Federal Efforts Intensify to Override State-Level AI Regulations

A significant federal initiative is gaining momentum to override state-level artificial intelligence regulations in the U.S. This renewed push follows an earlier, unsuccessful attempt to impose a moratorium on existing state AI legislation. A leaked White House executive order draft, reviewed on November 19, details a new strategy aimed at curbing what are perceived as burdensome state AI laws, prioritizing innovation.

Under the proposed order, various federal agencies would play crucial roles in dismantling legislative hurdles at the state level. The Department of Justice (DOJ) is slated to establish a task force dedicated to challenging the constitutionality of state AI laws. Within 90 days, the Department of Commerce would provide analytical support and referrals to aid the DOJ in identifying target laws.

Further reinforcing this preemption strategy, the Federal Communications Commission (FCC) is directed to examine AI model reporting and disclosure standards. Concurrently, the Federal Trade Commission (FTC) would develop a policy statement clarifying how the FTC Act preempts state deception statutes related to AI. Discussions are also underway among Republican members of Congress to potentially include AI moratorium language in the National Defense Authorization Act (NDAA).

This federal drive has received a public boost from former President Donald Trump, who advocated for a unified "Federal Standard instead of a patchwork of 50 State Regulatory Regimes." Trump emphasized the need to protect children and prevent censorship while warning that "overregulation by States is threatening to undermine" AI's growth potential. His explicit support marks a shift from his silence during a previous, failed moratorium attempt in July.

The draft order characterizes existing state AI statutes as "cumbersome" and "fear-based regulatory capture," citing over 1,000 AI bills that threaten innovation. Specific examples like provisions in the Colorado AI Act and California's Transparency in Frontier Artificial Intelligence Act are highlighted as negatively impacting the sector. The DOJ's task force will target laws that unconstitutionally regulate interstate commerce, are preempted by federal regulations, or are otherwise deemed unlawful by the Attorney General.

However, this approach faces significant scrutiny. Legal experts like Alexei Klestoff, Senior Legal Director at ZwillGen, note the draft order's attempt to label state laws as requiring "alterations to truthful outputs" or "deceptive conduct" without adequate explanation. Danielle Davis, Director of Technology Policy at the Joint Center for Political and Economic Studies, describes the DOJ's proposed role in challenging state-level AI protections as "extraordinary." She points out that the DOJ would be effectively using litigation to create a federal standard rather than enforcing one passed by Congress, raising potential constitutional conflicts, particularly concerning the Commerce Clause.

The order also includes provisions mirroring previous moratorium proposals, linking state broadband funding eligibility to their stance on AI laws. States could avoid ineligibility by refraining from enacting AI laws or agreeing not to enforce existing ones during funding application periods.

Opposition to federal preemption remains robust. Congressional Democrats, including House Energy and Commerce Ranking Member Frank Pallone, insist that states must be allowed to implement safeguards for their residents. Some prominent Republicans, such as Governors Ron DeSantis and Sarah Huckabee Sanders, also oppose the preemption debate, emphasizing the importance of state consumer protection in the absence of federal rules. Senator Josh Hawley suggests increased industry lobbying as a driver for these new considerations.

California's approach, which integrates innovation with privacy protections (e.g., CCPA and ADMT rules), serves as a contrasting model. Tom Kemp, Executive Director of CalPrivacy, warns that blocking "common sense state laws erode consumer trust and safety" and would "rob millions of Californians of rights they already enjoy."

Globally, these U.S. efforts unfold as the European Union re-evaluates its AI Act and other digital regulations, aiming to maintain competitiveness with the U.S. and other global digital market players.