The discussion regarding state oversight of AI has notably resurfaced.

On Wednesday, the White House unveiled the AI Action Plan, a highly awaited document detailing essential facets of federal AI initiatives. The objective of the plan is chiefly to minimize limitations on technology firms to foster AI innovation and position the U.S. as a dominant force within the sector. Certain suggestions found in this extensive report mirror initiatives proposed in the AI moratorium that Republicans sought to advance in the Big Beautiful Bill Act.

The Senate passed a vote of 99-1 to remove the suggested 10-year prohibition on state AI oversight from the budget legislation. Nevertheless, the AI Action Plan aims to reinstate it, voicing concerns about “states with onerous AI regulations that squander [federal] funds” as barriers to the progress of AI.

In the “Eliminate Red Tape and Heavy Regulation” segment, the plan prompts the Office of Management and Budget (OMB) to “work alongside Federal agencies with AI-related discretionary funding programs to ensure… that they take into account a state’s AI regulatory atmosphere when making funding choices and restrict funding if the state’s AI regulatory frameworks may impede the effectiveness of that funding or award.”

Fundamentally, the plan seeks to authorize agencies to deny federal funding based on states’ conformity with the Trump Administration’s AI regulatory framework.

The AI moratorium makes a comeback

“This is the AI moratorium, again,” Cody Venzke, Senior Policy Counsel, Surveillance, Privacy, and Technology for the ACLU, communicated to Mashable via email. Despite the Senate’s overwhelmingly adverse response to the proposal, “the Administration is nevertheless aiming to provide AI firms with a free pass,” Venzke remarked. “While the legal tools may differ, the consequence remains the same: it permits the continuation of AI dangers that are already manifesting, and states are already escalating their efforts.”

Opponents of the AI moratorium contended that it would remove states’ capacity to shield residents from AI threats. Those criticizing this component of the AI Action Plan voiced comparable apprehensions. “In the absence of Congressional measures, states should be allowed to proceed with regulations that safeguard consumers,” articulated Grace Gedye, policy analyst for AI matters at Consumer Reports. “Today’s move leaves states hanging; it remains ambiguous which state statutes will be deemed ‘burdensome’ and which federal resources are at stake.”

Certain industry authorities, such as Gabriel Weil, a professor at Touro Law Center, are scrutinizing the AI Action Plan’s absence of specifics.

This Tweet is currently unavailable. It might be loading or has been removed.

Linking state AI oversight to federal financing was the final version of Republicans’ AI moratorium. The proposed measure, which was rejected by the Senate, included $500 million in federal broadband funds contingent on states voluntarily agreeing to the moratorium. Before being voted against, it was modified to provide financial incentives rather than imposing a complete prohibition on states’ legislative powers. The AI Action Plan adopts a similar tactic of presenting an incentive instead of a penalty, yet with the penalty still looming.

“This is also extremely perilous; this administration has frequently weaponized federal resources to challenge state and local regulations they oppose, often doing so with a lack of transparency or due process,” expressed Venzke, who noted that such policies could affect various aspects of “AI.”