This week in AI federal policy, the Senate is expected to complete debate on amendments and vote on final passage of their reconciliation bill, the One Big Beautiful Bill Act (OBBBA) as early as Monday. If Senate Republicans muster the votes necessary to pass the bill, it will then be sent the House of Representatives, where its fate is unclear. Congress will be in recess for the rest of the week for the July 4^th holiday.

Late Sunday night, Senate Commerce Chair Ted Cruz (R-TX) and Sen. Marsha Blackburn (R-TN) reportedly reached an agreement on the AI moratorium language which would cut to five years the “temporary pause” on state enforcement of AI regulations. The AI moratorium language within the OBBBA had previously been rewritten to satisfy reconciliation rules by tying the moratorium to new AI infrastructure funding. The OBBBA provides an additional $500 million to the Broadband, Equity, Access, and Deployment (BEAD) Program to support projects to deploy AI models, systems, and underlying infrastructure within a state. Any state that voluntarily seeks to receive a portion of the $500 million for AI investments must adopt a new NTIA master service agreement and temporarily pause the enforcement of any law or regulation that regulates AI models, AI systems, or automated decision systems over the next ten five years.

Opponents of the provision had promised to offer an amendment to strip the provision from the bill. Voting on amendments, called vote-a-rama, is expected to begin Monday at 9am.

Read more below

Congress

Hearings

• Last week
  • On June 24, the House Oversight and Government Reform Cybersecurity, Information Technology, and Government Innovation Subcommittee held a hearing on Preparing for the Quantum Age: When Cryptography Breaks.
  • On June 24, the Senate Judiciary Subcommittee on Competition Policy, Antitrust and Consumer Rights held a hearing on Deregulation & Competition: Reducing Regulatory Burdens to Unlock Innovation and Spur New Entry.
  • On June 25, the House Select Committee on China held a hearing on Algorithms and Authoritarians: Why U.S. AI Must Lead.
  • On June 25, the House Ways and Means Health Subcommittee held a hearing on Health at Your Fingertips: Harnessing the Power of Digital Health Data.
• This week
  • No hearings are scheduled.
• Upcoming
  • On July 8-11, the Senate Armed Services Committee will mark up the FY2026 National Defense Authorization Act (NDAA).

Legislation

• House Select Committee on the CCP Chair John Moolenaar (R-MI) and Ranking Member Raja Krishnamoorthi (D-IL) and Sens. Rick Scott (R-FL) and Gary Peters (D-MI) introduced the No Adversarial AI Act toprohibit U.S. executive agencies from acquiring or using artificial intelligence developed by companies tied to foreign adversaries like the Chinese Communist Party. introduced the Senate version. (Press release)(Press release)

• Senate Armed Services Committee Chair Roger Wicker (R-MS) introduced updated legislative text of the FY2026 National Defense Authorization Act (NDAA), which includes funding for DoD AI programs. In previous years, the NDAA has served as a legislative vehicle for Congress to enact emerging technology legislation. (Press release)(Overview)(Text)

Correspondence

• House Select Committee on the CCP Chair John Moolenaar sent a letter to Department of Commerce Secretary Howard Lutnick urging the Administration to adopt a series of recommendations to prevent China from “co-opting” the global AI ecosystem and to use diplomacy to minimize Chinese influence in the AI supply chain with other nations. (Letter)

Publications

• Senate Commerce Committee Chair Ted Cruz (R-TX) published a one-pager on Investing in AI and Beating China in the AI Race, summarizing key components of the AI-related provisions within the Commerce Committee’s reconciliation legislation. The one-pager indicates that “If a state voluntarily chooses to receive a portion of this new federal investments to deploy AI, they must agree to adopt NTIA-negotiated Master Service Agreements and to “temporarily pause any enforcement of any state restrictions… related to AI models, AI systems, or automated decision systems for 10 years.” (Politico)

