U.S. President Donald Trump speaks about artificial intelligence at the “Win the AI Race” summit held in Washington, DC, on July 23, 2025.
Kent Nishimura | Reuters
An executive order that President Donald Trump could soon sign would block states’ artificial intelligence laws by launching legal challenges and withholding federal funding, according to a draft executive order obtained by CNBC on Wednesday.
The draft emerged shortly after President Trump publicly called for a single federal standard for AI “rather than 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 mission would be to challenge state AI laws.
Such a challenge would be filed “on the grounds that such law unconstitutionally regulates interstate commerce, preempts existing federal regulations, or is unlawful in the opinion of the Attorney General,” according to the draft law.
The order also directs Secretary of Commerce Howard Lutnick to notify states with challenged AI laws that they are not eligible for funding under the federal Broadband Equity Access and Deployment Program. BEAD is a more than $42 billion program with funding allocated to every state and territory in the United States.
The order, first reported by The Information, has not yet been finalized. White House officials told CNBC that discussions surrounding it are just speculation until it is officially announced.
As written, the EO would be a big win for the burgeoning AI industry, but its leaders, including Sam Altman’s OpenAI, venture capital firm Andreessen Horowitz, and other Silicon Valley titans, oppose inconsistent state-by-state policy approaches.
It would be an equally devastating blow to state lawmakers across the country who have been trying to pass legislation that would put guardrails on early technology.
New York State Assemblyman Alex Boaz, a co-sponsor of the state AI safety bill, said in a statement to CNBC that the draft EO is “a blank check to Donald Trump’s tech billionaire backers who have already made a lot of money by allowing unfettered AI to wipe out jobs, destroy children’s brains, and send electricity bills through the roof, and now they stand to profit exponentially more from it.”
Boas, a Democrat running for Congress, became the first target this week of a well-funded super PAC backed by AI industry leaders.
Republicans consider pausing AI
The White House is also working with a group of Republican lawmakers to consider whether a moratorium on AI laws in certain states could be included as one of the major mandatory bills Congress is working on.
The language is still in draft form, but it would likely hamper states’ ability to regulate issues such as how AI is developed, according to four people familiar with the discussions. Sources said countries would also likely be able to develop policies on other AI-related issues, including fraud, consumer protection and images depicting child sexual abuse.
A proposed 10-year ban on states regulating AI was originally included in Republicans’ “big, beautiful bill,” but it was killed before President Trump signed it in July.
The current draft proposal may not have an expiration date, according to people familiar with the discussions.
“We’re seeing China moving very aggressively,” House Majority Leader Steve Scalise (R-Louisiana) told CNBC on Tuesday. “AI is the wave of the future, and we want America to be a leader in it, and we want our policies to reflect that.”
The new federal AI policy has bipartisan support, including support from those who support state-level action.
“Let me be clear: We need a federal solution. But we need a solution that is created by experts and not sold to the highest bidder. Until then, states must act,” Boas said in an X post Thursday.
But there is also bipartisan opposition to boxing out states.
“States’ rights to AI should not be suspended,” Georgia Republican Rep. Marjorie Taylor Greene wrote about X. “Each state must retain the right to regulate and legislate AI and anything else in its own interest.”
Democratic House Minority Leader Hakeem Jeffries of New York also rejected the idea of a state-level moratorium on AI.
“This provision doesn’t seem to have a lot of support among Democrats and Republicans in Congress,” he told CNBC in a brief hallway interview. “So I don’t know why Donald Trump would bring this issue up again at this time.”
Sen. Mark Warner, D-Virginia, told CNBC’s “Squawk Box” Thursday morning that he’s open to a solo pre-emption nationwide. But it would be a mistake to block states from taking action until they are ready.
“If we take the pressure off the states, Congress will never act,” Warner said. “Think about the fact that we’re not doing anything on social media. If we had the same response to AI without putting guardrails in place, I think we would be condemning it.”
—CNBC’s Kevin Breuninger contributed to this report.
