Expect Many Legal Challenges Related to Indirect Impact of Trump’s AI Order

The order directs DOJ to establish an AI litigation task force to challenge state laws deemed inconsistent with the administration’s pro-innovation and deregulation approach. Observers have suggested DOJ could challenge state laws under the Dormant Commerce Clause, though the viability of such challenges is in question.

In addition, the order directs the Commerce Department to identify “onerous” state AI laws for the DOJ task force. Commerce, through the National Telecommunications and Information Administration, is directed to withhold federal broadband funding from states with onerous laws. The FTC would use its unfair or deceptive practices authority to preempt state laws that impede AI models. The FCC is directed to establish a federal standard for AI disclosure and reporting that would preempt state regulations.

The EO signals the administration’s desire to preempt state AI laws through various indirect means, but it doesn’t “suspend or invalidate existing regulations,” said attorneys at Mintz. The order doesn’t have the force of legislation or preemption, they said: It attempts to “neuter” the opposition through “leveraging executive branch litigation authority and spending levers to discourage state lawmaking, and potentially establish federal standards intended to supersede state-level AI laws.” Businesses should continue to comply with current state laws while litigation plays out, they said.

Florida Gov. Ron DeSantis (R) said earlier this month that DOJ could challenge state laws in places like California and Colorado under the Dormant Commerce Clause. “I don’t anticipate that even happening against any of the stuff we’re doing in Florida, but if it does, I think we would be well-positioned to prevail,” he said.

Hintze Law privacy attorney Sam Castic, in his Wednesday newsletter, said the EO has “no direct impacts for the private sector, but it may influence how states choose to proceed on enacting and enforcing AI laws.”

Attorneys at Davis Wright Tremaine said to expect overlapping lawsuits, including state-led claims related to federal grant-conditioning, the Spending Clause and statutory authority. DWT expects AI-driven companies to file in support of DOJ lawsuits against specific state laws. They also expect states, industry or civil society to file Administrative Procedure Act-related challenges against any FCC-established standards attempting to preempt state law and grant-policy implementation.

DWT said the EO doesn’t “immediately preempt state laws, but is instead a pressure-and-positioning instrument: it seeks to narrow the practical space for state AI regulation to survive, considering litigation risk, funding leverage, and administrative signaling, while laying the groundwork for possible congressional action.

Electronic Privacy Information Center Senior Counsel Calli Schroeder said states will continue playing a role in setting AI policy, particularly how it impacts privacy risks, children’s mental health, economic stability and environmental policy.

“We have seen time and again that federal law can set a strong floor and allow states to continue to address new risks in the future,” said EPIC Deputy Director Caitriona Fitzgerald. “The reason states feel the need to regulate AI is because they see the harms and risks, and they see Congress’s failure to act.”

Expect constitutional challenges concerning states' rights in the coming months, said attorneys at McDermott Will: “While the EO could prompt Congress to act, consensus on the moratorium’s duration and terms is unlikely to happen quickly. This presents challenges for businesses that are investing time and resources in complying with, or preparing to comply with, potentially impacted laws.”