The US Senate voted 99-1 on July 1, to remove a proposed 10-year federal ban on state regulation of AI from President Donald Trump’s tax-cut and spending bill.

The amendment was introduced by Republican Senator Marsha Blackburn and passed during an extended session.

Republican Senator Thom Tillis cast the only dissenting vote.

The original bill would have allowed states to regulate AI only if they opted out of a US$500 million federal AI infrastructure fund.

Major AI companies, including Google, supported federal preemption to avoid inconsistent state rules.

Blackburn initially supported a five-year compromise allowing some state regulation but later withdrew her support, saying it didn’t go far enough.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ The growing divide in AI regulatory approaches reflects deeper federal-state tensions

The Senate’s near-unanimous vote to strike down the AI regulation ban highlights an intensifying debate about which level of government should oversee emerging technologies.

This regulatory tension follows a pattern where tech companies have consistently pushed for federal preemption of state laws, arguing that a patchwork of regulations creates compliance challenges and hinders innovation1.

Multiple states had already begun crafting their own AI regulations in response to perceived federal inaction, with state attorneys general taking increasingly active roles in technology governance2.

The rejected moratorium represented an unusually broad attempt to preempt state authority, which is not typically seen in other technology sectors where federal and state regulations often coexist.

The overwhelming bipartisan opposition to the ban suggests growing congressional sensitivity to state sovereignty concerns, particularly in areas where states have historically protected consumer interests.

2️⃣ Tech industry’s regulatory preferences face growing political headwinds

Major AI companies like Google and OpenAI have consistently advocated for national regulatory frameworks that would preempt state laws, similar to their earlier approaches with privacy and content moderation regulations1.