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The AI Moratorium is Unconstitutional

Constitutional Concerns Surrounding the AI Moratorium in the Senate Budget Reconciliation Bill

Introduction

The rapid proliferation of artificial intelligence (AI) technologies has introduced novel challenges to child safety online, particularly through AI-generated content like deepfake pornography and harmful chatbot interactions. States have historically played a critical role in regulating content to protect minors, as affirmed by the Supreme Court’s decision in Free Speech Coalition, Inc. v. Paxton (606 U.S. (2025)), which upheld Texas’s H.B. 1181, a law requiring age verification for websites hosting content deemed obscene for minors. However, a proposed 10-year moratorium on state AI laws, embedded in the U.S. Senate’s budget reconciliation bill and tied to $500 million in federal broadband funding under the Broadband, Equity, Access, and Deployment (BEAD) Program, threatens to undermine this state authority. This paper synthesizes the constitutional implications of the moratorium, drawing on Paxton and related legal principles, to argue that it poses significant First Amendment, Tenth Amendment, and Spending Clause concerns and should be removed from the reconciliation bill.

Expository Analysis

Background: The AI Moratorium and Its Context

The moratorium, introduced as a condition for states to receive BEAD funding, prohibits states from enacting or enforcing AI-related laws for a decade. Championed by Senate Commerce Committee Chair Ted Cruz, it aims to foster a uniform federal AI policy and prevent a patchwork of state regulations that could stifle innovation (TechPolicy.Press, May 22, 2025). The Senate parliamentarian approved its inclusion in the reconciliation bill on June 22, 2025, ruling that its tie to federal funding satisfied the Byrd Rule, which governs budgetary provisions in reconciliation processes. By linking the moratorium to broadband funds, it was framed as a condition to facilitate federal IT modernization, allowing it to proceed via a simple majority vote.

However, the moratorium has sparked controversy. Critics, including 260 state lawmakers, 40 state attorneys general, and Senators Marsha Blackburn (R-TN) and Ed Markey (D-MA), argue it represents federal overreach, limiting states’ ability to address AI-driven harms like deepfake pornography, algorithmic discrimination, and mental health risks to minors. The moratorium’s broad scope, prohibiting all state AI laws, contrasts with the targeted approach upheld in Paxton, raising questions about its constitutionality.

Free Speech Coalition, Inc. v. Paxton: A Framework for State Regulation

In Paxton, the Supreme Court upheld Texas’s H.B. 1181, which mandates age verification for websites where over one-third of content is “obscene for minors” (Tex. Civ. Prac. & Rem. Code Ann. §129B.002(a)). The majority, led by Justice Thomas, applied intermediate scrutiny, reasoning that the law advanced a compelling state interest-protecting minors from harmful content-without substantially burdening more protected adult speech than necessary (Paxton, slip op. at 32-34). The Court viewed the age-verification requirement (using government ID or transactional data) as an “incidental” burden on adults’ First Amendment rights to access speech protected for them but obscene for minors, distinguishing it from outright bans in prior cases like Sable Communications v. FCC (492 U.S. 115) and Ashcroft v. ACLU (542 U.S. 656) (Paxton, slip op. at 21-25).

Justice Kagan’s dissent argued for strict scrutiny, asserting that H.B. 1181’s content-based restriction-targeting sexually explicit material-demanded the least restrictive means to achieve the state’s goal (Paxton, Kagan, J., dissenting, slip op. at 6-7). Kagan emphasized that prior cases (Sable, Reno v. ACLU, Playboy Entertainment Group, Ashcroft) consistently applied strict scrutiny to content-based laws burdening adult speech, even when aimed at protecting minors (Paxton, Kagan, J., dissenting, slip op. at 7-10). She contended that H.B. 1181’s age-verification requirement could chill adult access to protected speech due to privacy concerns and costs to website operators (Paxton, Kagan, J., dissenting, slip op. at 5-6).

