By MATT BROWN and MATT O’BRIEN

WASHINGTON (AP) — A proposal to deter states from regulating artificial intelligence for a decade was soundly defeated in the U.S. Senate on Tuesday, thwarting attempts to insert the measure into President Donald Trump’s big bill of tax breaks and spending cuts.

The Senate voted 99-1 to strike the AI provision from the legislation after weeks of criticism from both Republican and Democratic governors and state officials.

Originally proposed as a 10-year ban on states doing anything to regulate AI, lawmakers later tied it to federal funding so that only states that backed off on AI regulations would be able to get subsidies for broadband internet or AI infrastructure.

A last-ditch Republican effort to save the provision would have reduced the time frame to five years and sought to exempt some favored AI laws, such as those protecting children or country music performers from harmful AI tools.

But that effort was abandoned when Sen. Marsha Blackburn, a Tennessee Republican, teamed up with Democratic Sen. Maria Cantwell of Washington on Monday night to introduce an amendment to strike the entire proposal.

Blackburn said on the floor that “it is frustrating” that Congress has been unable to legislate on emerging technology, including online privacy and AI-generated “deepfakes” that impersonate an artist’s voice or visual likeness. “But you know who has passed it? It is our states,” Blackburn said. “They’re the ones that are protecting children in the virtual space. They’re the ones that are out there protecting our entertainers — name, image, likeness — broadcasters, podcasters, authors.”

Voting on the amendment happened after 4 a.m. Tuesday as part of an overnight session as Republican leaders sought to secure support for the tax cut bill while fending off other proposed amendments, mostly from Democrats trying to defeat the package.

Proponents of an AI moratorium had argued that a patchwork of state and local AI laws is hindering progress in the AI industry and the ability of U.S. firms to compete with China.

Some prominent tech leaders welcomed the idea after Republican Sen. Ted Cruz of Texas, who leads the Senate Commerce committee, floated it at a hearing in May.

But state and local lawmakers and AI safety advocates argued that the rule is a gift to an industry that wants to avoid accountability for its products. Led by Arkansas Gov. Sarah Huckabee Sanders, a majority of GOP governors sent a letter to Congress opposing it.

Sanders, who was White House press secretary in Trump’s first term, credited Blackburn for “leading the charge” to defend states’ rights to regulate AI.

“This is a monumental win for Republican Governors, President Trump’s one, big beautiful bill, and the American people,” Sanders wrote on X on Tuesday.

Also appealing to lawmakers to strike the provision was a group of parents of children who have died as a result of online harms.

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Cruz over the weekend tried to broker a last-ditch compromise with Blackburn to save the provision. Changes included language designed to protect Tennessee’s so-called ELVIS Act, championed by the country music industry to restrict AI tools from replicating an artist’s voice without their consent. Cruz said it could have “passed easily” had Blackburn not backed out. Blackburn said Tuesday there were “problems with the language” of the amendment.

“When I spoke to President Trump last night, he said it was a terrific agreement,” Cruz said. “The agreement protected kids and protected the rights of creative artists. But outside interests opposed that deal.”

Cruz withdrew the compromise amendment and blamed a number of people and entities he said “hated the moratorium,” including China, Democratic California Gov. Gavin Newsom, a teachers union leader and “transgender groups and radical left-wing groups who want to use blue state regulations to mandate woke AI.”

He didn’t mention the broad group of Republican state legislators, attorneys general and governors who also opposed it. Critics say Cruz’s proposal, while carving out some exemptions, would have affected states’ enforcement of any AI rules if they were found to create an “undue or disproportionate burden” on AI systems.

“The proposed ban that has now been removed would have stopped states from protecting their residents while offering nothing in return at the federal level,” Jim Steyer, founder and CEO of children’s advocacy group Common Sense Media, wrote in a statement. “In the end, 99 senators voted to strip the language out when just hours earlier it looked like the moratorium might have survived.”

O’Brien reported from Providence, Rhode Island.

By CHRISTOPHER RUGABER, AP Economics Writer

WASHINGTON (AP) — Federal Reserve Chair Jerome Powell on Tuesday stuck to his position that the central bank will keep its key rate on hold while it waits to see how President Donald Trump’s tariffs effect the economy, despite the steady stream of criticism from the White House, which wants lower borrowing costs.

