Yes, the Big Beautiful Bill Act has passed the House of Representatives and is on its way to the Senate–with the AI safe harbor moratorium and its $500,000,000 giveaway appropriation intact. Yes, right next to Medicaid cuts, etc.

So now what? The controversial AI regulation moratorium tucked inside the reconciliation package is still a major point of contention. Critics argue that the provision—which would block state and local governments from enforcing or adopting AI-related laws for a decade—is blatantly non-germane to a budget bill. But what if the AI moratorium, in the context of a broader $500 million appropriation for a federal AI modernization initiative, isn’t so clearly in violation of the Byrd Rule? Just remember–these guys are not babies. They’ve thought about this and they intend to win–that’s why the language survived the House.

Remember, the assumption is that President Trump can’t get the BBB through the Senate in regular order which would require 60 votes and instead is going to jam it through under “budget reconciliation” rules which requires a simple majority vote in the Republican-held Senate. Reconciliation requires that there not be shenanigans (hah) and that the budget reconciliation actually deals with the budget and not some policy change that is getting sneaked under the tent. Well, what if it’s both?

Let’s consider what the Senate’s Byrd Rule actually requires.

To survive reconciliation, a provision must:
1. Affect federal outlays or revenues;
2. Have a budgetary impact that is not “merely incidental” to its policy effects;
3. Fall within the scope of the congressional instructions to the committees of jurisdiction;
4. Not increase the federal deficit outside the budget window;
5. Not make recommendations regarding Social Security;
6. Not violate Senate rules on germaneness or jurisdiction.

Critics rightly point out that a sweeping 10-year regulatory moratorium in Section 43201(c) smells more like federal policy overreach than fiscal fine-tuning, particularly since it’s pretty clearly a 10th Amendment violation of state police powers. But the moratorium exists within a broader federal AI modernization framework in Section 43201(a) that does involve a substantial appropriation: $500 million allocated for updating federal AI infrastructure, developing national standards, and coordinating interagency protocols. That money is real, scoreable, and central to the bill’s stated purpose.

Here’s the crux of the argument: if the appropriation is deemed valid under the Byrd Rule, the guardrails that enable its effective execution may also be valid – especially if they condition the use of federal funds on a coherent national framework. The moratorium can then be interpreted not as an abstract policy preference, but as a necessary precondition for ensuring that the $500 million achieves its budgetary goals without fragmentation.

In other words, the moratorium could be cast as a budget safeguard. Allowing 50 different state AI rules to proliferate while the federal government invests in a national AI backbone could undercut the very purpose of the expenditure. If that fragmentation leads to duplicative spending, legal conflict, or wasted infrastructure, then the moratorium arguably serves a protective fiscal function.

Precedent matters here. Reconciliation has been used in the past to impose conditions on Medicaid, restrict use of federal education funds, and shape how states comply with federal energy and transportation programs. The Supreme Court has rejected some of these on 10th Amendment grounds (NFIB v. Sebelius), but the Byrd Rule test is about budgetary relevance, not constitutional viability.

And that’s where the moratorium finds its most plausible defense: it is incidental only if you believe the spending exists in a vacuum. In truth, the $500 million appropriation depends on consistent, scalable implementation. A federal moratorium ensures that states don’t undermine the utility of that spending. It may be unwise. It may be a budget buster. It may be unpopular. But if it’s tightly tied to the execution of a federal program with scoreable fiscal effects, it just might survive the Byrd test.

So while artists, civil liberties advocates and state officials rightly decry the moratorium on policy grounds, its procedural fate may ultimately rest on a more mundane calculus: Does this provision help protect federal funds from inefficiency? If the answer is yes—and the appropriation stays—then the moratorium may live on, not because it deserves to, but because it was drafted just cleverly enough to thread the eye of the Byrd Rule needle.

Like I said, these guys aren’t babies and they thought about this because they mean to win. Ideally, somebody should have stopped it from ever getting into the bill in the first place. But since they didn’t, our challenge is going to be stopping it from getting through attached to a triple-whip, too big to fail, must pass signature legislation that Trump campaigned on and was elected.

And even if we are successful in stopping the AI moratorium safe harbor in the Senate, do you think it’s just going to go away? Will the Tech Bros just say, you got me, now I’ll happily pay those wrongful death claims?