• Rep. Ted Lieu (D-CA) published an op-ed in the Los Angeles Times on AI Isn’t Just Standing By. It’s Doing Things — Without Guardrails, saying, “To address the unresolved and significant issues raised by AI, which will become magnified as AI agents proliferate, Congress should turn the task force into a House Select Committee. Such a specialized committee could put witnesses under oath, hold hearings in public and employ a dedicated staff to help tackle one of the most significant technological revolutions in history. AI moves quickly. If we act now, we can still catch up.” (Op-ed)

Trump Administration

National Institute of Standards and Technology (NIST)

• NIST will hold an Information Security and Privacy Advisory Board meeting on July 16-17 on matters including a briefing on NIST’s work in digital ledger technologies and update on NIST post-quantum cryptographic guidance. (Notice)

Noteworthy Quotes and Events

ADMINISTRATION

White House

• On the federal court ruling Anthropic’s use of U.S. copyrighted books falls under fair use, White House AI & Crypto Czar David Sacks tweeted, “Positive ruling for AI. There must be a fair use concept for training data or models would be crippled. China is going to train on all the data regardless, so without fair use, the U.S. would lose the AI race.”

Commerce Department

• Secretary Howard Lutnick tweeted, “President Trump’s One Big Beautiful Bill isn’t just vital for our economy, it is non-negotiable for our national security. By creating a single national standard for AI, the bill ends the chaos of 50 different state laws and makes sure American companies can develop cutting-edge tech for our military, infrastructure, and critical industries–without interference from anti-innovation politicians. This is required to stay ahead of our adversaries and keep America at the forefront of AI.”

CONGRESS

AI Moratorium / Pause

• On the AI moratorium, Senate Commerce Chair Ted Cruz (R-TX) said, “As a condition of receiving a portion of a new $500 million federal investment to deploy AI, states that voluntarily seek these funds must agree to temporarily pause AI regulations and use the funding in a cost-efficient manner.” (Politico)

• Regarding Congressional opposition to the moratorium, Cruz said, “The provision is in the bill, and it’s going to remain in the bill.” (Axios)

• On inclusion of the AI moratorium in the reconciliation bill, Thune said, “I think there’ll be some version of it in the bill, but… it’s possible, based on kind of the feedback we’re getting from members, that it might change in some way.” (Axios)

• Sen. Dick Durbin (D-IL) tweeted, “Republicans want to pass an AI provision in this bill that would force states to choose between regulating AI or accepting federal funding under the Broadband Equity, Access, and Deployment Program. You heard that right. They want to hold high-speed internet access hostage so Big Tech has free rein.”

• Sen. Chris Van Hollen (D-MD) tweeted, “Buried in the Republicans’ billionaire tax giveaway is a special interest provision that would essentially ban states from regulating AI for a decade. This is a dangerous proposal that has nothing to do with taxes. It cannot become law.”

• Sen. Marsha Blackburn (R-TN) tweeted, “Thank you, AGTennessee for standing against the AI moratorium. Tennessee has led the nation in enabling innovation while protecting creators, kids, and all individuals from the potential harms of AI. The AI moratorium would decimate the progress that we’ve made.”

• Blackburn also tweeted, “The vast majority of Americans agree – Congress must not erase the progress states have made to protect their citizens from the abuse of AI.”

• Blackburn also tweeted, “While AI has opened the door to exciting innovation, it has also exposed creators and artists to detrimental harms. We cannot afford to block states from instituting AI regulations for 10 years while AI evolves unchecked.”

• Blackburn also tweeted, “States should not be punished for trying to protect their citizens from the harms of AI. It’s why 37 state attorneys general and governors across the political spectrum have spoken out against a federal moratorium on the regulation of AI.”

• Energy and Commerce Committee tweeted, “States have already proposed over 1,000 conflicting and restrictive AI laws. America can’t win with 50 different sets of rules. The One, Big, Beautiful Bill puts America on the cutting edge of AI technologies.”

• Sen. Jack Reed (D-RI) tweeted, “40 of 50 state Attorneys General (including AGNeronha) & bipartisan RI state legislators oppose the Republican proposal to ban state AI regulation. States play a key role protecting their residents & should have the flexibility to enforce AI safeguards.”

