Trump draft executive order aims to block state AI laws

If you are building an AI company in the United States, your biggest headache might not be GPU compute, but having to comply with 50 different rulebooks across 50 states.

The Trump administration has drafted an executive order designed to give the federal government sweeping powers to strike down state-level AI regulations. However, according to a recent report from Reuters, the controversial plan has now been put on hold amid mounting political resistance.

A federal task force with a broadband hammer

According to a draft obtained by The Verge, the executive order would direct the Department of Justice to establish a dedicated AI Litigation Task Force. Its sole responsibility would be taking states to court over AI laws that federal officials argue obstruct industry growth.

The order takes direct aim at California's recent legislation addressing catastrophic AI risks and a Colorado law preventing algorithmic discrimination. To guide the effort, the task force would regularly consult with White House special advisers, including billionaire venture capitalist David Sacks.

The draft also lays out an aggressive 90-day roadmap for federal agencies. Most notably, the Department of Commerce would be instructed to identify offending states and evaluate stripping them of federal funding from the Broadband Equity Access and Deployment (BEAD) program, which subsidizes rural high-speed internet.

Meanwhile, Federal Communications Commission Chairman Brendan Carr has floated using the Communications Act to override state rules, arguing that federal intervention is needed to prevent state-mandated ideological bias from derailing frontier models.

The backup plan hits a familiar wall

Trump has repeatedly argued against a 50-state regulatory patchwork, insisting at business forums that businesses need one unified federal approval rather than catering to localized policies.

This executive order was actually the White House's backup plan. Earlier, an attempt to pass a 10-year moratorium on state AI laws inside Trump's broader budget package crashed in the Senate with a crushing 99 to 1 vote. House leaders then explored slipping the moratorium into the National Defense Authorization Act.

Seeing legislative hurdles everywhere, the administration drafted the executive decree. Yet experts immediately questioned its teeth. Adam Thierer, a senior fellow at the R Street Institute, pointed out that huge economies like California could easily shrug off threats to rural broadband grants.

The regulatory battle has also split Silicon Valley down the middle. Pro-acceleration investors aligned with the administration have openly criticized AI labs like Anthropic for endorsing state safety bills such as California's SB 53.

Why it matters

For AI startups and builders, navigating 50 differing state compliance regimes is an expensive nightmare. A single federal standard would drastically lower legal overhead and accelerate deployment across the country. But for everyday consumers, gutting state-level authorities means losing the quickest local defenses against algorithmic bias, consumer deception, and predatory automated systems.

On the industry level, this highlights a growing civil war in tech. Frontier labs advocating for structured guardrails are being actively challenged by venture capital figures who see safety regulations as unnecessary brakes on American technological dominance.

We think weaponizing executive power and rural broadband dollars to crush state autonomy was always a high-risk gamble. Attempting to bypass Congress after a 99 to 1 defeat was legally fragile, and it inevitably triggered fierce backlash from state attorneys general and traditional federalist conservatives alike. Putting the order on hold looks like a pragmatic recognition of reality: AI governance cannot be solved by unilateral fiat.