The Nation Strikes Back: Preventing Federal Attacks on AI Surveillance in 2025
Recent efforts by federal authorities to pre-empt state-level regulation in the high-stakes area of artificial intelligence governance have been a huge defeat, at least for now. The move underscores growing tensions between Washington and states over who should take the reins of emerging technology. The latest attempt to insert a moratorium on state AI rules into the upcoming defense bill was thwarted by bipartisan opposition and intense lobbying from state officials, TechCrunch reports. The episode highlights how states are leading the way in addressing AI risks, from deepfakes to algorithmic bias, while the federal government has lagged behind.
The story goes back to when a similar clause came up during budget adjustment talks earlier this year. The post on X (formerly Twitter) sparked a public backlash, with users condemning it as a corporate contribution to suppressing regional protections for a decade. One influential thread from labor organizations warned of unchecked surveillance and the erosion of workers’ rights, reiterating concerns that without state cooperation, the introduction of AI could worsen inequalities. This sentiment is consistent with extensive reporting in the Deseret News, which noted that both Democrats and Republicans have spoken out against such federal overreach and questioned why AI companies seem to have influence in these discussions.
Failed bids are not isolated. This follows a pattern of federal maneuvers, such as a draft executive order drafted under the Trump administration aimed at challenging states’ regulatory authority. As detailed in an analysis by the Institute for Law & AI, this order raised significant legal questions regarding the balance of power under the preemption doctrine and the Commerce Clause. Critics say it could set a dangerous precedent and override dozens of state laws already in place.
The rise of state-led AI governance
Over the past year, states have stepped aggressively into the hole left by federal inaction. Brian Cave Leighton Paisner’s snapshot reveals that more than a quarter of businesses have now adopted AI, and legislation is on the rise on everything from transparency requirements to liability for harm caused by AI. In 2025 alone, lawmakers in at least 38 states enacted more than 100 bills involving deepfakes, healthcare applications, and even experimental sandboxes for innovation.
This popularity stems from practical necessity. States like California and New York have pioneered rules requiring disclosure of AI-generated content to combat misinformation in elections and the media. Recent news stories from AI CERT highlight that this local surge is the most ambitious technology regulatory experiment since the early days of the internet, with jurisdictions tailoring their approaches to local needs. Colorado’s focus on consumer protection, for example, contrasts with Texas’ focus on business-friendly guidelines, presenting a diverse patchwork that federal advocates decry as chaotic.
But this diversity is exactly what supporters admire. Industry officials point out that national experiments allow for rapid iteration and test what works before widespread adoption. The National Governors Association report highlights how governors are leveraging AI for public services while establishing safeguards against abuse, such as predictive policing and automated welfare decisions.
Federal government opposition and its motivations
Efforts to block state regulation appear to be rooted in industry lobbying, with tech giants arguing that a fragmented system is hindering innovation and competitiveness. The draft executive order, reported by NBC News, proposes using national security as an excuse to override state laws and positioning AI as a key technology to ensure unified federal control. This echoes previous attempts, such as one slipped into a budget proposal imposing a 10-year ban, which Post X described as a covert operation that has sparked widespread alarm.
Opponents are multifaceted. More than 200 state lawmakers wrote a letter condemning the move, warning that it would undo years of progress in curbing Big Tech’s excesses. The enforcement trends outlined in Lexology Pro show that regulators are increasingly targeting AI washing and data privacy violations, areas where states are proving nimble. According to TechCrunch, the defense bill’s failure came after intense negotiations in which senators from both parties prioritized states’ rights.
A legal battle has also erupted. Thirty-six state attorneys general have publicly opposed preemption, saying it could violate federalist principles. The coalition, backed by legislation and analysis from groups like the AI Institute, argues that without state oversight, risks such as biased algorithms in hiring and lending could grow unchecked.
Industry reaction and economic impact
Reactions from technology industry leaders have been mixed. While some fear regulatory whiplash and welcome federal harmonization, others see value in state-level testing grounds. PR Newswire’s 2025 report on cybersecurity warns that AI adoption is exploding faster than governance, and companies are facing compliance headaches from various state regulations. But that doesn’t stop you from investing. Venture capital into AI startups is at a record high this year, suggesting that regulatory diversity is not a complete deterrent.
Economically, the risks are enormous. Given the US’ technological dominance, national regulation of AI could influence global standards. For example, White & Case LLP’s insights show that Illinois’ biometric data law is influencing international imitation. Successful federal preemption in future rounds could streamline operations for multinational companies, but at the cost of local protections.
Critics, including labor groups who support X, worry that it will empower companies over consumers. The AFL-CIO’s position, as expressed in public statements, emphasizes concerns about removal from office and oversight without redress.
Ongoing legal and political struggles
The battle isn’t over yet. Root Fifty’s reporting indicates the idea of a moratorium could resurface in executive action or other legislation. Posts on X by policy watchers suggest a “ghost of pre-emption” scenario, where failed bills haunt new proposals. This fixation reflects a deeper ideological divide between advocates of free markets and those who prioritize ethical guardrails.
Court challenges loom large. Potential litigation could trigger the supremacy clause, which tests whether federal inaction justifies state intervention. A breakdown of the draft order by the Institute for Law & AI predicts a lengthy lawsuit that could reach the Supreme Court.
On the other hand, states will not wait. New bills in the 2025 session that NCSL is tracking aim to expand the existing framework to include AI in education and environmental monitoring.
The far-reaching impact of innovation
Supporters of national autonomy argue that innovation thrives in an environment of clear rules. A future Privacy Forum blog on state approaches will provide more details on how sandboxes (controlled test zones) can foster responsible development without stifling creativity. This is in contrast to the federal government’s proposals, which risk being overly restrictive or, on the contrary, inviting a laissez-faire attitude.
Public opinion, as judged by X’s argument, leans toward caution. Users frequently highlight dystopian risks, from AI-powered misinformation to autonomous weapons, and call for multi-layered governance.
As 2025 progresses, the interplay between federal ambitions and state resilience will shape the trajectory of AI. The thwarting of another bid has bought states time to strengthen their roles, but fears of a pre-emptive strike remain and more conflicts are expected.
Voices from the field
Interviews with insiders revealed frustration and determination. “The federal government’s overreach ignores the reality on the ground that we face every day,” a state lawmaker involved with the opposition told reporters. Tech company executives acknowledged off the record that despite calls for uniformity, state innovations are promoting better practices, such as stronger bias audits.
Global watchers are eyeing a similar situation overseas. The EU’s AI law sets out a comprehensive model, but incremental efforts by U.S. states could complement or compete with it, according to an analysis by White & Case LLP.
In the healthcare industry, where AI diagnostics are booming, state regulations regarding liability are important. Without them, governance vacuums widen adoption gaps, as the PR Newswire report highlights.
The path forward amidst uncertainty
In the future, collaboration may be able to bridge the gap. The federal and state task force proposals that emerged in the NCSL update may be harmonized rather than erased. However, according to NBC News, the Trump administration’s military draft order is still in effect and tensions are high.
X posts in recent days have captured the sense of urgency, with one user noting that “big tech companies are lobbying for a free pass as countries fight for accountability.” This grassroots pressure could determine the outcome.
Ultimately, the bloc’s failure signals a pivotal moment for states to assert authority in an era when AI permeates everyday life, from employment to healthcare. As the battle continues, the outcome will define not only regulation but also the ethical contours of technological progress.
