Report from Politico
In Brief – The budget reconciliation bill that will be considered by the full Senate will likely include a modified version of the 10-year moratorium on state laws regulating AI following a key decision by the Senate Parliamentarian. The moratorium was initially added to the budget bill in the House. Because reconciliation is a special legislative vehicle that can pass the Senate without the usual 60-vote super-majority, all provisions must comply with the “Byrd Rule” tests, including that it primarily involves federal taxes or spending. Key Senate backers, including Majority Leader John Thune (R-SD) and Commerce Committee Chairman Ted Cruz (R-TX), were concerned that the House provision would fail the Byrd Rule test and modified it to tie the moratorium to spending on a federal program providing broadband grants to states. Although some opponents argued that the new version still violated the Byrd Rule, the Parliamentarian ruled that it was acceptable. Although most opponents are progressives, there are conservatives in the House and Senate arguing against the measure.
Context – The AI regulation camp notched some wins in 2024, especially the EU’s huge AI Act, and seemed to have momentum. Colorado became the first US state to enact broad AI regulation; the UK government was focused on AI safety and pressure was building in Japan for AI rules. But things shifted, with President Trump staking out a strong pro-industry position on AI development during his campaign, and California’s governor vetoing broad-based AI regulation in December. This year, the US, UK and Japan have all been moving away from AI regulation, and even some EU leaders are voicing concern over the pace of their AI rules. The proposed moratorium on state AI laws will test how far the pendulum will swing, as large bipartisan coalitions of state AGs and state legislators rallied against the ban. The New York and Texas state legislatures have both recently passed AI bills. Whether either state’s legislation is signed into law, and whether the Cruz-drafted moratorium overcomes an amendment on the Senate floor, are the next big questions.