President Donald Trump is marshaling the powers of the executive branch and Congress and threatening to withhold funding for states considering rules that could impede the rollout of artificial intelligence across the U.S.
Trump inked an executive order Thursday — a win for Big Tech that seeks to limit state laws that the administration deems “cumbersome” and “excessive” as data centers proliferate across the nation. The move closely mirrors the Trump administration’s battle with state climate laws.
Trump, flanked by advisers and Senate Commerce Chair Ted Cruz (R-Texas) in the Oval Office, said AI developers need “one source” for approval as opposed to running into obstacles in states like California, New York and Illinois. Trump called Illinois Gov. JB Pritzker “unreasonable” and said “hostile” states could impede trillions of dollars the U.S. is poised to receive as it takes on China in the AI race.
“If they had to get 50 different approvals from 50 different states, you can forget it,” Trump said. “All you need is one hostile actor and you wouldn’t be able to do it.”
The order tees up a fight between the executive branch and states in a way that legal experts said is clever but will face considerable hurdles in the courts. They also said the order — and the resulting threat of lawsuits and loss of federal funds — could chill states’ enthusiasm for taking up legislation to regulate AI.
As of July, all 50 states, Puerto Rico, the Virgin Islands and the District of Columbia had introduced AI legislation, according to the National Conference of State Legislatures. Thirty-eight states have adopted or enacted about 100 new laws.
Roughly a quarter of the bills are concentrated in three states — California, New York and Illinois. The result of the proliferation of state AI bills has been a “confusing patchwork of regulation,” said David Sacks, Trump’s AI and crypto czar, during the Oval Office announcement. “What we need is a single federal standard, and that’s what the EO says.”
But while the order received praise from Republican lawmakers and AI developers, it left governors fuming. California Democratic Gov. Gavin Newsom called it a “con job,” and Florida Republican Gov. Ron DeSantis suggested the order could be an illegal attempt to usurp states’ power.
“An executive order doesn’t/can’t preempt state legislative action. Congress could, theoretically, preempt states through legislation,” DeSantis wrote in a post on the social media platform X.
“The problem is that Congress hasn’t proposed any coherent regulatory scheme but instead just wanted to block states from doing anything for 10 years, which would be an AI amnesty,” he continued. “I doubt Congress has the votes to pass this because it is so unpopular with the public.”
California Attorney General Rob Bonta (D), who has on average sued the administration once a week, pledged the state would “respond as appropriate” to the executive order. The order marks the administration’s third attempt to limit states’ abilities to protect residents from the “chilling risks” posed by AI, Bonta said.
“President Trump is attempting to limit the ability of states — red states and blue states alike — to implement commonsense protections for our residents,” Bonta said.
The legal outlook is also messy, experts say. The conservative-dominated Supreme Court is generally sympathetic to arguments that states should have the power to set their own rules — even when they are burdensome to out-of-state entities.
Lyrissa Lidsky, who teaches constitutional law at the University of Florida, said the executive order is part of Trump’s playbook but has big constitutional problems and will face legal challenges. The order, she said, is a shot across the bow at states contemplating AI legislation and an attempt to push through policy that Congress failed to advance, noting that provisions to limit state AI rules didn’t make it into the GOP megabill and the NDAA.
“It’s usurping the legislative role,” said Lidsky. ”It really is Congress’ job to pass legislation to preempt the state from regulating, otherwise as a matter of federalism, states have the power to regulate.”
Pat Parenteau, professor emeritus at Vermont Law and Graduate School, agreed, and said the order is “long on rhetoric and short on legal authority,” and that Trump’s appetite for suing blue states has yet to be successful. While there could be situations where a state law conflicts with federal statute, Parenteau said it involves a fact-based, case-by-case determination by the courts and ultimately the Supreme Court.
“The president cannot wave a magic wand an erase state laws regulating AI,” said Parenteau. “There is no federal law that categorically preempts the states in this arena.”
‘So much for states’ rights’
The AI order builds on and uses similar tactics to Trump’s previous directives on AI, energy and data centers, said Hari Osofsky, a law professor at Northwestern University.
