Executive Order Targeting State AI Regulation Shakes Up State Enforcement
On December 11, 2025, President Trump signed Executive Order 14365, titled “Ensuring a National Policy Framework for Artificial Intelligence.” The order seeks to establish a unified federal approach to regulating artificial intelligence (AI), aiming to prevent what the administration calls a “patchwork” of state laws that could hinder innovation and impose excessive compliance costs. After rescinding the prior administration’s comprehensive 2023 executive order on AI governance, Executive Order 14110 (titled “Executive Order on Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence”), in January, President Trump’s executive order constitutes the current administration’s latest effort to supersede regulation of AI at the state level and was announced despite bipartisan opposition in Congress and among state attorneys general (AGs).
The order directs the Department of Justice to create an AI Litigation Task Force within 30 days to challenge state statutes deemed overly restrictive or inconsistent with federal objectives. It also instructs the Commerce Department to review state AI laws within 90 days and recommend withholding certain broadband funding from states that fail to align with federal standards. The Secretary of Commerce will refer those overly restrictive state laws to the DOJ’s AI Litigation Task Force.
Additionally, the Federal Communications Commission (FCC) must consider whether to develop disclosure and reporting requirements for AI systems and examine whether state mandates on ideological bias or deceptive practices will be preempted by these potential new federal requirements. Any federal disclosure and reporting law for AI systems would, of course, be a game changer in enforcing deceptive or unfair AI output. The FCC must ultimately issue a policy statement explaining that state laws that require the alteration of outputs to comport with pre-determined values or ranges are preempted by the Federal Trade Commission’s prohibition on deceptive practices.
While the U.S. currently lacks a federal AI law, the White House will prepare a recommendation to Congress to establish a “uniform Federal policy framework for AI that preempts State AI laws that conflict with the policy set forth in this order.” While the Trump Administration’s executive order broadly instructs the development of federal AI legislation, it largely focuses on overriding state regulation and does not offer much substantive indication as to what a comprehensive AI framework might look like. Conversely, the now-rescinded 2023 executive order on AI directed federal agencies to designate a Chief AI Officer and comprehensively set forth overarching areas of policy focus, including: safety and security, innovation and competition, worker support, considerations surrounding bias and civil rights, consumer protection, privacy, use of AI by the federal government, and international considerations. With the 2023 order rescinded and the current order’s sparsity regarding federal regulation, the United States still lacks a national framework for AI governance. The latest order does, however, state that states will be permitted by the Federal framework to regulate certain areas involving AI, including those relating to child safety protections, data center infrastructure, and state government AI procurement.
The current Administration contends that these measures are necessary to maintain U.S. competitiveness in the global AI race and to prevent state-level regulations from forcing AI models to produce what it calls “false results.” Critics, however, worry that the order undermines states’ rights and could erode important consumer protections against algorithmic bias, deepfakes, and fraud. Constitutional challenges are likely, particularly around the use of funding conditions and the dormant Commerce Clause, as states like California and Colorado defend their own AI transparency and fairness laws.
For the technology sector, this executive order seeks to promote regulatory clarity and reduced compliance burdens, which major firms such as Google, Microsoft, and OpenAI have publicly supported. Yet advocacy groups argue that the policy favors large corporations at the expense of local innovation and consumer safeguards. The executive order does not directly invalidate state laws but leverages litigation, funding restrictions, and federal rulemaking to pressure states toward conformity. Its long-term impact will depend on how aggressively federal agencies enforce these directives, how courts interpret constitutional limits, and whether Congress steps in to codify a comprehensive AI regulatory framework. In short, the order marks a pivotal moment in the struggle between federal authority and state autonomy in shaping the future of artificial intelligence governance.
