President Trump Signs Executive Order Preempting State AI Laws and Centralizing Federal Oversight

Seyfarth Synopsis: Yesterday, President Trump signed the highly anticipated Ensuring a National Policy Framework for Artificial Intelligence Executive Order, asserting broad federal authority over state Artificial Intelligence laws that the Administration views as obstructing national AI policy.  The EO establishes a “minimally burdensome” national AI governance framework,  creates a DOJ AI Litigation Task Force, directs federal agencies to identify and challenge state requirements deemed inconsistent with federal priorities, and conditions certain broadband funding on states’ willingness to pause enforcement of AI statutes that conflict with the EO.  These measures signal an aggressive federal preemption strategy and are expected to face significant legal challenges as states push back against what they characterize as an encroachment on long-standing state authority.

On December 11, 2025, President Trump signed the Ensuring a National Policy Framework for Artificial Intelligence Executive Order (EO), a sweeping federal action designed to implement a “minimally burdensome” AI governance strategy and to significantly curtail the authority of individual states to regulate Artificial Intelligence (AI). In announcing the EO, President Trump reiterated his position that federal intervention is necessary to avoid a fragmented system of state requirements, noting in a social media post earlier this week: “I will be doing a ONE RULE Executive Order this week. You can’t expect a company to get 50 Approvals every time they want to do something.”

The EO builds on prior initiatives aimed at limiting state-level restrictions on AI. From the attempted 10-year state AI moratorium originally included in the Big Beautiful Bill to the Administration’s AI Action Plan (see, Seyfarth AI Action Plan Update), the Trump Administration’s AI policy direction has consistently emphasized a “build, baby, build” approach.  Through this EO, multiple federal agencies are charged with operationalizing that direction through a uniform national AI policy framework.   

The EO begins by framing its core policy objective stating, “It is the policy of the United States to sustain and enhance the United States’ global AI dominance through a minimally burdensome, national policy framework for AI.”  Consistent with that objective, the EO emphasizes that U.S. companies must be free to innovate without cumbersome regulation, warning that expansive state-level requirements create a patchwork of 50 different regimes that complicate compliance—particularly for start-ups—and risk embedding ideological biases into AI models.

The EO specifically identifies Colorado’s Consumer Protections for Artificial Intelligence Act—scheduled to take effect in June 2026—as an example of a state law that prohibits “algorithmic discrimination.” According to the EO, such laws risk requiring AI systems to “produce false results in order to avoid differential treatment or impact.”  As we have previously reported, Colorado legislators have grappled with the scope and practical implications of these requirements since Governor Polis signed the legislation.  Notably, Governor Polis expressly invited lawmakers at the signing to return in future sessions to refine and amend the statute. Since then, legislators and stakeholders have continued to explore potential amendments aimed at clarifying key definitions, compliance obligations, and the law’s practical application.

The EO also notes that some state laws impermissibly regulate beyond state borders, raising Commerce Clause concerns.  To address these issues, the Administration calls for a single national standard that preempts conflicting state laws while safeguarding key priorities such as child protection, copyright integrity, and community safety.  According to the EO, this unified framework is essential to ensure the United States remains competitive in the global AI race.

Key Components of the Executive Order

To operationalize its “One Rule” approach, the EO establishes a multi-pronged enforcement strategy designed to centralize AI governance and preempt conflicting state laws.  Sections 3 through 8 outline the core mechanisms, including litigation authority, a federal review of state AI regulations, funding restrictions to influence state policy, and rulemaking to create a national transparency framework. Below, we highlight several of the most significant components that employers and AI developers should monitor closely.

DOJ AI Litigation Task Force

A central feature of the EO is the creation of a Department of Justice AI Litigation Task Force, “whose sole responsibility” is to challenge state AI laws viewed as inconsistent with national policy.  The Task Force will pursue litigation against state laws that, in the Attorney General’s judgment, unconstitutionally regulate interstate commerce, raise preemption concerns, or otherwise conflict with federal law.  The EO also calls for close coordination between the Task Force and various White House advisors and policy leads to monitor and respond to emerging state AI laws that warrant challenge.

Secretary of Commerce Review of State AI Laws

Within 90 days, the EO directs the Secretary of Commerce to conduct a review of state AI laws deemed to conflict with national policy.  The review must identify any laws that require AI models to “alter their truthful outputs” or that compel disclosures that violate the First Amendment or other constitutional provisions.  As part of this review, the Secretary may also identify states whose laws promote AI innovation consistent with national policy.

