In a decisive 99-1 vote, the U.S. Senate on Tuesday removed a controversial provision from a major budget bill that would have blocked states from regulating artificial intelligence. The move followed the collapse of a last-minute compromise between key senators and came after a wave of bipartisan opposition. Critics, including dozens of state attorneys general and numerous consumer groups, argued the moratorium would harm consumers and allow Big Tech to operate without crucial oversight.
The vote marks a significant setback for tech lobbyists and lawmakers seeking to centralize AI policy at the federal level, handing a major victory to advocates for states’ rights in governing emerging technology.
The provision was originally introduced by Senator Ted Cruz (R-TX) as part of President Donald Trump’s budget reconciliation package, known as the “One Big Beautiful Bill Act”. It proposed a ten-year ban on states creating or enforcing their own laws related to AI. The path to its removal, however, was paved with high-stakes political maneuvering that played out in the final hours of debate.
Over the weekend, Senator Marsha Blackburn (R-TN) had reached a compromise with Cruz to shorten the proposed ban to five years. But by Monday, Blackburn had reversed her position entirely, introducing an amendment with Senator Maria Cantwell (D-WA) to strip the provision from the bill altogether.
In a formal statement, Blackburn explained her decision, emphasizing the need for state-level protections in the absence of comprehensive federal law, saying “Until Congress passes federally preemptive legislation… we can’t block states from making laws that protect their citizens.”
She added that the provision “could allow Big Tech to continue to exploit kids, creators, and conservatives.” The reversal reportedly left Cruz “visibly frustrated,” he blamed “outside interests” for the deal’s collapse as he urged the chamber to remove it.
A Broad Coalition Mobilizes in Opposition
The opposition to the moratorium was exceptionally broad and cut across party lines. A powerful coalition mobilized to fight the measure, warning it would leave consumers vulnerable to AI-driven harms. A bipartisan group of 40 state attorneys general had previously written to congressional leaders to oppose the preemption clause, arguing that states serve as the primary defenders of consumer rights.
California Attorney General Rob Bonta was a vocal critic, arguing that “states must be able to protect their residents by responding to emerging and evolving AI technology.”
This sentiment was echoed by a diverse array of organizations. Consumer advocacy groups like the Consumer Federation of America, which called the five-year compromise proposal even “more dangerous for consumers,” worried about unchecked algorithmic bias in lending and housing. Civil rights groups, unions, and even faith-based organizations all lined up against the federal ban, citing fears of discrimination, worker exploitation, and a lack of accountability.
Silicon Valley’s Push for Federal Preemption
The push for the moratorium was championed by many prominent figures in Silicon Valley and their lobbyists. OpenAI’s Sam Altman and a16z’s Marc Andreessen were among those who backed the so-called “AI moratorium.” Their central argument was that a “patchwork” of fifty different state-level regulations would create a compliance nightmare, stifle innovation, and put U.S. companies at a disadvantage globally.
This debate also exposed a significant rift within the tech industry itself. While many companies lobbied for federal preemption, AI safety and research company Anthropic took a firm stand against it. It was reported in May that Anthropic was actively lobbying Congress to vote against the bill, a move that reportedly angered some in the Trump administration.
Anthropic’s stance is consistent with its past policy arguments. The company has previously clashed with chipmaker Nvidia over the necessity of strong U.S. export controls on AI technology to maintain a strategic advantage over China. In that debate, Anthropic argued that “maintaining America’s compute advantage through export controls is essential for national security and economic prosperity.”
This contrasts sharply with competitors like OpenAI, which has actively lobbied the Trump administration for lighter regulation and an accelerated AI development framework. The administration has shown a willingness to streamline rules, recently rescinding a Biden-era AI chip export rule that a Commerce Department spokesperson described as “overly complex, overly bureaucratic, and would stymie American innovation.”
The Senate’s vote effectively returns the power to regulate AI to the states, at least for now. Senator Thom Tillis (R-NC) was the sole vote against the amendment to remove the moratorium. The outcome is a significant win for the coalition of state officials and advocacy groups who fought for local control over one of the 21st century’s most transformative technologies. It underscores the deep divisions and complex challenges that Congress faces as it grapples with establishing a national framework for AI governance.
