Key Takeaways
- The White House issued an Executive Order on December 11, 2025, to establish a unified national approach to AI regulation
- The Order limits the authority of states to enact and enforce individual AI laws, aiming to maintain U.S. competitiveness in the global AI race
- 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
- 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 should review existing and planned AI deployments, track the Commerce Department’s evaluation of state laws, and develop contingency plans for potential changes in applicable legal requirements
Introduction to the Executive Order
The White House’s recent Executive Order, "Ensuring a National Policy Framework for Artificial Intelligence Order," marks a significant shift in federal artificial intelligence (AI) policy. As stated in the Order, "the current patchwork of state regulations creates excessive compliance burdens that stifle innovation." The administration argues that this move is necessary to maintain U.S. competitiveness in the global AI race. 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.
Key Provisions and Timelines of the Executive Order
The Executive Order includes several key provisions and timelines. For instance, the Attorney General must establish an AI Litigation Task Force within 30 days to contest state AI laws on constitutional grounds. The Secretary of Commerce must publish an evaluation within 90 days, identifying state AI laws that conflict with the Order’s policy objectives. As noted in the Order, this 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. Additionally, 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.
Implications for Companies
Companies operating in the AI space 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. As the Order states, "companies should review all existing and planned AI deployments to identify current state law compliance requirements." Companies should also track the Commerce Department’s evaluation of state laws to understand which regulations may face federal challenges or preemption. Furthermore, companies should evaluate whether operations in states with AI laws could affect funding eligibility if applicable and develop contingency plans for scenarios where state laws remain enforceable, are successfully preempted, or enter extended litigation.
Protected Categories and Exemptions
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. As noted in the Order, "the Secretary of Commerce must publish an evaluation within 90 days, identifying state AI laws that conflict with the Order’s policy objectives." This exemption is significant, as it acknowledges the importance of state-level regulation in certain areas.
Conclusion and Future Outlook
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. As noted in the Order, "the federal government and states will embark on a federalism conflict." Companies should keep compliance programs adaptable to accommodate potential changes in applicable legal requirements and closely monitor legal developments to navigate this uncertain regulatory environment. In the words of the Order, "companies should maintain compliance flexibility, closely monitor legal developments, and engage in policy discussions" to ensure they are prepared for the challenges ahead.
https://www.bipc.com/new-executive-order-signals-federal-preemption-strategy-for-state-laws-on-artificial-intelligence