Paxton is directly relevant to the moratorium because it affirms states’ authority to regulate online content to protect minors using narrowly tailored measures. A state law requiring age verification for AI-generated content (e.g., deepfakes or explicit chatbot outputs) would mirror H.B. 1181 in purpose (child protection), mechanism (age verification), and targeted speech (obscene for minors but protected for adults). Such a law would likely survive intermediate scrutiny under Paxton’s majority framework, yet the moratorium would prohibit it, raising constitutional concerns.

Constitutional Dimensions of the Moratorium

First Amendment Implications

The moratorium’s blanket prohibition on state AI laws could infringe on First Amendment rights by preventing states from regulating AI-generated content in a manner consistent with Paxton. For instance, AI technologies can produce deepfake pornography (e.g., the Elliston Berry case) or chatbot interactions that harm minors (e.g., Character.ai lawsuits), both cited in a Townhall article (Congress Is Handing AI Developers a Free Pass to Harm Kids, May 28, 2025) as evidence of AI’s risks to children. A state law mandating age verification for such content would align with H.B. 1181’s approach, targeting material obscene for minors while preserving adult access to protected speech.

Under Paxton’s majority opinion, such a law would face intermediate scrutiny, requiring the state to show it advances a compelling state interest (child protection) without burdening substantially more speech than necessary (Paxton, slip op. at 32). Paxton upheld age verification as a legitimate, non-excessive burden, citing its use in other industries (Paxton, slip op. at 33-34). By banning such laws, the moratorium could increase minors’ exposure to harmful AI content, undermining the compelling state interest recognized in Paxton. This could indirectly chill adult speech if platforms, lacking state guidance, over-censor content to avoid liability, a concern raised in Reno v. ACLU (521 U.S. 844, 874).

Kagan’s dissent strengthens the First Amendment challenge. She argued that content-based restrictions, even burdens like age verification, require strict scrutiny to ensure the least restrictive means (Paxton, Kagan, J., dissenting, slip op. at 11). The moratorium’s broad preemption could fail strict scrutiny if it prevents states from adopting tailored AI regulations that protect minors more effectively than federal alternatives (e.g., content filters), especially if less privacy-invasive methods like biometric age verification exist (Paxton, Kagan, J., dissenting, slip op. at 11).

Tenth Amendment and Federalism Concerns

Paxton implicitly endorses states’ police powers to regulate harmful content (Paxton, slip op. at 32, citing Sable, 492 U.S. at 126). The moratorium, by prohibiting state AI laws, infringes on this authority, raising Tenth Amendment concerns. The Supreme Court has struck down federal laws that “commandeer” state legislative processes by compelling states to enact or refrain from enacting policies (New York v. United States, 505 U.S. 144, 1992). The moratorium’s condition-abstaining from AI regulation to receive BEAD funds-effectively coerces states into surrendering their regulatory authority, particularly in areas like child safety and consumer protection, where states like New York (RAISE Act) and Colorado have already acted.

The moratorium’s preemption is overly broad, blocking even Paxton-compliant laws that could survive constitutional scrutiny. This conflicts with federalism principles, which reserve non-delegated powers to states, especially in public health and safety (Bond v. United States, 572 U.S. 844, 2014).

Spending Clause Analysis

The moratorium’s tie to BEAD funding invokes the Spending Clause, governed by South Dakota v. Dole (483 U.S. 203, 1987), which requires conditions on federal funds to serve the general welfare, be clearly stated, relate to the program’s purpose, and avoid inducing unconstitutional actions. The moratorium’s constitutionality falters on several prongs:

  • Relatedness: The link between banning AI laws and broadband deployment is tenuous. Paxton upheld state regulation of online content, not infrastructure (Paxton, slip op. at 32). Prohibiting AI laws does not directly advance broadband goals, weakening the Dole relatedness test.
  • Coercion: The $500 million in BEAD funds is significant, especially for states reliant on it for rural broadband. This could be deemed coercive under NFIB v. Sebelius (567 U.S. 519, 2012), which struck down a Medicaid expansion mandate for exerting excessive pressure.
  • Unconstitutional Conditions: By forcing states to forgo Paxton-compliant AI regulations, the moratorium may compel unconstitutional inaction, infringing on states’ Tenth Amendment rights to regulate child safety.

