The United States is on the brink of introducing a landmark federal policy that would prevent individual states from enacting their own regulations on artificial intelligence (AI). This proposed shift in regulatory power is embedded in the One Big Beautiful Bill Act (OBBBA) 2025, a comprehensive 1,000-page legislative package backed by President Donald Trump. The bill narrowly cleared the House of Representatives last week with a 215-214 vote.
Officially labeled HR.1, the bill combines several key policy reforms on issues like healthcare, immigration, taxation, and technology, and is central to President Trump’s domestic agenda.
A particularly contentious element of the bill is Section 43201, which introduces a 10-year moratorium on state-level AI laws. This section mandates that no state or local government can create or enforce regulations pertaining to AI models or automated decision-making systems during the specified period. The U.S. Department of Commerce would instead receive funding to upgrade federal IT systems with commercially available AI tools, focusing on automation, service delivery, and cybersecurity.
A Nationwide AI Freeze?
If passed by the Senate and signed into law, the measure would override more than 60 AI-related laws already in effect across U.S. states, many of which address algorithmic bias, surveillance, and ethical AI use. The bill’s sweeping language may also extend the pause to various non-AI computational technologies, depending on their classification.
Supporters: Innovation Over Interference
Proponents of the federal preemption include Republican lawmakers, major tech companies, industry lobby groups, and free-market think tanks. They argue that the current state-by-state approach leads to regulatory confusion and stifles innovation. A unified federal standard, they say, would provide clarity and enable U.S. firms to remain competitive—especially against Chinese tech giants.
Notably, OpenAI supported the idea in its recommendations to Trump’s AI Action Plan, even advocating for restrictions on AI models originating from China’s DeepSeek, citing privacy and security risks.
Critics: A Risky Rollback of Rights
Opposition has come from Democrats, some Republicans, civil society organizations, and AI ethics experts who warn that the bill might put vulnerable populations at risk by eliminating state-level consumer protections. Several state lawmakers, attorneys general, and advocacy groups say the federal government’s sweeping control violates the Tenth Amendment, which reserves certain powers for the states.
Critics also point to the bill’s vague definition of “automated decision systems,” fearing it could block a wide range of important regulations—from protections against hiring discrimination by AI to bans on harmful deepfakes.
Divided Tech Industry
Tech leaders are not uniformly aligned on this issue. While OpenAI’s Sam Altman and Scale AI’s Alexandr Wang endorsed a single national standard, others like Dario Amodei, CEO of Anthropic, expressed concern about the 10-year freeze, likening it to “ripping out the steering wheel” with no way to regain control.
What Lies Ahead
The bill now heads to the U.S. Senate, where it faces significant scrutiny. Senators on both sides of the aisle are expected to challenge the inclusion of the AI moratorium under the Byrd Rule, which restricts unrelated policy items in budget reconciliation legislation.
In addition to AI-related provisions, OBBBA also proposes to roll back green energy tax incentives for electric vehicles and clean infrastructure, while allocating billions for border security, including technologies like ground sensors, surveillance drones, and tunnel detection systems.
As the debate continues, the outcome of this legislation could not only reshape U.S. AI governance but also set a precedent for regulatory frameworks around the world—including in tech-emerging nations like India.
