Federal AI Preemption Takes Center Stage: Key Deadlines, Strategic Risks, and Opportunities Under Trump’s Latest Executive Orders

Timeline of Critical Deadlines:

• January 10, 2026 (30 days): DOJ establishes AI Litigation Task Force; legal challenges to state laws may commence.
• February 9, 2026 (90 days): Energy Department identifies Genesis Mission resources and industry partnerships.
• March 11, 2026 (90 days): Commerce Department publishes evaluation of onerous state AI laws; FTC issues policy statement on deceptive practices; BEAD funding restrictions take effect.
• June 9, 2026 (180 days): FCC initiates rulemaking on federal AI reporting and disclosure standards.
• August 22, 2026 (270 days): Agencies demonstrate practical AI applications in priority sectors.

On December 11, 2025, President Donald Trump signed the landmark Ensuring A National Policy Framework for Artificial Intelligence Executive Order which, in conjunction with the November 24, 2025 Genesis Mission Executive Order, has established a comprehensive federal AI strategy that fundamentally reshapes the regulatory landscape. 

While the Genesis Mission EO focused on mobilizing federal resources for AI development, the latest AI Framework EO targets state AI laws (or states considering passing AI laws) the administration views as potential hurdles to AI innovation and federal policy. The dual executive orders represent a fundamental reordering of AI regulatory authority in favor of federal control. Unlike the previously proposed component of the One Big Beautiful Bill Act which originally proposed a ten-year moratorium on enforcement state AI laws, the December 11 preemption order directly confronts state regulation through litigation, funding restrictions, and agency preemption. The administration frames AI dominance as critical to national security and economic competitiveness. Together, these orders represent the most aggressive federal assertion of AI regulatory authority to date and build on the administration’s “America’s AI Action Plan” and emphasis on “winning the AI race.”

Federal Preemption is Now Administration Policy. While the Genesis Mission EO reportedly omitted preemption language following industry and legislative pushback, the centerpiece of the more recent AI Framework EO is federal preemption of state AI laws. This shift – pitting federal policy at odds with existing state laws – creates immediate compliance uncertainties and litigation risks for companies. 

Companies that were in the process of complying with state AI laws now have to account for this latest EO. The 30-day timeline for establishing the DOJ AI Litigation Task Force means legal challenges could commence as early as January 2026.

Key Provisions of the December 11 Preemption Order:

AI Litigation Task Force. Within 30 days, the Attorney General must establish a dedicated AI Litigation Task Force with the sole mission of challenging state AI laws deemed inconsistent with federal policy. 

The Task Force will target laws that allegedly:

1. Unconstitutionally regulate interstate commerce;
2. Are preempted by existing federal regulations, or
3. Are otherwise deemed unlawful. 

The order specifically criticizes Colorado's anti-discrimination law, suggesting it may force AI models to produce false results to avoid differential impacts on protected groups. The Task Force will coordinate with the Special Advisor for AI and Crypto, the Assistant to the President for Science and Technology, and other senior White House officials, signaling that litigation decisions will be driven by policy objectives rather than purely legal considerations.

Commerce Department Evaluation of State Laws. Within 90 days, the Secretary of Commerce must publish a comprehensive evaluation identifying “onerous” state AI laws that conflict with federal policy. 

This evaluation will target laws requiring AI models to alter truthful outputs or compelling disclosures that may violate the First Amendment. The evaluation will also identify laws for DOJ litigation referral, creating a formal pipeline from policy review to legal challenge. The evaluation may also identify state laws that “promote AI innovation,” suggesting potential safe harbor treatment for states adopting industry-friendly approaches.

Financial Penalties for Non-Compliant States.  The order leverages federal funding to coerce state compliance. States with “onerous AI laws” become ineligible for non-deployment funds under the Broadband Equity Access and Deployment (BEAD) Program. All federal agencies must assess whether to condition discretionary grants on states either not enacting conflicting AI laws or agreeing not to enforce existing laws during grant performance periods. 

This funding mechanism creates incentives for states to avoid AI regulation or suspend enforcement, effectively achieving preemption through financial pressure rather than litigation alone.

FCC Rulemaking on National Standards. Within 180 days (90 days after the Commerce evaluation), the FCC Chairman must initiate proceedings to adopt federal reporting and disclosure standards for AI models that preempt conflicting state laws. This is a significant expansion of FCC jurisdiction into AI regulation, using the agency’s telecommunications authority to establish nationwide AI standards.

FTC Policy Statement on Deceptive Practices. Within 90 days, the FTC Chairman must issue a policy statement explaining when state laws requiring alterations to AI outputs are preempted by the Federal Trade Commission Act’s prohibition on deceptive practices. This creative legal theory attempts to characterize state anti-bias requirements as mandating “deceptive conduct,” thereby triggering federal preemption.

Genesis Mission: Federal AI Development Initiative. The companion Genesis Mission order establishes a federally led AI research and development program comparable to the Manhattan Project. 

The mission creates an “American Science and Security Platform” centralizing computational resources and federal datasets to train AI models. Within 90 days, the Secretary of Energy must identify available systems, data, and industry partner resources. Within 270 days, agencies must demonstrate AI applications in advanced manufacturing, robotics, biotechnology, and nuclear energy. 

The order explicitly contemplates expanded public-private partnerships, building on existing collaborations at Oak Ridge National Laboratory with AMD, HPE, and Nvidia. Companies offering specialized AI capabilities, computing resources, or domain expertise should anticipate significant contracting opportunities as agencies mobilize resources.

Legal and Strategic Implications:

Immediate Compliance Uncertainty. Companies face a critical decision point: Continue complying with state AI laws while facing potential DOJ litigation that may invalidate those laws or pause compliance pending legal clarity and risk state enforcement. 

This is a particular problem for companies operating in California, Colorado, and other states with comprehensive AI regulations. The order provides no safe harbor for good-faith compliance with state laws that are subsequently challenged. Companies that invested significant resources in state law compliance may find those investments wasted if federal preemption prevails.

Constitutional and Preemption Litigation. The order frames state AI regulation as unconstitutional interference with interstate commerce and impermissible extraterritorial regulation. These Commerce Clause arguments have mixed success rates depending on how directly state laws regulate out-of-state conduct. The order’s preemption theories are equally contentious, claiming existing federal regulations preempt state AI laws requires showing actual conflict, not merely overlapping subject matter. 

The FTC deceptive practices theory is particularly novel and vulnerable to challenge. Characterizing state anti-discrimination requirements as mandating “deception” inverts traditional consumer protection frameworks and may not survive judicial scrutiny.

First Amendment Concerns. The order repeatedly invokes First Amendment concerns, arguing that state disclosure requirements and content mandates violate protected speech. This framing positions AI model outputs as constitutionally protected expression, a theory with implications beyond the immediate preemption context. If successful, this argument could likely limit not only state but also federal regulation of AI-generated content.

Carve-Outs and Exceptions. Section 8(b) exempts certain state laws from proposed federal preemption legislation: child safety protections, AI infrastructure and data center regulation (except permitting reforms), state government procurement and use of AI, and unspecified “other topics.” These carve-outs suggest potential areas where state regulation will remain viable, though the boundaries are undefined.

These newest EOs and the resultant actions coming in the next 30 to 90 days present meaningful considerations, challenges and opportunities for companies of all sizes. The Womble Bond Dickinson Digital Solutions team will follow this alert with a series of more detailed insights on the various impacts of these EOs across sectors. 

For immediate assistance assessing your AI compliance strategy in light of these executive orders, or to discuss federal partnership opportunities under the Genesis Mission, contact the Womble Bond Dickinson Digital Solutions Group.