“One big, beautiful bill” passed by the Senate on Tuesday continues to allow states to regulate AI and restructure US energy policies.
President Donald Trump's first proposed bill (which focused primarily on tax policy) included a 10-year suspension of state AI law enforcement and a withdrawal of incentives from the Clean Energy Tax Credit Act (IRA) from the 2022 Inflation Reduction Act (IRA).
“AI Moratorium's overwhelming rejection of 99-1 almost asserts that lawmakers cannot serve the two masters,” said Alla Valente, principal analyst at Forrester. “They can't serve their components and Silicon Valley. The risk appetite around AI is so different, something has to give.”
The House has been unable to oppose or fully approve some of the Senate's changes to one big beautiful bill, but there is little time left to Trump's July 4 deadline. If the Senate changes are in effect, they will have broad importance to US business investments in AI and energy.
Senate removes state AI law suspension
The Senate has eliminated the language of suspending state AI laws. This means that states can continue to implement and enforce their own AI regulations.
The suspension of state AI laws could have caused the state to suspend new AI rules, but Valente said that by eliminating moratoriums, the state could encourage states to review and amend AI rules and consider new technologies such as generator AI.
This indicates that the AI needs guardrails.
Ala ValentePrincipal Analyst, Forester
Companies have expressed concern about an increase in patchwork of state AI laws that complicated and cost regulatory compliance. Valente said by eliminating the state AI law moratorium, it creates an opportunity for Congress to create its own AI framework for American companies.
“This shows that AI needs guardrails,” Valente said.
Lauren Bresset, senior manager of government relations at the Security Industry Association, said she supported the suspension of state AI law enforcement to allow for a period of law learning to provide consistency and predictability in the corporate market.
However, without a suspension of state AI laws, businesses will need to return to the current status as they navigate AI policies in different states.
“In the meantime, we are not completely disappointed by the removal of this provision,” she said. “Even if they decide to introduce this learning period and suspend the influx of state law, I think there is still a demand for federal law that will preempt state law.”
Bresset said there is helping the federal government create an AI legislative framework that “provides uniformity and clarity that businesses want to reduce compliance burdens.”
US energy policy changes with reduced IRA tax credits
The Senate's large and beautiful version of the bill retains reductions in the clean energy tax incentives offered under the IRA, which ends tax credits for clean energy projects that will begin operation after 2027. The bill also ends tax credits for energy-efficient construction investments.
The clean energy tax cut also applies to many consumer incentives, such as the $7,500 electric vehicle credit and the installation of clean energy technologies such as solar panels at home.
The IRA passed during the administration of former President Joe Biden, encouraged businesses to invest in clean energy options such as wind and solar, investing in new and emerging energy sources, such as geothermal. Since then, major high-tech vendors, including Google, Meta and Microsoft, have leaked investments in clean energy sources to power AI data centers across the US.
Daniel Castro, vice president of the Information Technology and Innovation Foundation, said the reduction in IRAs indicates a move from clean energy production in the country. Removing investment incentives and tax credits from the clean energy industry represents a “net loss” in terms of manufacturing jobs and further investment in the US, he said.
“The last administration's message is very clear and they see it as a future industry for the US and want investors to come here and invest in. The government has a back,” Castro said. “This sends a message completely against it.”
Makenzie Holland is a senior news writer covering big technology and federal regulations. Before joining Informa TechTarget, she Wilmington Starnake and crime and education reporters Waba Spray Dealer.
