President Trump Unveils AI EO Advancing Federal Preemption of State Laws

Key Points

• On December 11, 2025, President Trump issued an EO establishing a coordinated federal effort to block or override burdensome state AI regulations.
• Key agencies—including DOJ, Commerce, FCC, and FTC—are directed to evaluate, challenge, or preempt state laws, with discretionary funding potentially conditioned on state compliance.
• While the EO lays the groundwork for a preemptive federal AI framework, implementation ultimately requires congressional action. The White House, led by Special Advisor David Sacks, will prepare legislative recommendations for Congress.

Overview

On December 11, 2025, President Trump issued an executive order (EO) seeking to block State artificial intelligence (AI) laws shortly after his calls for Congress to enact a similar proposal.

The EO promotes a “minimally burdensome national standard — not 50 discordant State ones,” launching a coordinated federal strategy to preempt State AI laws. Within 30 days, the U.S. Department of Justice (DOJ) is charged with identifying and challenging conflicting State laws via a newly-created AI Litigation Task Force, while the Commerce Department is tasked with evaluating State AI laws and tying eligibility for federal funding—particularly remaining Broadband Equity Access and Deployment (BEAD) Program funds—to compliance. More broadly, Federal agencies must assess whether they can condition discretionary funding on States refraining from enacting conflicting AI laws or agreeing not to enforce such laws while receiving Federal funds. Meanwhile, the Federal Communications Commission (FCC) and Federal Trade Commission (FTC) are tasked with developing Federal disclosure and consumer-protection standards that would override inconsistent State requirements.  

While the EO sets the groundwork for a preemptive federal AI framework, congressional action is ultimately required. Accordingly, it directs the White House Office of Legislative Affairs to prepare legislative recommendations for Congress, with Special Advisor for AI and Crypto David Sacks playing a central role.

Prior to the issuance of the EO, President Trump urged lawmakers to include preemption of state AI laws in the fiscal year (FY) 2026 National Defense Authorization Act (NDAA). Despite reported support from House GOP Leadership, this proposal was quickly opposed by House Armed Services Committee (HASC) Chair Mike Rogers (R-AL) and Senate Armed Services Committee (SASC) Ranking Member Jack Reed (D-RI). On December 7, 2025, House and Senate Armed Services committee leaders unveiled legislative text (House Amendment to S. 1071) for the FY 2026 NDAA, which notably excludes federal preemption of state AI laws following bipartisan criticism from both state and federal policymakers, including Florida Gov. Ron DeSantis, Arkansas Gov. Sarah Huckabee Sanders, and Sen. Josh Hawley (R-MO) (see prior alert here).

However, other key GOP lawmakers remain supportive of a moratorium on state AI regulations, including Senate Commerce Committee Chair Ted Cruz (R-TX). The Chair sought to include such a provision in the One Big Beautiful Bill Act (P.L. 119-21) over the summer, but it was ultimately stripped from the package. The initial proposal included a 10-year moratorium, later reduced to five years, on States enforcing their own AI laws in order to access a $500 million fund for building out AI infrastructure. While the measure was a narrowed version of an earlier proposal tying the moratorium to the $42 billion BEAD program, Democrats argued that the revised moratorium would have still affected all $42 billion.

In the House, Rep. Jay Obernolte (R-CA) has announced plans to introduce legislation codifying elements of President Trump’s AI Action Plan (see prior alert here) near the end of this year, though the timeline is now expected to extend into 2026. Rep. Olbernolte’s bill is expected to include federal preemption language.

A full summary of the EO’s directives is below.

U.S. Department of Justice (DOJ)

Within 30 days, the EO directs the U.S. Attorney General to establish an AI Litigation Task Force, with the sole directive of challenging State AI laws, “including on grounds that such laws unconstitutionally regulate interstate commerce, are preempted by existing Federal regulations, or are otherwise unlawful in the Attorney General’s judgment.”

Special Advisor for AI and Crypto David Sacks will work alongside the DOJ, along with the Assistant to the President for Science and Technology and the Assistant to the President for Economic Policy.

U.S. Department of Commerce

Within 90 days, the EO directs the Commerce Department to publish an evaluation of existing State AI laws, specifically identifying those that conflict with the intent of the EO, as well as laws that should be referred to the DOJ’s AI Litigation Task Force. Specifically, the evaluation must identify laws that require AI models to “alter their truthful outputs,” or those that “may 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.”

The evaluation will serve as the basis by which the Commerce Department will determine states’ eligibility for the remaining funding under the BEAD Program. Coinciding with the evaluation, the Department must issue a Policy Notice specifying the conditions under which states may be eligible for remaining funding, which is informally known as “non-deployment funding.” States with AI laws expressly identified in the evaluation would be ineligible for non-deployment funds, “to the maximum extent allowed by Federal law.”  Approximately $20 billion of non-deployment funds remain in the BEAD program.

More broadly, the EO directs all Federal agencies to immediately evaluate their discretionary grant programs and determine (1) whether they may condition such grants on States not enacting an AI law that conflicts with the policy of the EO, and (2) for States enacting such laws, whether they may condition the grants on States entering into a binding agreement with the agency not to enforce the law during the year in which it receives discretionary funding.

Federal Communications Commission (FCC)

Within 90 days of the publication of the Commerce Department’s evaluation of state AI laws, the FCC must “initiate a proceeding to determine whether to adopt a Federal reporting and disclosure standard for AI models that preempts conflicting State laws.”

Federal Trade Commission (FTC) 

Within 90 days of the order, the FTC must issue a policy statement on the application of the FTC Act’s prohibition on unfair and deceptive acts or practices to AI models. The policy statement must “explain the circumstances under which State laws that require alterations to the truthful outputs of AI models are preempted by the FTC Act’s prohibition on engaging in deceptive acts or practices affecting commerce.”

Executive Office of the President (EOP)

The EO also directs the Special Advisor for AI and Crypto and the Office of Legislative Affairs to jointly prepare for legislative recommendations establishing a preemptive federal regulatory framework for AI. The final EO contains language expressly stating that the legislative recommendations may not “propose preempting otherwise lawful State AI laws relating to (i) child safety protections; (ii) AI compute and data center infrastructure, other than generally applicable permitting reforms; (iii) state government procurement and use of AI; and (iv) other topics as shall be determined.”

Conclusion

Akin’s lobbying & public policy team continues to advise clients on navigating the evolving AI regulatory landscape and will closely track implementation of the EO’s directives, as well as parallel Congressional efforts, and keep clients apprised of key developments.