Ban on AI State Regulation Removed From Big Beautiful Bill

Senate Strips AI Regulation Ban from Trump's 'Big Beautiful Bill' in Overwhelming 99-1 Vote

Bipartisan opposition leads to dramatic reversal on controversial provision that would have blocked state AI laws for a decade

July 15, 2025

WASHINGTON — In a stunning defeat for the tech industry, the U.S. Senate voted 99-1 early Tuesday morning to remove a controversial provision from President Donald Trump's "One Big Beautiful Bill" that would have prevented states from regulating artificial intelligence for up to 10 years.

The dramatic reversal came after weeks of mounting bipartisan opposition from state officials, advocacy groups, and even some Republicans who initially supported the measure. The provision's removal represents one of the most significant policy defeats for major tech companies including Google, Meta, and OpenAI, which had lobbied heavily for the AI regulation moratorium.

The Provision That Sparked Outrage

The original House-passed version of the reconciliation bill included language that would have prohibited states and localities from enforcing "any law or regulation that limits, restricts, or otherwise regulates artificial intelligence models, artificial intelligence systems, or automated decision systems entered into interstate commerce" for a full decade.

House Republicans had quietly inserted the 450-word provision into the massive tax and spending package in May, with support from Energy and Commerce Committee Chairman Brett Guthrie (R-Ky.) and backing from the White House. The measure was designed to prevent what supporters called a "patchwork" of conflicting state regulations that could hamper AI innovation and America's competition with China.

However, the provision quickly drew fierce criticism when its scope became apparent. According to analysis by the Brennan Center for Justice, the moratorium would have overturned 149 existing state laws and blocked future regulations on AI systems.

Bipartisan Opposition Builds

Opposition to the AI provision transcended traditional party lines, uniting an unusual coalition of conservative Republicans, liberal Democrats, state officials, and advocacy groups.

Representative Marjorie Taylor Greene (R-Ga.), a typically staunch Trump ally, admitted she "hadn't read the entire" bill before voting for it and expressed regret over missing the AI provision. "I would have voted NO if I had known this was in there," Greene wrote on social media platform X on June 3.

Representative Thomas Massie (R-Ky.) emerged as one of the earliest and most vocal critics, posting pictures of the provision on X with warnings that it would allow AI companies to build massive data centers in residential areas without local oversight. "The Big Beautiful Bill contains a provision banning state & local governments from regulating AI," Massie wrote. "It's worse than you think."

The opposition grew to include 260 state lawmakers from both parties across all 50 states, who signed a letter voicing "strong opposition" to the provision. Forty state attorneys general from both parties also wrote to Congress urging its removal, warning that "the impact of such a broad moratorium would be sweeping and wholly destructive of reasonable state efforts to prevent known harms associated with AI."

Personal Stories Drive Opposition

The debate was intensified by personal accounts of AI-related harms. Megan Garcia, a Florida mother whose 14-year-old son died by suicide after prolonged interaction with an AI chatbot, wrote to lawmakers warning that "a moratorium gives companies free rein to create and launch products that sexually groom children and encourage suicide, as in the case of my dear boy."

Parents and advocacy groups argued that in the absence of federal action on AI safety, state laws provided crucial protections for children and consumers.

Cruz and Blackburn's Failed Compromise

Senate Commerce Committee Chairman Ted Cruz (R-Texas) initially championed the provision, arguing it was necessary to prevent states from "strangling AI deployment with EU-style regulation." When faced with growing opposition, Cruz attempted to broker a compromise with Senator Marsha Blackburn (R-Tenn.), who had emerged as a leading Republican critic.

Over the weekend before the vote, Blackburn and Cruz reached an agreement that would have reduced the moratorium from 10 years to five years and carved out exceptions for laws protecting children's online safety and artists' intellectual property rights. The revised version would have tied compliance to federal broadband funding rather than imposing an outright ban.

However, the compromise quickly unraveled. Steve Bannon, the former Trump strategist and MAGA media figure, along with legal activist Mike David, contacted Blackburn's office urging her not to "let the tech bros have their way." Blackburn also received pressure from parents' groups and creative organizations representing musicians concerned about AI theft of their work.

