Shifting Ground in AI Regulation: Federal AI Action Plan Targets State Oversight

In a recent article, attorney Donald J. Anderson of Pullman & Comley examines how the Trump administration’s July 2025 “America’s AI Action Plan” may alter the landscape of AI regulation in employment and beyond. Anderson and co-author Russ Anderson previously explored the growing patchwork of laws, such as the Colorado Artificial Intelligence Act (CAIA), which requires employers to exercise “reasonable care” to prevent algorithmic discrimination. The new federal initiative, however, could redefine what that standard means in practice.

The AI Action Plan, along with three accompanying executive orders, emphasizes accelerating AI innovation, strengthening infrastructure, and asserting US leadership globally. As Anderson explains, Executive Order 14179 revokes certain prior AI directives viewed as restrictive to innovation. The Plan also pressures states by linking federal AI-related funding to their regulatory approach. Specifically, it directs agencies to consider whether state AI rules are “burdensome” and to withhold or limit funding accordingly. Additionally, the Federal Communications Commission (FCC) is tasked with assessing whether state AI laws interfere with its federal authority.

Perhaps most consequentially, the Action Plan calls for revising the National Institute of Standards and Technology (NIST) AI Risk Management Framework to remove references to Diversity, Equity, and Inclusion (DEI) and other related terms. Anderson notes that this could affect employers’ compliance strategies under state laws, such as the CAIA, which currently rely on the NIST framework to demonstrate reasonable care.

For compliance professionals, the federal government’s push for deregulation may create new conflicts between state and federal AI regulation. Organizations that use AI in hiring or performance management should closely track these developments to ensure ongoing compliance with both federal and state mandates.