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‘Big Beautiful Bill’ Leaves AI Regulation to States and Localities … For Now

By Guy Brenner & Jonathan Slowik on July 8, 2025
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On July 4, 2025, President Trump signed the One Big Beautiful Bill Act into law—a budget reconciliation bill enacting several signature policies of the President’s second-term agenda.  Left on the cutting-room floor, however, was an ambitious attempt to prohibit nearly all state and local regulation of artificial intelligence (“AI”) for the foreseeable future.

The version of the bill passed by the House of Representatives on May 22, 2025, contained a provision preventing states and localities, for a period of 10 years, from enforcing “any law or regulation … limiting, restricting, or otherwise regulating artificial intelligence models, artificial intelligence systems, or automated decision systems entered into interstate commerce.”  Initially, a proposed version of the bill in the Senate included a similar provision that made the moratorium a condition of states receiving any of the $500 million in funds earmarked to support deployment of AI models or systems and underlying infrastructure. 

However, the moratorium was ultimately stripped from the bill when it became clear the moratorium lacked majority support. 

Thus, the version signed into law leaves states and localities free to continue regulating AI systems, including the use of such systems to make or assist with employment decisions such as hiring, firing, promotions, discipline, evaluations, compensation, and the like.  Prominent statutes regulating such uses of AI have passed in Colorado, New York City, and Illinois, and are under consideration in several other states.  However, the demise of the moratorium in the budget reconciliation law has renewed calls by some for federal regulation in the space that would prevent a patchwork of state and local laws regulating AI. 

We will continue to monitor and report on developments in this space.

Photo of Guy Brenner Guy Brenner

Guy Brenner is a partner in the Labor & Employment Law Department and leads the Firm’s Washington, D.C. Labor & Employment practice. He is head of the Government Contractor Compliance Group and is co-head of the Non-Compete & Trade Secrets Group. He has…

Guy Brenner is a partner in the Labor & Employment Law Department and leads the Firm’s Washington, D.C. Labor & Employment practice. He is head of the Government Contractor Compliance Group and is co-head of the Non-Compete & Trade Secrets Group. He has extensive experience representing employers in both single-plaintiff and class action matters, as well as in arbitration proceedings. He also regularly assists federal government contractors with the many special employment-related compliance challenges they face.

Guy represents employers in all aspects of employment and labor litigation and counseling, with an emphasis on non-compete and trade secrets issues, medical and disability leave matters, employee/independent contractor classification issues, and the investigation and litigation of whistleblower claims. He assists employers in negotiating and drafting executive agreements and employee mobility agreements, including non-competition, non-solicit and non-disclosure agreements, and also conducts and supervises internal investigations. He also regularly advises clients on pay equity matters, including privileged pay equity analyses.

Guy advises federal government contractors and subcontractors all aspects of Office of Federal Contract Compliance Programs (OFCCP) regulations and requirements, including preparing affirmative action plans, responding to desk audits, and managing on-site audits.

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Photo of Jonathan Slowik Jonathan Slowik

Jonathan Slowik is a special counsel in the Labor Department and a member of the Employment Litigation & Counseling Group.

Read more about Jonathan Slowik
  • Posted in:
    Employment & Labor
  • Blog:
    Law and the Workplace
  • Organization:
    Proskauer Rose LLP
  • Article: View Original Source

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