WASHINGTON (AP) — House Republicans shocked tech industry observers and angered state governments by including a clause in their “big, beautiful” tax bill that would prohibit states and localities from regulating artificial intelligence (AI) for ten years. This brief yet impactful provision, embedded in the House Energy and Commerce Committee’s extensive markup, would greatly benefit the AI industry, which has lobbied for uniform and light regulation as companies develop transformative AI technologies. However, the clause faces significant hurdles in the U. S. Senate, where procedural rules, such as the Byrd Rule, may prevent its inclusion in the GOP legislation. Sen. John Cornyn (R-Texas) expressed doubt about the clause’s survival, noting the Byrd Rule requires budget reconciliation bills to focus on budgetary issues rather than broad policy changes. “That sounds to me like a policy change, ” he said, emphasizing its unlikely passage. Lawmakers from both parties have shown interest in AI regulation, with many introducing bills, including bipartisan efforts, but progress has been slow due to Congressional divisions. An exception is a bipartisan bill expected soon to be signed into law by President Donald Trump, which imposes stricter penalties on distributing intimate “revenge porn” images, including those generated by AI, without consent. Sen. Bernie Moreno (R-Ohio) argued for federal regulation due to AI’s borderless nature, stating that a patchwork of 50 state laws is impractical. Nonetheless, he remained uncertain about the House proposal’s prospects in the Senate. The AI provision bans states and political subdivisions from enforcing any laws regulating AI models, systems, or automated decision systems. This could invalidate state regulations on AI applications in business, research, utilities, education, and government decision-making, affecting systems from popular AI like ChatGPT to tools determining hiring or housing eligibility. The proposal aligns with a broader Trump administration effort to eliminate regulations that limit AI’s risks and inherent bias. Meanwhile, about half of U. S.

states have passed laws restricting AI deepfakes in political campaigns, driven by concerns over AI-generated deceptive media affecting global 2024 elections. California State Senator Scott Wiener, a Democrat, condemned the Republican proposal as “truly gross, ” criticizing Congress’s failure to regulate AI responsibly while simultaneously barring states from acting. A bipartisan group of state attorneys general also opposed the bill in a letter, warning of federal overreach undermining state efforts, as highlighted by South Carolina Attorney General Alan Wilson (R). Amid the debate, AI industry leaders continue advancing research while vying to develop dominant AI systems. They advocate for uniform, minimal federal regulation to compete internationally, especially with Chinese firms. OpenAI CEO Sam Altman testified to the Senate that a “patchwork” of regulations would hinder innovation, urging a single, light-touch federal framework. At the same hearing, Sen. Ted Cruz proposed a 10-year “learning period” banning states from comprehensive AI regulations, seeking a level playing field for AI developers. Altman expressed support for a unified federal approach, despite uncertainty about the exact meaning of a 10-year delay. Microsoft president Brad Smith cautiously endorsed allowing the federal government to lead regulation, likening it to nurturing early internet commerce under limited U. S. regulation, emphasizing the need to resolve details around product safety and pre-release reviews. This stance marks a shift for executives like Altman and Smith, who previously supported AI regulation and praised pioneering state measures, such as facial recognition safeguards in Washington. Ten Senate Republicans have shown sympathy for a national AI regulatory framework, though bipartisan consensus sufficient to overcome a filibuster remains uncertain. Sen. Mike Rounds (R-South Dakota) supported federal regulation to avoid a “real mess” from disparate state laws, emphasizing Congress’s role in overseeing interstate commerce involving AI. —————— Reporting by O’Brien in Providence, Rhode Island; contributions from Ali Swenson (New York), Jesse Bedayn (Denver), Jeffrey Collins (Columbia, SC), and Trân Nguyễn (Sacramento, CA).