The headlines said Trump's December 2025 executive order "blocks" or "preempts" state AI regulations. That's misleading. An executive order, by itself, doesn't preempt state law. The Supremacy Clause elevates the Constitution, federal statutes, and treaties—not White House directives. When the administration rolled out Executive Order 14365, "Ensuring a National Policy Framework for Artificial Intelligence," it wasn't flipping a switch. It was starting a process: a litigation task force, agency reviews, federal standard-setting, and funding conditions. What actually gets preempted depends on what happens next—in court, in the agencies, and in Congress. Here's what the order does, what it leaves alone, and what's still up for grabs.
The Order Doesn't Preempt. It Orchestrates.
EO 14365 does three things that can lead to preemption, without being preemption itself.
First, the AI Litigation Task Force. The Attorney General has 30 days to stand up a task force that will challenge state AI laws. The grounds are broad: laws that are unconstitutional, preempted by federal law, or "otherwise unlawful." We're not talking about the order preempting anything. We're talking about the Justice Department going to court and arguing that specific state laws are invalid—for example, that they burden interstate commerce or conflict with existing federal statute or regulation. Whether preemption actually happens is for the courts. The order just directs the federal government to litigate.
Second, agency action. The order tells the FTC and the FCC to evaluate whether state laws that require AI companies to embed certain viewpoints or "DEI ideology" into models violate federal law, and to develop federal reporting and policy standards. It tells the Commerce Secretary to identify state laws that conflict with federal policy and to consider withholding Broadband Equity, Access, and Deployment (BEAD) funds from states that enforce them. Federal agency rules, once finalized, can have preemptive effect when Congress has given the agency authority to occupy the field or when state law conflicts with federal regulation. But that requires the agencies to actually issue rules and defend them. We're not there yet.
Third, funding as leverage. Conditioning BEAD and other discretionary grants on a state's willingness to back off certain AI regulations doesn't preempt state law. It gives states a choice: change your enforcement or lose money. Some states will hold the line; others may negotiate or soften. "What gets preempted" isn't only a legal question. It's also a question of which states fold under financial pressure.
What the Order Explicitly Preserves
The order is careful to carve out areas where state authority is left intact. Child safety, AI-related infrastructure, and government procurement are called out. State laws that focus on protecting minors from AI-generated content or that govern how states build and buy AI systems aren't in the crosshairs. If your state has passed or is considering AI rules narrowly aimed at kids, critical infrastructure, or state contracting, the order itself says the national framework "should also ensure that children are protected" and that those domains aren't the target. That's not a guarantee no one will ever challenge such a law, but the administration has signaled it won't treat them as the enemy.
What's In the Crosshairs
The administration's rhetoric zeroes in on state laws that, in its view, force AI systems to produce "false results" or bake in "ideological" or "DEI" requirements. Colorado's Consumer Protections for Artificial Intelligence Act (SB24-205) is the prime example. It requires deployers of high-risk AI systems to avoid algorithmic discrimination, run impact assessments, and maintain documentation. The law defines high-risk by reference to consequential decisions in employment, education, lending, housing, healthcare, insurance, and similar domains. The state's attorney general has defended it as a consumer-protection and civil-rights measure. The federal view is that some of these obligations effectively compel AI outputs to conform to particular viewpoints and thus violate the First Amendment or conflict with federal policy.
That's the fight. Colorado (and any state with similar requirements) will argue they're regulating conduct and outcomes—discrimination, transparency, accountability—not speech or "ideology." The federal side will argue the line between conduct and compelled speech is crossed when the state requires models to behave in ways that amount to viewpoint regulation. Courts will have to decide. Until they do, nothing is "preempted" in the formal sense; we have uncertainty and the threat of litigation.
Other state bills that impose impact assessments, discrimination standards, or disclosure rules for AI in high-stakes domains could face the same arguments. The task force will pick targets; we don't yet have a public list.
The Congressional Wild Card
Separate from the order, Congress has considered—and in the House, passed—legislation that would impose a multiyear moratorium on state AI regulation. If something like that becomes law, that would be express preemption: federal statute displacing state law within a defined scope. The executive order doesn't do that. It sets up the machinery (litigation, agency standards, funding) that can shrink the practical space for state regulation and set the table for courts to find conflict preemption or for agencies to adopt rules that preempt. But a clear, durable preemption regime for state AI laws would come from Congress, not from the order alone.
What practitioners should do
If you're in a state with an AI law (like Colorado's) or you're tracking one, don't assume the order has already preempted it. It hasn't. Assume instead that (a) your state law is still in effect until a court says otherwise or a federal rule displaces it, (b) state laws focused on child safety, infrastructure, or procurement are less likely to be challenged, and (c) laws that impose anti-discrimination, impact-assessment, or disclosure requirements on high-risk AI are the ones the task force and agencies will scrutinize. Plan for both scenarios: compliance with current state law and readiness to adapt if federal litigation or rulemaking narrows its scope. Watch for DOJ complaints, FTC/FCC notices or rules, and Commerce's report on conflicting state laws. Those will tell you what the administration thinks actually conflicts and what it's willing to fight over.
The order is a statement of intent and a set of instructions to the executive branch. What actually gets preempted will be decided in court, in the Federal Register, and in state capitols—not in the four corners of the document.