Trump's AI Executive Order: A 'One Rulebook' Promise or Legal Limbo?
President Trump Issues Executive Order on AI Regulation
President Donald Trump authorized an executive order on Thursday evening, instructing federal agencies to contest state-level AI laws. The administration contends that emerging companies require respite from a “patchwork” of differing regulations. However, legal analysts and startups suggest this order may prolong ambiguity, potentially initiating legal challenges and leaving newer businesses to navigate evolving state requirements while awaiting congressional action on a unified national standard.
Details of the Executive Order
The order, formally titled “Ensuring a National Policy Framework for Artificial Intelligence,” mandates the Department of Justice to establish a task force within 30 days. This task force will challenge specific state laws, asserting that AI constitutes interstate commerce and therefore necessitates federal oversight.
Furthermore, the Commerce Department has been given a 90-day timeframe to compile a list of state AI laws deemed “onerous.” This evaluation could impact states’ access to federal funding, including grants for broadband infrastructure.
The order also requests the Federal Trade Commission and Federal Communications Commission to develop federal standards capable of superseding state regulations. Additionally, the administration is directed to collaborate with Congress to formulate a consistent, nationwide AI law.
Context and Reactions
This action follows a broader effort to consolidate state-by-state AI rules, particularly after congressional attempts to temporarily halt state regulation failed to gain traction. Legislators from both parties have voiced concerns that a lack of federal standards could expose consumers to risks and leave companies with insufficient oversight.
Critics have been vocal. Michael Kleinman, head of U.S. Policy at the Future of Life Institute, characterized the order as “a gift for Silicon Valley oligarchs,” alleging that influential companies are leveraging their Washington connections to avoid accountability.
David Sacks, Trump’s AI and crypto policy advisor, has been a prominent advocate for federal preemption of state AI laws.
Potential Challenges and Concerns
Even proponents of a national framework acknowledge that the order itself does not create one. Startups may face a prolonged period of adjustment as state laws remain in effect unless blocked by courts or voluntarily paused by the states themselves.
Sean Fitzpatrick, CEO of LexisNexis North America, U.K., and Ireland, anticipates states will vigorously defend their authority to protect consumers, leading to legal battles potentially reaching the Supreme Court.
While some believe the order could streamline the regulatory debate by focusing it in Washington, others argue the ensuing legal conflicts will create immediate obstacles for startups grappling with conflicting state and federal requirements.
Impact on Startups
Hart Brown, principal author of Oklahoma governor Kevin Stitt’s Task Force on AI and Emerging Technology recommendations, explained that startups often lack “robust regulatory governance programs” until they reach a scale necessitating such infrastructure. Developing these programs can be both costly and time-consuming, particularly in a rapidly changing regulatory landscape.
Arul Nigam, co-founder at Circuit Breaker Labs, shared similar concerns, questioning whether AI companion and chatbot companies should prioritize self-regulation or adhere to emerging open-source standards.
He emphasized that the current patchwork of state laws disproportionately impacts smaller startups in his sector, creating uncertainty about future development.
Further Concerns Regarding Innovation and Trust
Andrew Gamino-Cheong, CTO and co-founder of AI governance company Trustible, predicts the executive order will hinder AI innovation and its intended benefits. He argues that larger tech companies possess the resources to navigate legal complexities, while startups are disadvantaged.
He also noted that legal ambiguity complicates sales to risk-averse clients in sectors like law, finance, and healthcare, extending sales cycles and increasing costs. A perception of unregulated AI could further erode public trust, hindering adoption.
Legal Perspectives and Calls for Congressional Action
Gary Kibel, a partner at Davis + Gilbert, stated that businesses would benefit from a single national standard, but questioned whether an executive order is the appropriate mechanism to override duly enacted state laws. He cautioned that the current uncertainty presents two undesirable extremes: overly restrictive regulations or a complete lack of oversight, potentially favoring large tech companies.
Morgan Reed, president of The App Association, urged Congress to swiftly enact a “comprehensive, targeted, and risk-based national AI framework,” emphasizing that a protracted court battle over the executive order’s constitutionality is not a viable solution.
