AI Regulation vs. Federal Preemption: The Fight for Control Over Tech
- Ethan Carter
- 20 hours ago
- 7 min read
Washington is finally close to making a move on AI regulation, but the battle lines aren't being drawn over safety protocols or algorithmic bias. The fight is about jurisdiction. For the first time, the central tension isn't the technology itself, but a legal doctrine known as federal preemption.
In the vacuum left by a stagnant Congress, states like California and Texas have rushed to fill the void. They have introduced dozens of bills targeting everything from deepfakes to algorithmic discrimination. Silicon Valley hates this. They call it a "regulatory patchwork" that stifles innovation. Now, allies of the tech industry within the incoming administration are launching a counter-offensive to strip states of their power to govern artificial intelligence, replacing local rules with a national standard that critics fear might be no standard at all.
The Rise of State AI Legislation and the "Patchwork" Problem
To understand why federal preemption has become the hottest topic in tech policy, you have to look at what the states are doing. As of late 2025, 38 states have adopted more than 100 AI-related laws.
California's SB-53 (Transparency in Frontier Artificial Intelligence Act) focuses on safety testing for large models, requiring major AI developers to publish safety frameworks and report safety incidents.Texas's Responsible AI Governance Act prohibits the intentional misuse of AI systems. Colorado and Utah have their own frameworks. For a software engineer in San Francisco or Austin, this looks like a nightmare: a product legal in one state might be a liability in another.
This is the core argument for the "regulatory patchwork" theory. Tech giants and venture capital firms argue that if every state creates its own consumer protection standards, it becomes impossible to ship products.
Josh Vlasto, co-founder of the pro-AI PAC "Leading the Future," put it bluntly to reporters: these laws create an unworkable environment that slows the US down in the race against China. The industry's solution isn't necessarily to comply with 50 different laws, but to have Congress pass one law that overrides—or preempts—them all.
Federal Preemption Strategies in the NDAA and Executive Orders
The mechanism for this override is currently being buried in massive legislative packages. Reports indicate that House lawmakers are attempting to tuck language into the National Defense Authorization Act (NDAA) that would block states from enacting or enforcing their own AI regulation.
Simultaneously, a draft Executive Order titled "Eliminating State Law Obstruction of National AI Policy" suggests a more direct assault on state authority.This EO would reportedly create an "AI Litigation Task Force" designed to challenge state AI legislation in court. It would also direct federal agencies to label state laws as "onerous" and push the FCC and FTC toward national standards that supersede local rules.
The draft EO directs the Federal Trade Commission (FTC) to evaluate state AI-output requirements and directs federal agencies to assess whether to condition discretionary grants on state non-enforcement of AI laws.
This strategy effectively weaponizes federal preemption. Usually, preemption is a trade-off: states give up their power to regulate in exchange for a robust federal framework that protects citizens. The controversy here is that the proposed federal framework appears designed to be minimal.
The Role of Trump AI Policy and Industry Insiders
The push for preemption is heavily influenced by the incoming administration's specific Trump AI policy. The leaked EO suggests giving significant authority to David Sacks, a venture capitalist and the designated "AI and Crypto Czar."Sacks has publicly advocated for industry self-regulation and keeping federal oversight minimal to "maximize growth."
This aligns with the goals of super PACs like "Leading the Future," which is backed by heavyweights from Andreessen Horowitz and Palantir.They have raised over $100 million to oppose candidates who support strict AI regulation. Their stance is clear: existing laws covering fraud and liability are enough. They prefer a reactive approach—fixing problems after they happen in court—rather than proactive safety testing mandated by states.
Critics argue this isn't about standardizing safety; it's about removing it. By using federal preemption to wipe out state laws without implementing a strong federal replacement, the administration could effectively deregulate the entire sector.
AI Safety vs Innovation: The Core Debate
The narrative pushed by Silicon Valley is that strict AI regulation kills startups. If a small company has to pay for expensive safety audits mandated by California, they might fold, leaving only the incumbents like Google and OpenAI.
Nathan Leamer of "Build AI" argues that state laws often try to prevent problems before they arise, which implies knowing how the tech will evolve—an impossible task.He favors letting companies move fast and address issues in court afterward.
On the other side, cybersecurity expert Bruce Schneier and data scientist Nathan E. Sanders argue the "patchwork" complaint is overblown.Most global companies already comply with the EU's strict AI Act, which is far more comprehensive than anything proposed in Utah or Texas. If they can adapt to Europe, they can adapt to California. The suspicion among skeptics is that the industry is using the "innovation" argument as a shield to avoid accountability entirely.
