WASHINGTON – June 29, 2025 – Republican senators have agreed to scale back a controversial proposal that would have barred U.S. states from enacting new artificial intelligence regulations for a decade. Instead, the updated version now calls for a five-year moratorium, Senator Marsha Blackburn (R-TN) announced in a statement.

The revised bill offers states access to $500 million in federal funding for AI infrastructure and deployment — but only if they agree to temporarily pause new AI legislation during that five-year period.

This change marks a significant compromise from the original 10-year blanket ban passed in the House in May. It also increases the likelihood that some form of the moratorium will be included in the final version of the bill currently being debated in the Senate.

Unlike the original House bill — which controversially tied AI regulation bans to billions in broadband funding — the Senate version uses a smaller funding incentive, potentially weakening enforcement. Major states like California or New York may opt to forgo the funding and pass state-level AI rules anyway, effectively treating the federal moratorium as a "pay-to-legislate" scheme.

To address mounting criticism, lawmakers added carve-outs to allow regulation in specific sensitive areas, including consumer fraud, child sexual abuse material, and children's online safety.

Despite being more limited than earlier versions, the five-year pause still underscores Washington’s cautious stance on AI oversight, reflecting fears that premature regulation could hinder U.S. leadership in AI innovation and deployment.