In announcing a new executive order focused on artificial intelligence, President Donald Trump denounced what he described as “excessive state regulation” and expressed concerns about the challenges of having 50 states, each with their own laws, regulating the lucrative and rapidly evolving technology.
The order, issued on December 11, also promotes a call for supremacy over China in the development of the technology and the need for a unified federal framework for AI oversight.
For some lawyers, this adds another difficulty as they try to advise clients on the use of AI and how to mitigate risks as more companies integrate the technology into their business practices.
Scott Kosnoff, an Indianapolis-based partner at Faegre Drinker Biddle & Reath LLP, is also chair of the firm’s AI-X — or artificial intelligence and algorithmic decision-making — team.
A provision in the original version of Trump’s One Big Beautiful Bill would have blocked state and local governments from regulating AI systems and models for 10 years, but it was ultimately removed from the final budget reconciliation bill signed by Trump.
The provision passed the House but was largely defeated in the Senate, Kosnoff said. Trump’s executive order represents “the final chapter” in efforts to preempt state legislation on AI.
“I don’t think anyone expected the idea to be dead,” he stressed, adding that he expects legal challenges to the Trump order.
Kosnoff said the companies he works with are concerned about what he calls the downsides of AI.
Most companies using this technology face some regulatory risk, litigation risk and reputational risk, he added.
Brian McGinnis, a partner at Barnes & Thornburg and a founding member and co-chair of the firm’s Data Security and Privacy Law Practice Group, said he believed the executive order was issued relatively quickly and noted that it had not been passed by Congress.
He said the move had created a level of uncertainty among customers, which he called “bad for business.” But he acknowledged that the law in general is not adapted to technological advances.
Brian Jones, a partner at Bose McKinney & Evans LLP, said Indiana, without a state regulatory AI model, was not in the executive’s crosshairs, unlike some other states.
He noted that the order discourages states from taking actions beyond minimum AI regulations.
“We’re not going to have a unified federal approach through an executive order,” Jones said.
Some states have already implemented laws regarding AI and privacy
Kosnoff said the order comes after several states, including California and Colorado, adopted their own forms of AI regulation.
Trump’s latest executive order on AI specifically mentions Colorado’s new law banning “algorithmic discrimination,” which he said “could even force AI models to produce false results in order to avoid ‘differential treatment or impact’ on protected groups.”
Four states – Colorado, California, Utah and Texas – have passed laws setting certain rules for AI in the private sector, according to the International Association of Privacy Professionals.
These laws include limiting the collection of certain personal information and requiring more transparency from companies.
McGinnis said other states, including New York and Illinois, are much further along than Indiana in terms of proposing or adopting AI-related laws and regulations.
He said his best guess is that some states will hold off on passing new AI laws until any legal challenges to Trump’s order are brought to federal court.
McGinnis said he would be shocked if Indiana felt the need to propose another AI regulation in the meantime.
Kosnoff pointed out that Florida Governor Ron DeSantis had proposed an “Artificial Intelligence Bill of Rights” and questioned whether Trump’s executive order would impact his state.
DeSantis announced the proposal a week before Trump signed his order.
The proposal “would prevent Floridians from footing the bill for hyperscale AI data centers and allow local governments to reject their development in their communities.”
“Today, I proposed new legislation on artificial intelligence and AI data centers to protect the privacy, security and quality of life of Floridians,” DeSantis said in his Dec. 4 announcement. “Our AI proposal will establish an AI Bill of Rights to define and safeguard the rights of Floridians, including data privacy, parental controls, consumer protections, and restrictions on AI’s use of an individual’s name, image, or likeness without consent.”
Kosnoff stressed that not all states would adopt Florida’s comprehensive approach.
He said he supports calls for a single federal standard for regulating AI.
“In the meantime, states feel obligated to fill the void that Congress leaves,” Kosnoff said.
What could this mean for Indiana?
Indiana does not have a comprehensive AI law.
Former Governor Eric Holcomb signed Senate Bill 150 in 2004. The law created an AI Task Force to study and evaluate state agencies’ use of AI technology.
Jones said he doesn’t think the order will hinder states that already require mandatory disclosure of AI models, but he also doesn’t think Indiana will take legislative action and pass laws similar to those in Colorado, New York and California.
Indiana Attorney General Todd Rokita has been outspoken this year about some of his concerns about AI as it relates to protecting children from inappropriate content and protecting consumers from unfair and deceptive behavior.
A spokesperson for Rokita’s office emailed The Indiana Lawyer two letters regarding AI that Indiana’s attorney general signed.
The first was addressed by Rokita and 43 other attorneys general to industry officials, including Apple executives. Meta, Microsoft and Google.
This letter stated that attorneys general would take all legal measures to protect children from harm caused by AI.
In the second letter, Rokita and 35 other attorneys general sent to Congress in November and expressed opposition to congressional preemption of state laws.
“It would be nice if Congress adopted a uniform AI policy that would appropriately protect Hoosiers from the potential harms and negative effects of AI,” the office spokesperson said.
The spokesperson said it is too early to know what the federal government might actually do as a result of Trump’s executive order, particularly regarding the creation of an AI litigation task force to challenge state AI laws, the required assessment of state AI laws deemed “onerous” or inconsistent with U.S. policy, and the expected policy statement from the FTC chairman on unfair and deceptive acts or practices under the law 15 USC 45 on AI models.
Any attempt to predict the implications of the decree would be pure speculation, the spokesperson added.•