The Vote and Its Aftermath

By Monday evening, Blackburn had withdrawn her support for even the compromise version. She teamed up with Democratic Senator Maria Cantwell of Washington to introduce an amendment stripping the entire AI provision from the bill.

The Senate vote was overwhelming: 99 senators voted to remove the provision, with only Senator Thom Tillis (R-N.C.) — who had already announced he wouldn't seek reelection and opposed Trump's broader budget bill — voting to keep it. Even Cruz ultimately joined the vote to strip his own provision.

"This is a monumental win for Republican Governors, President Trump's one, big beautiful bill, and the American people," Arkansas Governor Sarah Huckabee Sanders, Trump's former press secretary, wrote on X.

Industry Response and Broader Implications

The defeat represents a significant setback for major technology companies that had argued the moratorium was necessary for innovation. OpenAI CEO Sam Altman had previously complained about the difficulty of complying with "50 different sets of regulations," while other tech executives warned that state-level AI laws could hamper American competitiveness against China.

The removal of the AI provision comes as states have increasingly moved to fill the regulatory void at the federal level. According to the National Conference of State Legislatures, lawmakers filed more than 1,000 AI-related bills in 2025, with 28 states and the Virgin Islands adopting at least 75 new measures.

Jim Steyer, founder and CEO of children's advocacy group Common Sense Media, celebrated the outcome: "The proposed ban that has now been removed would have stopped states from protecting their residents while offering nothing in return at the federal level."

Final Status and Implementation

President Trump signed the "One Big Beautiful Bill Act" into law on July 4, 2025, during a White House ceremony that combined the traditional Independence Day military family picnic with a celebration of the legislative victory. The signing came just one day ahead of Trump's self-imposed July 4 deadline.

The final House vote was 218-214 on July 3, 2025, with only Republicans Thomas Massie of Kentucky and Brian Fitzpatrick of Pennsylvania joining all Democrats in opposition. The Senate had previously passed the legislation 51-50 on July 1, with Vice President J.D. Vance casting the tie-breaking vote.

The bill is now fully enacted and operational as federal law. However, the removal of the AI provision means that state regulation of artificial intelligence will continue to develop across the country without federal preemption.

Official Congressional Analysis

Multiple official Congressional Budget Office reports analyzed the legislation's fiscal impact:

CBO Cost Estimates:

• CBO estimates the bill would increase total deficits by $3.4 trillion over the 2025-2034 period
• The legislation would increase debt held by the public at the end of 2034 to 124 percent of GDP, up from the baseline projection of 117 percent
• CBO estimates the bill would increase real GDP by 0.5 percent on average over the 2025-2034 period
• The Committee for a Responsible Federal Budget estimates the bill would add over $3.9 trillion to the national debt when including interest costs

Key CBO Publications:

1. Dynamic Economic Analysis (Publication 61486): Comprehensive analysis including macroeconomic effects
2. Senate Amendment Analysis (Publication 61534): CBO's cost estimate of the Senate substitute amendment
3. Distributional Effects Analysis (Publication 61422): Impact on different income groups
4. Original House Bill Analysis (Publication 61461): Initial House-passed version assessment

The episode highlights the growing political tensions around AI regulation and the difficulty of crafting federal policy for rapidly evolving technology. With the AI provision defeated, attention now turns to whether Congress will pursue a more targeted federal framework for AI governance, or whether states will continue to lead on this emerging issue.

