The National League of Cities (NLC), the League’s federal partner, is warning of several possible preemptive actions by Congress and the Federal Communications Commission around AI regulation that may potentially impact municipalities.
Over the summer, Congress debated including a provision in the One Big Beautiful Bill Act that would have established a moratorium on state and local laws regarding AI. While it was ultimately stripped out of the final bill before passage, AI preemption has remained a priority for President Trump, as well as key members of Congress. In the AI Action Plan released by the White House this summer, the Federal Communications Commission was instructed to examine state laws for the potential to hinder AI advancement.
Members of Congress were actively pushing to include an AI preemption in the upcoming defense bill, which must pass by the end of the year. Numerous public interest and government groups came out in vocal opposition of this proposal, including NLC.
A draft executive order was also leaked this week that would establish an "AI Litigation Task Force whose sole responsibility shall be to challenge State AI laws."
It also directs the Department of Commerce to publish an evaluation of state AI laws that conflict with a national policy goal of American global AI dominance "through a minimally burdensome, uniform national policy framework for AI."
In addition, it would restrict states with AI laws targeted by the order from receiving their full allocation of BEAD non-deployment funding. It also directs all other agencies to determine whether other grants may be conditioned on states not enacting or enforcing laws in conflict with the order.
It is unclear at this time how exactly local governments may be impacted. Obviously, any restriction of state access to federal grants is likely to eventually impact local budgets. While local governments have not been named in the executive order, it is possible that local ordinances could be included in the process of preempting states.
It is also unclear to what extent data center governance would be included as laws that are targeted for preemption. Given the emphasis placed on the role of data centers in prior executive orders and in the national AI Action Plan, it seems possible that policies by states (and potentially localities) that govern the siting and utility usage of data centers would be included.
We will continue to monitor developments and share information as necessary. We also encourage you to express opposition to including an AI preemption provision in the defense bill to your member of Congress.
Contact: Paul Penna, Director of Government Affairs, ppenna@njlm.org, 609-695-3481, x110.