The Blackburn-Cruz AI Regulatory Pause Compromise Offers a Path Forward

This analysis is in response to breaking news and will be updated. Please contact pr@rstreet.org to speak with the author.

On June 30th, Senators Marsha Blackburn (R) and Ted Cruz (R) announced a major compromise in the debate over a proposed moratorium on state and local AI-specific regulatory enactments. The senators, who had been at odds over the moratorium’s scope, agreed to new language that shortened the length of the pause on state and local AI-specific regulatory enactments from 10 to 5 years and then added further clarifications about what is exempt from the proposal. A different version of the AI pause already passed in the House as part of the “One Big, Beautiful Bill Act.” The Senate bill took a slightly different approach, but also included a 10-year pause on state and local AI regulatory enactments. 

The debate in the Senate proved contentious and Sen. Blackburn emerged as a leading critic of the AI regulatory pause, necessitating a compromise with Sen. Cruz and other backers of the idea. In addition to winning a shorter length of time for the duration of the regulatory pause, Sen. Blackburn was able to achieve specific concessions about it not applying to “a law or regulation pertaining to unfair or deceptive acts or practices, child online safety, child sexual abuse material, [and] rights of publicity.” 

Essentially, this new compromise language clarifies what was already true. Namely, the moratorium exempts “generally applicable law” from its coverage. Generally applicable laws include a broad category of policies like unfair and deceptive practices law, civil rights law, product recall authority, court-based common law remedies, and a variety of other consumer protections. The new Blackburn-Cruz compromise simply adds a few specific mentions of particular types of generally applicable laws that would be exempted for the moratorium. 

However, some critics of the moratorium are still debating what the closing language of this provision means when it caveats the new clarifications by noting that the compromise exempts state laws so long as they do not impose an “undue or disproportionate burden,” in order to “reasonably effectuate the broader underlying purposes of the law or regulation.”  Critics worry that this language could be used to undercut the new clarifications, or even undermine the general notion that the moratorium does not apply to generally applicable law. 

I do not read it that way. Some critics want to find an excuse to stop the AI regulatory pause proposal, so it is important to be aware that some of them may be trying to scare people into thinking there are big loopholes where none exist. In reality, if anything, the precise opposite could happen: state and local governments will likely find many creative ways to contort the “generally applicable law” exception to push through many laws that still regulate AI without calling it such. 

To be clear, even with the new compromises, this remains a much-needed measure that will help America address the growing patchwork of over 1,000 AI-related laws popping up across the nation. Congress needs to take action to protect the market for interstate algorithmic commerce and constrain state-by-state over-regulation before it undermines America’s global competitiveness and makes it harder for U.S. firms to remain competitive with China.  Even if the AI regulatory moratorium only lasts 5 years, that is a good start, and Congress can continue to work with states to determine a sensible approach to AI policy in the coming years. A recent R Street analysis also discussed several specific policy initiatives Congress can take up immediately as lawmakers continue to consider AI governance.  

It is nonetheless true that many challenging questions remain about how the AI regulatory moratorium will be enforced. What we are learning from the political fight over the AI regulatory pause is that legislative drafting is very complicated and open to considerable interpretation. Lawmakers are confronted with complex trade-offs when deciding whether to speak in broad terms or instead get hyper-specific about provisions and exemptions. Taking the latter route sounds smart, but it can quickly become a contentious political spectacle with various interests seeking an ever-expanding list of exemptions. Practically speaking, that approach also often fails to get anything done due to protracted political fights. 

The Blackburn-Cruz language being considered now strikes a reasonable compromise by seeking to speak in general terms about the scope of the AI moratorium’s coverage, while also offering some targeted language on a few specific issues where Sen. Blackburn and others requested greater clarification. This approach offers a path forward to ensure Congress’s voice is heard and can help shape policy for the national AI marketplace before a patchwork of costly, confusing regulations decimates innovation, investment, and competition in this vital technology sector.