Powell, speaking in Sintra, Portugal, at a conference hosted by the European Central Bank, also said that U.S. inflation is likely to pick up later this summer, though he acknowledged that the timing and magnitude of any price increase from the duties is uncertain. But he said the Fed will keep rates on hold while it evaluates the impact of tariffs on the U.S. economy.

“As long as the economy is in solid shape, we think the prudent thing to do is to wait and see what those effects might be,” Powell said, referring to the sweeping duties Trump has imposed this year.

Federal Reserve Chairman Jerome Powell speaks during an open meeting of the Board of Governors at the Federal Reserve, Wednesday, June 25, 2025, in Washington. (AP Photo/Mark Schiefelbein)

Powell’s comments underscored the divide between the U.S. central bank’s leader and the Trump administration. Trump has repeatedly urged the Fed to cut its key rate, which he says would save U.S. taxpayers on interest costs on the federal government’s massive debt, and boost the economy. The fight has threatened the Fed’s traditional independence from politics, though since the Supreme Court signaled the president can’t fire the chair, financial markets haven’t responded to Trump’s criticism.

The Fed chair also said that without tariffs, the Fed would probably be cutting its key rate right now. The central bank went “on hold” after it saw how large Trump’s proposed tariffs were, Powell said, and economists began forecasting higher inflation.

At the same time, Powell did not rule out a rate cut at the Fed’s next policy meeting July 29-30.

“I wouldn’t take any meeting off the table or put it directly on the table,” Powell said. Most economists, however, expect the Fed won’t reduce rates until September at the earliest.

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On Monday, the president attacked Powell again and extended his criticisms to the entire Fed governing board, which participates on interest-rate decisions.

“The board just sits there and watches, so they are equally to blame,” Trump said. The attack on the board ratchets up pressure on individual Fed officials, such as Governor Chris Waller, who have been mentioned as potential successors to Powell, whose term ends in May 2026.

The Fed has kept its key short-term interest rate unchanged this year, at about 4.3%, after cutting it three times in 2024.

At a news conference in June, Powell suggested that the central bank would “learn a great deal more over the summer” about whether President Donald Trump’s sweeping tariffs would push up inflation or not. The comment suggested the Fed wouldn’t consider cutting rates until its September meeting.

Yet a few days later, Fed governors Waller and Michelle Bowman, who were both appointed by Trump, said that it was unlikely the tariffs would lead to persistent inflation. Both also indicated that they would likely support reducing the Fed’s rate at its July 29-30 meeting.

By MANUEL VALDES and LINDSEY WASSON

COEUR D’ALENE, Idaho (AP) — A 20-year-old man’s life appeared to have begun to unravel in the months before authorities say he fatally shot two firefighters and severely wounded a third as they responded to a wildfire near Coeur d’Alene, Idaho.

Wess Roley was living out of his vehicle and his former roommate, T.J. Franks Jr., said he shaved off his long hair and started to “kind of go downhill.” The two lived together for about six months in Sandpoint, Idaho, until Roley moved out in January, Franks said Monday.

Roley, who authorities say took his own life after Sunday’s shootings, is suspected of killing two battalion chiefs whose firefighting careers in Idaho spanned nearly half a century combined. The deaths of Frank Harwood, 42, with Kootenai County Fire and Rescue, and John Morrison, 52, with the Coeur d’Alene Fire Department, have left their colleagues reeling, resulting in their departments adding law enforcement to every call, no matter how routine.

“I don’t know that we’re ever going to be able to guarantee people’s peace of mind, at least for a while after an incident like this,” Kootenai County Fire and Rescue Chief Christopher Way said. “But we are taking every measure we can to ensure safety of our responders.”

Roley had set a fire using flint at Canfield Mountain, a popular recreation area, according to authorities. The firefighters who rushed to the scene found themselves under fire and took cover behind fire trucks.

“There was an interaction with the firefighters,” Kootenai County Sheriff Bob Norris said. “It has something to do with his vehicle being parked where it was.”