---

Sources

1. PBS NewsHour. "Senate pulls AI regulatory ban from GOP bill after complaints from states." July 1, 2025. https://www.pbs.org/newshour/politics/senate-pulls-ai-regulatory-ban-from-gop-bill-after-complaints-from-states
2. TIME Magazine. "Senators Reject 10-Year Ban on State-Level AI Regulation." July 1, 2025. https://time.com/7299044/senators-reject-10-year-ban-on-state-level-ai-regulation-in-blow-to-big-tech/
3. Associated Press. "Senate strikes AI provision from the Republican tax bill after uproar." July 1, 2025. https://apnews.com/article/congress-ai-provision-moratorium-states-20beeeb6967057be5fe64678f72f6ab0
4. The Washington Post. "In dramatic reversal, Senate kills AI-law moratorium." July 1, 2025. https://www.washingtonpost.com/technology/2025/07/01/ai-moratorium-defeat-senate-silicon-valley/
5. TechCrunch. "US Senate removes controversial 'AI moratorium' from budget bill." July 1, 2025. https://techcrunch.com/2025/07/01/us-senate-removes-controversial-ai-moratorium-from-budget-bill/
6. NBC News. "'Big, beautiful bill' passes Senate without AI-law moratorium." July 1, 2025. https://www.nbcnews.com/tech/tech-news/big-beautiful-bill-ai-moratorium-ted-cruz-pass-vote-rcna215111
7. Reason Magazine. "Senate votes 99–1 to remove AI moratorium from 'Big, Beautiful Bill'." July 1, 2025. https://reason.com/2025/07/01/senate-votes-99-1-to-remove-ai-moratorium-from-big-beautiful-bill/
8. Poynter Institute. "'One Big Beautiful Bill' could block AI regulations for 10 years, leaving its harms unchecked." June 2025. https://www.poynter.org/fact-checking/2025/ai-regulation-ban-one-big-beautiful-bill-trump-congress/
9. Taft Law. "Legislative Update: Senate Removes Restrictions on AI Regulations from 'Big Beautiful Bill'." July 2025. https://www.taftlaw.com/news-events/white-house-toolkit/senate-removes-restrictions-on-ai-regulations-from-president-trumps-big-beautiful-bill/
10. CBS News. "House passes 'big, beautiful bill,' sending it to Trump's desk in 218-214 vote." July 3, 2025. https://www.cbsnews.com/news/house-vote-big-beautiful-bill-rules-committee/
11. NPR. "Trump on Fourth of July signs 'One Big Beautiful Bill' to implement his agenda." July 4, 2025. https://www.npr.org/2025/07/03/nx-s1-5454841/house-republicans-trump-tax-bill-medicaid
12. CNN Politics. "Trump signs agenda bill into law with July 4 celebration." July 4, 2025. https://www.cnn.com/2025/07/04/politics/donald-trump-policy-bill-celebration
13. NBC News. "Trump signs big tax cut and spending bill into law in July Fourth ceremony." July 4, 2025. https://www.nbcnews.com/politics/white-house/trump-signs-big-tax-cut-spending-bill-law-july-fourth-ceremony-rcna216753
14. Wikipedia. "One Big Beautiful Bill Act." Updated July 15, 2025. https://en.wikipedia.org/wiki/One_Big_Beautiful_Bill_Act
15. ABC News. "The 2 House Republicans who voted no on Trump's sweeping domestic policy bill." July 3, 2025. https://abcnews.go.com/Politics/2-house-republicans-voted-trumps-sweeping-domestic-policy/story?id=123459797

Official Congressional Reports:

16. Congressional Budget Office. "H.R. 1, One Big Beautiful Bill Act (Dynamic Estimate)." Publication 61486, June 17, 2025. https://www.cbo.gov/publication/61486
17. Congressional Budget Office. "Estimated Budgetary Effects of an Amendment in the Nature of a Substitute to H.R. 1, the One Big Beautiful Bill Act, Relative to CBO's January 2025 Baseline." Publication 61534, June 29, 2025. https://www.cbo.gov/publication/61534
18. Congressional Budget Office. "Preliminary Analysis of the Distributional Effects of the One Big Beautiful Bill Act." Publication 61422, May 2025. https://www.cbo.gov/publication/61422
19. Congressional Budget Office. "Estimated Budgetary Effects of H.R. 1, the One Big Beautiful Bill Act." Publication 61461, May 22, 2025. https://www.cbo.gov/publication/61461
20. Committee for a Responsible Federal Budget. "CBO Score Shows Senate OBBBA Adds Over $3.9 Trillion to Debt." July 2025. https://www.crfb.org/blogs/cbo-score-shows-senate-obbba-adds-over-39-trillion-debt
21. The Jackson Press. "Ban on AI State Regulation Removed From Big Beautiful Bill." July 2025. (Original source document)

Ban on AI State Regulation Removed From Big Beautiful Bill – The Jackson Press