*

Trump's tax bill includes 10-year state AI regulation ban

*

State attorneys general say bill would harm consumers

*

Measure must pass Senate rule on budget process

By Jody Godoy

May 16 (Reuters) - A Republican proposal to block states

from regulating artificial intelligence for 10 years drew

opposition on Friday from a bipartisan group of attorneys

general in California, New York, Ohio and other states that have

regulated high-risk uses of the technology.

The measure included in President Donald Trump's tax cut

bill would preempt AI laws and regulations passed recently in

dozens of states.

A group of 40 state attorneys general, including Republicans

from Ohio, Tennessee, Arkansas, Utah and Virginia and other

states, urged Congress to ditch the measure on Friday, as the

U.S. House of Representatives' budget committee geared up for a

Sunday night hearing.

"Imposing a broad moratorium on all state action, while

Congress fails to act in this area is irresponsible and deprives

consumers of reasonable protections," said the group.

The attorney general from California -- which is home to

prominent AI companies, including OpenAI, Alphabet,

Meta Platforms ( META ) and Anthropic -- was among the Democrats

who signed the letter.

"I strongly oppose any effort to block states from

developing and enforcing common-sense regulation; states must be

able to protect their residents by responding to emerging and

evolving AI technology," Attorney General Rob Bonta said.

California implemented a raft of bills this year limiting

specific uses of AI, illustrating the kind of laws that would be

blocked under the moratorium.

Like several other states, California has criminalized the

use of AI to generate sexually explicit images of individuals

without their consent. The state also prohibits unauthorized

deepfakes in political advertising, and requires healthcare

providers to notify patients when they are interacting with an

AI and not a human.

Healthcare provider networks, also known as HMOs, are barred

in California from using AI systems instead of doctors to decide

medical necessity.

House Republicans said in a hearing Tuesday that the measure

was necessary to help the federal government in implementing AI,

for which the package allocates $500 million.

"It's nonsensical to do that if we're going to allow 1,000

different pending bills in state legislatures across the country

to become law," said Jay Obernolte, a Republican from California

who represents part of Silicon Valley, including Mountain View

where Google is based.

"It would be impossible for any agency that operates in all

the states to be able to comply with those regulations," he

said.

Google has called the proposed moratorium "an important

first step to both protect national security and ensure

continued American AI leadership."

That position will be tested if the measure makes it to the

Senate. It will need to clear the budget reconciliation process,

which is supposed to be used only for budget-related

legislation.