House Republicans have inserted a controversial provision into a federal budget bill that would block states from regulating artificial intelligence. The measure would impose a 10-year freeze on new state or local AI laws unless they actively promote AI development.
The last-minute addition appeared just two days before Tuesday’s committee markup. On Wednesday, the House Energy and Commerce Committee advanced the broader reconciliation package containing the AI provision.
The sweeping language defines AI systems broadly to include:
- Facial recognition technology
- Generative AI tools
- Algorithmic decision-making for housing, hiring, and public benefits
This comes as multiple AI systems face legal challenges. Property software firm RealPage currently faces lawsuits from state attorneys general alleging rent-fixing through algorithms. SafeRent recently settled a discrimination case involving biased tenant scoring systems.
Several states have already implemented AI safeguards that could be nullified:
→ New York requires bias audits for hiring algorithms
→ California mandates disclosure of AI-generated healthcare communications
“Corporations want immunity as their algorithms deny housing, jobs and benefits,” said Lee Hepner of the American Economic Liberties Project. “This AI regulation ban proposal gives it to them.”
The move aligns with Trump administration priorities. President Trump rescinded Biden’s AI safety order upon taking office. Tech industry allies argue regulation stifles innovation, a position reflected in the bill.
Legal experts warn the AI regulation ban proposal creates dangerous gaps in consumer protections. As algorithms increasingly control life opportunities, the battle over oversight intensifies.
The AI regulation ban proposal’s fate remains uncertain as the budget bill progresses. Its passage could prevent states from addressing algorithmic bias until 2035, leaving federal agencies as the sole regulators.
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