Capitol to Capitol | March 24, 2026

Capitol to Capitol | March 24, 2026

NewsletterCapitol to Capitol

Questions? Please use the email icon at left to contact NCSL's State-Federal Affairs Division.

NCSL Updates

NCSL Leads Coalition Urging Congress to Pass WRDA 2026

NCSL, along with the other Big Seven state and local government organizations, urged Congress to pass the bipartisan Water Resources and Development Act. Read full letter.

NCSL Resource: State Legislative Responses to Education Provisions in the One Big Beautiful Bill Act

This legislative tracker summarizes common themes across state legislation on the scholarship tax credit, Workforce Pell Grants and student loan accountability. Check out the NCSL staff breakdown of provisions.

Preserving State Authority in Federal Market Structure Legislation

In a letter to the Senate Banking Committee, NCSL urges Congress to preserve state regulatory authority and investor protections as it considers legislation on digital asset market structures. NCSL highlights the role of state regulators in combating fraud and argues that federal laws should support, not weaken, existing protections. Read the full letter.

Congressional Updates

Momentum Builds Around AI Policy With Mixed News for States' Rights

Congress and the White House released separate proposals aimed at shaping a national approach to artificial intelligence.

Sen. Marsha Blackburn's National AI Framework

U.S. Sen. Marsha Blackburn (R-Tenn.) released an updated draft of a national AI policy framework, known as the TRUMP AMERICA AI Act, intended to serve as a starting point for congressional negotiations. According to Blackburn, the framework would codify the White House's December 2025 executive order calling for a unified federal approach to AI but in most cases would preserve room for states to enact stronger AI policies.

The proposal appears to leave intact a wide range of state laws addressing consumer protection, civil rights, criminal activity, election integrity, fraud and child safety.

The framework incorporates major elements of Blackburn's previously introduced bipartisan bills, including the Kids Online Safety Act and the NO FAKES Act, creating new obligations for AI developers and platforms to mitigate foreseeable harms to minors and provide name, image and likeness protections.

The draft would direct the National Institute of Standards and Technology to develop guidelines and standards on content provenance, watermarking and the detection of synthetic content. It would also require certain companies and federal agencies to submit quarterly reports to the Department of Labor on AI-related workforce impacts, including layoffs and job displacement. In addition, the proposal instructs the secretary of energy to enter into agreements with data center owners and operators to protect consumers from electricity rate increases and other adverse impacts associated with data center development; entities that decline to participate would be deemed ineligible for specified federal incentives. The draft also sunsets Section 230 of the Communications Decency Act of 1996, which protects social media companies from liability for content posted by third-party users and requires safety testing protocols.

Finally, the proposal establishes the National Artificial Intelligence Research Resource to reduce barriers to AI research and development by making high-performance computing resources, large datasets and advanced infrastructure available as a shared national resource for students, researchers, nonprofit organizations, small businesses and academic institutions.

The White House's AI Legislative Framework

The White House released the National AI Policy Framework, with recommendations for legislative action that build on the administration's December executive order on AI.

The White House framework contains several thematic goals and shares similarities with the Blackburn proposal, including a new ratepayer protection pledge, some protections for children and creators, and opportunities to study workforce realignment as well as develop workforce training and support programs. However, the framework contains several provisions that aim to preempt state laws, especially those regulating AI development and Americans' use of AI and those penalizing AI developers for a third party's unlawful conduct involving their models.

Next Steps

The White House has delivered its framework to Congress. NCSL will continue to monitor efforts to translate the framework into legislative text, as well as how it may intersect with Blackburn's proposal.

House Committee Debates Preemptive Financial Data Privacy Bill

A draft bill in the House Financial Services Committee would substantially revise the federal Gramm-Leach-Bliley Act, the primary federal law governing consumer financial data. While the bill expands certain consumer privacy rights at the federal level, it also broadly preempts state privacy and cybersecurity laws, while preserving only a narrow enforcement role for state insurance regulators.

Historically, the GLBA has functioned as a federal floor, with states free to enact stronger protections, as some have done. The draft flips that model, allowing Congress and federal regulators to set the maximum standards, which states cannot exceed, even to protect residents when federal standards lag behind technology or threaten intelligence or market realities.

As drafted, the proposal conflicts with longstanding NCSL policy opposing federal legislation that preempts state law. NCSL will continue to monitor discussions surrounding potential updates to the GLBA and will oppose any efforts to undermine state authority in this area.

Senate Passes Comprehensive Housing Legislation, Sends It Back to House

The 21st Century ROAD to Housing Act aims to increase the housing supply by reforming federal regulations and modernizing existing federal programs. The bill, which passed the Senate on an 89-10 vote, returns to the House, where it could be passed as written or go into a conference committee.

The Senate legislation, which includes no new appropriations, combines 18 sections from the House-passed Housing for the 21st Century Act and a previously passed Senate package, the ROAD to Housing Act. Notable provisions would streamline environmental reviews, eliminate the permanent chassis requirement for manufactured homes and increase Federal Housing Administration Multifamily loan limits.

