Transmission // 01
The states versus the order
2 min
A December executive order set out to preempt state AI law using a litigation task force and $42 billion in broadband funding. The states enacted 109 AI laws anyway.
American AI regulation is now a jurisdictional fight, and the mechanism is more interesting than the politics.
On 11 December 2025 an executive order titled “Ensuring a National Policy Framework for Artificial Intelligence” set out to establish federal policy that preempts state AI laws deemed inconsistent with it. In March 2026 the White House followed with legislative recommendations asking Congress to broadly preempt state laws imposing “undue burdens”.
Two levers, neither of them a statute
Preemption normally requires Congress to pass something. This approach routes around that with two instruments:
A litigation task force. The order directs the Attorney General to stand up a unit to challenge state AI laws — on dormant commerce clause grounds, among others. The theory is that a state regulating a model available nationwide is regulating interstate commerce.
Conditioned money. Commerce is directed to condition $42 billion in already-allocated BEAD broadband funding on states repealing AI regulations judged onerous. This is the lever that actually moves things, because it does not require winning anything in court — it requires a state legislature to weigh its AI statute against rural fibre.
What it does not touch
The carve-outs are as revealing as the targets. Not proposed for preemption: child safety, compute and data centre infrastructure (except generally-applicable permitting reform), and state procurement of AI.
Read that as a map of where the political floor is. Nobody, on any side, wants to be the party that federalised away a state’s child-safety law.
The states kept legislating
By 1 July 2026 states had enacted 109 AI laws and 28 data centre laws — slightly behind last year’s pace of 121 and 27 by the same date, but not remotely a chilling effect.
So the practical outcome for anyone building is the worst of both: a federal framework asserted but not enacted, fifty state regimes still accumulating, and a live constitutional question over which one binds you. Compliance means satisfying the strictest state that matters to your revenue and hoping the question resolves before you have to argue it.
Europe has one bad law. America has fifty decent ones and an argument about whether they count. It is not obvious which is worse to build under.