Reps. Jay Obernolte (R-Calif.) and Lori Trahan (D-Mass.) released a 269-page discussion draft of the Great American AI Act on June 4, joined by Scott Franklin (R-Fla.), Suhas Subramanyam (D-Va.), Erin Houchin (R-Ind.), and Scott Peters (D-Calif.). It’s the first comprehensive U.S. AI framework to put state preemption directly into legislative text.

The draft runs four titles: Frontier AI Governance, Workforce, Cybersecurity, and Research, Development, and International Cooperation. “Large frontier developers,” defined as firms with more than $500 million in prior-year gross revenue that have trained a frontier model, would publish AI safety frameworks and submit to semi-annual audits by state-licensed Independent Verification Organizations, with a liability shield for the IVOs. Penalties run up to $1 million per violation per day, an order of magnitude beyond the $1–3 million total caps in the state laws being absorbed.

Section 121 is the structural fulcrum. For three years, it preempts state and local laws “specifically regulating the development” of AI models, while preserving use, deployment, and laws of general applicability. A document from Trahan’s office names California’s AB 2013 training-data disclosure law and parts of SB 942’s watermarking provisions as preempted; New York and Illinois statutes get federalized into the audit regime. The bill also extends the Cybersecurity Information Sharing Act of 2015 through fiscal 2035.

The politics are already fracturing. The House Democratic Caucus Commission on AI says it doesn’t support the draft as written. Brad Carson, president of Americans for Responsible Innovation, called preemption a “generational mistake” that converts the state floor into a “federal ceiling.” From the opposite flank, Majority Leader Steve Scalise (R-La.) has signaled appetite for broader preemption than the text offers. Trahan says she intends to “fix” language that could swallow state consumer-protection and civil-rights enforcement.

The state-floor era of American AI regulation, barely two years old, is being negotiated into a federal ceiling before it had time to set.

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