White House Executive Order Aims to Set National AI Policy, Targets State Laws Like Colorado’s AI Act

On December 11, 2025, President Trump issued a significant Executive Order aiming to create a unified national policy framework for artificial intelligence (AI). This directive not only kickstarts new federal policy efforts but also takes aim at certain state-level AI laws seen as conflicting with federal goals, like Colorado’s. The Order establishes a DOJ litigation task force, requires a review of state AI laws by the Commerce Department, and signals possible federal funding conditions and new FCC/FTC actions. While the Order doesn’t immediately override any state laws, it’s a clear roadmap for upcoming federal challenges to state AI regulation.

Key Takeaways:

• State Challenges: The Executive Order launches a DOJ task force to challenge state AI laws and directs the Commerce Department to identify “onerous” state regulations for potential legal action.
• Funding Conditions: Certain remaining BEAD program grants may be withheld from states with “onerous” AI laws, and agencies are instructed to consider grant conditions tied to AI policy consistency.
• FCC and FTC Developments: The FCC and FTC are directed to consider new AI reporting and disclosure standards that could preempt state laws, though their authority and impact remain to be seen.
• Policy Roadmap: A legislative proposal for a national AI framework is in the works, but the Executive Order itself doesn’t invalidate any state laws; near-term attention will focus on which state laws become federal targets and on what grounds.

New Developments Resulting from AI National Policy Framework Executive Order

EO, Section 3: DOJ to Establish an AI Litigation Task Force

The Executive Order directs the Attorney General to create an AI Litigation Task Force within 30 days, with a mandate to challenge state AI laws the Administration views as inconsistent with its national AI policy objectives. The Order signals that DOJ may assert multiple legal theories in court, including arguments that certain state laws improperly burden interstate commerce or conflict with federal regulatory approaches.

EO, Section 4: Commerce Department to Publish an “Onerous State AI Laws” Evaluation

Within 90 days, the Secretary of Commerce must publish an evaluation of existing state AI laws that identifies onerous laws and refers certain laws for potential DOJ challenge. The Order highlights, in particular, state laws that require models to change “truthful” outputs or that compel disclosures in ways that could raise constitutional concerns. 

EO, Section 5: Federal Funding Conditions, Including for BEAD-Related Non-Deployment Funds

The Order directs Commerce to issue a policy notice within 90 days describing when states may be eligible for certain remaining Broadband Equity Access and Deployment (BEAD) Program funding and provides that states with identified onerous AI laws may be ineligible for non deployment BEAD funds to the maximum extent permitted by law. § 5(a). It also directs federal agencies to review whether certain discretionary grants could be conditioned on states not adopting or agreeing not to enforce AI laws that conflict with the Order’s policy. § 5(b).

EO, Sections 6-7: FCC and FTC Actions on AI Disclosures and Preemption

In addition to DOJ-led litigation and Commerce’s review of state AI laws, the Executive Order directs parallel activity at the FCC and FTC that could shape the federal government’s approach to AI reporting, disclosures, and asserted federal preemption of state requirements. 

The Order instructs the FCC Chair, within 90 days after Commerce publishes its identification of state laws, to initiate a proceeding to consider whether to adopt a federal AI reporting and disclosure standard that would preempt conflicting state laws. § 6. Separately, within 90 days, the Order directs the FTC Chair to issue a policy statement describing how the FTC Act’s prohibition on unfair or deceptive acts or practices applies to AI models, including when certain state laws—particularly those that require “alterations” to “truthful outputs”—could be treated as preempted. § 7.

For the FCC, a viable preemption argument would generally require a substantive rule within the Commission’s jurisdiction that directly conflicts with a state requirement—making preemption most plausible in communications-adjacent areas where Congress has delegated regulatory authority. Conversely, a proceeding framed at a high level around “AI reporting and disclosure” could face threshold questions about whether the subject matter falls within the FCC’s delegated authority at all. 

