President Trump is weighing a draft executive order that would take direct aim at state AI laws and connect that fight to federal broadband funding. The proposal would give the federal government a litigation role against state rules and could restrict access to part of the $42 billion Broadband Equity, Access, and Deployment program.
The draft, titled Eliminating State Law Obstruction of National AI Policy, frames state-level AI regulation as a threat to a single national approach. It also revives the core of a Ted Cruz plan that failed after broad opposition from both Republicans and Democrats.
A federal push against state AI laws
The draft order would tell the attorney general to create an AI Litigation Task Force. Its assigned role would be to challenge state AI laws, including on arguments that those laws unconstitutionally regulate interstate commerce, are preempted by existing federal regulations, or are otherwise unlawful in the attorney general's judgment.
The draft says the Trump administration would seek a minimally burdensome national standard instead of state-by-state rules. It specifically names laws enacted by California and Colorado, while also directing the Secretary of Commerce to review whether other state AI laws should be challenged.
That review would focus on laws that, according to the draft, require AI models to alter their truthful outputs or compel AI developers or deployers to disclose or report information in ways that could violate the First Amendment or another part of the Constitution.
The draft executive order was published by Transformer, an AI news site, and was previously reported on by The Information.
How BEAD broadband funding enters the fight
The broadband piece is central because the order would connect AI regulation to eligibility for federal funds. The idea echoes a proposal from Sen. Ted Cruz (R-Texas), who had sought to keep states with AI laws out of the US government's $42 billion BEAD program.
That Cruz proposal faced resistance from both parties. Cruz softened it, but it still lost in a 99-1 vote after Cruz himself gave up and voted against his own plan.
Trump's draft order would apparently apply to about half of the money in the $42 billion program. BEAD was created to deploy broadband to homes and businesses without modern access. The Trump administration had already thrown out Biden-era plans for distributing the money and required states to rewrite their grant proposals with lower-cost alternatives.
Because of that overhaul, it is projected that only about half of the $42 billion allocated by Congress in 2021 will be spent on deploying broadband. The source article says the future of the other half is undetermined. Possible uses include depositing it into the US Treasury, using it for other broadband-related purposes such as Wi-Fi and Internet-capable devices for US residents, or overhauling municipal permitting systems.
What the draft order would change
The draft executive order would partially answer what happens to the remaining BEAD money. It would direct the Commerce Department to issue a policy notice describing when states may receive a share of the remaining funds.
Under the draft, states with identified AI laws would be made ineligible for non-deployment funds to the maximum extent allowed by federal law. The policy notice would also be required to explain how a fragmented state regulatory landscape for AI could undermine BEAD-funded deployments, the growth of AI applications that rely on high-speed networks, and BEAD's mission of universal, high-speed connectivity.
The funding threat would not necessarily stop with broadband. The draft order would direct federal agencies to assess discretionary grant programs and decide whether they can condition grants on states not enacting an AI law that conflicts with the policy of the order.
The proposal also assigns roles to two federal regulators:
- The Federal Communications Commission chairman would be directed to start a proceeding on whether to adopt a federal reporting and disclosure standard for AI models that preempts conflicting state laws.
- The Federal Trade Commission chairman would be required to issue a policy statement on when state laws requiring changes to truthful AI model outputs are preempted by the FTC Act's prohibition on deceptive acts or practices affecting commerce.
Opposition and the push for one federal standard
The earlier Cruz proposal drew opposition from lawmakers who argued that states should not be blocked while Congress has not enacted broader federal rules. When the moratorium was proposed in mid-2025, Sen. Marsha Blackburn (R-Tenn.) helped lead the fight against it.
Until Congress passes federally preemptive legislation like the Kids Online Safety Act and an online privacy framework, we can't block states from making laws that protect their citizens
Sen. Maria Cantwell (D-Wash.) also opposed the Cruz plan. She said it would preempt good state consumer protection laws related to robocalls, deepfakes, and autonomous vehicles.
Trump's draft executive order also seeks legislation that would preempt state laws. It would direct administration officials to prepare a legislative recommendation for Trump's review, establishing a uniform federal regulatory framework for AI that preempts state AI laws conflicting with the policy in the order.
That congressional fight is already active. House Majority Leader Steve Scalise (R-La.) said this week that a ban on state AI laws could be included in the National Defense Authorization Act. Democrats are trying to keep the ban out of the bill.
Sen. Jack Reed (D-R.I.), the ranking member on the Armed Services Committee, told Semafor: We have to allow states to take the lead because we're not able to, so far in Washington, come up with appropriate legislation.
Trump has also argued publicly for federal preemption. In a Truth Social post on Tuesday, he claimed that states are trying to embed DEI ideology into AI models. He wrote that the country must have one federal standard instead of 50 state regulatory regimes, and called for the measure to be placed in the NDAA or passed as a separate bill.
Why the stakes are larger than AI policy
The draft order turns a dispute over AI regulation into a broader fight over federal leverage. It would not merely ask courts to review state AI laws. It would also use agency action and grant conditions to pressure states toward the federal position.
For states, the practical stakes could include litigation risk and limits on access to non-deployment BEAD funds. For the federal government, the draft reflects a strategy of using executive action, agency proceedings, and legislation to move toward a single national AI standard.
The key unresolved question is whether that approach can survive the same political resistance that defeated the Cruz plan. The source article makes clear that the earlier version lost almost unanimously, but the draft order brings the idea back through executive branch action and a renewed push in Congress.