Trump Attempts to Preempt State AI Regulation Through Executive Order

Introduction

Following several unsuccessful attempts to secure federal preemption of state artificial intelligence (“AI”) regulations through Congress, first, through the “Big Beautiful Bill,”¹ and then as part of the National Defense Authorization Act, President Trump turned to executive action, signing a sweeping executive order last night, entitled “Ensuring a National Policy Framework for Artificial Intelligence” (the “Executive Order”). Consistent with the deregulatory priorities outlined in Trump’s “America’s AI Action Plan”² published this summer, the Executive Order directs federal agencies to challenge state laws regulating AI, with the stated goals of establishing a “minimally burdensome national standard” for AI and preempting conflicting state regulations.³

This alert summarizes the Executive Order’s key provisions and analyzes its potential impact on existing and proposed state laws.

Key Provisions of the Executive Order

The Executive Order contemplates a two-stage approach to preemption: first, through agency action and litigation targeting state laws for preemption under the Constitution and existing federal legislation, and second, more broadly, through future legislation.⁴

As part of the first stage, the Executive Order contemplates:

• Creating an AI Litigation Task Force: The Executive Order directs the Attorney General to establish an “AI Litigation Task Force” to challenge state laws deemed inconsistent with federal policy, including on constitutional grounds such as preemption and interstate commerce.⁵
• Clarifying Current Preemption: The Federal Communications Commission is tasked with considering a federal reporting and disclosure standard for AI that would preempt conflicting state laws, while the Federal Trade Commission is directed to issue a policy statement clarifying that state laws requiring deceptive conduct in AI models are preempted by federal law.⁶
• Identifying State Laws for Scrutiny: The Executive Order directs the Secretary of Commerce to publish an evaluation of state AI laws, identifying those that require AI models to “alter truthful outputs” or that compel disclosures that may violate the First Amendment or other constitutional rights, and to refer such laws to the Task Force.⁷
• Considering Funding Restrictions: The Executive Order instructs the Secretary of Commerce to identify “onerous” AI laws that may be rendered ineligible for certain federal funding, including Broadband Equity Access and Deployment (BEAD) Program funds. Further, the Executive Order directs agencies to consider conditioning discretionary grants on states’ compliance with federal AI policy.⁸

As part of the second stage, the Executive Order tasks David Sacks, the Special Advisor for AI and Crypto, with proposing legislation to Congress that would more broadly preempt state AI laws, with special carve-outs for state laws protecting child safety, facilitating data center infrastructure, or relating to state government procurement and use of AI.⁹

State Laws on the Chopping Block

In the absence of a broader legislative preemption, the Executive Order signals a focus on state AI laws that aim to prevent discrimination and ensure algorithmic transparency and accountability, particularly those laws that impose compliance and disclosure obligations which could be deemed “onerous.” Key examples include: Colorado’s AI Act, California’s transparency and algorithmic accountability statutes, Texas’s Responsible Artificial Intelligence Governance Act, Utah’s AI Policy Act.

It is less clear whether the Task Force will target state laws that implicate, but were not necessarily created to regulate, AI, like state privacy laws affording consumers the right to opt out of automated profiling, or laws that are directed at discrete use cases of AI, such as requirements for mental health AI chatbots.

Pushback on Preemption Theories

The Executive Order’s strategic approach to preemption is likely to face significant pushback from states. Although state laws can be preempted if they pose an obstacle to the accomplishment of the full purposes and objectives of federal law, unlike statutes or regulations, Executive Orders do not carry the force of federal law. Given the absence of a current comprehensive federal regulatory scheme on AI and Congress’s repeated refusal to impose restrictions on state regulation of AI, states are likely to contend that Congress did not intend to prevent states from regulating this space.

Moreover, states are likely to dispute that their regulations impermissibly regulate interstate commerce under the dormant Commerce Clause doctrine. State laws that merely impose effects on the market beyond a state’s borders do not violate the dormant Commerce Clause doctrine.

The Executive Order also signals that Section 5 of the Federal Trade Commission Act’s prohibition on unfair and deceptive acts or practices may be a ground for preemption. The Executive Order only directs the issuance of a policy statement, meaning the details on the administration’s position regarding Section 5 preemption remain to be seen. States are likely to contest whether Section 5 has preemptive effect over state laws, and federal efforts to restrict modification of “truthful outputs of AI models” could raise First Amendment implications.

Although the Executive Order also signals the prospect that state laws may be challenged as preempted by “existing Federal regulations” or as “otherwise unlawful in the Attorney General’s judgment,” it does not specify what these regulations or grounds may be, or how widely these alternative theories may sweep.

There also remain questions regarding the mechanism for asserting preemption: while the Department of Justice’s authority to bring lawsuits against state laws based on preemption may be uncertain, given the absence of a current federal regulatory framework on AI that is impaired by state regulations, preemption is often asserted as a defense to state enforcement efforts or to private lawsuits. As states move to enforce violations of their laws, the administration may seek opportunities to appear in such lawsuits to advance its preemption strategy.

Conclusion

The Executive Order marks a significant escalation in the federal-state battle over AI regulation, with immediate implications for stakeholders subject to state laws governing AI use. While the Executive Order’s legal durability remains uncertain, it signals aggressive federal efforts to preempt state regulation and establish a unified national framework. Stakeholders should remain vigilant, monitor developments, and be prepared to adapt compliance strategies as the regulatory environment evolves.

For more information or assistance in navigating these developments, please contact your advisor at Ropes & Gray.