A provision quietly inserted into the federal budget reconciliation bill — and now passed by the US House of Representatives — would ban states and local governments from passing or enforcing any laws regulating artificial intelligence (AI) for the next 10 years.
This sweeping federal preemption would directly undercut Maryland’s existing AI laws, including newly passed protections against deepfakes, child exploitation online, and consumer data misuse.
It would also prevent counties from adopting or enforcing local policies in response to emerging threats, constituent concerns, or service innovations involving AI.
Equally concerning for local governments, the moratorium would limit state and county authority over infrastructure like data centers, which rely on AI systems to operate. By restricting local zoning authority, the proposal could increase costs for ratepayers and infringe on county land use decisions.
Because Congress has yet to pass comprehensive AI legislation, this 10-year freeze would expose communities across the country to a host of risks — from cyberattacks and financial fraud to discrimination, privacy violations, and harmful algorithmic impacts on children, with no ability for states or counties to act.
Across the country, states and local governments have developed thoughtful, bipartisan AI legislation, collaborating closely with industry, academic experts, and the public. In contrast, Congress has failed to respond with meaningful national standards, making this proposed moratorium especially concerning.
In a letter this week, the National Conference of State Legislatures (NCSL) urged Congress to oppose the provision:
States have demonstrated leadership on critical issues in the technology space, often well in advance of federal action. By implementing a blanket moratorium on state laws, Congress forfeits the benefits of this policy leadership and eliminates opportunities to test and refine regulatory models through localized experimentation.
The bill now heads to the US Senate for consideration.
Stay tuned to Conduit Street for more information.
