How House Republicans are trying to modernize the Commerce Department by killing state AI laws

The Department of Commerce (DOC) cannot modernize and implement artificial intelligence with a patchwork of state-level laws and regulations standing in the way, according to those who support the provision in the House-passed reconciliation package that awaits Senate approval.

Legislators voted to include a provision in H.R. 1, the reconciliation package for fiscal year 2026 known as the “One Big Beautiful Bill Act,” which would end all state-level AI laws and regulations for the next 10 years in order to remove impediments from the Commerce Department’s modernization efforts, which will involve AI implementation.

How it’s made. The package would appropriate $500 million to DOC for the next decade to modernize the agency and secure federal IT systems through deploying commercial AI solutions. This modernization effort is also said to improve the agency’s cybersecurity posture through “modernized architecture, automated threat detection, and integrated [AI] solutions.”

⁨Cobun Zweifel-Keegan⁩, the managing director for the International Association of Privacy Professionals’s DC office, said that the bill is a clear reflection of Republican priorities in Congress, which include focusing on AI innovation with an eye towards competition with China and economic development.

Zweifel-Keegan said that the argument for the inclusion of the moratorium boils down to, “You can’t buy things that aren’t on the market.”

He added that this argument is necessary because, “If it’s not tied to the budget in any meaningful way, it won’t survive, and that’s a big risk to this bill, to this provision…the potential that people succeed in making an argument that it isn’t directly [or]sufficiently tied to the budget and doesn’t meet the requirements of the Byrd Rule.”

California Democrat Rep. Ted Lieu hammered a different point home, stating that the DOC is not in need of state laws being removed to modernize and implement AI.

King of the hill. Lieu said he agrees with Marjorie Taylor Greene “once every 100 years”—so we’ll have to wait another century, since the two legislators agree that the moratorium on AI is “bad.”

Lieu told IT Brew on the sidelines of an event hosted by the Washington AI Network on June 3 that he isn’t opposed to preemption, as “it’s not wise that 50 states have hundreds of different regulations on AI.”

“I am opposed to preempting with nothing, and that’s what this provision does,” Lieu said. “It preempts with nothing, and I think that is a bad idea.”

Lieu’s House AI Task Force counterpart, Rep. Jay Obernolte, a California Republican, pointed to the need to modernize the DOC without state laws standing in the way on the sidelines of the same event.

“It is nonsensical to invest half a billion dollars in the procurement of AI to make government more efficient and more effective if then every government agency has to navigate a potential maze of 50 different state approaches to the regulation of AI,” Obernolte told IT Brew. “You really can’t have one and still have the other.”

Lieu disagreed, stating, “The Commerce Department can still implement what it needs to implement without having to have a 10-year moratorium.”

Obernolte added that the moratorium only applies to the enforcement of laws that target AI specifically; broader laws that enforce consumer protection would not be affected.

“The intention is that the moratorium is, in very short order, replaced by federal regulation passed by Congress that establishes not only a federal regulatory system for AI,” Obernolte said. “But also some preemptive guardrails that make it clear what is interstate commerce and therefore preempted and reserved for regulation by Congress, and outside of those guardrails where states are free to regulate themselves and be the laboratories of democracy that they have always been.”

The good fight. Those who are advocating against the bill, like Jonathan Walter, senior policy counsel at the Leadership Conference on Civil and Human Rights, point to public safety, consumer protections, and civil rights as areas for concern with a looming moratorium on state AI laws.

“Without strong guardrails around [AI], people could be denied access to quality education, life-saving healthcare, or a home loan that they qualify for,” Walter said.

He continued: “There are a whole host of life and liberty altering impacts. One thing I wanted to underscore is that this is absolutely being pushed and celebrated by the tech industry, so they think that this gives them a free pass [to] do whatever they want without any kind of safeguards…I would suspect that even if it doesn’t make it through the reconciliation process, that we will see this continue to come up for the rest of this Congress.”

Walter looked at the moratorium and the DOC’s link as “Republicans’s attempt to get the moratorium through the Byrd bath.” There’s “no real link between a ban on state AI laws and the modernization of the federal government’s IT systems,” he said.