On December 11, 2025, President Donald Trump signed an executive order (EO) seeking to limit states’ regulation of artificial intelligence (AI) and instead establish “a minimally burdensome national policy framework for AI.” Cooley’s alert summarizes the EO and explains what it could mean for corporate compliance programs. Here’s an excerpt:
Prepare for upheaval as states and the federal government clash over AI regulation
- In the short term, expect legal challenges. States and others may challenge the EO in court. In parallel, the federal government, following directives from the Justice Department’s AI litigation task force, may challenge state AI laws in court. However, unless paused by a court or revoked by a state, AI compliance requirements under state law remain in place.
- In the medium to long term, federal AI standards may be coming. Legislative proposals from White House officials must still be passed by Congress to have the force of law. However, other federal agencies may act sooner to regulate AI. For example, companies should keep a close eye on Federal Communications Commission and Federal Trade Commission rules that may affect their reporting requirements or result in AI regulatory investigations.
The alert notes that companies leveraging AI should anticipate potential changes in federal standards and enforcement priorities while continuing to comply with state laws that remain in effect. And, of course, companies that operate on a global basis need to consider regulations outside of the US as well.
For companies that are publicly held, planning to go public or engaging in private capital raising, disclosure obligations layer in yet another dynamic. If uncertainty around AI compliance or proposed updates to regulations could materially affect the company’s competitive position, legal exposure, or other matters that would make an investment in the company speculative or risky or materially affect the results of operations, it will be important to explain that in a straightforward way in offering documents and/or public reports.
The EO does not change the need to be specific about AI in offering documents and reports when AI is a key aspect of the business. For example, investors and regulators want to understand what the company means by “artificial intelligence” and how it is used to create revenue or reduce costs. While it’s tempting to shoot for the moon when explaining AI opportunities, in the context of Securities and Exchange Commission filings and private offering documents, it is very important to be accurate. Companies may also want to consider disclosing how their board oversees AI-related risks and opportunities. Well-informed counsel is invaluable when balancing the need for market excitement with the need to protect against potential liabilities down the road.