• Reed also tweeted, “AI is rapidly evolving & regulations must evolve with it to keep pace. The Republican budget bill would strip states of their right to regulate AI at the state level and protect their citizens from the misuse of artificial intelligence. This GOP provision should be stripped.”

• Sen. Richard Blumenthal (D-CT) tweeted, “AI provisions in the Big, Ugly Betrayal bill will stop states from protecting against deepfakes, election interference&other harms while holding broadband expansion hostage. I’ll fight these restrictions so states can safeguard residents from AI threats&close the digital divide.”

• Rep. Luz Rivas (D-CA) tweeted, “SenateGOP must strip the AI moratorium provision in the Big Ugly Bill. This provision would halt innovation and block states’ abilities to protect Americans from current and future AI challenges. So while the Senate GOP considers removing the AI moratorium provision, let’s not forget that HouseGOP voted AGAINST my amendment that would have removed this provision.”

• Rep. Ro Khanna (D-CA) tweeted, “Banning state AI regulation for 10 years will endanger kids, threaten job security, and raise prices for consumers. This provision is dangerous. The Senate cannot let it pass.”

• Sen. Chris Murphy (D-CT) tweeted, “The provision in the Republican budget that bans states from regulating AI is really extraordinary and deserves way more attention. It’s just a gift to the AI industry so that they can speed forward with job killing AI with zero checks and zero protections for workers.”

• Energy and Commerce Committee tweeted, “JayObernolte is right, an AI moratorium is essential to developing and adopting new technology. Today’s witnesses testify how the AI moratorium would assist in the advancement of advanced vehicles and modernize American roadways.”

• Energy and Commerce Committee also tweeted, “In New York, GovKathyHochul is about to sign a left-wing AI bill giving anti-Trump AG Letitia James sweeping powers to crush AI investments. Without an AI moratorium, progressives are going to undermine the $1 trillion investments POTUS already secured for American communities.”

• Energy and Commerce Committee also tweeted, “Eliminating a patchwork of state AI laws ensures America stays ahead of our adversaries and protects our national security interests. By passing the One Big Beautiful Bill, we can win the AI race and empower American innovation.”

• Sen. Maria Cantwell (D-WA) tweeted, “Dozens of states have laws regulating AI in some way. Now Congress is threatening these laws, which will leave hundreds of millions of Americans vulnerable to AI harm.”

• Sen. Ron Wyden (D-OR) tweeted, “Buried in the Republican budget bill: a provision preventing states from regulating AI for a decade. Everything from rent-setting algorithms to facial recognition to hiring systems would be unregulated. I’m working to remove it.”

• Sen. Cory Booker (D-NJ) tweeted, “In addition to throwing 16 million people off their healthcare, cutting food assistance for 2 million hungry kids, and slashing taxes for billionaires, the Republican budget bill would punish states that adopt AI regulations at any point over the next decade.   This would undermine states’ ability to address real and pressing harms, like AI systems that enable discrimination in hiring, housing, and healthcare.   America should lead the world in AI and other emerging technologies—and in setting clear rules of the road to ensure they align with the public interest.   These goals aren’t in conflict. They reinforce one another. This provision undermines both.   I oppose it.”

• House Democrats tweeted, “Hidden in this disastrous bill: Republicans want to block states from passing ANY AI laws—for a DECADE.   On today’s Democrat Daily Download, RepMenendez sounds the alarm on why this move is dangerous—and how HouseDemocrats are pushing back.”

• Rep. Marjorie Taylor Greene (R-GA) tweeted, “The Senate is making changes to the AI provision in the One Big Beautiful Bill. Instead of an automatic 10 year moratorium on states to regulate or make laws on AI, they are tying the 10 year AI moratorium to a newly created $500,000,000 broad band account for states. Mostly red states are the ones with rural areas that don’t have Internet. So in other words, if a state takes any money from that account, they automatically put a 10 year moratorium on themselves to regulate or make laws on AI. With no legislation in Congress to regulate or make laws on AI, why would Republicans do this? And why would they continue to try to keep this and the One Big Beautiful Bill that delivers President Trump’s agenda? Why can’t Republicans do separate legislation on AI? 40 state AG’s wrote a letter to Congress against the 10 year AI moratorium on state’s rights. It’s not too late for the Senate to take it out before the OBBB comes back to the house for a vote.”

