By Jody Godoy Dec 12 (Reuters) – U.S. President Donald Trump's executive order seeking to bar state laws on artificial intelligence that he says slow innovation will face political and legal opposition from states seeking to preserve their right to regulate the rapidly growing technology. The order instructing federal agencies to sue and withhold funds from states whose AI laws the administration deems problematic is a win for tech companies, who argue a patchwork of state laws hinders U.S. competition with China on AI. But the Trump administration will face legal obstacles in implementing it, experts said, and potential opposition from Republican states. "There is not a lot of legal authority that the administration can rely on to enforce a significant portion of the order," said Joel Thayer, head of the Digital Progress Institute. FIGHTS OVER INTERNET ACCESS FUNDING One of the order's major enforcement mechanisms directs the Commerce Department to block states with onerous AI regulations from the $42 billion Broadband Equity, Access, and Deployment program (BEAD). The order might be opposed by some of the president's staunchest rural supporters. BEAD funding is vital for increasing Internet access in rural areas, a key voting group for Trump. He won voters living in rural areas by 40 points (69%-29%) in 2024, which was higher than his margins in 2020 or 2016. Dean Ball, a former White House official who contributed to the AI Action Plan the administration issued in the summer, said the attempt to tie the funding to AI laws faces uncertainty. Courts would consider how related the AI laws are to the purpose of the broadband statute, and the fact that many states have already received funding pre-approval. Whether Congress intended to give the administration authority over state AI regulation when it authorized broadband funding will also be a significant legal question, he said. “I think the administration has a 30 to 35% chance of this working legally,” said Ball. Some Republican governors, including Arkansas Governor Sarah Huckabee Sanders, have previously spoken against the federal government blocking their states' laws. Florida Governor Ron DeSantis, a Republican, last month called a then-pending bid by Congress to block states from regulating AI a "subsidy to Big Tech." DeSantis has proposed an AI bill of rights that includes data privacy, parental controls and consumer protections. CHALLENGE OVER INTERSTATE COMMERCE The order also tasks the Department of Justice with challenging state laws because they violate the Constitution by meddling in interstate commerce. Venture capital firm Andreessen Horowitz has supported that argument, saying the Supreme Court has held that the Constitution implicitly limits state lawmaking authority. But courts have rejected previous attempts to block state privacy legislation by invoking that part of the Constitution known as the "dormant commerce clause," said Slade Bond, a former DOJ official who works with Americans for Responsible Innovation, a group that has opposed blocking state AI laws. "The lodestone of the constitutional analysis is really about, are you treating out-of-state businesses differently than in-state businesses?" Bond said. (Reporting by Jody Godoy in New York, additional reporting by Karen Freifeld and Courtney Rozen in WashingtonEditing by Rod Nickel)
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