Federal Strategy to Preempt State-Based AI Laws | Ervin Cohen & Jessup LLP

The White House issued a draft Executive Order titled “Eliminating State Law Obstruction of National AI Policy” to preempt state AI laws in favor of a centralized national framework.
The executive order proposes to create an AI Litigation Task Force to challenge state statutes that conflict with federal priorities.
Federal agencies, including the Department of Justice, Commerce Department, FCC, and FTC, are directed to review and potentially withhold funding from states with restrictive AI laws.
The order seeks to respond to state-level AI legislation, notably California’s Transparency in Frontier AI Models Act and Colorado’s Artificial Intelligence Act.
Businesses should be prepared for shifting obligations as federal agencies may override state requirements, necessitating flexible compliance frameworks for those operating nationally.
Companies dependent on AI vendors need to monitor contractual obligations related to disclosures, risk assessments, and transparency requirements, as these may conflict with federal requirements.
Despite the uncertainty of the order’s finalization, companies must start evaluating how federal preemption could impact their compliance, contracts, and overall AI governance practices.
The draft order aligns with congressional initiatives to integrate AI preemption into federal legislation, including the Fiscal Year 2026 National Defense Authorization Act.

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