Trump signs order seeking to limit state-level AI regulation

WASHINGTON - US President Donald Trump on Dec 11 signed an executive order aimed at thwarting state-level regulation of artificial intelligence through lawsuits and funding cuts, handing a win to tech industry leaders who’ve pressed for preemption of local rules.

Mr Trump said the measure was necessary to bolster the emerging technology and counter a patchwork of state-level rules the industry worries will hamper its growth.

“You have to have a central source of approval when they need approval. So things have to come to one source. They can’t go to California, New York and various other places,” Mr Trump said on Dec 11 during an event in the Oval Office.

To that end, the order directs the US Attorney-General to establish an “AI Litigation Task Force” with the responsibility of challenging state AI laws that are “inconsistent” with that policy. 

It also directs the secretary of Commerce – within 90 days – to consult with other officials and “publish an evaluation of existing State AI laws that identifies onerous laws that conflict with the policy.”

The Commerce secretary must also issue a notice specifying the conditions under which states may remain eligible for funding through the Broadband Equity Access and Deployment Programme. 

Executive departments will be allowed to assess discretionary grant programmes in consultation with Mr Trump’s special adviser for AI and crypto to determine whether agencies may condition such grants on states not enacting AI laws that conflict with the president’s goals.

Championed by White House AI czar David Sacks, the directive culminates months of lobbying by AI companies led by OpenAI and Alphabet Inc’s Google as well as venture capital giant Andreessen Horowitz.

Executives including Nvidia Corp chief executive officer Jensen Huang have warned that state laws popping up across the country risk overwhelming a nascent industry and potentially harming US competitiveness with China in AI.

Mr Trump said he had consulted with numerous tech industry leaders on the order and indicated Apple Inc CEO Tim Cook, who has been visiting Washington this week, was among them.

“They won’t be able to do this. This will not be successful unless they have one source of approval or disapproval. Frankly, you can have disapproval too, but it’s one source. They can’t go to 50 different sources,” Mr Trump said.

The president’s order marks the latest in a series of moves he’s taken to boost the AI industry since his return to the White House, including steps to make it easier to build infrastructure and increase energy supply for power-hungry data centres.

He’s also sought to promote the export of American technology to global markets, including with his blessing for Saudi Arabia to buy advanced chips for the kingdom’s state-backed AI venture.

“It is pass/fail versus China,” Treasury Secretary Scott Bessent, who attended the signing, told reporters. “We have the lead, we’ve got to maintain it.”

The White House pivoted to the executive order after Mr Trump officials and Republican lawmakers failed to include similar legislation preempting state AI laws in a must-pass defence Bill earlier in December.

A comparable measure pausing state AI laws was rejected by the US Senate in July on a 99-1 vote.

Ms Alexandra Givens, president of the Centre for Democracy & Technology, said in a statement on the night of Dec 11 that the “executive order is designed to chill state-level action to provide oversight and accountability for the developers and deployers of AI systems, while doing nothing to address the real and documented harms these systems create.”

 “States that take steps to protect their residents from such harms should not be subject to threats of legal attacks,” she added.

Congressional struggle

US lawmakers have struggled for years to pass AI legislation, and there’s currently no federal standard governing the technology, leaving local authorities to fill that void.

The text of the order says that the administration must act with Congress to ensure that there is a “minimally burdensome national standard – not 50 discordant State ones,” and directs the White House advisor on AI and crypto and the assistant to the president for science and technology to “jointly prepare a legislative recommendation establishing a uniform Federal policy framework for AI that preempts State AI laws that conflict with the policy set forth in this order.”

As AI becomes a central part of daily life, taking on roles such as assessing job applications, identifying criminal suspects, handling medical claims and creating images nearly impossible to distinguish from genuine photos or video, state lawmakers have expressed eagerness to impose some rules of the road.

Mr Trump’s order will complicate those efforts, putting any state passing legislation into potential conflict with the White House.

Tech companies have largely opposed state-level regulatory efforts, particularly in California and New York, that would hold companies accountable for harms caused by AI products like chatbots.

Mr Trump and his allies have touted the AI boom as a plus to the US economy, even as it poses political challenges, including voter concerns that data centres are spiking energy bills and fears that the technology will spur job losses.

After a proposed draft of the order circulated widely in November, New York Governor Kathy Hochul, a Democrat, assailed the effort, saying the White House was trying to “shield big corporations from taking basic steps to prevent potential harm from AI.”

The order also pits Mr Trump against some governors from his own Republican Party, including Mr Ron DeSantis of Florida and Ms Sarah Huckabee Sanders of Arkansas. BLOOMBERG