• Greene also tweeted, “I sincerely hope the Senate takes out the POISON PILL in the One Big Beautiful Bill that puts a 10 year moratorium on states ability to regulate and make their own laws on AI! If this dirty trick is not taken out then those who snuck it in will be responsible for failure. The OBBB is supposed to be President Trump’s campaign promises on taxes, energy, and border security & immigration NOT AI. AI legislation, which is extremely important, needs to be done SEPARATELY and CORRECTLY!!! Don’t screw it up!!!”

• Rep. Warren Davidson (R-OH) tweeted, “When we said the shortcomings in the HouseGOP version of the Big Beautiful Bill were fixable, the SenateGOP must have misunderstood something. Great work on SALT, but the Green New Deal had zero Republican votes. Let’s keep it that way. And, please, drop this AI nonsense. MAGA!”

• Davidson also tweeted, “The Byrd Rule is exposed as cosmetic power politics. The AI provision of BBB survived the Byrd Bath.”

• Davidson also tweeted, “The Big Beautiful Bill is supposed to implement the MAGA agenda. Moderates added SALT expansion and kept some Green New Deal. Who added AI? The AI / surveillance immunity provision needs removed and debated separately, as a bill subject to amendment.”

• Rep. Henry Cuellar (D-TX) tweeted, “Congress must lead on AI regulation. In a digital age, we cannot ignore the technologies that touch every part of our lives. But taking away states’ ability to regulate AI is the wrong approach. We need smart, balanced federal standards, not one-size-fits-all rules buried in a budget bill.”

• Rep. Thomas Massie (R-KY) tweeted, “It’s still in the bill. The AI provision is proof positive that if they really want something in the bill, it will survive the Senate Parliamentarian’s scrutiny.”

Senate Majority Leader Thune on AI

• In remarks on Breitbart News, Senate Majority Leader John Thune (R-SD) said, “Trump is opening that up and making America energy dominant in a way that not only takes care of our own needs, but hopefully can help us with our allies around the world who become way too dependent upon other countries like Russia, for example… In our country, with the demand for artificial intelligence … data centers, crypto, all those things are incredibly energy intensive, and we’ve got to be looking for ways to meet that demand – and in an affordable way and in a reliable way – and get away from any dependence upon foreign countries.” (Press release)

• Regarding Congress’s approach to AI regulation, Thune said, “We want to be the leaders in AI and quantum andall these new technologies. And the way to do that is not to come in with a heavy hand of government, it’s to come in with a light touch.” He also said, “I think this is the kind of thing where you can put some basic sort of parameters in place, but you’re going to have to come along and be able to tweak those in the future, too.” (Axios)

• On the potential for bipartisan legislation on AI, Thune said, “At some point, I’m hoping we will legislate on this issue. I think there are enough equities that both sides have in this.” (Axios)

Miscellaneous

• In his opening statement at the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party (CCP) hearing on Algorithms and Authoritarians: Why U.S. AI Must Lead, Chair John Moolenaar (R-MI) said, “We are in a new Cold War and AI is a strategic technology at the center. The future balance of power may very well be determined by who leads in AI. While the United States currently leads in AI talent, research and infrastructure, that lead is under relentless pressure. The Chinese Communist Party is moving fast and not playing fair… Artificial Intelligence is the defining strategic asset of the 21st century. And the United States must lead its development, protection, and deployment. If we fail to act, the CCP will cease and other critical technology using our innovation against us. That’s why we need an America First AI policy, one that defends us industry and forces airtight export controls and secures our technology from authoritarian misuse. This isn’t about left or right. It’s about whether the future is shaped by freedom, or digital tyranny.” 