Two helicopters converged on the area, armed with snipers ready to take out the suspect if needed, while the FBI used his cellphone data to track him and the sheriff ordered residents to shelter in place. They eventually found Roley’s body in the mountains, his firearm beside him. He had killed himself, the sheriff said.

Roley had once aspired to be a firefighter and had only a handful of minor contacts with area police, Norris said. A motive was still unknown, he said.

He had ties to California and Arizona and was living in Idaho “for the better part of 2024,” although it was unclear why he was there, Norris said.

When Roley was living with Franks, his apartment cameras caught Roley throwing gang signs at them, which worried Franks to the point that he called police.

The landlord also called Franks one morning because neighbors reported that Roley’s vehicle had been left running for about 12 hours. Franks said Roley was asleep in his room and said he forgot about the vehicle.

Hours after Sunday’s shooting, people gathered along Interstate 90 holding American flags to pay their respects as the two fallen firefighters’ bodies were taken to the medical examiner’s office in Spokane, Washington, about 35 miles from Coeur d’Alene.

Two firefighters were killed and another was badly injured after they were ambushed and shot while responding to a wildfire near Coeur d’Alene, Idaho. (AP Digital Embed)

Gov. Brad Little ordered U.S. and Idaho state flags to be lowered to half-staff to honor the firefighters until the day after their memorial service.

“All our public safety officers, especially our firefighters, bravely confront danger on a daily basis but we have never seen a heinous act of violence like this on our firefighters before,” he said in a statement.

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Harwood, one of the victims of the shooting, had been with the county fire department for 17 years, Kootenai County Fire and Rescue Chief Christopher Way said during a news conference Monday. Harwood was married and had two children, and he also was a veteran of the Army National Guard.

Morrison, who was also killed, started his career with the Coeur d’Alene Fire Department in 1996 and had also worked as a paramedic.

Coeur d’Alene Fire Department Fire Engineer David Tysdal, 47, sustained gunshot wounds and was in critical condition. Authorities said he had two successful surgeries.

“We still are in shock and are struggling to understand why someone would target unarmed, selfless public servants,” said Coeur d’Alene Mayor Woody McEvers.

By Monday afternoon, the fire was “reasonably contained,” and responders had “stopped significant forward progress,” Way said. The Idaho Department of Lands said it had burned about 26 acres (10.5 hectares).

Associated Press journalists Hallie Golden and Martha Bellisle in Seattle and Ed White in Detroit to this report.

By MICHELLE CHAPMAN, AP Business Writer

Lululemon has filed a lawsuit against Costco that accuses the wholesale club operator of selling lower-priced duplicates of some of its popular athleisure clothing.

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Lululemon Athletica claims in its lawsuit filed in the U.S. District Court for the Central District of California that Costco has “unlawfully traded” on its reputation, goodwill and sweat equity by selling unauthorized and unlicensed apparel that uses knockoff, infringing versions of its patents.

Lululemon alleges that Costco is known to use manufacturers of popular branded products for its private label Kirkland brand, but that the company and the manufacturers don’t tell consumers of the connection between them for many of the Kirkland-branded products. Because of this, Lululemon claims this leads at least some shoppers to believe that Kirkland-branded products are made by the authentic supplier of the “original” products. Lululemon claims Costco doesn’t try to dispel the ambiguity.

“As an innovation-led company that invests significantly in the research, development, and design of our products, we take the responsibility of protecting and enforcing our intellectual property rights very seriously and pursue the appropriate legal action when necessary,” a Lululemon company spokesperson said in a statement.

Some of the products Lululemon says Costco is making duplicates of include its popular Scuba hoodies, Define jackets, and ABC pants.

Lululemon claims one of the duplicates that Costco sells is the Hi-Tec Men’s Scuba Full Zip, with the lawsuit showing a screenshot image of Costco’s website showing the item priced at $19.97. Lululemon sells several men’s jackets that cost more than $100 each.

Costco, based in Issaquah, Washington, did not immediately respond to a request for comment on Tuesday.

Lululemon is requesting a jury trial and wants Costco to stop selling the products that it considers to be duplicates. It is also seeking an unspecified amount in monetary damages.

Lulemon was in a similar legal dispute with Peloton in 2021. Two years later the companies announced a five-year partnership that included Lululemon becoming the primary athletic apparel partner to Peloton.