It was a late-night drama, but the result is crystal clear: the U.S. Senate voted 99–1 on July 1, 2025 to remove the AI moratorium from the sweeping tax and spending package informally known as the “One Big Beautiful Bill.” That provision, which would have blocked states from regulating AI for a full 10 years, is now gone.
Senators Marsha Blackburn (R‑TN) and Maria Cantwell (D‑WA) introduced the amendment to strike the ban after earlier proposals (even a weakened five-year version) failed to secure consensus. The lone dissenter was Senator Thom Tillis (R‑NC).
What This Now Means
The removal of the AI moratorium is a signal that federalism still counts when it comes to AI.
States Are Free to Act
Once the House sends up the final bill and it becomes law, states like California, New York, Illinois, and Texas can keep going with AI-specific rules. For example:
- Mandatory disclosures of AI model use
- Deepfake labeling requirements
- Audits of biased algorithms
- Restrictions on AI in hiring or law enforcement
Each of these is now back on the table.
Fed vs. State Balance
Big Tech had argued that a patchwork of state regulations would hinder innovation, especially against global competitors. But critics said the moratorium would have stripped all guardrails, especially around children’s safety, privacy, and online harassment. The Senate’s vote reflects concern that without meaningful federal protections, states must step in.
What’s Left Unaffected
This change doesn’t touch federal AI efforts already underway, like the Take It Down Act, which bans non-consensual intimate deepfakes, or the President’s Executive Order 14179, aimed at bolstering AI guidance. It simply affirms states’ authority to pursue local safeguards rather than requiring federal alignment.
What Comes Next
- House Review: The Senate-passed version now goes to the House, where negotiations might reintroduce AI clauses, but after a 99–1 Senate margin, pushing them back would be politically tough.
- State Initiatives: Expect swift action from states. California’s “Safe AI Act,” Massachusetts’ algorithm audit proposals, and other efforts are likely to accelerate.
- Legal Strategy Shift: Businesses and law firms must update compliance playbooks. Instead of preparing for one federal rule, they’ll need to navigate a mosaic of evolving state laws. Litigation strategies will need to account for shifting jurisdictional standards.
Why Legal Pros Should Take Note
This is a major development with significant ramifications for the legal sector. Attorneys and in-house counsel now face a new regulatory landscape that’s dynamic and decentralized:
- Drafting and enforcing multistate compliance policies
- Predicting where AI regulation will emerge next
- Advising on pre‑emption risks and jurisdictional traps
- Engaging in rulemaking and legislative advocacy at both state and federal levels
And this complicated matrix is not just Big Tech’s concern anymore, it is altering the legal universe, and doing so at full throttle.
Final Take
With the AI moratorium removed, states regained their regulatory footing and the national AI conversation just got a lot more interesting. Whether federal policymakers later choose to write a cohesive framework or leave regulation in the hands of local governments is still up in the air. But one thing is certain: AI attorneys are now in hot demand.
