On December 11, 2025, President Trump signed an Executive Order (EO), Ensuring a National Policy Framework for Artificial Intelligence1 that orders federal agencies to take steps to evaluate and challenge on constitutional grounds state Artificial Intelligence (AI) laws deemed excessive, while calling for federal legislation and agency actions that could preempt such state AI laws.
The EO is framed as a national security imperative, stating in Section 2 that it is the policy of the United States to enhance US global AI dominance through a “minimally burdensome” national policy framework for AI (National AI Policy). The EO states that this policy will encourage innovation, but is thwarted by an excessive, cumbersome patchwork of 50 different state regulatory regimes. The EO also asserts that certain state laws require entities to “embed ideological bias within models,” and cites Colorado’s new AI law, SB24-205, that bans “algorithmic discrimination,” as an example of an excessive state law that may require AI models to produce false results in order to avoid a “differential treatment or impact” on protected groups.
The EO is not self-executing. Rather, it lays the groundwork for federal challenges to state AI laws, for new regulations and federal laws that would preempt state AI laws, and for restrictions on federal funding to states with “onerous” AI laws, as identified by a Commerce/White House Task Force. The key mechanisms for accomplishing these goals are:
- AI Litigation Task Force at Justice. Within 30 days, the Attorney General is charged with forming an AI Litigation Task Force that will challenge state AI laws inconsistent with the National AI Policy. The state AI laws will be challenged on the grounds that they unconstitutionally regulate interstate commerce, are preempted by existing federal regulations or are otherwise unlawful. The White House Special Advisor for AI and Crypto (AI and Crypto Advisor), the White House Assistant to the President for Science and Technology (APST), and other White House officials will be consulted
- evaluation of State AI Laws. Within 90 days, under Section 4 of the EO, the Secretary of Commerce, in consultation with the AI and Crypto Advisor, APST and other White House officials, will publish an evaluation of existing state AI laws that are onerous and in violation of the National AI Policy2
- truthful outputs. This evaluation will also identify state laws that “require AI models to alter their truthful outputs,” or that may compel AI developers or deployers to disclose information in violation of the First Amendment or are otherwise unconstitutional. This provision echoes EO 14319, Preventing Woke AI in the Federal Government (July 23, 2025)3 that requires all Large Language Models (LLMs) procured by the federal government to produce reliable outputs free from harmful ideological biases and social agendas and to comply with the Unbiased AI Principles of Truth-Seeking and Ideological Neutrality. On December 11, 2026, OMB Director Russell Vought issued a memorandum4 that sets out requirements agencies must follow when procuring an LLM, including required contractual terms, modifications and due diligence, to ensure the Unbiased AI Principles are followed
- restrictions on funding to the States. The EO orders two actions to restrict federal funding to the states with AI laws deemed onerous under Section 4 of the EO. First, the Commerce Department must make states that have been identified under Section 4 ineligible for remaining federal grants to expand high-speed internet to underserved or unserved areas, “to the maximum extent permitted by federal law.” Second, all executive departments and agencies must assess their grant programs in consultation with the AI and Crypto Advisor and determine if grants can be conditioned on a state not enacting onerous AI laws or not enforcing an existing law that violates National AI Policy
- Federal Communications Commission (FCC) adoption of a reporting and disclosure standard for AI models. Within 90 days of publication of the evaluation of state AI laws in Section 4, the FCC, in consultation with the AI and Crypto Advisor, must start a proceeding to determine whether or not to adopt a federal reporting and disclosure standard for AI models that would preempt conflicting state laws
- the Federal Trade Commission (FTC) policy statement on the FTC Act. Within 90 days, the FTC, in consultation with the AI and Crypto Advisor, must issue a policy statement on when state laws that require “alterations to the truthful outputs of AI models” are preempted by the FTC Act’s prohibition on engaging in deceptive acts or practices affecting commerce
- call for federal legislation that preempts certain state AI laws. The AI and Crypto Advisor and APST will jointly prepare a federal legislative recommendation that “established a uniform federal policy framework for AI” and that preempts conflicting state laws. Preemption will not apply to state laws that protect children and other limited topics
What to expect: We can expect the Justice Department, the Commerce Department and other federal agencies to challenge state AI laws identified as onerous under Section 4 of the EO on constitutional grounds and to restrict federal grants to those states. We can also expect significant pushback from states and other groups to these actions. While the actions mapped in the EO will not have an immediate effect, their consequences could be significant if the executive branch’s novel constitutional interpretations ultimately prevail in federal court. On the federal legislative front, given the fractious nature of Capitol Hill politics, especially in an election year, prospects for near-term federal legislation on a uniform federal AI framework are thought to be dim indeed.
Compliance considerations for our clients: As noted above, the EO is not self-executing. No state AI law has been preempted solely by the issuance of the EO, so that, at least for now, companies’ compliance obligations remain unchanged. However, companies must pay close attention to how the mandates in this EO play out and whether particular state AI laws are enjoined, repealed, modified, not enforced or remain untouched.
In August, a special session of Colorado’s lawmakers postponed the effective date of its landmark AI Act (SB 24-205) from February 1, 2026, to June 30, 2026,5 to give businesses and the General Assembly more time to work on clarifying provisions. Colorado’s General Assembly is expected to start its next session in early 2026 and all eyes will be on how Colorado will navigate this EO relative to SB 24-205.
For insurers, who hold a special position in the nation’s pre-emption framework due to the McCarran-Ferguson Act, attention should be paid to any legislative or executive attempts to repeal or otherwise undermine the current protections to state regulation of insurance found in the McCarran-Ferguson Act.
Additional observation: On December 17, 2025, Andreessen Horowitz (aka a16z), a Silicon Valley venture capital firm, issued a legislative “roadmap” on AI,6 which the firm describes as “a critical first steps to enacting federal AI legislation that sets a clear standard for AI governance” and offers nine key legislative reminders. It will be interesting to observe how closely the White House’s legislative proposals on AI track the a16z roadmap.
1 https://www.federalregister.gov/documents/2025/12/16/2025-23092/ensuring-a-national-policy-framework-for-artificial-intelligence
2 Note that the White House’s Office of Science and Technology Policy (OSTP) issued a request for input that closed October 27, 2025, on statutes, rules, guidance or policies that “unnecessarily hinder the development, deployment, and adoption of AI technologies in the US.” https://www.federalregister.gov/documents/2025/09/26/2025-18737/notice-of-request-for-information-regulatory-reform-on-artificial-intelligence.
3 https://www.federalregister.gov/documents/2025/07/28/2025-14217/preventing-woke-ai-in-the-federal-government. For further information, see our legal alert: The Trump Administration’s plan to win the AI race – a legal perspective.
4 https://www.whitehouse.gov/wp-content/uploads/2025/12/M-26-04-Increasing-Public-Trust-in-Artificial-Intelligence-Through-Unbiased-AI-Principles-1.pdf
5 See https://leg.colorado.gov/bills/sb25b-004.
6 A Roadmap for Federal AI Legislation: Protect People, Empower Builders, Win the Future | Andreessen Horowitz
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