approval. The AI-related provision introduces a 10-year moratorium on state laws and regulations concerning AI, a move that has sparked significant debate.

What the Bill Says About AI Regulation

Section 43201 of the OBBBA directs the Commerce Department to modernize federal IT systems using commercial AI and mandates its adoption to boost efficiency, automation, and cybersecurity.

Crucially, the bill prohibits any state or local government from enforcing laws that regulate AI models, AI systems, or automated decision systems for ten years from enactment. This means existing and future state-level AI laws are effectively frozen.

Currently, over 60 AI-related state laws address issues like algorithmic bias and government AI usage. The National Conference of State Legislatures reports dozens more bills are under consideration. The broad definition of "automated decision systems" could also stall oversight of other related technologies.

Support for the Moratorium

• Republican lawmakers and business groups, including the US Chamber of Commerce and free-market think tanks, back the measure.
• Tech companies argue this pause is essential to foster innovation and keep American firms competitive against China in the AI race.
• OpenAI supports a unified federal framework and has even called for banning certain Chinese AI models over security concerns.
• Proponents assert that the moratorium will prevent a confusing patchwork of state regulations and provide Congress time to craft comprehensive federal AI legislation.

Opposition to the Moratorium

• Democrats, some Republicans, state officials, AI experts, and civil rights organizations oppose the ban.
• Concerns include reduced protections for consumers—especially vulnerable groups—and the rollback of existing state laws targeting issues like deepfakes and hiring discrimination.
• Critics argue the moratorium represents federal overreach, undermining states’ rights to experiment with AI policy.
• Legal experts warn the moratorium may violate the Tenth Amendment, which reserves certain powers to states.
• Republican Senator Marsha Blackburn emphasized the necessity of state-level protections, while Senator Josh Hawley highlighted the importance of federalism and local oversight.

Tech Industry Reactions

OpenAI CEO Sam Altman urged for a single, light-touch federal AI framework to avoid the complexity of complying with multiple state laws. He sees a unified approach as critical for maintaining industry momentum.

Similarly, Alexandr Wang, CEO of Scale AI, called for clarity through a single federal standard, citing the pitfalls of 50 different regulations.

Conversely, Anthropic CEO Dario Amodei expressed reservations about the moratorium, likening it to removing a car's steering wheel for a decade—implying a lack of necessary control and safety measures.

What’s Next for the Bill

The OBBBA heads to the Senate, where its fate is uncertain. Both Democrats and some Republicans plan to challenge the AI moratorium's inclusion under the Byrd Rule, which bars unrelated provisions in budget reconciliation bills.

Aside from AI regulation, the bill also proposes ending certain green energy tax credits and allocates billions for border security upgrades, including advanced surveillance technologies.

Legal professionals should closely monitor the Senate debates and potential court challenges, as the outcome will have significant implications for state sovereignty, AI governance, and consumer protections.

For legal experts interested in AI policy and regulation, staying informed on federal developments is crucial. Resources like Complete AI Training offer courses and insights to better understand AI technology and its legal landscape.