Congress is actively debating proposals to create the first federal artificial intelligence law but competing visions in the House and Senate and deep disagreements over state authority have so far prevented a unified statute. Meanwhile, several states have enacted their own AI safety and transparency laws, creating a potentially complex regulatory environment for U.S. businesses.
The leading bill in the House, the American Artificial Intelligence Leadership and Uniformity Act (H.R. 5388), was introduced Sept. 16 by Rep. Michael Baumgartner, R-Wash. and referred to a dozen committees, including Science, Space and Technology; Energy and Commerce; Judiciary; and Financial Services. The measure would establish a national AI framework and temporarily preempt certain state AI laws that govern systems engaged in interstate commerce. The bill is currently at the “introduced” stage and has not been marked up or scheduled for a committee vote.
In the Senate, lawmakers have pursued a modular approach rather than a single sweeping bill. Sen. Ted Cruz, R-Texas, chair of the Senate Commerce, Science and Transportation Committee, last fall introduced the SANDBOX Act (S. 2750), which would create a federal regulatory “sandbox” allowing AI developers to seek temporary waivers from certain regulations to promote innovation. The bill remains in committee.
Other Senate proposals focus on AI risk evaluation and testing and workforce impacts, though none have advanced to floor votes. Senate negotiators also stripped a controversial 10-year moratorium on state AI regulation from an earlier must-pass budget bill after bipartisan resistance, underscoring Senate skepticism about broad federal preemption.
President Trump’s administration has issued an executive order directing federal agencies to pursue a “national policy framework” for AI and discouraging state regulation it views as burdensome. The order directs the executive branch to identify and challenge state laws deemed inconsistent with federal policy, though it does not itself override state statutes.
With no federal statute enacted, states have moved aggressively:
- In New York, Gov. Kathy Hochul signed the Responsible AI Safety and Education Act (RAISE Act) in December, requiring large AI developers to publish safety frameworks and disclose serious incidents to the state within 72 hours, and create an oversight office within the Department of Financial Services.
- California enacted the Transparency in Frontier Artificial Intelligence Act (SB-53) this year, requiring transparency reports and risk assessments for advanced AI models.
- Other states such as Colorado already have comprehensive AI laws covering bias and high-risk systems.
Why Distributors Should Care
Wholesale distributors are increasingly adopting AI for pricing, demand forecasting, credit scoring, customer engagement, and supply chain operations. Regulatory uncertainty at the federal and state level could affect how these systems are governed and audited, with implications for compliance, contracting and risk management.
- One Federal Standard vs. Many: Legislation like H.R. 5388 aims to establish a single national benchmark. If enacted, it could prevent a patchwork of state rules that distributors must navigate when operating across state lines. Without federal preemption, distributors could face multiple overlapping requirements from New York, California, Colorado, and other states.
- Vendor Contracts and Risk Allocation: If a federal sandbox regime becomes law, vendors might accelerate AI tool deployment under flexible standards, but distributors could bear increased liability if systems produce biased outcomes or violate state rules that remain in effect.
- Documentation and Transparency: Proposals emphasizing risk evaluation could push distributors to maintain stronger documentation, incident reporting and explainability for internal AI systems to satisfy evolving governance expectations.
- Workforce and Operational Exposure: Should workforce-impact or related reporting requirements be included in final AI legislation, distributors actively automating roles may face new disclosure obligations.
Status Snapshot (Dec. 2025)
- Federal AI law: No bill enacted; multiple proposals in play.
- House: H.R. 5388 introduced; broad committee referrals; no floor schedule.
- Senate: SANDBOX Act and other targeted bills in committee; broad preemption proposals previously rejected.
- Executive action: White House national framework order in effect.
- States: New York and California have active AI safety and transparency laws; other states have or are developing AI legislation.
Bottom line: U.S. AI policy is in a transitional phase, with federal lawmakers crafting competing visions even as state regulators move forward. For distributors integrating AI into core operations, the coming year will be critical to assess and align technology use with emerging governance expectations at both state and federal levels.
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