California and other states are rushing to regulate the development of AI, but a provision in House Republicans’ budget reconciliation bill could stop them from doing so for a decade.
The section of the bill from the House Committee on Energy and Commerce contains a provision that could stop states and local governments from enforcing “any law or regulation” on most AI software for the next 10 years. If enacted, this measure would freeze efforts in states including California and Colorado to set guardrails for the development and deployment of AI software.
Republicans argue the moratorium is necessary to give Congress time to pass a comprehensive policy governing AI and avoid a patchwork of policies. And while critics of the moratorium agree a federal law would be better than state-by-state regulations on AI, they’re skeptical that policy is coming quickly enough to address a ballooning industry.
“I do think that we should have a debate on what AI guardrails should look like instead of having 50 different pieces of legislation, but Congress isn’t doing it,” Democratic Rep. Ami Bera of California told NOTUS. “So that’s why you see a lot of states enacting different legislation — Congress specifically needs to come up with a framework.”
Republican Rep. Jay Obernolte of California told NOTUS he is confident the moratorium will make it to the final reconciliation bill. But he said he hopes that comprehensive AI regulation makes it through Congress in “months, not years.”
“The idea is not to have a moratorium; the idea is to replace the moratorium with the federal framework with some preemptive guidelines,” he said.
There’s a reason for Bera’s and others’ skepticism. No bills comprehensively regulating AI development have been introduced this Congress. And House leadership did not continue the Bipartisan Task Force on Artificial Intelligence, an effort to help Congress draft AI legislation, this year.
Some of the largest tech companies have lobbied Congress to stop states from regulating AI, Politico reported.
Jonathan Mehta Stein, chair of the California Initiative for Technology and Democracy, characterized the moratorium in the budget reconciliation bill as a “handout to Big Tech.”
“This provision gives Big Tech what it wants, which is: no rules, no accountability and billions in profit,” Mehta Stein said. “They aren’t passing this moratorium in tandem with comprehensive AI regulations. They’re just passing a get-out-of-jail-free card from state legislation.”
The moratorium would be particularly pivotal in California. Since most of the advanced AI labs are located there, the California Legislature has an outsized influence in regulating how AI is developed.
Last year, Democratic state Sen. Scott Wiener pushed for comprehensive AI legislation that was intended to create safeguards for the development of frontier AI models in California. The bill passed the California Legislature but was vetoed by Gov. Gavin Newsom.
In February, Wiener reintroduced a more concise version of the bill meant to create additional protections for whistleblowers and create incentives for responsible AI development. This type of legislation would be put on ice under the House budget reconciliation bill.
The moratorium also could bring unintended consequences, critics say.
“It’s framed in such an overbroad way that at this moment, where every company is saying that they’re an AI company, it’s entirely unclear what sort of aperture the contours this moratorium would end up being,” Zeve Sanderson, founding director of the NYU Center for Social Media and Politics, told NOTUS.
For example, financial services companies might use AI to determine optimal mortgage rates, Sanderson said. If the AI ends up using discriminatory practices in its determination, states could be unable to enforce legislation to stop it, he said.
Obernolte said that the provision takes this issue into account and that states can still enforce their existing laws on consumer protection even if AI is involved.
“The language is very specifically written to exclude laws that apply broadly and not specifically to just AI,” Obernolte said. “Consumer protection laws that states have already have in place, or fraudulent business practices, all of those would still be operative and still be enforceable against the deployment of AI.”
This story was produced as part of a partnership between NOTUS — a publication from the nonprofit, nonpartisan Allbritton Journalism Institute — and NEWSWELL, home of Times of San Diego, Santa Barbara News-Press and Stocktonia.
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