Feds single out Colorado in first attack on state AI laws

New Executive Order Targets State Laws

President Trump just signed an executive order that could blow up AI regulations across the country.

On December 11, 2025, the White House announced it would create a special task force inside the Department of Justice to sue states over their artificial intelligence laws.

Colorado is the first target, but California, Texas, and two dozen other states with AI laws could be next.

The order also threatens to pull billions in federal funding from states that don’t comply, and it’s already drawing legal challenges and bipartisan pushback.

Colorado Gets Called Out by Name

The executive order singles out one state law by name: the Colorado AI Act.

The administration claims the law’s requirement to prevent “algorithmic discrimination” would force AI systems to produce false results.

Colorado passed the law in May 2024, making it the first comprehensive AI regulation in the country. The law requires companies to prevent AI from making biased decisions about jobs, housing, loans, and healthcare.

Colorado delayed its effective date to June 30, 2026, but the White House wants it gone entirely.

What Colorado’s Law Actually Does

The Colorado AI Act targets what it calls “high-risk” AI systems, meaning any AI that makes or influences major decisions about people’s lives.

Companies must conduct impact assessments, disclose when AI is being used, and take steps to prevent discriminatory outcomes based on race, gender, disability, or other protected characteristics. Violations can result in fines up to $20,000 each.

The law was modeled partly on the European Union’s AI Act but takes a narrower approach focused specifically on preventing bias.

States Could Lose Billions in Funding

The executive order doesn’t just threaten lawsuits.

It also instructs federal agencies to withhold broadband funding from states with AI laws the administration considers too restrictive. California alone has $1.8 billion in broadband money at stake, much of it already committed to projects that would bring internet access to more than 300,000 people.

The Commerce Department must publish a list of “onerous” state laws within 90 days, and states on that list could find their funding frozen.

David Sacks Leads the Charge

The executive order puts venture capitalist David Sacks, the White House’s Special Advisor for AI and Crypto, at the center of the fight.

Sacks is tasked with drafting federal legislation that would create one national AI standard to replace state laws.

In a Bloomberg interview, Sacks called the Colorado AI Act “probably the most excessive” state regulation and said the patchwork of 50 different state approaches doesn’t make sense.

Critics have raised conflict-of-interest concerns because Sacks and his firm maintain over 400 investments in tech companies.

Congress Already Said No Twice

The executive order comes after Congress rejected similar proposals twice in 2025. In July, the Senate voted 99-1 to strip a 10-year AI moratorium from a budget bill.

In December, Republican leaders tried to insert preemption language into the annual defense spending bill, but that effort also failed.

The Senate rejected these measures because of bipartisan concerns about federal overreach and opposition from state governors.

The executive order is essentially the White House trying to do through executive action what it couldn’t get through Congress.

States Passed 73 AI Laws in 2025

While Congress stalled, states moved fast. According to tracking by the Transparency Coalition, 27 states passed 73 new AI-related laws in 2025.

California led with 13, followed by Texas with 8, Montana with 6, and Utah and Arkansas with 5 each.

The laws cover everything from banning AI-generated deepfakes to requiring human teachers in community colleges to preventing AI from posing as licensed medical professionals.

Over 1,000 AI-related bills were introduced across all states this year.

California Has the Most to Lose

California has passed more AI laws than any other state since 2016, and the executive order hits it especially hard.

The state enacted about a dozen AI laws in 2025, including one requiring large AI developers to disclose their risk management protocols.

Governor Gavin Newsom has pushed for AI regulation even as the state hosts the headquarters of Anthropic, Google, Nvidia, and OpenAI.

California lawmakers show no signs of backing down, with more than 100 film industry workers recently testifying in support of new AI transparency bills.

FTC and FCC Get 90-Day Deadlines

The executive order puts two federal agencies on the clock.

The Federal Trade Commission must issue a policy statement within 90 days explaining when state laws are preempted by federal rules against deceptive practices.

The Federal Communications Commission must consider whether to adopt federal AI reporting standards that would override state requirements.

Nearly two dozen state attorneys general have already sent a letter urging the FCC not to issue preemptive AI regulations, setting up an early legal battle.

Legal Experts Question the Order

The executive order may face an uphill climb in court.

Legal analysts point out that presidents cannot preempt state laws through executive action alone, and there is currently no federal AI law for states to conflict with.

Tech policy researchers cite a 2023 Supreme Court decision that upheld California’s right to regulate its pork industry even though the rules affected farmers in other states.

The dormant Commerce Clause argument the administration plans to use has historically allowed states significant leeway to regulate products sold within their borders.

Child Safety Laws Stay Protected

The executive order includes some carve-outs. State laws protecting children from AI harms are explicitly exempt from the preemption push, along with regulations about data center infrastructure and state government purchases of AI systems.

David Sacks emphasized that child safety would remain protected.

But critics say the exemptions are too narrow and that the order still threatens state laws addressing deepfakes, algorithmic bias in hiring, and AI in healthcare decisions.

The fight over where to draw the line is just getting started.

This article was created with AI assistance and human editing.

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