States Move to Fill AI Policy Void Left by Washington

Artificial intelligence surfaced as a significant issue in the midterm elections, yet the practical consequences for federal policy and the ongoing data center buildout remain unsettled, according to Sunayna Tuteja, a senior fellow at the Atlantic Council and former chief innovation officer at the Federal Reserve System, in an interview on Bloomberg Tech.

Speaking with Tim Stenovec, Tuteja said the center of gravity for AI rulemaking is shifting away from Congress and toward state capitols, particularly on questions tied to data center siting and construction.

Why are states gaining influence over AI policy?

Tuteja argued that with no comprehensive federal framework in place, states are positioned to take a larger role in deciding how data centers are permitted and regulated. That shift tracks with the broader pattern of AI's emergence as a midterm campaign issue without a corresponding resolution at the national level, Tuteja told Bloomberg Tech.

What does the data center buildout have to do with state rules?

The expansion of data centers needed to support AI systems sits at the center of the debate, Tuteja said, because local and state governments typically control the permitting, zoning and infrastructure decisions that determine where and how fast facilities get built. As federal direction stays unresolved, those state-level levers become more consequential, according to Tuteja.

"Regulation and innovation don't have to be at odds," Tuteja argued in the Bloomberg Tech interview, framing the choice facing policymakers as the United States competes with China on AI development.

Does AI regulation have to slow down innovation?

Tuteja rejected the premise that stronger rules and faster technological progress are mutually exclusive. Her comments on Bloomberg Tech frame the state-level debate over data centers as a test case for whether governments can write guardrails without stalling the buildout AI developers say they need.

How does the US-China competition factor into this?

Tuteja placed the domestic policy debate inside the wider contest with China, suggesting that how the United States handles regulation at the state level will shape its competitive position. She did not specify which states have moved first or what their rules entail, according to the interview summary provided by Bloomberg.

What happens next in Washington?

The interview leaves open what, if anything, Congress does next. Tuteja's comments suggest that absent federal action, states will continue to set precedent on data center policy by default rather than by design — a dynamic she said is likely to persist as both political parties weigh how aggressively to regulate an industry still expanding rapidly across the country.

The full interview is available via Bloomberg Tech.