Trump's DOJ Prepares to Sue States Over AI Laws

The administration’s new executive order sets up a federal task force to challenge state regulations. It also warns that states that do not follow the rules could lose broadband funding. Colorado’s new AI Act seems to be the first target. Legal experts at Gibson Dunn say President Trump’s December 11 executive order specifically calls Colorado’s law "problematic." This could lead to a major conflict between the federal government and states over AI rules. The order establishes an AI Litigation Task Force within the Department of Justice. Its job is to challenge state laws the administration sees as barriers to American AI leadership. States that keep the order's "onerous AI laws" will lose eligibility for federal broadband funding under the Broadband Equity Access and Deployment Program, according to Miller Johnson's analysis. This marks a big change from the administration's failed attempt to pass legislation. After Congress turned down the "One Big Beautiful Bill Act"’s AI regulation provision in November, which aimed to pause state-level AI laws, the White House responded with executive action. According to the White House, the new order directs the Attorney General to create an AI Litigation Task Force to challenge state AI laws that conflict with federal policy, which could reshape how AI is regulated in the US.S.The most debated part of the order is about what the administration calls "truthful outputs." Section 7 tells the Federal Trade Commission to say that changing AI results to reduce bias breaks federal laws against deceptive practices. "The Order directs the FTC to issue a policy statement explaining that prohibition on deceptive acts preempts state laws that 'require alterations to the truthful outputs of AI models,'" says Helgi Walker, a partner at Gibson Dunn who focuses on administrative law. According to Executive Order 14179, state laws are increasingly held responsible for requiring organizations to embed ideological bias within artificial intelligence models, shifting the focus from civil rights concerns to how truth in advertising is defined and regulated. The economic argument for this federal move focuses on the burden for startups. According to a White House statement, the executive order argues that separate state-level regulations create a patchwork of 50 rules, making compliance harder, especially for start-ups. However, the extent to which the order can supersede state laws remains legally uncertain. It tells federal agencies to challenge state laws in court and threaten funding, but it cannot cancel existing state laws. The main enforcement tool is the DOJ’s new task force, which must be operational by mid-January, as required by the 30-day deadline in Section 3. The Commerce Department has 90 days from December 11 to decide which state laws are "onerous" enough to trigger cuts to broadband funding. This gives states a deadline to decide whether to defend their AI rules or comply with federal demands. The administration says its goal is to keep the U.S. ahead in AI. The executive order says it is "the policy of the United States to sustain and enhance America's global AI dominance in order to promote human flourishing, economic competitiveness, and national security." Using funding threats to compel states to comply is similar to past federal-state disputes over highway funding and drinking ages. The first lawsuits are expected by February, after the task force is ready and the Commerce Department decides which states to target. If federal courts agree with the administration’s new idea that bias mitigation is the same as deception, the U.S. could end up with one federal AI rule instead of a patchwork of regulations in each state.