In a move that has ignited significant controversy, officials within the Trump administration and their allies in the US Congress are making a renewed push to prevent individual states from regulating artificial intelligence companies. This initiative, reportedly urged by a handful of Silicon Valley executives, seeks to establish federal pre-emption over state-level AI legislation.
The Legislative Push and Its Critics
The most recent attempt involved an effort by Republican leadership in the House of Representatives to insert a clause blocking state AI laws into the must-pass National Defense Authorization Act (NDAA). This manoeuvre occurred even as House members were hearing testimony about the damaging effects of AI chatbots on children. The NDAA, which authorises Pentagon funding, must be passed by the end of the year.
Simultaneously, the White House is circulating a draft executive order designed to curtail states' authority to legislate on AI. Republican leaders have indicated that even if the NDAA effort fails, they will pursue other avenues to achieve federal pre-emption.
Critics, including author Michael Kleinman in a guest commentary for Barron's, argue this approach is fundamentally flawed. They point out that the Senate had already overwhelmingly rejected a similar proposal in July by a vote of 99-1. Opponents contend that preventing states from acting is dangerous for American families, undermines states' rights, and is ultimately bad for business.
Why Instability Harms Business and Innovation
Proponents of state authority argue that businesses thrive on regulatory stability and predictability. The current federal strategy, which involves legislating through defence bills and governing by executive order, creates the opposite environment. Executive orders can be reversed overnight, as demonstrated in January when the Trump administration revoked President Joe Biden's 2023 AI executive order.
Furthermore, the NDAA process often bypasses standard committee hearings and expert testimony, leaving most members of Congress with a simple yes-or-no vote on a finalised bill. This method lacks a democratic mandate, with polls showing 57% of all voters oppose federal pre-emption of state AI laws, including a plurality of Trump voters. Only 19% support the idea.
When regulation stems from rushed, backroom deals rather than robust debate, it results in contradictory and unstable policy. This uncertainty, experts warn, suppresses the very innovation that pre-emption advocates claim to protect, making the federal government a source of regulatory chaos.
The State-Led Approach and the Path Forward
In the absence of comprehensive federal action, states have begun crafting their own AI regulations. While tech industry allies highlight a "patchwork" of over a thousand state AI bills introduced annually, few become law. Those that do often address specific, real-world harms.
Notable legislation has emerged in politically diverse states like California, Texas, and Utah. These laws focus on practical safeguards such as reporting safety incidents, strengthening whistle-blower protections, and requiring disclosures for mental health chatbots.
The current federal pre-emption proposals do not replace these state laws with a new federal standard. No such standard exists, and neither Congress nor President Trump has proposed one. The result could be a regulatory vacuum with no clear path to establishing necessary guardrails, a situation some see as a deliberate Big Tech strategy to avoid accountability.
All American companies, from large pharmaceuticals to small street vendors, already navigate a mix of federal and state regulations on consumer protection and privacy. This framework has historically protected the public and bolstered consumer confidence without stifling innovation. AI companies, critics assert, should not receive a special exemption. True pro-business policy requires Congress to reject pre-emption and undertake the hard work of crafting coherent legislation through regular democratic channels.
