States Win AI Regulation Battle as Senate Rejects Federal Ban

States have gained a significant victory in the battle over AI regulation, as the U.S. Senate overwhelmingly voted to remove a 10-year federal moratorium from President Trump’s comprehensive tax and spending bill. The 99-1 vote clears the path for individual states to enact their own AI policies, bypassing federal restrictions.
Republican Senator Marsha Blackburn spearheaded the successful amendment during a protracted “vote-a-rama” session. This action underscores a growing consensus in the Senate that states are best positioned to address the localized impacts and ethical considerations of AI, particularly when federal legislation lags behind.
Initially, the Senate’s of the bill would have only indirectly restricted states, by making those with AI regulations ineligible for a new $500 million fund for AI infrastructure. The outright removal of the ban, however, grants states full and unfettered authority to legislate on AI, without any federal financial or regulatory impediments.
Despite the preferences of major AI companies like Google and OpenAI for a unified federal regulatory approach to minimize innovation hurdles, Senator Blackburn argued for the immediate necessity of state-level safeguards. She underscored that “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.”