White House floats executive order to override state AI laws

The White House is floating an executive order to override state AI laws by launching legal challenges and conditioning federal grants after President Trump publicly backed a federal regulation standard, per a copy of the draft seen by Axios.Why it matters: It would mark a sharp escalation in the administration's bid to centralize and accelerate U.S. AI policy.AI and crypto czar David Sacks is involved in the majority of the agency-level work the executive order calls for, according to a summary of the draft executive order also seen by Axios. The order is in flux, and a final version could look different. This approach would have far less teeth than legislation, and could face legal scrutiny. What's inside: The "Eliminating State Law Obstruction of National AI Policy" executive order calls on government agencies to move aggressively to end a patchwork of state laws in favor of a "minimally burdensome national standard."The draft executive order tasks the attorney general with establishing an "AI Litigation Task Force" within 30 days to challenge state AI laws "including on grounds that such laws unconstitutionally regulate interstate commerce."Various agencies would have to evaluate and publish existing state laws that conflict with the executive order, including those that "may compel AI developers or deployers to disclose or report information in a manner that would violate the First Amendment."Federal Communications Commission chair Brendan Carr would "initiate a proceeding to determine whether to adopt a Federal reporting and disclosure standard for AI models that preempts conflicting State laws" within 90 days.Federal Trade Commission chair Andrew Ferguson would within 90 days have to "issue a policy statement on the application of the FTC Act's prohibition on unfair and deceptive practices … to AI models."Sacks and the director of the White House Office of Legislative Affairs are directed to work on a legislative recommendation for a federal regulatory framework for AI that preempts state law.States that aren't in line with the executive order would have grant funds at risk.The commerce secretary would have to issue a policy notice within 90 days outlining the eligibility conditions for states to receive remaining Broadband Equity Access and Deployment funding to expand internet access.The order also calls on all agencies to assess their grant programs for states and decide whether they've enacted AI laws that are contradictory to the executive order, according to a summary.The other side: "Until officially announced by the [White House], discussion about potential executive orders is speculation," a White House official told Axios.Meanwhile, Hill Republicans are racing to figure out how to slip a state AI law provision into the must-pass annual defense policy bill, their last chance to do so before the year's end.That will be difficult, and the last attempt to do so in Congress was soundly rejected. Senate Majority Leader John Thune told reporters Wednesday that language being negotiated on the Hill should ensure "states have some role when it comes to how companies operate within the states" but also "recognizes the importance" of enabling interstate commerce."Our members are taking a hard look at how best to do that and the president clearly has weighed in on what he would like to see happen and we'll certainly take his views and give them optimum consideration," Thune added.Tension point: The EO is likely to deepen divides among Hill Republicans who want to protect their states' internet grants.Outside of Congress, Republicans are also deeply divided over the possible AI state law pre-emption.Florida Gov. Ron DeSantis, Arkansas Gov. Sarah Huckabee Sanders and Steve Bannon-aligned conservative firebrand Mike Davis have all spoken out against it, calling it a Big Tech bailout.The bottom line: The White House can't preempt state-level regulation — that's Congress' job. But it can direct agencies to take action, put pressure on lawmakers, and encourage litigation.

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