Practical Implications and Child Safety Risks

The Townhall article underscores the urgency of regulating AI to protect minors, citing a 2025 JAMA study linking screen addiction to suicide risk and cases like Gavin Guffy (sextortion on Instagram), Molly Russell (self-harm content), and Elliston Berry (AI deepfake victimization). The moratorium’s ban on state AI laws could exacerbate these harms by preventing targeted regulations, such as age verification for AI-generated content, which Paxton upheld as constitutional. Without state intervention, platforms may under-regulate, increasing minors’ exposure to harmful content, or over-censor, chilling protected adult speech.

Persuasive Argument: The Moratorium Should Be Stripped

The AI moratorium’s constitutional flaws, illuminated by Paxton, demand its removal from the Senate reconciliation bill. It undermines states’ ability to protect minors from AI-driven harms, violates federalism principles, and oversteps Spending Clause bounds, all while risking First Amendment protections.

First, the moratorium directly conflicts with Paxton’s endorsement of state authority to regulate harmful online content. H.B. 1181’s age-verification requirement was upheld as a narrowly tailored means to shield minors from obscene material without unduly burdening adult speech (Paxton, slip op. at 36). An AI age-verification law would serve the same compelling state interest-protecting children from deepfakes or harmful chatbot interactions-using similar methods. By banning such laws, the moratorium thwarts states’ ability to address pressing harms, as evidenced by real-world cases like Elliston Berry’s victimization by AI-generated deepfakes. This not only kindizes child safety but also risks chilling adult speech if platforms resort to broad censorship, a First Amendment violation Kagan’s dissent warns against (Paxton, Kagan, J., dissenting, slip op. at 5-6).

Second, the moratorium’s preemption of state AI laws violates the Tenth Amendment by commandeering state legislative authority. Paxton affirms states’ police powers to regulate for child safety (Paxton, slip op. at 32). By forcing states to abandon AI regulations to access BEAD funds, the moratorium coerces them into ceding this authority, contravening New York v. United States. States like New York and Colorado have tailored AI laws to local needs, and the moratorium’s blanket ban nullifies these efforts, undermining federalism.

Third, the moratorium fails Spending Clause scrutiny. Its tenuous link to broadband deployment-unlike Paxton’s focus on content regulation-does not satisfy Dole’s relatedness requirement. The $500 million in BEAD funds exerts coercive pressure, particularly on rural states, echoing NFIB v. Sebelius. By compelling states to forgo constitutional regulations, the moratorium imposes an unconstitutional condition, stripping them of their Paxton-affirmed rights.

The moratorium’s defenders, like Sen. Cruz, argue it promotes innovation and uniform federal policy (TechPolicy.Press, May 22, 2025). Yet, innovation does not justify sacrificing child safety or state sovereignty. Federal AI policy can coexist with state experimentation, as Paxton demonstrates states can regulate without stifling speech. The moratorium’s overbroad ban, prohibiting even narrowly tailored laws, is neither necessary nor constitutional.

Congress should strip the moratorium from the reconciliation bill. It risks exacerbating harms to minors, as seen in cases like Berry’s, and invites legal challenges that could delay broadband funding. By allowing states to enact Paxton-compliant AI laws, Congress can balance innovation with child safety, respecting constitutional boundaries.

Conclusion

The AI moratorium poses significant constitutional problems, clashing with Paxton’s affirmation of state authority to regulate harmful content, infringing on Tenth Amendment rights, and exceeding Spending Clause limits. Its prohibition on state AI laws, including age-verification measures, undermines child safety and risks chilling protected speech. Stripping the moratorium from the reconciliation bill is essential to preserve federalism, protect First Amendment rights, and ensure states can address AI’s evolving threats to minors.

Key Citations:

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James K. Bishop

James K. Bishop is a conservative writer and raconteur hailing from Texas, known for his incisive and often provocative takes on political and cultural issues. With a staunch commitment to originalist constitutional principles, he emphasizes limited government, individual liberties, and traditional American values. Active on X under the handle @James_K_Bishop, he frequently engages his audience with sharp critiques of progressive policies, media narratives, and overreaches by the federal government. His style is direct, often laced with humor and wit, which resonates strongly with his conservative followers.