Funding Restrictions to Influence State Policy

Another significant mechanism imposed by the EO is the use of funding restrictions to influence state AI laws.  Within 90 days, the Secretary of Commerce must issue a Policy Notice specifying conditions for state eligibility under the Broadband Equity Access and Deployment (BEAD) Program.  States identified as having onerous AI laws will be ineligible for certain BEAD funds, to the maximum extent permitted by law.

In addition, executive departments and agencies must review their discretionary grant programs to determine whether funding can be conditioned on states either refraining from enacting conflicting AI laws or agreeing not to enforce such laws during the grant performance period.  These financial measures, combined with the federal government’s significant spending power, are expected to exert substantial pressure on states to align with national AI policy.

Federal AI Transparency Framework

In a somewhat unexpected development, the EO also directs the Chairman of the FCC—working in consultation with the Special Advisor for AI and Crypto—to initiate a formal proceeding to evaluate the establishment of a federal AI reporting and disclosure transparency framework for AI models.  If adopted, such a framework would be designed to supersede and preempt conflicting state reporting and disclosure requirements, thereby further centralizing AI governance at the federal level.   

Anticipated State Pushback

While the EO reflects the Administration’s strong preference for a single, national AI governance framework, efforts to preempt state action are expected to face significant resistance.  Many states have advanced AI legislation to address concerns around discrimination, transparency, and consumer protection, and view federal preemption as undermining those objectives.

In recent months, state officials have raised growing concerns about federal efforts to limit state authority over AI regulation.  Most recently, in a November 25, 2025 letter, a coalition of 36 state attorneys general urged Congress to oppose proposals that would restrict states from enacting or enforcing laws addressing perceived risks associated with AI.  That letter reflects broader resistance among states to federal initiatives that could constrain traditional areas of state regulation, including consumer protection, civil rights, and public safety.

As a result, states are likely to frame legal challenges to the EO around core federalism principles. While the specific arguments will vary, challenges may focus on whether executive action—absent clear congressional authorization—can lawfully constrain state legislative and enforcement authority.  Litigation may also examine whether the use of funding conditions and coordinated agency action effectively function as de facto preemption, raising questions about the limits of federal power to influence state policy choices through executive means rather than through acts of Congress.

Employers should anticipate a prolonged period of legal uncertainty as these disputes play out in court.  State enforcement actions may continue until such questions are resolved.

Implications for Employers

Against this backdrop, the EO introduces significant challenges for employers developing or deploying AI tools across multiple states and global jurisdictions.  State and local laws in Colorado, California, Illinois, and New York City, among others, may be subject to challenge in light of the EO.  At the same time, multinational employers remain subject to robust non-U.S. requirements—such as the EU AI Act, China’s algorithmic and generative AI rules, and Canada’s forthcoming requirements—creating a complex patchwork of obligations even if certain U.S. state laws are paused or preempted.

Importantly, preemption of new AI laws does not eliminate legal exposure for employers.  Practitioners widely note that existing federal and state civil rights statutes already prohibit discrimination in employment, regardless of whether an AI-specific law applies. That view is reflected in the emergence of lawsuits challenging AI-driven employment practices under traditional anti-discrimination frameworks.  In other words, the absence of an AI statute does not insulate employers from risk.

The EO does not prevent employers from voluntarily implementing responsible AI governance practices.  We anticipate that many organizations will continue to adopt internal risk management frameworks designed to promote the development and deployment of AI systems that are valid, reliable, safe, transparent, explainable, privacy-enhanced, and fair—core characteristics of trustworthy AI as reflected in a number of voluntary frameworks and industry standards, including the National Institute of Standards and Technology’s AI Risk Management Framework.

Notably, the EO does not eliminate employer risk associated with deploying AI tools in talent management processes.  Accordingly, employers that invest in voluntary efforts to implement responsible AI measures may be better positioned to navigate stakeholder expectations and mitigate litigation risk.  Organizations that take proactive steps to validate, monitor, and govern their HR technologies will be best positioned to navigate the next wave of civil rights enforcement and private litigation challenging AI-driven employment decisions.

Next Steps

Seyfarth will continue monitoring state and federal developments on AI activity and will closely monitor state responses to the EO.  We will continue to provide updates as key developments arise.  For additional information, please contact the authors of this alert, a member of Seyfarth’s People Analytics team, or any of Seyfarth’s attorneys.