Quick Hits<\/p>\n
President Donald Trump signed an executive order (EO) aimed at halting state-level AI regulations, positioning it as part of a broader strategy to enhance U.S. leadership in AI technology and promote a uniform national policy.<\/p>\n
The EO establishes an \u201cAI Litigation Task Force\u201d to challenge state laws deemed unconstitutional or otherwise unlawful or preempted and directs federal agencies to report on and restrict funding to states that implement AI regulations.<\/p>\n
The move is expected to provoke resistance from states that have already enacted various AI regulations to address concerns such as bias, privacy, and transparency, highlighting the ongoing tension between federal and state approaches to AI governance.<\/p>\n
The EO, entitled \u201cEnsuring a National Policy Framework for Artificial Intelligence<\/a>,\u201d seeks to establish a uniform, minimally burdensome national standard for AI by challenging and limiting conflicting state AI laws, asserting federal preemption where appropriate, and marshals several federal agencies to take actions or withhold funding to stop such laws and regulations or at least deter states from considering laws or regulations that may restrict AI.<\/p>\n The EO directs the creation of a task force to challenge state AI laws, mandates a federal evaluation of \u201conerous\u201d state AI laws, conditions certain federal funding on states\u2019 AI laws being non-onerous, and initiates steps at various government agencies to develop federal standards and preemption positions regarding reporting, disclosure, and deceptive conduct mandates imposed on AI models.<\/p>\n \u201cIt is the policy of the United States to sustain and enhance the United States\u2019 global AI dominance through a minimally burdensome uniform national policy framework for AI,\u201d the EO states.<\/p>\n \u2018AI Litigation Task Force\u2019<\/p>\n The EO directs U.S. Attorney General Pam Bondi to establish within thirty days an \u201cAI Litigation Task Force\u201d within the U.S. Department of Justice (DOJ) with the \u201csole responsibility\u201d to challenge state AI laws in court, \u201cincluding on grounds that such laws unconstitutionally regulate interstate commerce, are preempted by existing Federal regulations, or are otherwise unlawful in the Attorney General\u2019s judgment.\u201d The task force will consult with administration officials, including Special Advisor for AI and Crypto David Sacks.<\/p>\n Federal Evaluation of State AI Laws<\/p>\n Further, the EO directs Secretary of Commerce Howard Lutnick to produce within ninety days an evaluation of existing state AI laws identifying \u201conerous\u201d laws that conflict with the EO\u2019s policy, and refer those to the AI Litigation Task Force for potential challenge. The EO states that the evaluation must, \u201cat a minimum, identify laws that either \u201crequire AI models to alter their truthful outputs\u201d or compel disclosures\/reporting in ways that could violate the First Amendment of the U.S. Constitution or other constitutional provisions.<\/p>\n Funding Conditions and Restrictions<\/p>\n The EO further directs the secretary of commerce to issue a policy notice conditioning access to certain federal funding on states\u2019 AI regulatory posture. Specifically, the policy notice must set conditions under which states remain eligible for remaining funds under the federal Broadband Equity, Access, and Deployment (BEAD) Program, a $42.5 billion federal grant program for the expansion of high-speed internet infrastructure. The order specifies that states with laws identified as conflicting will be ineligible for nondeployment funds to the maximum extent allowed by federal law.<\/p>\n Federal agencies are further directed to assess whether discretionary grants can be conditioned on states refraining from enacting conflicting AI laws or agreeing not to enforce existing ones during any year they receive funding.<\/p>\n Federal Preemption and a National Framework<\/p>\n The EO directs the preparation of a legislative recommendation for establishing a uniform federal regulatory framework for AI that expressly preempts conflicting state AI laws.<\/p>\n The EO also directs the Federal Communications Commission chairman to initiate a proceeding to determine whether to adopt a federal reporting and disclosure standard for AI models that preempts conflicting state laws. Additionally, the order directs the Federal Trade Commission chairman to issue within ninety days a policy statement on how the Federal Trade Commission (FTC) Act\u2019s prohibition on unfair or deceptive acts or practices could apply to AI models, and clarify when state law requirements that AI outputs be altered are preempted by the FTC Act.<\/p>\n Potential State Pushback<\/p>\n The EO and resulting litigation challenges tied to it are likely to receive pushback from states. Several states and municipalities, including California<\/a>, Colorado<\/a>, Illinois, Texas, and New York City<\/a>, have enacted laws or regulations that impose restrictions on the use and development of AI, including transparency obligations, notice requirements, antidiscrimination protections, and guardrails to protect safety. According to the Conference of State Legislatures, all fifty states, Puerto Rico, the Virgin Islands, and Washington, D.C., have introduced legislation on AI in 2025.<\/p>\n Next Steps<\/p>\n The EO is a coordinated federal initiative to consolidate AI regulation at the national level, challenge conflicting state laws, condition funding to discourage fragmentation, and launch federal preemption pathways through agency action and proposed legislation\u2014all with the stated goal of accelerating U.S. AI innovation and safeguarding national and economic security.<\/p>\n \u00a0The order creates uncertainty over the growing number of state and local laws and regulations on AI and opens the door for states with conflicting laws to face restrictions on federal funds. Actions connected to the EO are likely to face legal resistance from states and other groups; presently, employers should stay mindful of the evolving legal obligations in various United States jurisdictions concerning AI, including those going into effect in early 2026 in Illinois<\/a> and Texas<\/a>.<\/p>\n Ogletree Deakins\u2019 Cybersecurity and Privacy Practice Group<\/a>, Technology Practice Group<\/a>, and Workforce Analytics and Compliance Practice Group<\/a> will continue to monitor developments and will provide updates on the Cybersecurity and Privacy<\/a>, Governmental Affairs<\/a>, Technology<\/a>, and Workforce Analytics and Compliance<\/a> blogs as additional information becomes available.<\/p>\n This article and more information on how the Trump administration\u2019s actions impact employers can be found on Ogletree Deakins\u2019 Administration Resource Hub<\/a>.<\/p>\n Follow and Subscribe
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