Why Texas Should Welcome a Federal Pause on State AI Laws

Estimated Time to Read: 10 minutes

Sixteen bipartisan members of the Texas Senate recently sent a letter urging U.S. Senators Ted Cruz (R) and John Cornyn (R) to oppose any federal moratorium on state regulation of artificial intelligence. Led by State Sen. Angela Paxton (R-McKinney), the group argues that states must retain full authority to respond to emerging risks in artificial intelligence. Their letter warns of rapid advances toward artificial general intelligence, potential cyberattacks from foreign adversaries, and concerning interactions between AI systems and minors. These points fuel the senators’ argument that Texas needs flexibility and should not be restricted by federal limits on state action.

These arguments are summed up in one of the letter’s central claims:

“Surely we can all agree that these kinds of state protections do not interfere with legitimate innovation and are reasonable and appropriate.”

The senators also claim that Texas has already taken important steps to govern this technology. They reference the Texas Responsible Artificial Intelligence Governance Act (TRIAGA) and frame it as a model of responsible oversight. Their message portrays state leadership as both necessary and urgent. The argument is built on the belief that states, not Washington, are best equipped to protect privacy, prevent harm, and confront the risks posed by fast-moving technology.

State Sen. Angela Paxton echoed this view when promoting the letter publicly:

While the concerns are understandable, the conclusion does not follow. Texas’ recent actions on AI regulation illustrate why a federal pause is not only justified but critical for avoiding regulatory fragmentation, protecting economic growth, and guarding against unnecessary expansion of the administrative state.

The National Debate Over Artificial Intelligence Regulation

As the national conversation accelerates, policymakers across the political spectrum are wrestling with how rapidly artificial intelligence is reshaping the economy, national security, and everyday life. States are moving ahead with their own rules, while federal leaders are considering whether a unified approach is necessary to prevent confusion and protect competitiveness. That tension has created two distinct paths for the country, and understanding the stakes behind them is essential to evaluating the proposed federal pause.

Why Federal Artificial Intelligence Standards Matter

Artificial intelligence touches every sector of the national economy. Healthcare, housing, finance, education, transportation, public safety, and national security all rely on technologies that operate across state lines. When states begin to regulate AI independently, they create a patchwork of rules that companies must navigate simultaneously. This approach increases costs, reduces competition, and undermines predictability for families, innovators, and small businesses.

As more states adopt unique disclosure rules, bias audit mandates, content labeling requirements, and training data obligations, American companies face a maze of conflicting demands. Large corporations may be able to build compliance infrastructure to meet fifty different sets of rules. Smaller firms cannot. This difference favors incumbents, stifles open-source development, and creates artificial barriers to entry in a field that thrives on open experimentation.

A temporary federal pause gives the country time to prevent this patchwork from calcifying. The goal is not permanent national control of artificial intelligence. The goal is a unified, rational, and liberty-oriented framework that preserves innovation and protects Americans without strangling emerging industries. A national standard avoids duplication of costs, prevents forum shopping by regulators, and ensures that one state’s decisions do not become de facto national mandates.

Texas’ recent regulatory environment demonstrates how quickly this problem becomes real.

Texas and HB 149 as a Case Study in State AI Regulation

To see how quickly state regulation can widen into something far more complex than originally intended, Texas offers one of the clearest examples in the country. The state’s new AI law, HB 149, began as an attempt to address legitimate concerns around privacy and child protection. By the time it passed, it had become a sweeping framework that reshaped the regulatory landscape for developers, businesses, and consumers. Before evaluating its consequences, it is important to understand its scope.

Understanding HB 149 and the Texas AI Regulatory Regime

During the 89th Legislative Session, Texas enacted House Bill 149 (HB 149), authored by State Rep. Giovanni Capriglione (R-Southlake). HB 149 profoundly reshapes how artificial intelligence is developed and used in the state. The new provisions govern biometric data, mandate consumer disclosures, restrict certain AI uses, impose documentation obligations, and create enforcement mechanisms through the Texas Attorney General. HB 149 also establishes the Texas Artificial Intelligence Council (TAIC) and creates a regulatory sandbox program.

What began as an attempt to address concerns about child protection and privacy became a dramatic expansion of state oversight. The bill’s fiscal impact is substantial. According to the Legislative Budget Board (LBB), HB 149 results in a negative impact of $24,937,448 on General Revenue through the 2026 to 2027 biennium and imposes recurring annual costs of $10,222,415 every year thereafter. It requires 20 new state employees across the Department of Information Resources (DIR) and the Office of the Attorney General (OAG), along with more than $700,000 annually in payroll-related overhead. Technology costs are also high, including $3 million per year for the DIR to support the AI sandbox and associated compliance audits, $4 million per year for the OAG to retain outside machine learning and artificial intelligence experts, and more than $4 million in one-time technology costs for complaint intake systems, enforcement tools, and associated infrastructure. These figures confirm that HB 149 creates a permanent and expensive enforcement apparatus that will grow government for years to come.

