WASHINGTON — As artificial intelligence (AI) rapidly reshapes the global economy, the Progressive Policy Institute (PPI) is calling on Congress to enact a temporary, three-year moratorium on state-level AI regulation to pave the way for a comprehensive federal framework.
In a new report, “The Case for a Targeted AI Moratorium,” Senior Economic & Technology Policy Analyst Andrew Fung argues that a patchwork of conflicting state laws risks stifling innovation, raising compliance costs, and repeating the federal failures seen in data privacy regulation.
The report details how more than 700 AI-related bills were introduced in state legislatures last year, with 26 states already enacting varied and often conflicting rules. These range from requirements for watermarking AI-generated content to limits on digital replicas and employment-related algorithms. According to Fung, this rapid and disjointed activity threatens to entrench a Balkanized regulatory landscape that increases burdens for businesses, confuses consumers, and reduces the likelihood of coherent national legislation. Fung draws a clear parallel to the U.S. experience with data privacy, where Congress’s failure to act early left Americans with inconsistent protections and companies facing billions in compliance costs.
The report arrives as Congress considers a reconciliation bill containing a provision for a 10-year moratorium on state AI laws. Fung opposes its inclusion in the reconciliation process and views that duration as excessive, but supports a shorter, strategic pause that would allow federal lawmakers time to craft thoughtful, uniform rules.
“Getting AI regulation right is essential to both U.S. competitiveness and consumer protection,” said Fung. “A short-term federal pause gives Congress breathing room to act before states lock in divergent and duplicative frameworks that would be nearly impossible to harmonize later.”
Drawing parallels to privacy regulation — where fragmented state laws derailed bipartisan federal efforts — the report highlights the dangers of legislative inertia. Already, more than 700 AI-related bills have been introduced in state legislatures, and 26 states have enacted varying rules, sowing confusion for innovators and regulators alike.
Key takeaways from the report include:
Drawing parallels to privacy regulation — where fragmented state laws derailed bipartisan federal efforts — the report highlights the dangers of legislative inertia. Already, more than 700 AI-related bills have been introduced in state legislatures, and 26 states have enacted varying rules, sowing confusion for innovators and regulators alike.
Read and download the report here.
Founded in 1989, PPI is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Find an expert and learn more about PPI by visiting progressivepolicy.org. Follow us @PPI.
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Media Contact: Ian O’Keefe – iokeefe@ppionline.org
