NCSL warns House reconciliation provision would bar states from enforcing AI laws for 10 years

At a House Energy and Digital Infrastructure Committee hearing on May 21, Barry Taben, legislative director for state and federal affairs at the National Conference of State Legislatures, told Vermont lawmakers that a provision in the U.S. House budget reconciliation bill — cited in testimony as section 43201(c) — would prevent states from enforcing “any law or regulation regulating artificial intelligence models, artificial intelligence systems, or automated decision systems” for 10 years after enactment.

Taben said the most recent version of the provision adds the phrase “entered into interstate commerce,” but that, in his reading and that of other state advocates, the moratorium would still “foreclose the state's ability to enact and enforce a host of significant AI laws for the next 10 years.” He said the scope of state laws potentially affected could be “enormous,” including statutes aimed at mitigating algorithmic bias, requiring transparency, establishing consumer protections, curtailing scams and frauds against older Vermonters and children, and limiting harms from deepfakes or local data-center impacts.

The moratorium, as described in testimony, does include narrow exceptions. Taben outlined that states could still adopt laws whose “primary purpose and effect is to streamline…