Despite revisions intended to narrow the bill, HB 149 still imposes heavy documentation requirements on developers and deployers. It expands state control over data practices and creates legal uncertainty for innovators. It concentrates oversight in unelected bodies, increases investigative authority, and shifts risk away from government actors and toward businesses and individuals. Although it includes some civil liberties protections, the overall result is a sizable expansion of state power that contradicts Texas’s reputation as a pro-innovation, limited-government environment.

Why HB 149 Shows the Need for a Federal Pause

Texas lawmakers point to HB 149 as proof that states can govern AI responsibly. The reality tells a different story. HB 149 demonstrates how quickly well-intentioned regulation can balloon into a costly and complex bureaucracy. It illustrates the risk of mission creep, ambiguous ethical mandates, and enforcement structures that disproportionately burden small enterprises and noncommercial developers. It shows how easily state laws can mimic interventionist models seen in California and Colorado.

If every state adopts its own variation of bills like HB 149, American innovators will face conflicting rules in every major market. A federal pause on state AI regulations would prevent this scenario while allowing Congress to develop a national framework that preserves core liberties and promotes permissionless innovation.

HB 149 should not be viewed as a success but as a cautionary example.

The Broader National Landscape of State AI Regulation

As Texas moves forward with its own far-reaching rules, it is not alone. States across the country are racing to legislate artificial intelligence in ways that diverge sharply from one another. This growing patchwork has already begun to shape the broader regulatory environment, and the consequences for innovation, compliance, and economic freedom are becoming increasingly difficult to overlook.

How State Patchworks Create Barriers to Innovation

States are enacting laws that diverge significantly from one another. California emphasizes disclosure and training data transparency. Colorado requires annual reporting and risk assessments. Illinois and New York advance bias audit mandates. Maine requires disclosure in cases of potential deception. Some states regulate developers and deployers differently. Others impose strict consumer appeal rights. Several are experimenting with rules governing generative AI and frontier models.

This regulatory sprawl is unpredictable and burdensome. It forces companies to comply with dozens of regimes simultaneously. It invites litigation and creates uncertainty. It strengthens large corporations at the expense of smaller competitors. It restricts experimentation and reduces the availability of open-source models. It creates inconsistent protections for consumers depending on where they live.

State patchworks do not solve AI’s challenges. They multiply them.

Why Federal Preemption Protects Liberty and Innovation

Against this backdrop, it is worth stepping back and evaluating the broader principles at stake. Artificial intelligence is not just another policy area, and its regulation will influence how the country balances innovation with individual freedom for years to come. Federal preemption provides a way to preserve that balance, and examining it through a liberty-focused lens highlights why a unified national framework is not only reasonable but necessary.

How Federal Preemption Aligns With Liberty Principles

Federal preemption is often misunderstood as federal overreach. In reality, a carefully defined national framework can preserve liberty far more effectively than fragmented, duplicative, and expansive state regulation.

Federal preemption protects individual liberty by avoiding vague, unpredictable, or speech-chilling standards at the state level. It protects personal responsibility by ensuring that accountability frameworks are clear, consistent, and nationally applicable. It strengthens free enterprise by preventing fifty different governments from imposing conflicting mandates that favor incumbents and deter new entrants. It supports private property rights by harmonizing data protections without overreaching prohibitions that interfere with lawful training practices. Most importantly, it limits government by preventing states from constructing sprawling bureaucracies that expand indefinitely and impose permanent fiscal burdens.

Why State-Level AI Crackdowns Undermine Innovation

Texas lawmakers often argue that state flexibility is essential for protecting families. But state flexibility can quickly become state overreach. HB 149, SB 1964, and HB 2818 collectively reveal a pattern in which Texas is building more bureaucracy rather than less. Agencies are gaining more staff, more authority, and more funding to regulate private actors. Innovation is being stifled rather than encouraged. Open-source development is being complicated rather than supported. Small businesses face steep compliance obligations, while large corporations can navigate the regulatory maze with ease.

Federal opponents often warn against national micromanagement, but the real threat in the short term is uncoordinated and expansive state action.

A temporary federal pause gives Congress time to design a framework that preserves constitutional rights, advances innovation, and restrains government growth.

Why a Federal Pause Is the Right Path Forward

Texas senators are pushing back against a federal moratorium on state AI regulation. Their concerns about exploitation, cyber threats, and child protection are real and deserve thoughtful attention, but their conclusion is misplaced. State-level crackdowns like HB 149 demonstrate that states can unintentionally create heavy-handed systems that burden innovators, grow government, and undermine free enterprise.

A temporary federal pause is not a rejection of Texas values. It is a practical recognition that artificial intelligence is a national technology requiring national coherence. A federal framework can protect families without creating a labyrinth of conflicting laws. It can empower entrepreneurs rather than restricting them. It can preserve the liberty that underpins American innovation and competitiveness.

Texas should welcome this pause. The future of artificial intelligence depends on clear rules, limited government, and the freedom to innovate. Federal preemption gives the country the breathing room it needs to get the framework right.

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