The new administration has announced an “AI Action Plan” to ensure looser regulations for artificial intelligence developments. This might seem like positive news for AI startups throughout the country, but what does it actually mean? How might the administration’s plans conflict with state regulations on AI? It makes sense to unpack this policy shift, especially as it represents a complete U-turn compared to the previous administration’s stance. Generally speaking, less regulation is a positive sign for business – but regulatory compliance remains a crucial step for AI startups. An AI lawyer may be able to help you navigate these evolving challenges.

Unpacking the Official Statement From the White House

In January 2025, the White House released a “fact sheet” on the new administration’s approach to “enhancing America’s AI leadership.” The first sentence included a vow to “remove barriers to AI innovation,” but how exactly does the administration hope to achieve this goal?

A considerable part of the plan revolves around removing the previous administration’s efforts to regulate AI. The new administration has rescinded an executive order signed by the Biden Administration that mandated certain controls over AI development. The new administration calls this executive order “dangerous” and “unnecessary.”

The administration has also signed a new executive order that forces all departments and agencies throughout the country to rescind any additional policies they might have established that hinder AI development.

There is also a section that explores the potentially harmful role of “ideological bias” and “social agendas” in the AI world. The administration has made it clear that AI development must be free from these biases and agendas – although it is not quite clear how they plan to do this.

Toward the end of the fact sheet, the administration pointed to the previous achievements during the current president’s first term. This included the doubling of AI research funding, the creation of the country’s first AI research institutes, and the creation of AI regulatory guidance in the private sector.

What Makes the Current Administration More Lenient Toward AI Development?

With Biden’s executive order on AI regulation rescinded, there are now fewer guardrails on AI development. Some of the most notable regulations that this executive order enforced were testing requirements for AI models. Under the previous regulations, AI startups had to properly test their AI models for safety issues before releasing them to the public.

Some of these policies were difficult for those running AI startups to understand. For example, one of the regulations sought to control “algorithmic discrimination.”

The loosening of safety requirements represents another major departure from previous policies. Under the Biden administration, there were regulations about energy usage that revolved around public safety. As many AI startups know, it takes a considerable amount of energy to train and run these models. Under the previous administration, there were also regulations that sought to prevent people from using AI to develop various weapons and military applications. These safeguards seem to be gone.

How California’s AI Regulation Plan Conflicts With These New Policies

Part of the new AI Action Plan requires all government agencies to rescind policies that would hinder AI innovations. These include state government agencies, and this has the potential to cause considerable conflicts in states that want to promote more AI regulation. California is a prime example, and a recent article by Cal Matters highlights 30 proposals that would directly conflict with the new administration’s action plan.

After the election, a lawmaker in California proposed a new law that would prevent startups and companies from engaging in “automated discrimination.” Assembly Bill 1018 would enforce serious regulations on tech platforms that help companies make decisions on education, housing, medical care, loans, crime, and access to government support. This lawmaker echoes concerns that AI could one day prevent certain races from getting access to loans, health care, and affordable housing.

Another bill would require a human driver in all commercial vehicles – effectively making self-driving software much less viable in California. This is despite the fact that AI could reduce accidents in trucking, delivery, and rideshare industries. California has a long history of proposing similar laws, and many of them were vetoed by Governor Newsom in recent years. In some cases, Newsom seemed to agree with the current administration and voiced concerns about hindering AI innovation.

One has to remember that California (specifically Silicon Valley) represents the beating heart of AI development in the United States. For some, it may seem strange for this state to adopt such strict policies –especially since it relies so heavily on AI innovation for its economy.

The real question is how state regulation will conflict with federal policies going forward. Will the federal government try to overrule any AI regulation measures put into place by states like California? It is perhaps too early to tell, as the new administration has been in power for just a few short months.

Since so many AI startups begin in Silicon Valley, California would be an obvious target if the federal government ever decides to put its foot down. If they are serious about their AI Action Plan, it doesn’t make sense for them to allow California to set its own rules, considering the Golden State essentially owns most AI innovation in the United States.

It is worthy to note that while all of that gets sorted there are some constants we should to keep in mind, the EU AI Act has promoted a risk-based approach to AI regulation that is likely to be viewed as a model for benchmarking new regulations. Its not hard to envision the EU AI Act gaining global prominence in AI much the same way GDPR gained prominence in global privacy.

Work With an Experienced AI Lawyer to Ensure Compliance

AI is constantly evolving – and so is the regulatory landscape that governs it in the United States. If you are running an AI startup, you need to stay up-to-date on the latest technological developments – but you also need to keep an eye on regulatory and policy shifts. You are probably planning to run your AI startup for more than a few years, and a new administration could completely change the way you do business in the future. Confidently face these challenges with help from an experienced AI lawyer. These legal professionals can help you avoid regulatory issues and take advantage of new opportunities. Work with John P. O’Brien – and benefit from our consulting services today.