Illustration: Sarah Grillo/Axios
An effort to stop states from regulating AI is all but dead after a flood of opposition overwhelmed repeated attempts to get the provision across the finish line.
Why it matters: There's an appetite to regulate AI outside of Washington, and Senate Commerce Committee Chair Ted Cruz wasn't able to overcome it despite support from the Trump administration and some of the wealthiest companies in the world.
- Governors, state legislators, attorneys general from red and blue states, conservative pundits, faith-based organizations, labor unions, and more than 100 groups advocating for consumers and kids called on Congress to remove the provision.
Driving the news: 99 senators, including Cruz himself, ended up voting to strip the AI moratorium from the budget bill early Tuesday morning.
- Only Sen. Thom Tillis voted to keep the pause in the bill.
Catch up quick: To clear the Byrd Rule, Cruz tied the moratorium to AI and broadband grants. That backfired.
- Groups quickly mobilized to warn that the full $42 billion in BEAD funds — not just $500 million appropriated for AI deployment — would be at risk for states that chose to regulate, bringing more scrutiny from the parliamentarian.
- When Sen. Marsha Blackburn, the loudest Republican against the moratorium, struck a deal with Cruz on a watered-down pause, groups jumped on what they said was a loophole that would mean losing Tennessee AI protections for kids and artists.
- Blackburn backed out, and returned to her original plan of eliminating the moratorium fully, joining forces with Sens. Maria Cantwell and Ed Markey.
What they're saying: "The Senate came together tonight to say that we can't just run over good state consumer protection laws," Cantwell said in a statement following the amendment's defeat.
- "States can fight robocalls, deepfakes and provide safe autonomous vehicle laws," Cantwell said. "This also allows us to work together nationally to provide a new federal framework on artificial intelligence that accelerates U.S. leadership in AI while still protecting consumers."
- Economic Security Project's Anna Aurilio: "Senator Cruz and his Big Tech pals tried to pull a fast one on all of us by forcing states to accept an entire decade of regulation-free AI development, no matter the risks."
The other side: Groups representing tech companies that wanted Congress to save them from a state-by-state patchwork of AI laws are facing a major setback.
- "We're disappointed by the outcome of the Senate vote. Without a unified national approach, American innovation will be buried under a patchwork of red tape. And China will be the one that benefits. We can't allow that to happen," Doug Kelly, CEO of the Meta-backed American Edge Project, said in a statement to Axios.
- CTA's Michael Petricone: "This failure leaves American startups to navigate a chaotic patchwork of state laws — an impossible environment for innovation."
What's next: Advocates are now calling Republicans in the House to make sure the provision stays out of the reconciliation bill, Aurilio added.
- Some House Freedom Caucus members, including Rep. Marjorie Taylor Greene, have spoken out against the moratorium.