The order calls on Attorney General Pam Bondi to establish an “AI Litigation Task Force” focused on challenging state laws, and for Secretary of Commerce Howard Lutnick to evaluate state AI laws and specify the conditions for federal funding under the Broadband Equity Access and Deployment, or BEAD, program.
The order also calls on Sacks and Assistant to the Director of the Office of Science and Technology Policy Michael Kratsios to jointly prepare a legislative recommendation for a “uniform federal policy for AI” that would preempt state AI laws, said Osofsky.
Civil rights and environmental advocates blasted the order and vowed to fight the directive on Capitol Hill and in court. More than 230 national, state and local organizations this week called on Congress to set a national moratorium on the approval and construction of new data centers.
Cody Venzke, senior policy counsel with the American Civil Liberties Union, said the order is unconstitutional and has been defeated on Capitol Hill, noting that the Senate earlier this year struck language from a budget reconciliation bill that would have limited state AI laws.
“It is no surprise that the first attempt at attacking state AI laws was defeated in a landslide 99-1 vote in the Senate,” said Venzke. “Moreover, the executive order is not just dangerous, it’s unconstitutional. The Supreme Court has made clear that the president may not unilaterally and retroactively change the conditions on federal grants to states after the fact.”
“Trump’s order on its own cannot overrule state and local protections,” said Mitch Jones, director of policy and litigation at Food & Water Watch. “We’ll be following the administration’s attempts to implement this farcical order, and we’ll fight it in Congress, in the states, in the courts, and with communities across this country.”
Camden Weber, climate and energy policy specialist at the Center for Biological Diversity, said the order will strip states of the power to protect their air, water, and ratepayers from AI’s exploding energy demands. “Lawmakers on both sides of the aisle, including Trump allies, have repeatedly rejected bans on state AI regulation,” said Weber. “Now Trump is trying to jam it through by decree so his inner circle can benefit. So much for states’ rights.”
The Climate Justice Alliance and the NAACP also warned the order sought to weaponize federal agencies against states to build AI infrastructure as quickly as possible.
The order disregards the division of state and federal authority protected under the 10th Amendment, the groups said in a statement.
“Unregulated AI development will drive a surge in data center construction, which will have massive energy, water, and land demands whose impacts will inevitably fall hardest on predominantly Black, Brown, low-income, and Indigenous communities,” the groups said. “These same communities rarely reap any benefits of AI due to the digital divide, are more at risk of job displacement, and face disproportionate exposure to hyperscale data center pollution.”
But Andy Bockis, a partner at the law firm Saul Ewing, who represents data center developers, was skeptical that the executive order would implicate AI data center construction.
The terms of the order “relate primarily to models that may produce purportedly false results based on what the order calls ‘algorithmic discrimination,’” Bockis said in an email.
“I don’t read the Executive Order as seeking to preempt environmental laws, in part because there is no reference to environmental requirements (or building or construction in general) in the order,” he said.
Climate parallels
The move is not the first time the administration has sought to curb states’ rights.
Trump in April issued an executive order directing the Department of Justice to target any state climate policies “burdening” energy development.
The department followed up, filing lawsuits against Vermont and New York to block the two states from carrying out climate Superfund laws that seek to force energy companies to pay the cost of adapting to climate change.
It also filed suit against Hawaii and Michigan in an effort to deter the states from suing the fossil fuel industry. And it has urged the Supreme Court to side with industry and find that federal law bars state and local governments from suing oil and gas companies for the costs of climate change.
All the cases are still pending.
Osofsky, the Northwestern University law professor, said she expects “litigation by the Department of Justice challenging state AI laws and state countersuits in the coming weeks.”
DOJ in September asked for the public’s help to identify laws with “significant adverse effects” on the economy.
The National Conference of State Legislatures criticized the department’s request as “inappropriate” and urged withdrawal.
The conference, which represents state lawmakers across the country, charged that DOJ’s intent to revoke state laws “raises concerns regarding collaborative federalism and the 10th Amendment,” which holds that powers not delegated to the federal government by the Constitution are reserved for states.
James Paretti, a former EEOC chief of staff who is now a shareholder at employment law firm Littler, said in a note to clients that it was “highly likely” states that have adopted AI regulation will challenge the move as an unconstitutional encroachment of federal authority on states’ rights.
Reporters Niina H. Farah and Pamela King contributed.