For the FTC, the Order contemplates a policy statement applying the FTC Act’s unfair or deceptive acts prohibition to AI, which does not itself impose binding obligations. Moreover, the FTC Act has typically not been used as a basis for preemption, as evidenced by the longstanding parallel operation of federal and state consumer-protection regimes.

EO, Section 8: White House to Develop a Federal Legislative Proposal With Specified Carve-Outs

Finally, the Order calls for a legislative recommendation, from officials within the executive branch, establishing a uniform federal AI framework that would preempt conflicting state laws, while stating that the proposal should not recommend preempting state laws addressing (among other topics) child safety protections, AI compute/data center infrastructure (with limited exceptions), and state procurement and use of AI. 8(a)–(b). 

Implications for State AI Legislation

The Executive Order does not, by itself, change federal statutory law or immediately invalidate state AI statutes. Instead, it is best understood as a roadmap for near-term federal action rather than an immediate override of state law. In practical terms, the Order tees up several upcoming milestones, including DOJ’s new litigation task force and Commerce’s “onerous laws” evaluation chief among them, that may determine which state laws become priority targets, and on what theories. The likely success of any federal challenges to states laws, however, is unclear.

Preemption can be express (where Congress includes a preemption clause), or implied—most commonly through “conflict preemption,” where compliance with both federal and state requirements is impossible, or where a state law is said to pose an obstacle to accomplishing federal objectives. In the AI context, those questions typically turn on whether there is a sufficiently specific federal statute or binding federal rule that governs the same subject matter as the state law. An Executive Order, standing alone, does not generally create the type of federal substantive requirement that displaces state regulation. 

In particular, there is currently no single comprehensive federal AI statute or uniform federal regulatory regime that clearly and broadly displaces state regulation of AI; that reality may constrain conflict-preemption arguments unless and until Congress enacts an AI framework or agencies adopt narrower rules within delegated authority. The Order’s express reference to Colorado’s framework also suggests that “algorithmic discrimination” or “algorithmic bias” laws may be among the early test cases—an area where states have moved ahead of federal lawmakers, and where preemption, Commerce Clause, and compelled-speech theories may be deployed in different ways depending on the statute’s structure.

Any funding restrictions are likely to be program-specific and may be contested. Conditioning federal dollars on state policy choices is generally scrutinized most heavily when the condition is sweeping, unclear, or not closely connected to the purpose of the funding program at issue. How the BEAD-related provisions play out may, therefore, depend less on the Order’s high-level framing and more on the details of Commerce’s implementing notice, the status and amount of non-deployment funds, and how closely any conditions are tied to the BEAD program’s statutory objectives. 

Finally, the FCC and FTC directives are better read as roadmap items as well. Any preemption argument would likely depend on what (if anything) the FCC ultimately adopts within its statutory jurisdiction and whether that standard actually conflicts with particular state requirements, and the FTC’s contemplated policy statement—standing alone—would not itself create binding obligations and may have limited preemptive force absent concrete enforcement positions or rules.

In the near term, the key questions to watch are: (i) which state laws Commerce identifies as “onerous,” including whether laws like Colorado’s AI regime are formally designated; (ii) where DOJ chooses to bring early test cases; and (iii) whether agencies seek to use grant conditions in ways that have meaningful operational consequences for states and regulated parties.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Jonathan P. Schneller, an O’Melveny partner licensed to practice law in California; Reema Shah, an O’Melveny partner licensed to practice law in New York; Mark Liang, an O’Melveny partner licensed to practice law in California; Amy R. Lucas, an O’Melveny partner licensed to practice law in California; Cassandra Seto, an O’Melveny partner licensed to practice law in California; Daniel R. Suvor, an O’Melveny partner licensed to practice law in California; Sergei Zaslavsky, an O’Melveny partner licensed to practice law in the District of Columbia and Maryland; and Xander Nabavi-Noori, an O’Melveny associate licensed to practice law in the District of Columbia, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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