Congress Moves to Block State AI, Why Silicon Valley is Spending $100 Million to Kill Local AI Regulation
- Tech industry groups and federal lawmakers are using the National Defense Authorization Act to try to block states from passing their own AI regulations.
- Pro-AI political action committees have raised over $100 million to support candidates who favor federal preemption and industry self-regulation.
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| Photo by Igor Omilaev on Unsplash |
Washington is finally approaching a decision point on how to govern artificial intelligence. The emerging conflict has little to do with the actual technology or its capabilities. The real fight is about jurisdiction and power. Federal lawmakers and powerful tech interests are aligning to strip states of their ability to police the industry. This has set the stage for a high stakes constitutional showdown between Silicon Valley, Capitol Hill, and state legislatures across the country.
States have not waited for permission to act. In the absence of federal guidance, local governments have introduced dozens of bills designed to protect their residents. California recently pushed its safety bill SB 53 and Texas introduced the Responsible AI Governance Act. These measures aim to stop the intentional misuse of AI systems and protect consumers from fraud. This surge of local activity has panicked the tech industry. Major companies and startups argue that navigating fifty different legal frameworks is impossible. They claim this regulatory patchwork will stifle innovation and hand the advantage to China.
The industry is now throwing massive financial weight behind a push for federal preemption. This strategy involves passing a national law that overrides and effectively nullifies any state level AI regulations. Leading the Future is a pro AI political action committee backed by heavyweights like Andreessen Horowitz and Palantir co founder Joe Lonsdale. The group has raised more than $100 million to influence this debate. They recently launched a $10 million campaign to pressure Congress into adopting a national standard that blocks state interference.
These efforts are finding a receptive audience in Washington. House lawmakers are currently attempting to use the National Defense Authorization Act to ban states from regulating AI. This is a massive annual defense bill that is considered must pass legislation. A leaked draft of a White House executive order shows similar intent. It proposes an AI Litigation Task Force designed to challenge state laws in court. The order would also empower federal agencies to override local rules that they deem too burdensome for the industry.
David Sacks has emerged as a central figure in this deregulation push. He is the co founder of Craft Ventures and serves as the AI and Crypto Czar. The draft executive order suggests giving him significant authority to shape a uniform legal framework. Sacks has been vocal about his preference for industry self regulation. His approach prioritizes maximizing growth over imposing strict guardrails. This aligns perfectly with the goals of the super PACs that are currently flooding state and local elections with cash to defeat pro regulation candidates.
Critics argue that this all or nothing approach is dangerous for consumers. Blocking state laws without having a strong federal standard in place creates a regulatory vacuum. Companies would essentially be free to operate without oversight. New York Assembly member Alex Bores points out that the marketplace often undervalues safety. He argues that trustworthy AI is the only kind that will succeed in the long run. Bores notes that states are simply moving faster to address the risks that the federal government ignores.
The statistics support the idea that Congress is lagging behind. Rep. Ted Lieu has introduced 67 bills to the House Science Committee since 2015 but only one has become law. Meanwhile states have adopted more than 100 AI related laws just this year. These local measures mostly target deepfakes and demand transparency. Experts like Bruce Schneier argue that the industry complaint about a "patchwork" of laws is just an excuse. He notes that these same companies already comply with strict and varied regulations in the European Union.
Rep. Lieu is attempting to bridge the gap with a new federal package. His proposed legislation covers fraud penalties, deepfake protections, and mandatory testing for large language models. Lieu admits the bill is not as strict as he would like. He is designing it specifically to survive a Republican controlled House and Senate. His goal is to get something on the books rather than holding out for a perfect law that will never pass.
The resistance to preemption remains strong among some federal lawmakers. Over 200 members of Congress signed an open letter opposing the inclusion of the state ban in the defense bill. They argued that states serve as laboratories of democracy and need the flexibility to confront new digital threats. Nearly 40 state attorneys general have also joined the fight to protect their jurisdiction. The coming months will determine whether the US adopts a unified national policy or continues with a fragmented state by state approach.