House Republican: AI Moratorium Doesn’t Block Consumer Protection Claims

Obernolte, former chairman of the now-defunct House AI Task Force, was instrumental in drafting moratorium language, according to House Commerce Committee Chairman Brett Guthrie, R-Ky., (see 2505140059). A bipartisan coalition of 40 AGs on Friday asked Congress to reject the proposal (see 2505160057).

“It’s not shocking that the states would be in opposition to the federal government taking away some of their authorities, so I’m not surprised they’d be in opposition, but I don’t think their arguments are well-founded,” said Obernolte. “Just to be clear, in direct response to the arguments the AGs made in that letter, we specifically carved out exemptions for broadly based regulations such as consumer protections. So to the extent that states have regulations on deceptive business practices, things like that, as long as they don’t specifically target artificial intelligence, they would continue to be enforceable. So I thought that part of their argument was spurious.”

The House Commerce Subcommittee heard testimony on AI regulation Wednesday during a hearing scheduled prior to the release of the moratorium language. Several members acknowledged the hearing had become somewhat of a referendum on the moratorium proposal.

“The general scuttlebutt is that this [proposal] does not fit within the budget reconciliation under the rules,” Rep. Cathy Castor, D-Fla., told us Tuesday. “It’s a substantive policy, not a financial one, so it’s likely to [be rejected in the Senate]. But the fact that they sprung it on everyone and then tried to push it through; I mean, everyone knows we’ve got to be doing more on AI, but it’s the cart before the horse to say” states can’t enforce AI regulations.

Obernolte said Republicans have made a “pretty straightforward case” about why the moratorium is fiscally related, but the decision will ultimately be up to the Senate parliamentarian. Republicans at Wednesday’s hearing repeatedly cited the impact of regulation on startups trying to compete with AI incumbents.

R Street Institute Senior Fellow Adam Thierer, during his testimony, cited Wall Street Journal statistics showing European businesses spend about 40% of their IT budgets on complying with regulations and two-thirds of those companies “don’t understand obligations” under the EU AI Act.

States like Colorado, where Gov. Jared Polis (D) supports a moratorium and legislators are trying to roll back their AI law, recognize this rush to AI regulation is a problem, Thierer added.

Europe would never allow its member states to regulate AI individually, said U.S. Chamber of Commerce Senior Vice President Sean Heather.

House Commerce Committee Republicans have failed to protect privacy and online safety for children by blocking bipartisan legislation, said Rep. Lori Trahan, D-Mass. She agreed a state patchwork for AI regulation isn’t good for business, innovation or consumers, but said the moratorium would further disincentivize Congress from crafting AI legislation.

Traditional consumer protection laws can’t address all AI-specific harms, testified AI Now Institute Co-Executive Director Amba Kak: There’s a growing list of privacy risks associated with AI technology.

For example, she noted the FTC’s settlement with Amazon over claims the company used its Alexa speaker to collect and store children’s audio indefinitely. The FTC and DOJ claimed the company violated the Children’s Online Privacy Protection Act. Kak said Amazon justified the audio collection by citing its benefit for AI development. So, AI has become a “real free-for-all to trample on the rights of all consumers,” and there’s a greater threat to teens and children, she added. Kak called for “targeted, bright-line” rules to hold the worst AI actors accountable.