Deep Brief:

  • According to a legal analysis, U.S. companies need to prepare for a "volatile and unstable regulatory landscape" following an executive order recently signed by President Donald Trump aimed at blocking certain state-level artificial intelligence laws.
  • Critics such as the American Civil Liberties Union argue the executive order is unconstitutional. One provision requires the federal government to deny funding to states that implement "burdensome" AI laws.
  • "Given the legal uncertainty and potential challenges to the executive order, it is important to note that existing state AI laws remain enforceable. However, whether states will actually enforce their AI regulations following the executive order remains to be seen," lawyers at the Roanoke, Virginia law firm Woods Rogers Vandeventer Black said in a Monday blog post.

Deep Insight:

Trump's executive order states that state AI laws "sometimes inappropriately regulate beyond state borders, hindering interstate commerce." The order, issued Thursday, drew mixed reactions and requires U.S. Attorney General Pam Bondi to establish an AI litigation task force within 30 days to challenge state AI laws that "unconstitutionally regulate interstate commerce" or conflict with existing federal laws.

Within 90 days, Commerce Secretary Howard Lutnick must issue a policy clarifying the conditions under which states can receive remaining funds under the Broadband Equity, Access, and Deployment program. Under the policy, states implementing burdensome AI laws would be deemed ineligible.

The president also asked White House AI and crypto special adviser David Sacks and presidential technology adviser Michael Kratsios to jointly recommend federal AI legislation that would preempt any state laws conflicting with administration policy.

"However, until national standards are established, my administration must act to curb the most burdensome and excessive laws emerging in the states that could hinder innovation," the executive order states.

The Woods Rogers Vandeventer Black analysis noted that the executive order opens a "Pandora's box, not only of constitutional questions but also of questions regarding the interpretation and scope of the executive order." The lawyers wrote: "Does the president have the legal authority to issue such a sweeping AI executive order targeting state laws? Some constitutional scholars argue that an executive order attempting to preempt state AI laws would violate state sovereignty as embodied in the anti-commandeering doctrine under the Tenth Amendment."

Cody Venzke, senior policy adviser at the American Civil Liberties Union, said in a statement condemning the order that the Supreme Court has made clear the president "cannot unilaterally and retroactively change the conditions of federal grants to states." He said: "Every grant is an agreement between the state and the federal government. Threatening to withhold funding for schools, broadband construction, nutrition support, and more over unrelated AI policy disputes would unnecessarily harm the American people."

The executive order also drew criticism from some lawmakers, including Minnesota Democratic Senator Amy Klobuchar, who posted on X that it is "dangerous and likely illegal."

The president's action was welcomed by business groups such as the U.S. Chamber of Commerce. Jordan Crenshaw, senior vice president of the Chamber's Technology Engagement Center, said in a statement: "The Chamber appreciates President Trump's efforts to address the growing challenge of a patchwork of state AI regulations. These piecemeal state laws could deprive small businesses and other startups of the tools they need to grow, innovate, and compete." He also said Congress must act to establish a federal AI framework to "provide the business community with the certainty and stability needed to fully harness the potential of artificial intelligence and give American businesses an advantage."