Tech giants lose second attempt to preempt state AI laws

Tech giants face their second major setback this year after lawmakers refused to use the defense bill to stop states from making and enforcing their own AI rules.

House Majority Leader Steve Scalise says the defense bill is not the right place to add language that would block state AI laws.

Congress says no to stopping states from making their own AI rules

The tech industry attempted to use the National Defense Authorization Act to prevent states from creating their own AI regulations, but Congress has blocked their efforts. Companies like Meta, OpenAI, Google, and Andreessen Horowitz sought to have Congress enact a rule that would establish a single national AI law, superseding stricter regulations in states like California and New York. The companies said one rule will make it easier to follow the law and avoid the confusion that comes from different state rules.

Lawmakers on the House and Senate Armed Services Committees opposed the proposal, arguing that adding a narrow AI law to a large military bill was inappropriate.

This is the second time Congress has blocked similar efforts to override state AI laws, as the Senate voted 99–1 against a measure that aimed to limit state power over AI earlier this year. Most lawmakers argue that states should retain the authority to regulate AI, prioritising the protection of people over concerns about costs and differing regulations. 

However, both sides of Congress say the discussions aren’t over, and lawmakers could still make a federal rule that works alongside state laws, but only if it respects states’ power and protects the public. 

White House and tech leaders try to change minds, but do not get the support they want

White House AI chief David Sacks spent days working with top Republican leaders in Congress and executives from some of the biggest AI companies in the United States. He and his team said a single national rule for AI will make it easier for companies to follow the law, boost innovations, and prevent countries like China from getting ahead of the U.S.

However, lawmakers disagreed, arguing that states must retain the power to hold companies accountable if AI products cause harm. Senate Majority Leader John Thune stated that the White House attempted to find a middle ground. Still, Congress was unwilling to grant tech companies a broad exemption or weaken state authority in any way.

President Donald Trump publicly asked Congress to block state-level AI rules, stating that using preemption language in the defense bill would protect U.S. companies and help them compete globally. However, even with the commander-in-chief and big tech companies working hand in hand to push the bill, Congress remained unswayed. Many lawmakers on the Armed Services Committee said the pleading parties rushed the decision and that it isn’t right for a bill focused on national defense. They warned that adding an AI law, which most AI companies are pushing for, to the defense bill would threaten the safety of citizens, workers, and communities. 

Tech companies are expected to continue pushing next year, as they believe the political situation will shift in their favor. States can still create and enforce their own AI rules that companies must follow. This goes to show just how strong a decision from Congress can be even when the White House, big tech, and whole presidents stand against it. 

Want your project in front of crypto’s top minds? Feature it in our next industry report, where data meets impact.