• In his opening statement at the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party (CCP) hearing on Algorithms and Authoritarians: Why U.S. AI Must Lead, Ranking Member Raja Krishnamoorthi (D-IL) said, “China is making an all-out push to dominate AGI, which will inevitably seek to surveil and suppress us at every turn. We cannot let this happen. The nightmare scenario should be a wake-up call for Congress. Last month it was reported that OpenAI’s chief scientist wanted to quote-unquote “build a bunker” before we release AGI. As you can see on this visual here, rather than building bunkers, however, we should be building safer AI. Whether it’s American AI or Chinese AI, it should not be released until we know it’s safe. That’s why I’m working on a new bill—the AGI Safety Act—that will require AGI to be aligned with human values and require it to comply with laws that apply to humans. This is just common sense. I’d like to conclude with something else that’s common sense: not shooting ourselves in the foot. Seventy percent of America’s AI researchers are foreign-born or foreign-educated… We cannot be deporting the people we depend on to build AI.” (Press release)

• On the outlook for Congressional action on AI, Sen. Mike Rounds (R-SD) said, “The challenge all of the states have is that getting anything through Congress in a reasonable length of time has become extremely difficult, right?”  (Axios)

• At the Senate Banking hearing on The Semiannual Monetary Policy Report to the Congress with Jerome Powell, Chair of the Board of Governors of the Federal Reserve System, Sen. Lisa Blunt Rochester (D-DE) asked Powell about the role of AI in the workforce.
  • Blunt Rochester: “I know we had a chance to talk in the past about my focus on jobs and the economy and labor. And I want to follow up on Senator Kim’s questioning, where the focus on the changing technology landscape and with artificial intelligence, generative AI, and just its impact on the economy in the labor market. How would you describe AI’s impact on the economy so far, and how is the Fed measuring it?”
  • Powell: “The effects of AI are probably not great at this time. Generative AI, the question is how big will they be and how quickly will that happen. Anyone who has been exposed to what AI is capable of has to be pretty stunned by what it is capable of. And this is even the early days, too. What experts tell us is that in two years these things you are doing, that will be nothing compared to what we can do in two years. I think it has enormous capabilities to make really significant changes in the economy and the labor force, and it can either augment people’s productivity or it can replace people, or it can do a little bit of both, but it’s going to be something.” (Press release)

• Sen. Andy Kim (D-NJ) asked Powell about the Fed’s use of AI in forecasting.
  • Kim: “I wanted to ask you, because, you know, in central banks and other countries, including Bank of England and European Central Bank, they’ve begun modeling the potential macroeconomic effects of artificial intelligence. They’re thinking about how they can use AI to be able to do some of the forecasting to think through what comes next. I guess I wanted to get a sense of what the Federal Reserve is thinking in terms of similar work in the AI space.”
  • Powell: “We have lots of people doing work on AI, and more than that, even monitoring research that’s going on everywhere in the world. And you know, speaking of uncertainty, it’s very clear that it has the potential to make really dramatic changes in our economy, in our workplace, in the jobs of workers, in the way companies work, and all of those things, and but it honestly, there’s a tremendous uncertainty about the timing of that and what the ultimate consequences will be, and what the medium term consequences will be.”
  • Kim: “I was wondering, if the Fed is evaluating AI credit models and how that could potentially deepen disparity in credit access or violate fair lending standards, is that something that you’ve looked into at this point?”
  • Powell: “Yes, absolutely.”
  • Kim: “Is the Fed looking to potentially affirm some industry standards on this?”
  • Powell: “That’s something we’ve been aware of for a long time. A lot of research had been done before generative AI came along. It was, it’s also just machine learning and technology generally, you need their implicit biases that can appear, something we’re very well aware of. And you know, we do work with people to make sure that that doesn’t happen.”

• Rep. Mariannette Miller-Meeks (R-IA) tweeted, “This week, I hosted a briefing with healthcare leaders on the future of AI in medicine. We discussed how AI can improve patient care, reduce cost, alleviate physician burnout, and safeguard privacy. The United States must lead in this space. We cannot let China control the future of healthcare technology.”