Skepticism Regarding Consumer Protection Standards
The fear among privacy advocates and Democratic lawmakers is that a federal preemption bill will be a ceiling, not a floor. If Congress passes a weak law that bans states from going further, consumer protection standards drop to the lowest common denominator.
Rep. Ted Lieu (D-CA) is drafting a federal "megabill" (over 200 pages) that covers fraud, deepfakes, and transparency. However, he admits he is writing a bill designed to pass a Republican-controlled government, meaning it will likely lack the strict mandates seen in state proposals. The AI Fraud Deterrence Act, put forth by Representatives Ted Lieu and Neal Dunn, aims to revise the legal definitions and consequences associated with fraud to reflect the increasing prevalence of AI in these criminal activities. This reality reinforces the view that preemption is a trap: states are blocked from acting, and the federal government refuses to act meaningfully.
User Perspectives: Trust, Privacy, and Enforcement
Beyond the high-level policy fights, the prospect of government-run AI regulation is met with deep cynicism by the public.
The Trust Deficit
Commenters and voters express significant distrust regarding who is doing the regulating. The sentiment is that AI regulation under a Trump administration won't protect users but will instead protect corporate interests. The aggressive move to block state laws via the NDAA is seen by many not as a strategy for efficiency, but as a "rogue" move to bypass democratic laboratories in the states.
The "Nuclear" Fallacy
There is a recurring comparison of AI to nuclear weapons—something that obviously requires federal, not state, control. You don't want Vermont having its own nuclear non-proliferation treaty. However, technical experts point out this analogy falls apart upon scrutiny.
Nuclear weapons require massive industrial infrastructure. AI models can be trained on consumer hardware. Code is speech and mathematics; it is harder to contain. While a federal preemption strategy makes sense for uranium, it makes less sense for software that can be replicated on a laptop. Regulating code at a federal level without local enforcement is likely to fail due to the sheer volume of development.
The Age Verification Trojan Horse
Another layer of user concern involves "child safety" provisions often attached to these federal bills. Users worry that federal AI regulation will become a vehicle for mandatory ID checks and age verification across the internet.
If the trade-off for federal preemption is a national requirement to upload a driver's license to use a chatbot, the privacy cost may outweigh the regulatory benefit. This connects to broader fears that regulation will focus on moral panic or surveillance rather than actual algorithmic harms like hiring bias or insurance fraud.
The Future of the Regulatory Landscape
The fight over federal preemption and AI regulation will likely come to a head in the legislative session following the NDAA negotiations.
If the preemption language survives in the defense bill, or if the Executive Order is signed, immediate lawsuits will follow. State Attorneys General have already signaled they will sue to protect their right to enforce consumer protection laws.
We are looking at a prolonged period of legal uncertainty. For now, the "patchwork" remains. The irony is that in their rush to eliminate the confusion of state laws, the push for a heavy-handed federal override may create a constitutional crisis that paralyzes the industry even further.
Washington wants to decide who gets to regulate AI. But with the technology moving faster than the ink can dry on the NDAA, the market—and the code—might just leave Washington behind.
FAQ: AI Regulation and Federal Control
1. What is federal preemption in the context of AI regulation?
Federal preemption occurs when a national law overrides state laws, effectively blocking states from enforcing their own rules. In AI, this would mean stricter state safety bills (like those in California) would be nullified in favor of a single US standard.
2. Why are tech companies pushing for federal preemption?
Tech giants and VCs argue that navigating a "patchwork" of 50 different state laws is expensive and stifles innovation. They prefer a single federal preemption standard to lower compliance costs and speed up development.
3. How does the NDAA affect state AI legislation?
Lawmakers are attempting to add provisions to the National Defense Authorization Act (NDAA) that would legally prohibit states from regulating AI. If passed, this defense bill would strip states of their authority to set consumer protection standards for artificial intelligence.
4. What are the criticisms of the Trump AI policy regarding preemption?
Critics argue that the administration's strategy uses preemption to deregulate the industry rather than standardize safety. By blocking states and installing a "light-touch" federal regime, opponents fear consumers will be left without protection against deepfakes or algorithmic bias.
5. Will federal regulation require age verification for AI?
It is a strong possibility. Many federal proposals focusing on "child safety" include mandates for age verification. Privacy advocates worry this will force users to provide government ID to access basic AI tools, regardless of state AI legislation preferences.
6. Can states legally resist federal preemption?
Yes, but it requires litigation. State Attorneys General often sue the federal government when preemption threatens their police powers. However, if the Trump AI policy is enacted via Executive Order rather than Congressional law, it will be much easier for states to overturn in court, as only Congress can preempt state law under Article I of the Constitution.
