House lawmakers propose AI regulation bill that would override state laws for three years

Bipartisan AI Legislation Introduces National Framework

Republican Rep. Jay Obernolte of California and Democratic Rep. Lori Trahan of Massachusetts released a 269-page discussion draft of the Great American AI Act on Thursday, marking a significant step in regulating advanced AI tools at the federal level 1

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. The bipartisan AI legislation would require large AI developers to keep the government informed about frontier model development, create plans to mitigate severe cybersecurity risks, and allow auditors to ensure compliance 1

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. Co-sponsors include Reps. Scott Franklin (R-Fla.), Suhas Subramanyam (D-Va.), Erin Houchin (R-Ind.), and Scott Peters (D-Calif.) 2

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State Law Preemption Sparks Controversy

The most contentious element of the national AI framework involves state law preemption, which would override state regulations targeting AI model development for three years 4

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. However, the draft explicitly would not preempt state-level AI regulations governing how AI is used once released, laws of general applicability, or common law remedies 5

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. Consumer advocacy organization Public Citizen called the proposal a "disastrous proposal" that Big Tech is "celebrating," with J.B. Branch, AI governance and technology policy counsel, arguing it does nothing to address algorithmic discrimination, consumer fraud, youth mental health harms, AI companions, and deepfakes 1

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. The Tech Oversight Project released surveys showing 56% of Obernolte's constituents and 63% of Trahan's constituents oppose efforts to weaken state AI laws 1

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Center for AI Standards and Innovation Gets $300 Million

The legislation would formally establish the Center for AI Standards and Innovation (CAISI) within the Commerce Department's National Institute of Standards and Technology, allocating $100 million per year from 2027-2029, totaling $300 million for the effort 1

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. President Trump's recent executive order on AI sought to establish this office, but it lacks funding without congressional approval 1

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. CAISI would evaluate frontier models, oversee voluntary guidelines and standards for AI security, and license independent verification organizations to audit labs' compliance with catastrophic risks protocols 5

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OpenAI Pursues Reverse Federalism Strategy

While Congress debates AI regulation, major firms like OpenAI and Anthropic have turned to state bills to establish their own policy positions 3

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. Chris Lehane, OpenAI's chief of global affairs, described the company's approach as "reverse federalism," creating a "de-facto" national framework by endorsing state bills in major blue states 3

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. OpenAI has secured wins in Illinois, California, and New York with bills requiring frontier developers to publish safety frameworks addressing catastrophic risks and submit third-party audits 3

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. Illinois SB 315 mandates frontier labs with more than $500 million in revenue to submit annual third-party audits of their safety plans 3

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Workforce Impact and Additional Protections

The draft addresses workforce impact by requiring the Secretary of Labor to oversee data collection, hold workshops, and establish an AI Workforce Research Hub to conduct analysis and develop policy recommendations 5

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. Jay Obernolte and Lori Trahan emphasized in a Bloomberg Law op-ed that "we can't prepare Americans for the future if we're not measuring what's happening in real time" 5

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. The framework would also protect whistleblower protection for AI workers, increase fines for AI-enabled fraud, and boost funding for AI literacy, education, and research 2

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. The legislation touches on content moderation, research security, and international AI standards 2

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What Comes Next for Federal AI Regulation

The lawmakers describe this discussion draft as "the start of a serious national conversation" to gather feedback from stakeholders, experts, and the public before formal introduction 2

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. The White House has been skeptical of approaches imposing strict requirements on companies, presenting challenges for passage 2

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. Mixed feedback on the House proposal, combined with separate Senate negotiations, indicates lawmakers face a difficult path forward with less than six months before a new Congress 3

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. The framework represents Congress's first substantive response to the Trump administration's AI policy "wish list" sent earlier this year 5

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