The bill would allow up to 20% of Community Development Block Grant funds to be used for new housing construction. The program would be amended to provide a bonus allocation to localities with higher housing growth. The legislation would increase the income eligibility threshold for the HOME Investment Partnerships Program, which grants funds to states and local governments to provide affordable housing for low-income households. The bill also authorizes a competitive grant program to assist state and local governments with housing planning and community development.

A late addition to the package includes Section 901, which would prevent institutional investors owning more than 350 single-family homes from buying more. The provision includes exemptions for build-to-rent development but requires investors to sell those homes within seven years. Read the legislation.

Return to Sender: Looming Financial Crisis at USPS

The U.S. Postal Service is approaching a financial breaking point and Congress is taking notice. The House Committee on Oversight and Government Reform held a hearing on March 17 to examine the service's financial future under Postmaster General David P. Steiner. After nearly two decades of operating losses, the service has maxed out its $15 billion borrowing limit and holds only about one month of cash on hand. The root cause is structural. First-class mail volumes have fallen more than 56% since 2007, gutting the revenue base Congress designed to fund universal delivery to 169 million addresses. Package growth has partially offset those losses, but not enough to close a gap deepened by billions in pension obligations the service must uniquely fund from its own operating revenue, unlike other federal agencies.

The Postal Regulatory Commission estimates that the cost of universal service now exceeds the value of the postal monopoly by $2 billion to $3 billion annually, which is a mismatch embedded in federal law that operational changes alone cannot fix. Congress controls the most consequential levers: restructuring pension financing, providing direct appropriations for universal service and expanding borrowing authority. Without legislative action, the default path is deferred investment and service cuts falling hardest on rural and low-density communities most reliant on the mail. Watch the hearing.

Senate Confirms Mullin to Head DHS

The Senate confirmed Markwayne Mullin as the next homeland security secretary in a 54-45 vote on Monday. The Oklahoma Republican, who was nominated by President Donald Trump, will begin his tenure with the agency on March 31. Read the Politico.

Administration Updates

Administration for Children and Families Revises Child Welfare Policy Manual

The agency removed "cultural competence" as an allowable topic for Title IV-E training for staff, foster parents and adoptive parents in child welfare agencies. Cultural competency remains in other parts of the manual as a training topic that states may claim at the enhanced federal financial participation rate. Access the policy manual here.

Federal Support for State, Territories and Local Justice Initiatives

The department announced the opening of new grants to states, local governments and territories to support criminal justice initiatives. States will receive allocations from the Edward Byrne Memorial Justice Assistance Grant program based on population, violent crime levels, and a guaranteed minimum share of total funds. The program's purpose is to strengthen public safety through flexible, formula-based funding under the nine Justice Assistance Grant programs:

• Law enforcement.
• Prosecution and courts.
• Prevention and education.
• Corrections and community corrections.
• Drug treatment.
• Planning, evaluation and technology improvement.
• Crime victim and witness assistance (other than compensation).
• Mental health and related law enforcement and corrections programs, including behavioral programs and crisis intervention teams.
• State crisis intervention court proceedings and related programs or initiatives, including mental health, drug and veterans courts, and extreme risk protection order programs.

Applications for fiscal year 2025-26 close April 14. Read the application process.

Labor Sets 30-Day Timeline for Apprenticeship Registration Decisions

Under new Labor Department guidance, the Office of Apprenticeship will make registration determinations within 30 days. The guidance also addresses registered apprenticeship program design, roles and functions of state apprenticeship agencies and councils and completion rate calculations. The department also launched a public webpage tracking registration timelines and an apprentice completion rate dashboard. Read the ETA guidance.

Court Updates

Arizona Files Criminal Charges Against Prediction Market Company

Arizona became the first state to file criminal charges against a prediction market company when Attorney General Kris Mayes sued Kalshi, alleging in a 20-count misdemeanor filing that the company violated state laws prohibiting unlicensed wagering and betting on elections. Kalshi, which filed a preemptive federal lawsuit against Arizona last week, contends it operates exclusively under the Commodity Futures Trading Commission jurisdiction as a designated contract market, a status affirmed by the U.S. Court of Appeals for the D.C. Circuit in 2024.

The case directly tests whether federal oversight of prediction markets preempts state criminal gambling laws.

NCSL is closely monitoring the issue. As outlined in NCSL's recent policy brief, Prediction Markets: A New Frontier in State Regulatory Authority, states retain broad powers over gambling within their borders, and more than a dozen states have laws specifically prohibiting election wagering. Illinois, Montana and Ohio have issued cease-and-desist orders to Kalshi, and civil suits are pending in Maryland, New Jersey and Nevada. Arizona's criminal charges escalate those actions, and the outcome may set a significant precedent for how far states can go in asserting regulatory authority over federally designated markets. Read the case State of Arizona v KalshiEX LLC and Kalshi Trading LLC.

Links

Letters and Testimony Capitol to Capitol