• Rep. Darin LaHood (R-IA) tweeted, “he authoritarian CCP is engaged in a high-priority, coordinated AI campaign. I’m proud to join my colleagues in introducing the No Adversarial AI Act. This bipartisan, bicameral bill constrains the CCP’s access to sensitive U.S. government information.”

• Rep. John Larson (D-CT) tweeted, “When someone needs help, they want to talk to a real person, not an AI algorithm. I support using new technologies to improve services at Social Security, but we can’t forget about the people. We need to invest in customer service & enhance Social Security benefits, not cut them!”

• Sen. Rick Scott (R-FL) tweeted, “With clear evidence that Communist China can access U.S. user data on AI, it’s insane for our federal agencies to use AI built by our adversaries. Our No Adversarial AI Act will stop this threat & keep America’s data out of enemy hands.”

• Rep. André Carson (D-IN) tweeted, “Today, I helped lead a CmteOnCCPDems hearing with AI leaders about what American companies are doing to stay competitive in the global race toward Artificial Super Intelligence. Generative AI models are rapidly evolving, and the U.S must continue to lead the industry while also ensuring American privacy, jobs, and our national security remain intact.”

• Rep. Zach Nunn (R-IA) tweeted, “The CCP just tested an ‘AI Commander’ that can generate 10,000 war plans a minute. The warning signs are clear—we can’t let China dominate the future of AI. Today at committeeonccp, I spotlighted my AI PLAN Act to unify U.S. strategy and keep us ahead.”

• Nunn also tweeted, “The CCP’s goal is clear: dominate AI and export surveillance tech through a ‘Digital Silk Road.’ We can’t let an authoritarian regime write the rules of the digital age. This is a race we can’t afford to lose.”

• Rep. Dusty Johnson (R-SD) tweeted, “America needs to bolster our AI data centers – this is an important national security challenge. If American AI relies on foreign computing power, we run the risk of countries like China being the powerhouse of AI. America cannot let that happen.”

• Rep. Nathaniel Moran (R-TX) tweeted, “The next frontier isn’t just AI itself—it’s AI doing its own research and development. This isn’t just tech we build, it’s tech that grows. If we’re not ahead of it, the CCP will be. We must urgently assess how far Chinese AI systems have come—and work with U.S. industry to contain the risks of automated AI R&D. Because once an AI starts improving itself, the race changes entirely.”

• Energy and Commerce Committee tweeted, “The CCP is using AI to advance their military operations. If America doesn’t lead on AI development, our enemies will.”

• As the newly-selected Ranking Member of the House Oversight Committee, Rep. Robert Garcia (D-CA) tweeted, “We are going to transform how and where we communicate our Oversight message and investigations. We are going to be in all digital spaces to ensure that Americans understand Trump’s corruption and our future-forward agenda for the country.”

• Rep. Max Miller (R-OH) tweeted, “What we need in the tax code is clarity and parity, especially when it comes to digital assets. Today, I joined ZachNunn at the btcpolicyorg summit to talk bitcoin. There is a lot of opportunity to bring innovation back to the United States, especially in next-generation technology. It begins with digital assets!”

• Rep. Pat Fallon (R-TX) tweeted, “China’s drone capabilities threaten our military edge, with AI systems tested in Taiwan scenarios. We must bolster our AI, swarm tech, and counter-UAV defenses. It is critical we foster innovation through public-private partnerships to ensure we outpace China’s advances.”

What I’m Reading This Week

• AI Policy in Congress Mid-2025: Where Are We Headed Next?, Adam Thierer, R Street.

• Behind the Curtain: An AI Marshall Plan, Jim VandeHei and Mike Allen, Axios.

• Why China’s AI Breakthroughs Should Come as No Surprise, Kaiser Kuo, World Economic Forum.

• The Global A.I. Divide, The New York Times.

About Zero One Strategies

Zero One Strategies is a boutique government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.

The practice focuses on key areas such as artificial intelligence, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.

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