On November 25, 2025, reports revealed a draft Executive Order prepared by the White House titled “Eliminating State Law Obstruction of National AI Policy.” The draft order seeks to preempt state AI laws in favor of a uniform national framework and would create an AI Litigation Task Force responsible for challenging state statutes deemed inconsistent with federal priorities. The proposal marks a significant federal effort to centralize AI governance. 

The draft order directs the Department of Justice, Commerce Department, Federal Communications Commission and Federal Trade Commission to evaluate and challenge state AI laws that may interfere with federal authority or burden interstate commerce. It also directs federal agencies to explore withholding certain funding streams from states with AI statutes the executive branch deems too restrictive.  The executive order appears designed to respond to the rapid expansion of state level AI laws, including California’s Transparency in Frontier AI Models Act and Colorado’s Artificial Intelligence Act, both of which impose transparency, audit and reporting requirements.

If federal preemption advances, businesses may face shifting obligations as federal agencies evaluate and potentially override state laws. Therefore, companies operating nationally should track both state requirements and federal proposals.  Moreover, organizations subject to multiple state AI laws should prepare for the possibility that federal rules may replace or narrow those obligations. To that end, corporate compliance frameworks should aspire to be flexible in order to accommodate potential federal preemption.

In addition, companies that rely on AI vendors should monitor contractual obligations tied to disclosures, risk assessments and transparency requirements, as such obligations may soon become inconsistent with federal statutory requirements for such engagements. Preemption may reduce state specific requirements but may increase federal expectations and complexities when it comes to AI governance and contractual obligations of AI vendors and clients.  Regardless of federal preemption, companies should, at a minimum and for the time being, maintain clear risk assessments, safety evaluations and documentation for AI systems as enforcement authority continues to expand.

The draft Executive Order aligns with ongoing congressional efforts to embed AI preemption provisions into federal legislation, including attempts to incorporate preemption into the Fiscal Year 2026 National Defense Authorization Act. Whether the draft order is finalized remains uncertain, but momentum toward federal control is increasing.  Therefore, companies should begin to evaluate how potential preemption could affect their compliance obligations, vendor contracts and overall AI governance practices.

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