State AI laws under federal scrutiny: Key takeaways from the executive order establishing federal AI policy framework

On December 11, 2025, President Trump signed an executive order titled “Ensuring a National Policy Framework for Artificial Intelligence,” (“Executive Order 14365”) which establishes a federal policy aimed at addressing the growing number of state-level AI regulations governing the AI ecosystem: “to sustain and enhance the United States’ global AI dominance through a minimally burdensome national policy framework for AI” (the “Policy”).

Building on the Trump Administration’s AI Action Plan issued on July 23, 2025 and the legislative efforts to initiate a moratorium on state AI laws within the federal budgetary bill, Executive Order 14365 sets out a plan to curb the proliferation of state AI laws and leverage various federal tools to discourage and challenge state regulations that conflict with the Administration’s policies. Because federal preemption typically flows from congressional enactments (rather than executive orders), Executive Order 14365 would likely not independently displace state AI laws, instead providing guidance for federal agencies and official conduct under the Policy framework. Key policy objectives under the Executive Order 14365 include:

• AI Litigation Task Force: Directing the Attorney General to establish an AI Litigation Task Force within 30 days, with the primary responsibility of challenging state AI laws that are inconsistent with the Policy, including on grounds such as interference with interstate commerce, preemption by existing federal regulations and First Amendment concerns.
• Evaluation of State AI Laws: Directing the Secretary of Commerce to publish an evaluation within 90 days identifying “onerous” state AI Laws and those that should be referred to the AI Litigation Task Force.
• Restriction on Federal Assistance: Instructing executive departments and agencies to evaluate and/or condition a state’s eligibility for federal funding based on whether its AI regulatory framework aligns with the Policy.
• Federal Reporting and Disclosure Standard: Directing the Federal Communications Commission (“FCC”) to initiate a proceeding within 90 days to consider adopting a federal reporting and disclosure standard for AI models that would preempt conflicting state laws.
• Federal Trade Commission (“FTC”) mandate on AI models: Directing the FTC to issue a policy statement within 90 days on the application of the FTC Act (prohibiting unfair or deceptive acts or practices) to AI models and identifying which state AI laws require altering the “truthful outputs” of AI models (with Colorado’s AI Act cited as a notable example).
• Legislative Recommendations: Directing the Special Advisor for AI and Cybersecurity and the Assistant to the President for Science and Technology to jointly prepare legislative recommendations establishing a uniform federal AI policy framework that would preempt conflicting state laws. Executive Order 14365, however, specifies certain carve-outs: (i) child safety protections; (ii) AI computing and data center infrastructure; (iii) state government procurement and use of AI; and (iv) other topics as determined.

While the interaction between federal initiatives and existing state requirements remains uncertain and may vary depending on legislative, regulatory and judicial developments, we note the following takeaways for AI developers and deployers to keep in mind, as they may affect responsibilities and potential liabilities:

• State AI Law Compliance: Since Congress has not yet passed a federal AI law that preempts state AI laws, existing state AI laws, including Colorado’s AI Act (effective June 30, 2026) and California’s Transparency in Frontier Artificial Intelligence Act (effective January 1, 2026), will likely not be impacted in the short term by Executive Order 14365. Businesses should closely monitor both state- and federal-level developments in the coming months, and the most prudent approach is to continue to comply with state AI laws until there is greater clarity.
• Monitoring Legal Challenges: We anticipate active legal developments from both the AI Litigation Task Force, which will challenge state AI laws, and from states potentially challenging Executive Order 14365. We expect the key legal debates to focus, inter alia, on state authority under the Tenth Amendment, the Dormant Commerce Clause, the legality of conditioning federal funding on state AI laws, and the scope of FTC and FCC regulatory authority as set forth in the Executive Order 14365.
• Stakeholder Involvement in Shaping AI Reporting and Disclosure Standards: Any federal reporting and disclosure standards for AI models proposed by the FCC will undergo a formal rulemaking process, including public comment periods, providing stakeholders with an opportunity to influence the policy details.
• Areas of Growing State Regulatory Patchwork: Certain areas, such as child safety protection, AI infrastructure and state government procurement, will continue to be governed by a patchwork of evolving state-level regulations. Businesses should monitor these areas closely to manage compliance risks.

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