Trump's AI Action Plan Includes 'Zombie' Moratorium on State Regulations

U.S. President Donald Trump's "AI Action Plan," announced Wednesday, revived a sweeping policy that seeks to prevent states from regulating artificial intelligence models.

The provision, which would have put a moratorium on states introducing and enforcing regulations on AI models, was stripped from the Republican reconciliation bill that passed earlier this month, after legislators voted it down overwhelmingly.

Critics have warned that the policy would make it impossible for states to prevent even the most perverse uses of AI technology, including the creation of non-consensual deep-fake pornography or the use of algorithms to make discriminatory decisions in hiring and healthcare.

But with backing from tech investors—including David Sacks, the White House AI and crypto czar, and Sriram Krishnan, the White House's senior policy advisor for AI—Trump is now reviving the "zombie" moratorium via executive order.

Buried within the 23-page document, titled "America's AI Action Plan," is a provision stating, "The Federal government should not allow AI-related federal funding to be directed toward states with burdensome AI regulations that waste these funds, but should also not interfere with states' rights to pass prudent laws that are not unduly restrictive to innovation."

This does not go as far as the initial proposal, which outright banned states from introducing legislation to regulate AI. It more closely mirrors a revised version proposed by Sen. Ted Cruz (R-Texas) after the initial measure failed to pass muster with the Senate parliamentarian.

That revised policy instead threatened to withhold funding for broadband internet infrastructure from states that enacted regulations on AI. However, that version was still voted down 99-1 in the Senate.

Trump's executive order modifies this language somewhat to suggest restricting AI funding specifically. It also leaves room for states to pass "prudent laws," though it provides no indication of what is considered "prudent."

More than 140 organizations—including labor unions, consumer advocates, and tech safety groups—have signed onto a letter released Wednesday by the group Demand Progress, which calls on Congress to stop Trump from implementing the policy it has already voted to scrap.

"Bluntly, there is no acceptable version of an AI moratorium," the groups said.

"A total immunity provision would block enforcement of state and local legislation governing AI systems," they continued. "Despite how little is publicly known about how many AI systems work, harms from those systems are already well-documented, and states are acting to mitigate those harms."

In addition to the dangers of deep-fake porn, the groups cited evidence of AI chatbots having sexualized conversations with minors and encouraging them to commit violent acts. They also pointed to systemic racial and gender biases that have resulted in faulty health diagnoses when AI models are used by physicians.

"This moratorium would mean that even if a company deliberately designs an algorithm that causes foreseeable harm—regardless of how intentional or egregious the misconduct or how devastating the consequences—the company making or using that bad tech would be unaccountable to lawmakers and the public," the groups wrote.

In June, the Financial Times reported that "lobbyists acting on behalf of Amazon, Google, Microsoft, and Meta [were] urging the Senate to enact" the moratorium. According to data from OpenSecrets, these four companies alone spent nearly $19 million on lobbying in just the first three months of 2025.

Top Silicon Valley executives, including OpenAI's Sam Altman, Anduril's Palmer Luckey, and a16z's Marc Andreessen, have also publicly championed the moratorium.

Emily Peterson-Cassin, the corporate power director at Demand Progress, said that "this zombie AI moratorium continues Big Tech's relentless drive to tear down commonsense safeguards protecting Americans from half-baked 'driverless' cars and deep-faked revenge porn."

"Republicans and Democrats in Congress overwhelmingly rejected the wildly unpopular AI moratorium," Peterson-Cassin added, "so now Big Tech is doing an end-run around the democratic process by jamming it through via executive order."