Cruz plan moves ahead but was reportedly watered down amid Republican opposition.
Sen. Ted Cruz (R-Texas) presides over a subcommittee hearing on June 3, 2025 in Washington, DC. Credit: Getty Images | Chip Somodevilla
A Republican proposal to penalize states that regulate artificial intelligence can move forward without requiring approval from 60 senators, the Senate parliamentarian decided on Saturday. But the moratorium on state AI laws did not have unanimous Republican support and has reportedly been watered down in an effort to push it toward passage.
In early June, Sen. Ted Cruz (R-Texas) proposed enforcing a 10-year moratorium on AI regulation by making states ineligible for broadband funding if they try to impose any limits on development of artificial intelligence. While the House previously approved a version of the so-called “One Big Beautiful Bill” with an outright 10-year ban on state AI regulation, Cruz took a different approach because of the Senate rule that limits inclusion of “extraneous matter” in budget reconciliation legislation.
Under the Senate’s Byrd rule, a senator can object to a potentially extraneous budget provision. A motion to waive the Byrd rule requires a vote of 60 percent of the Senate.
As originally drafted, Cruz’s backdoor ban on state AI laws would have made it impossible for states to receive money from the $42 billion Broadband Equity, Access, and Deployment (BEAD) program if they try to regulate AI. He tied the provision into the budget bill by proposing an extra $500 million for the broadband-deployment grant program and expanding its purpose to also subsidize construction and deployment of infrastructure for artificial intelligence systems.
Punchbowl News reported today that Cruz made changes in order to gain more Republican support and comply with Senate procedural rules. Cruz was quoted as saying that under his current version, states that regulate AI would only be shut out of the $500 million AI fund.
This would seem to protect states’ access to the $42 billion broadband deployment fund that will offer subsidies to ISPs that expand access to Internet service. Losing that funding would be a major blow to states that have spent the last couple of years developing plans to connect more of their residents to modern broadband. The latest Senate bill text was not available today. We contacted Cruz’s office and will update this article if we get a response.
A spokesperson for Sen. Maria Cantwell (D-Wash.) told Ars today that Cruz’s latest version could still prevent states from getting broadband funding. The text has “a backdoor to apply new AI requirements to the entire $42.45 billion program, not just the new $500 million,” Cantwell’s representative said.
Plan has opponents from both parties
Senate Parliamentarian Elizabeth MacDonough ruled that several parts of the Republican budget bill are subject to the Byrd rule and its 60-vote requirement, but Cruz’s AI proposal wasn’t one of them. A press release from Senate Budget Committee Ranking Member Jeff Merkley (D-Ore.) noted that “the parliamentarian’s advice is based on whether a provision is appropriate for reconciliation and conforms to the limitations of the Byrd rule; it is not a judgement on the relative merits of a particular policy.”
Surviving the parliamentarian review doesn’t guarantee passage. A Bloomberg article said the parliamentarian’s decision is “a win for tech companies pushing to stall and override dozens of AI safety laws across the country,” but that the “provision will likely still be challenged on the Senate floor, where stripping the provision would need just a simple majority. Some Republicans in both the House and Senate have pushed back on the AI provision.”
Republicans have a 53–47 edge in the Senate. Cantwell and Sen. Marsha Blackburn (R-Tenn.) teamed up for a press conference last week in which they spoke out against the proposed moratorium on state regulation.
Cantwell said that 24 states last year started “regulating AI in some way, and they have adopted these laws that fill a gap while we are waiting for federal action. Now Congress is threatening these laws, which will leave hundreds of millions of Americans vulnerable to AI harm by abolishing those state law protections.”
Blackburn said she agreed with Cantwell that the AI regulation proposal “is not the type of thing that we put into reconciliation bills.” Blackburn added that lawmakers “are working to move forward with legislation at the federal level, but we do not need a moratorium that would prohibit our states from stepping up and protecting citizens in their state.”
Sens. Ron Johnson (R-Wis.) and Josh Hawley (R-Mo.) have also criticized the idea of stopping states from regulating AI.
Cruz accused states of “strangling AI”
Cruz argued that his proposal stops states “from strangling AI deployment with EU-style regulation.” Under his first proposal, no BEAD funds were to be given to any state or territory that enforces “any law or regulation… limiting, restricting, or otherwise regulating artificial intelligence models, artificial intelligence systems, or automated decision systems entered into interstate commerce.”
The Cantwell/Blackburn press conference also included Washington Attorney General Nick Brown, a Democrat; and Tennessee Attorney General Jonathan Skrmetti, a Republican. Brown said that “Washington has a law that prohibits deep fakes being used against political candidates by mimicking their appearance and their speech,” another “that prohibits sharing fabricated sexual images without consent and provides for penalties for those who possess and distribute such images,” and a third “that prohibits the knowing distribution of forged digital likenesses that can be used to harm or defraud people.”
“All of those laws, in my reading, would be invalid if this was to pass through Congress, and each of those laws are prohibiting and protecting people here in our state,” Brown said.
Skrmetti said that if the Senate proposal becomes law “there would be arguments out there for the big tech companies that the moratorium does, in fact, preclude any enforcement of any consumer protection laws if there’s an AI component to the product that we’re looking at.”
Other Republican plans fail Byrd rule test
Senate Democrats said they are pleased that the parliamentarian ruled that several other parts of the bill are subject to the Byrd rule. “We continue to see Republicans’ blatant disregard for the rules of reconciliation when drafting this bill… Democrats plan to challenge every part of this bill that hurts working families and violates this process,” Merkley said.
Merkley’s press release said the provisions that are subject to a 60-vote threshold include one that “limits certain grant funding for ‘sanctuary cities,’ and where the Attorney General disagrees with states’ and localities’ immigration enforcement,” and another that “gives state and local officials the authority to arrest any noncitizen suspected of being in the US unlawfully.”
The Byrd rule also applies to a section that “limits the ability of federal courts to issue preliminary injunctions or temporary restraining orders against the federal government by requiring litigants to post a potentially enormous bond,” and another that “limits when the federal government can enter into or enforce settlement agreements that provide for payments to third parties to fully compensate victims, remedy harm, and punish and deter future violations,” Merkley’s office said.
The office of Senate Democratic Leader Chuck Schumer (D-N.Y.) said yesterday that the provision requiring litigants to post bonds has been struck from the legislation. “This Senate Republican provision, which was even worse than the similar House-passed version, required a plaintiff seeking an emergency court order, preliminary injunction, or a temporary restraining order against the Trump Administration or the federal government to pay a costly bond up front—essentially making the justice system pay-to-play,” Schumer’s office said.
Schumer said that “if enacted, this would have been one of the most brazen power grabs we’ve seen in American history—an attempt to let a future President Trump ignore court orders with impunity, putting him above the law.”
Jon is a Senior IT Reporter for Ars Technica. He covers the telecom industry, Federal Communications Commission rulemakings, broadband consumer affairs, court cases, and government regulation of the tech industry.
