Commentary Addressing Risks and Opportunities Through the Life Cycle of Data, Technology, Advertising and Innovation

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On Dec. 11, President Donald Trump signed a new executive order (EO),&nbsp;<a href="https://www.whitehouse.gov/presidential-actions/2025/12/eliminating-state-law-obstruction-of-national-artificial-intelligence-policy/" target="_blank" rel="noreferrer noopener">Ensuring a National Policy Framework for Artificial Intelligence</a>, aiming to limit and preempt state-level regulation of artificial intelligence. The EO has already generated considerable confusion, leading some to believe that it immediately limits current or pending state laws. It does not. Rather, the EO lays the groundwork for the federal government to challenge state AI laws, to pursue new regulations and laws that will preempt state AI laws, and to influence state action by withholding federal funds from states that pursue AI laws inconsistent with the EO’s vision for a single national standard.

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The EO builds on the Trump administration’s prior attempt to enact a moratorium on “cumbersome” state AI regulation within the One Big Beautiful Bill Act. Congress overwhelmingly rejected the moratorium. The administration now says the EO is necessary for three reasons, some of which will be familiar to those working to comply with the nation’s quickly expanding state privacy laws. First, the EO expresses concern with the compliance challenges resulting from a 50-state “patchwork of different regulatory regimes.” Second, it alleges that the anti-discrimination provisions in some state laws – including Colorado’s new AI Act – will “embed ideological bias within models,” raising both free speech and fairness concerns. And third, the EO asserts that state AI laws violate the Commerce Clause when they “impermissibly regulate beyond State borders.”

In contrast, the EO envisions a single, “minimally burdensome” national standard that preempts conflicting state rules. Importantly, however, the EO only lays the foundation for the administration’s new policy and does not itself preempt state laws. Current and pending state laws, including multiple California AI laws coming into effect on Jan. 1, 2026, remain in effect.

To implement the administration’s national policy, the EO directs federal agencies to attack inconsistent state AI laws through several concerted actions:

AI Litigation Task Force. Within 30 days, the attorney general must establish a litigation task force to challenge state AI laws that impermissibly regulate interstate commerce, are preempted by current or future federal regulation, or are “otherwise unlawful.” The EO requires the attorney general to consult with several presidential advisors, including the special advisor for AI and crypto, when deciding which laws to challenge.

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Evaluation of state laws. Within 90 days, the Commerce Department must publish an “evaluation” of state AI laws that conflict with the EO’s national policy. Notably, the evaluation must identify laws that “require AI models to alter their truthful outputs” or that “compel AI developers or deployers to disclose or report information in a manner that would violate the First Amendment or any other provision of the Constitution.”

Broad restrictions on state funding. In what may be the EO’s most immediate impact on states, the EO also includes two actions to restrict federal grants to states that enact or enforce AI laws inconsistent with the national policy. First, the Commerce Department must make states with “onerous AI laws” ineligible for remaining federal grants to expand high-speed Internet to unserved or underserved areas “to the maximum extent allowed by Federal law.” Second, all other executive departments and agencies must review their discretionary grant programs to determine whether they may condition their grants on a state either not enacting a conflicting state law or not enforcing an existing law that conflicts with the national policy.

Federal Communications Commission (FCC) establishment of a preemptive federal reporting and disclosure standard. Within 90 days of the EO’s publication, the FCC must start a proceeding “to determine whether to” adopt a federal reporting and disclosure standard for AI models that preempts state laws.

Federal Trade Commission (FTC) issuance of a policy statement on FTC Act preemption. Within 90 days of the EO’s publication, the FTC must issue a policy statement explaining when state laws that “require alterations to the truthful outputs of AI models” are preempted by the FTC Act’s prohibition on deceptive acts or practices. This action appears directly tied to the administration’s concern with anti-discrimination provisions in certain AI laws, such as the Colorado AI Act.

Call for action on preemptive federal legislation. Finally, the EO requires the president’s advisors to prepare a legislative recommendation to establish a “uniform Federal policy framework for AI” that preempts conflicting state laws. The EO calls for carve-outs allowing states to enact laws designed to protect children and for other limited purposes.

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What’s next? Although its intent is to provide a simple, clear national standard for AI regulation, we are far from that reality. Expect action by the Justice Department, the Commerce Department, and other federal agencies to challenge and restrict state AI laws as they implement the EO’s requirements. Also expect significant and widespread pushback to federal challenges and attempts to withhold federal funds. And although the EO calls for preemptive federal legislation – which would be the clearest path to achieving the EO’s goals – the current likelihood of broad preemptive federal legislation on AI is remote.

How should organizations subject to current or pending state AI laws react? As noted, the EO does not itself preempt existing state AI laws and organizations should not rely on this EO alone to determine compliance obligations. Instead, organizations must carefully follow the administration’s actions under this EO – and the states’ reactions – to determine how, if at all, the EO will impact their compliance obligations under state AI laws.

Ensuring a National Policy Framework for AI – the Trump Administration’s New Challenge to State AI Regulation