The Senate’s 940-page reconciliation package includes a contentious provision imposing a 10-year moratorium on state laws regulating artificial intelligence (AI) and automated decision systems. This moratorium applies to states that accept any portion of a newly created $500 million AI infrastructure fund tied to the Broadband Equity, Access, and Deployment (BEAD) Program. Once a state accepts these funds, the U.S. Department of Commerce could revoke not only the new AI funds but also previously awarded BEAD grants, potentially jeopardizing billions in broadband funding. The moratorium effectively restricts states from enforcing any AI-related laws, with no clear option to opt out later, thus limiting state sovereignty and their ability to protect residents.

Critics warn that this moratorium could have severe consequences, especially for vulnerable populations such as women and children, who face increasing risks from AI-enabled sexual exploitation and abuse. Many states have already enacted laws criminalizing AI-generated child sexual abuse material (CSAM), but the moratorium would nullify these protections, exposing millions to harm. The provision is seen as a coercive tool that pressures states to weaken AI regulations and safeguards in exchange for federal funding, raising ethical concerns about prioritizing financial incentives over public safety. Advocates urge Congress to reconsider the moratorium to ensure AI policies protect the most vulnerable rather than undermine essential state-level protections.