Regulation

States should regulate AI throughout the entire life cycle of development, from how data is collected through the training process, to fine tuning and application development and deployment. Require AI companies to submit to independent third-party oversight and testing throughout the AI life cycle, and provide enforcement agencies with the resources and in-house staffing necessary to conduct oversight throughout the AI life cycle.

Throughout 2025, the federal government repeatedly attempted to block states from passing laws regulating AI,¹ most recently by threatening to put a provision limiting states’ ability to pass AI laws into the National Defense Authorization Act (NDAA), a defense spending bill.² Legislators must continue to speak out against these attempts to block state authority to protect constituents.

1. Cecilia Kang, “Defeat of a 10-Year Ban on State A.I. Laws Is a Blow to Tech Industry,” New York Times, July 1, 2025, https://www.nytimes.com/2025/07/01/us/politics/state-ai-laws.html. ↩︎
2. Cristiano Lima-Strong, “It’s Back. Congress Gears Up for Year-End Fight Over Moratorium on AI Laws,” Tech Policy Press, November 18, 2025, https://www.techpolicy.press/its-back-congress-gears-up-for-yearend-fight-over-moratorium-on-ai-laws. ↩︎

The Trump administration has made its desire to use executive authority to boost the AI industry and fast-track data centers across the country extremely clear. This includes a drive to preempt state and local authority¹ and sidestep congressional authority in service of AI data centers.² Congress can protect against such unilateral actions.

Moreover, the July 2025 executive order “Accelerating Federal Permitting of Data Center Infrastructure” orders the secretary of commerce to launch an initiative providing financial support for qualifying data center projects.³ Congress, per its authority to control federal spending, can institute oversight over all federal investment in data center projects, including any loans, loan guarantees, grants, tax incentives, and offtake agreements suggested in the executive order.⁴

1. Executive Order 14365 of December 11, 2025, Ensuring a National Policy Framework for Artificial Intelligence, 90 Fed. Reg. 58499 (2025), https://www.federalregister.gov/documents/2025/12/16/2025-23092/ensuring-a-national-policy-framework-for-artificial-intelligence. ↩︎
2. Executive Order 14318, Accelerating Federal Permitting of Data Center Infrastructure. ↩︎
3. Ibid. ↩︎
4. The Appropriations Clause, Art. I, § 9, Cl, 7, reads that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” Congress has the authority to require that a financial program referenced in Sec. 3 of the Executive Order, “Accelerating Federal Permitting of Data Center Infrastructure,” proceed into Congressional appropriations. In that process of appropriations, Congress may impose conditions, limitations, or prohibitions on the use of the funds. ↩︎

Repeal or roll-back all federal tax subsidies and credits for data center infrastructure, such as the 100 percent bonus depreciation for IT infrastructure and data center equipment under Public Law 119–21¹ or the 45Q credit for carbon sequestration technologies.²

1. Public Law 119–21, 119th Cong., 1st sess. (July 4, 2025), 139 Stat. 72. ↩︎
2. 26 U.S.C. § 45Q (2023). ↩︎

Congress can attach enforceable conditions to all federal investment into AI firms to ensure that any taxpayer support for the AI industry works to benefit the public. See “Establish Public Benefit Conditions on All Federal Investment in AI”for a comprehensive list of these conditions.

Federal policymakers can pursue an enforcement strategy that utilizes competition, financial, fraud, and transparency regulations to surface and hold accountable toxic market behavior by AI companies.

Congressional policymakers can message clearly that there will be no federal bailout for AI firms that fail.

Congress can reject attempts to strip states of their ability to protect constituents from data centers through moratoriums or proposed national legislative frameworks, ensuring that permitting decisions for data centers remain firmly under state and local control. Congress can also make clear that the President cannot use emergency authorities to usurp state, county, or municipal laws and regulations—including zoning and permitting laws—with regard to data centers and associated energy infrastructure.¹

1. Thanks to Public Citizen for this recommendation. See Deanna Noel and Meghan Pazik, “Reining in Big Tech: Policy Solutions to Address the Data Center Buildout,” Public Citizen, December 3, 2025, https://www.citizen.org/article/reining-in-big-tech-policy-solutions-to-address-the-data-center-buildout. ↩︎

Reject federal sandbox¹ and civil immunity² bills that function as a moratorium by blocking states from passing and enforcing their own laws to regulate AI use cases.

1. S. 2750, SANDBOX Act, 119th Cong. (2025), introduced by Sen. Ted Cruz, https://www.congress.gov/bill/119th-congress/senate-bill/2750. ↩︎
2. S. 2081, RISE Act, 119th Cong. (2025), introduced by Sen. Cynthia Lummis, https://www.congress.gov/bill/119th-congress/senate-bill/2081/text. ↩︎

Resist passing weak and industry-written federal standards that effectively function as a moratorium, blocking states from passing stringent standards to protect their constituents.¹ In particular, the federal government can scrutinize the upcoming legislative recommendation establishing a federal policy framework for AI that preempts state AI laws prepared by the administration under the December 2025 Executive Order.²

1. Kate Brennan, Amba Kak, and Sarah Myers West, “The Storm Clouds Looming Past the State Moratorium: Weak Regulation is as Bad as None,” Tech Policy Press, June 10, 2025, https://www.techpolicy.press/the-storm-clouds-looming-past-the-state-moratorium-weak-regulation-is-as-bad-as-none. ↩︎
2. Executive Order 14365, Ensuring a National Policy Framework for Artificial Intelligence. ↩︎

States should regulate AI throughout the entire life cycle of development, from how data is collected through the training process, to fine tuning and application development and deployment. Require AI companies to submit to independent third-party oversight and testing throughout the AI life cycle, and provide enforcement agencies with the resources and in-house staffing necessary to conduct oversight throughout the AI life cycle.

Throughout 2025, the federal government repeatedly attempted to block states from passing laws regulating AI,¹ most recently by threatening to put a provision limiting states’ ability to pass AI laws into the National Defense Authorization Act (NDAA), a defense spending bill.² Legislators must continue to speak out against these attempts to block state authority to protect constituents.

1. Cecilia Kang, “Defeat of a 10-Year Ban on State A.I. Laws Is a Blow to Tech Industry,” New York Times, July 1, 2025, https://www.nytimes.com/2025/07/01/us/politics/state-ai-laws.html. ↩︎
2. Cristiano Lima-Strong, “It’s Back. Congress Gears Up for Year-End Fight Over Moratorium on AI Laws,” Tech Policy Press, November 18, 2025, https://www.techpolicy.press/its-back-congress-gears-up-for-yearend-fight-over-moratorium-on-ai-laws. ↩︎