A Republican effort to pressure states away from regulating artificial intelligence has cleared an important procedural hurdle in the Senate. But that does not mean the fight is over, or that the proposal has the full support of Republicans.
The plan, led by Sen. Ted Cruz (R-Texas), would connect state AI regulation to eligibility for certain federal broadband-related funding. It has been revised after Republican resistance, and opponents in both parties are still warning that it could weaken state-level protections before Congress has passed a national AI framework.
What the Senate ruling changes
On Saturday, Senate Parliamentarian Elizabeth MacDonough decided that Cruz’s AI proposal can move forward without requiring approval from 60 senators. That matters because the proposal is part of a Republican budget bill, where the Senate’s Byrd rule can block provisions considered extraneous to budget reconciliation.
Under the Byrd rule, a senator may object to a budget provision. A motion to waive that rule requires a vote of 60 percent of the Senate. MacDonough ruled that several parts of the Republican budget bill are subject to that requirement, but Cruz’s AI provision was not among them.
A press release from Senate Budget Committee Ranking Member Jeff Merkley (D-Ore.) emphasized that the parliamentarian’s role is procedural, not a judgment on policy. The release said that “the parliamentarian’s advice is based on whether a provision is appropriate for reconciliation and conforms to the limitations of the Byrd rule; it is not a judgement on the relative merits of a particular policy.”
That distinction is central. The ruling keeps the AI provision alive inside the budget process, but it does not settle whether the Senate will ultimately keep it in the bill.
How Cruz’s AI funding penalty changed
In early June, Cruz proposed a 10-year moratorium on AI regulation by tying state compliance to broadband funding. The House had previously approved a version of the so-called “One Big Beautiful Bill” with an outright 10-year ban on state AI regulation.
Cruz took a different route in the Senate because of the procedural limits on budget reconciliation. His original plan would have made states ineligible for money from the $42 billion Broadband Equity, Access, and Deployment (BEAD) program if they imposed limits on the development of artificial intelligence.
To connect the policy to the budget bill, Cruz proposed an extra $500 million for the broadband-deployment grant program and expanded its purpose to include construction and deployment of infrastructure for artificial intelligence systems.
Punchbowl News reported that Cruz changed the proposal to gain more Republican support and to comply with Senate rules. Cruz was quoted as saying that, under the current version, states that regulate AI would only lose access to the $500 million AI fund.
If that reading holds, states would keep access to the much larger broadband deployment fund, which supports subsidies to ISPs expanding Internet service. The source article noted that losing that funding would be a major blow to states that have spent the last couple of years developing plans to connect more residents to modern broadband.
But that point remains disputed. A spokesperson for Sen. Maria Cantwell (D-Wash.) told Ars that Cruz’s latest version could still block states from broadband funding. The spokesperson said the text has “a backdoor to apply new AI requirements to the entire $42.45 billion program, not just the new $500 million.”
Opposition is coming from both parties
The proposal has not divided neatly along party lines. Republicans have a 53–47 edge in the Senate, but some Republicans in both the House and Senate have pushed back on the AI provision.
Bloomberg described the parliamentarian’s decision as “a win for tech companies pushing to stall and override dozens of AI safety laws across the country,” while also reporting that the provision could still be challenged on the Senate floor. Stripping it would require only a simple majority.
Cantwell and Sen. Marsha Blackburn (R-Tenn.) held a press conference last week opposing the proposed moratorium on state regulation. Cantwell said 24 states last year began “regulating AI in some way,” adopting laws that fill a gap while federal action is still pending.
Blackburn said she agreed with Cantwell that the AI regulation proposal “is not the type of thing that we put into reconciliation bills.” She also said lawmakers are working on federal legislation, but that Congress does not need a moratorium preventing states from acting to protect their citizens.
Sens. Ron Johnson (R-Wis.) and Josh Hawley (R-Mo.) have also criticized the idea of stopping states from regulating AI.
The state-law stakes
Cruz has argued that his proposal would prevent states “from strangling AI deployment with EU-style regulation.” His first proposal would have denied BEAD funds to any state or territory enforcing “any law or regulation… limiting, restricting, or otherwise regulating artificial intelligence models, artificial intelligence systems, or automated decision systems entered into interstate commerce.”
Opponents argue that the language could sweep in state protections already on the books. At the Cantwell and Blackburn press conference, Washington Attorney General Nick Brown, a Democrat, and Tennessee Attorney General Jonathan Skrmetti, a Republican, raised concerns about the possible effect on consumer protection and state enforcement.
Brown pointed to Washington laws covering deep fakes used against political candidates, fabricated sexual images shared without consent, and forged digital likenesses used to harm or defraud people. “All of those laws, in my reading, would be invalid if this was to pass through Congress, and each of those laws are prohibiting and protecting people here in our state,” Brown said.
Skrmetti warned that if the Senate proposal becomes law, “there would be arguments out there for the big tech companies that the moratorium does, in fact, preclude any enforcement of any consumer protection laws if there’s an AI component to the product that we’re looking at.”
The result is a policy fight with several layers: how fast AI rules should move, whether states should act before Congress, and whether broadband funds should be used as leverage. The parliamentarian’s decision answered one procedural question. The political question now moves to senators who must decide whether the AI provision stays in the bill.