Federal proposal to bar state AI regulations hits bipartisan resistance in Minnesota

WASHINGTON — Buried in the federal budget bill moving through Congress is is a 10-year moratorium on states regulating the rapidly evolving artificial intelligence industry.

The move has drawn ire from state legislators across the country and brought together lawmakers from across the aisle in St. Paul.

“I believe in states’ rights,” said Minnesota state Sen. Eric Lucero, a Republican representing counties northwest of the Twin Cities. “They exist as laboratories of democracy.”

From bills on biometric data privacy to “neuro” rights, Lucero said he is concerned with Big Tech’s invasion into ordinary Americans’ privacy.

So is Sen. Erin Maye Quade, a Democrat who represents the south suburbs and has brought bills to ban AI’s uses, from setting dynamic pricing to so-called deepfake sexual imagery.

“It’s one of a few nonpartisan issues that still exists,” Quade said.

Proponents believe AI will fuel the next business revolution, but there is a contingent that wants to build guardrails.

The federal partisan budgetary reconciliation bill emerging this week from the Senate parliamentarian’s review includes language that would handcuff state lawmakers from regulating artificial intelligence for at least for 10 years.

The language in the Senate takes a less drastic position than the House-passed version, threatening to withhold federal broadband dollars should a state pass any AI regulations.

The goal, say proponents, is to prevent states from creating a patchwork of rules that strangles the emerging technology in the U.S. while China develops its own.

California Republican Rep. Jay Obernolte, seen as a lead AI proponent in Congress, has cited U.S. competition with China for repelling state regulations, saying “China is bent on establishing dominance in this space.”

Earlier this month, Vice President J.D. Vance, speaking with podcaster Theo Von, noted he could “can kind of go both ways” on the provision. He said he sympathizes with Tennessee senators defending Nashville country musicians from language models plagiarizing their music but opposes “California’s progressive regulations to control artificial intelligence.”

This year in California, over two dozen bills have been proposed, banning automated discrimination on health and financial decisions to requiring human drivers in commercial vehicles.

In the Upper Midwest, a patchwork of bills has emerged over the past two years, according to the National Conference of State Legislatures.

Wisconsin has required AI-generated content be disclosed in political ads. South Dakota bans AI-built attack ads, at least within 90 days of an election. North Dakota bans AI from serving as a teacher for distance learning.

Gopal Khanna, a director of the Agency for Healthcare Research and Quality during President Donald Trump’s first term and the first-ever chief information officer for Minnesota under Gov. Tim Pawlenty, compares the policymakers’ dilemma to previous industrial revolutions, with one catch.

“This time around it is much faster,” said Khanna, who leads the Minnesota-based Health AI Institute. “It’s moving at the speed of light.”

In Minnesota, controversial applications of AI is garnering scrutiny, from a Wright County AI-generated legal brief submitted to the Minnesota Tax Court to the Mankato City Council approving AI-assisted police cameras.

Quade said in a perfect world the federal government should take the lead. But the budget bill doesn’t put forward any guardrails.

“People are increasingly being presented what they can’t trust with their eyes or ears,” Quade said. “This is concerning across the political spectrum.”

In Congress, passage is not guaranteed in the Senate. House lawmakers say the AI moratorium escaped them when they voted on the One Big Beautiful Bill — the official name for the budget bill that includes everything from tax cuts to slashing Medicaid.

“I am adamantly OPPOSED to this and it is a violation of state rights and I would have voted NO if I had known this was in there,” Georgia Rep. Marjorie Taylor Green said on X.

In Minnesota, Lucero said he sympathizes with the idea for a federal moratorium.

“Look at our interstate system,” he said, ticking off regulations for everything from a road’s width to the road surface materials. He notes the road doesn’t change when you enter a new state.

“They’re not willy-nilly standards,” Lucero continued. “People can choose not to participate with the interstate system. …They can use back roads.”

But Lucero, who said he is unsure how he’d vote for the provisions in Congress, notes an important distinction to his interstate system analogy.

“With artificial intelligence,” Lucero said, “we are not given the choice to participate. We can’t take the back road.”