U.S. President Donald Trump delivers remarks on artificial intelligence at the “Winning the AI Race” Summit in Washington D.C., U.S., July 23, 2025.
Kent Nishimura | Reuters
An executive order that could soon be signed by President Donald Trump would thwart states’ artificial intelligence laws by launching legal challenges and withholding federal funding, according to a draft of the order obtained by CNBC on Wednesday.
The draft surfaced shortly after Trump publicly called for a single federal standard on AI “instead of a patchwork of 50 State Regulatory Regimes.”
The draft order would give Attorney General Pam Bondi 30 days to establish an “AI Litigation Task Force” whose sole task is to challenge state AI laws.
Those challenges would be issued “on grounds that such laws unconstitutionally regulate interstate commerce, are preempted by existing Federal regulations, or are otherwise unlawful in the Attorney General’s judgment,” the draft says.
The order also directs Commerce Secretary Howard Lutnick to notify states with contested AI laws that they are ineligible for funds under the federal Broadband Equity Access and Deployment program. BEAD is a more than $42 billion program that has allocated funding to all U.S. states and territories.
The order, which was first reported by The Information, is not yet finalized. A White House official told CNBC that any discussion around it is just speculation until it is officially announced.
As written, the EO would be a major win for the burgeoning AI industry, whose leaders — including Sam Altman’s OpenAI, venture capital firm Andreessen Horowitz and other Silicon Valley titans — oppose an inconsistent state-by-state policy approach.
It would be just as big a blow to state lawmakers across the country who have sought to pass bills that would place guardrails on the nascent technology.
New York State Assemblymember Alex Bores, who co-sponsored a state AI safety bill, in a statement to CNBC called the draft EO “a blank check to Donald Trump’s tech billionaire backers who’ve already made a fortune on — and now stand to profit exponentially more from — allowing unconstrained AI to wipe out jobs, destroy our kids’ brains, and drive electricity bills through the roof.”
Bores, a Democrat who is running for Congress, this week became the first target of a well-funded super PAC backed by AI industry leaders.
GOP mulls AI moratorium
The White House is also working with a group of Republican lawmakers to see if a moratorium on certain state AI laws could be included in one of the major must-pass bills that Congress is working on.
That language is still being drafted, but it would likely block states’ abilities to regulate on issues like how AI is developed, according to four sources familiar with the discussions. States would likely still be able to craft policy on other AI-related matters such as fraud, consumer protections and images depicting the sexual abuse of children, the sources said.
A proposed 10-year ban on states regulating AI was initially included in Republicans’ “big, beautiful bill,” but cut out before Trump signed it in July.
The current draft proposal could have no expiration date, including to one source familiar with the discussions.
“You’re seeing China move very aggressively,” House Majority Leader Steve Scalise, R-La., told CNBC on Tuesday. “AI is the wave of the future, but we want America to be dominant in it and we want our policies to reflect that.”
There is bipartisan support for new federal AI policy — even from those supporting state-level action.
“Let’s be clear: we need a federal solution. But we need one that’s crafted by experts and doesn’t sell you out to the highest bidder. Until then, states must act,” Bores said in an X post Thursday.
But there is also bipartisan opposition to boxing out the states.
“There should not be a moratorium on states rights for AI,” Rep. Marjorie Taylor Green, R-Ga., wrote on X. “States must retain the right to regulate and make laws on AI and anything else for the benefit of their state.”
House Minority Leader Hakeem Jeffries, D-N.Y., also shot down the idea of a state-level AI moratorium.
“That provision doesn’t appear to have a lot of support amongst Democrats and Republicans in the Congress,” he told CNBC in a brief hallway interview. “So I don’t know why Donald Trump is bringing it back up at this time.”
Sen. Mark Warner, D-Va., told CNBC’s “Squawk Box” on Thursday morning that he is open to a single national pre-emption. but it would be a mistake to block states for acting until one is ready.
“If we take away the pressure from the states, Congress will never act,” Warner said. “Let’s look at the fact we never did anything on social media. If we make that same response on AI and don’t put guardrails, I think we’ll come [to] rue it.”
— CNBC’s Kevin Breuninger contributed to this report.
