New Executive Order Signals Federal Preemption Strategy for State Laws on Artificial Intelligence
On December 11, 2025, the White House issued an Executive Order that marked a significant shift in federal artificial intelligence (AI) policy. The “Ensuring a National Policy Framework for Artificial Intelligence Order" (the Order) aims to establish a unified national approach to AI regulation by limiting the authority of the states to enact and enforce individual AI laws. The administration has positioned this move as necessary to maintain U.S. competitiveness in the global AI race, arguing that the current patchwork of state regulations creates excessive compliance burdens that stifle innovation.
The Order directs multiple federal agencies to take aggressive action within 90 days to identify, challenge, and potentially preempt state AI laws deemed inconsistent with federal policy objectives. Companies operating in the AI space should prepare for a period of regulatory uncertainty as the federal government and states embark on a federalism conflict.
Key Provisions and Timelines of the Executive Order
AI Litigation Task Force: The Attorney General must establish a task force within 30 days of the date of this Order whose sole responsibility is to contest state AI laws on constitutional grounds, including arguments that such laws unconstitutionally regulate interstate commerce, are preempted by existing federal regulations, or are otherwise unlawful.
Commerce Department Evaluation: The Secretary of Commerce must publish an evaluation within 90 days, identifying state AI laws that conflict with the Order’s policy objectives. The evaluation must identify laws that require AI models to alter truthful outputs or compel AI developers to disclose information in ways that may violate the First Amendment. The evaluation may also identify state laws that promote innovation consistent with federal policy.
Federal Funding Restrictions: The Secretary of Commerce must issue a Policy Notice within 90 days specifying the conditions under which states may be eligible for the remaining funds under the Broadband Equity Access and Deployment (BEAD) Program. States with identified problematic AI laws may be ineligible for non-deployed BEAD funds. Federal agencies must assess their discretionary grant programs and determine whether they can condition grants on states that are either not enacting conflicting AI laws or agreeing not to enforce existing ones during the funding performance period.
Federal Reporting Standards: Within 90 days after the Commerce Department’s evaluation is published (or within 180 days of the date of this Order), the Federal Communications Commission Chairman must initiate a proceeding to determine whether to adopt federal reporting and disclosure standards for AI models that would preempt conflicting state laws.
Federal Trade Commission (FTC) Policy Statement: The FTC Chairman must issue a policy statement within 90 days of the date of this Order on the ways the FTC Act’s prohibition on unfair and deceptive practices applies to AI models. This statement must explain when state laws requiring alterations to AI model outputs are preempted by federal law prohibiting deceptive practices.
Legislative Proposal: The Special Advisor for AI and Crypto and the Assistant to the President for Science and Technology must jointly develop a legislative recommendation for a uniform federal AI policy framework that preempts conflicting state laws.
Protected Categories: The Order specifically exempts certain categories of state AI laws from preemption efforts, including state laws relating to child safety protections, AI compute and data center infrastructure, state government procurement and use of AI, and others yet to be determined.
Implications for Companies
Companies should prepare for an extended period of regulatory uncertainty as federal agencies implement the Order’s directives, sovereign states defend their own regulatory authority, and courts adjudicate the constitutional boundaries between federal and state power. This means that maintaining compliance flexibility, closely monitoring legal developments, and engaging in policy discussions will be important strategies for the industry during the foreseeable future.
Companies developing or deploying AI systems should also consider taking the following steps in the near term in light of this Executive Order: (1) Review all existing and planned AI deployments to identify current state law compliance requirements; (2) track the Commerce Department’s evaluation of state laws to understand which regulations may face federal challenges or preemption; (3) evaluate whether operations in states with AI laws could affect funding eligibility if applicable; and (4) develop contingency plans for scenarios where state laws remain enforceable, are successfully preempted, or enter extended litigation.
In the long term, companies should keep compliance programs adaptable to accommodate potential changes in applicable legal requirements.
Conclusion
The Executive Order represents a bold assertion of federal authority over AI regulation that will reshape the legal landscape for AI development and deployment. While the Administration’s objectives of promoting innovation and maintaining global competitiveness are widely shared, the means of achieving these goals through preemption of state authority will face significant legal and political challenges in the months ahead.