Executive Order Targets State AI Regulation Through Federal Preemption

President Trump signed an executive order on Dec. 11, 2025, asserting broad federal authority over the regulation of artificial intelligence. The order directs federal agencies to take steps to discourage, challenge or override state-level AI policies. It formalizes federal intervention into state efforts to legislate in areas such as automated decision-making, algorithmic transparency and data governance. The order establishes a centralized federal framework for AI governance. It instructs the departments of Justice and Commerce, as well as the Federal Trade Commission, to identify state AI laws that the administration views as inconsistent with federal priorities. A newly created AI Litigation Task Force is authorized to pursue litigation against state AI laws determined to be unconstitutional or unduly burdensome. The order cites concerns that divergent state rules pose a threat to national economic competitiveness. It targets state laws that regulate across state lines, as interstate regulation is the prerogative of the federal government. It also addresses state laws in Colorado and California banning algorithmic discrimination, which the order charges may skew outputs and deceive consumers. The order notes the compliance difficulties for businesses operating under 50 regulatory regimes. The Department of Commerce is directed to issue a report within 90 days identifying state AI laws it deems problematic. The report may lead to restrictions on Broadband Equity Access and Deployment federal funds for noncompliant states. It may also highlight state laws that promote AI innovation. Executive branch agencies must assess their grant programs with the special advisor for AI and cryptocurrency. They are to decide whether grants may be conditioned on states either not enacting onerous AI legislation or not enforcing laws currently on the books during periods in which they receive federal funds. The FTC is tasked with issuing guidance describing circumstances in which state mandates related to AI outputs may be preempted under federal law. The issue of state preemption was the subject of congressional debate throughout 2025. Sen. Ted Cruz, R-TX, offered an amendment to impose a 10-year moratorium on enforcement of state AI laws in the One Big Beautiful Bill Act. The amendment was defeated in July by a nearly unanimous Senate vote. Policymakers declined to include related language in the FY26 National Defense Authorization Act, prompting the administration to pursue executive action.