A proposed federal moratorium on state-level AI regulation and enforcement passed out of the U.S. House Energy and Commerce Committee early Wednesday morning. The proposal has drawn criticism from Democratic lawmakers in the House and a bipartisan group of interstate policymakers.
In a vote of 29-24, the House E&C committee voted to advance the moratorium after Democrats aimed to remove the provision.
IAPP Managing Director, Washington, D.C., Cobun Zweifel-Keegan, CIPP/US, CIPM, analyzed the proposal earlier this week.
The moratorium is part of a proposed budget reconciliation bill, and if passed by the full Congress, would halt any state-level AI laws or laws that regulate AI systems or automated-decision making technology. To pass the reconciliation bill, Congress would only need a simple majority.
According to Politico, Committee Chair Brett Guthrie, R-Ky., defended the moratorium, saying it undergirds the reconciliation bill's USD500 million investment in AI technology systems. "To protect the integrity of this project," Guthrie said, "we're implementing guardrails that protect against state-level AI laws that can jeopardize our technological leadership."
U.S. President Donald Trump and his administration have been clear about promoting AI innovation over regulation or obstacles to AI development in the geopolitical AI race against China.
State-level response
In comments provided to the IAPP, Maryland state Senator Katie Fry Hester, D-Md., who also co-signed a letter challenging the proposed moratorium, said, "the states have always been a laboratory for democracy" and many are picking up where the federal government has left off. She cited the fact that Congress has not yet passed federal privacy legislation, so many state legislators are aiming to work together to limit the state-level patchwork across the country, giving businesses more legal certainty.
The letter, which is co-authored by Hester, as well as state lawmakers from Colorado, Connecticut, Minnesota, New York, Vermont and Virginia, along with New York University Professor Gary Marcus, characterized the moratorium as "a major step backwards" and suggested it is likely at odds with the 10th Amendment.
"This would be deeply problematic under any circumstance, but it's especially dangerous in the context of rapidly evolving technology already reshaping healthcare, education, civil rights, and employment," they write. "If enacted, the statute would preempt states from acting — even if AI systems cause measurable harm, such as through discriminatory lending, unsafe autonomous vehicles, or invasive workplace surveillance."
In a separate letter, the National Conference of State Legislatures, a bipartisan organization that represents legislatures in states, territories, commonwealths and Washington, D.C., expressed its "strong opposition" to the 10-year moratorium, arguing it's "an infringement on states' authority to effectively legislate in this rapidly evolving and consequential policy domain, and in our view, is a violation of the Byrd law."
In his article analyzing the moratorium, the IAPP's Zweifel-Keegan breaks down the how the Byrd rule comes into play in the reconciliation bill.
"States have historically served as vital laboratories of democracy, crafting policies that reflect the unique needs, values and priorities of their constituents," the NCSL writes. "In the realm of AI — where implications for privacy, cybersecurity, fraud, workforce, education, and public safety remain profound and continually evolving — legislative flexibility is essential. A federally imposed moratorium would not only stifle innovation but potentially leave communities vulnerable in the face of rapidly advancing technologies."
The push ahead for an AI law moratorium
In a recent Lawfare article, Kevin Frazier and Adam Thierer wrote the proliferation of AI bills "could undermine the nation's efforts to stay at the cutting edge of AI innovation at a critical moment when competition with China for global AI supremacy is intensifying." They called on Congress "to get serious about preemption."
They also argue that the "important goals of encouraging a robustly innovative national AI marketplace and strong strategic base to compete with China will be undermined unless Congress preempts the development of a patchwork of conflicting and costly state and local regulatory policies."
A spokesman for Colorado Gov. Jared Polis, a Democrat, said he supports the moratorium, saying, "He is generally supportive of a federal moratorium to give Congress a chance to figure this out and create a true 50-state solution to smart AI protections."
Just last year, Polis signed the Colorado AI Act, the first of its kind in the U.S.
However, in an analysis of the law at the time, Zweifel-Keegan and former IAPP Westin Fellow Andrew Folks, CIPP/E, CIPP/US, CIPM, pointed out that Polis "simultaneously released a signing statement contextualizing his approval of the bill. Most of the act's major provisions enter into effect 1 Feb. 2026, though the Colorado legislature reportedly intends to study and possibly revise the bill before that time."
Looking ahead
Speaking this week at IAPP AI Governance Global Europe 2025 in Dublin, Ireland, Daniel Pietragallo, AIGP, CIPP/US, FIP, special counsel at Buchhalter Law Firm and former Colorado Senior Assistant Attorney General, said the provision "is very well written. This is very narrowly tailored to get around any objections."
If ultimately passed by Congress, the provision will be challenged legally "to see if it meets certain requirements" under the Byrd exemption, but, he said, "I think it's got a really decent chance of passing through the U.S. Congress and signed into law by the current administration."
On the question of how states could potentially circumnavigate the proposed moratorium, Pietragallo said, "the way the law is written, it precludes enforcement for anything that involves AI or ATM, so that not only affects the Colorado AI Act, but also the Colorado Privacy Act, which would now preclude enforcement for situations where companies weren't allowing consumers to take advantage of their opt-out rights."
Pietragallo, however, noted the Colorado law "says that it's a consumer protection violation to violate the statute, and so while you're precluded from enforcing the AI governance statute, maybe states aren't precluded from taking the position that some of the conduct engaged in by the companies represents an unfair and deceptive practice. And you could bring an action under that theory and leave the words 'automated decision making' out."
Jedidiah Bracy is the editorial director for the IAPP.
IAPP staff writer Caitlin Andrews contributed reporting for this article.
