8-minute read | 1,800 words
What to know this week
President Trump signs AI executive order.
Last week, President Trump signed a new Executive Order (EO) to preempt state artificial intelligence (AI) laws.
Senators are investigating AI’s impacts on electricity costs.
Three democratic senators are investigating the impacts of data centers on utility networks.
This week's full stories
Trump’s new EO seeks sweeping preemption of state AI laws.
THE NEWS
Last week, President Trump signed EO 14365, otherwise known as Ensuring a National Policy Framework for AI. With this new order, the Trump administration aims to significantly restrict state AI laws. More specifically, the EO directs the attorney general to sue states and overturn state AI laws that do not support the “United States’ global AI dominance.” Further, if states were to keep these laws in place, the EO permits the administration to withhold certain funds for projects, such as supporting broadband infrastructure.
When announcing this EO, President Trump stated that “You can’t go to fifty different sources” for AI regulations, and that there must “be one source,” aligning with the administration’s goal to replace state rules with a federal framework. Notably, the order did emphasize that it would not preempt any state AI laws related to child safety.
With this effort, the Trump administration has requested the following:
- Establish an AI litigation Task Force, whose “sole responsibility shall be to challenge State AI laws inconsistent with the policy set forth.”
- Require the Secretary of Commerce to evaluate existing state laws and identify those that conflict with the EO’s policies.
- Direct the Secretary of Commerce to issue a Policy Notice detailing which states will have funds withheld.
- Request the Special Advisor for AI and Crypto to prepare legislative recommendations to create a uniform Federal policy framework for AI.
THE KNOWLEDGE
The AI dispute between the Trump administration and state legislatures has become increasingly debated over the past several months. Previously, federal lawmakers attempted to pass a ten-year moratorium on AI within the Big Beautiful Bill. While the provision did pass the House of Representatives, it ultimately failed in the Senate after losing its vote 99-1.
At the time, critics of this effort argued that the measure would undermine state authority and overwhelmingly benefit large technology firms. Massachusetts Representative Ed Markey commented on the vote, stating:
“This 99-1 vote sent a clear message that Congress will not sell out our kids and local communities in order to pad the pockets of Big Tech billionaires.”
The Trump administration’s most recent EO looks to advance this preemption policy through executive action, rather than legislation, prompting pushback from lawmakers and advocacy groups alike. Sarah Gardner, the chief executive of the Heat Initiative, criticized how “blocking state laws regulating AI is an unacceptable nightmare for parents and anyone who cares about protecting children.”
California State Senator Scott Wiener echoed these sentiments, also expressing frustrations with this order, commenting:
“If the Trump administration tries to enforce this ridiculous order, we will see them in court.”
Supporters of federal AI preemption argue that the current fragmented state rule framework could hinder the US’s AI competitiveness.
Given the wide sweeping impacts this order could have, the order's legality will likely be challenged in the courts. However, if it is allowed to stand, the administration will likely target some of the larger state AI laws.
THE IMPACT
Although the order was only signed, its imposed deadlines are rapidly approaching. If the order is allowed to stand, it will have wide-ranging impacts for AI developers, deployers, and state governments.
In the short term, states will likely prepare and focus significantly on challenging the EO itself, particularly around the administration looking to preempt state laws both without a federal framework in place and without formal legislation. Initial court rulings could significantly impact how the administration proceeds in the coming months and how much power the executive branch has when it comes to using preemption.
More broadly, preempting state AI laws could have significant nationwide effects. Legal challenges could influence how other states draft, defend, or pass AI legislation. Additionally, the order’s directive to create a new federal AI framework suggests that state-level regulations could become less impactful.
Due to these potential impacts, stakeholders should monitor both the judicial proceedings as well as details about this new federal AI framework, as either could significantly impact the US’s approach to AI governance.
Senators investigate the role of AI data centers in rising electricity costs.
THE NEWS
On Tuesday, three Democratic Senators began investigating the impacts that large AI data centers are having on the power grid. Senators Elizabeth Warren, Chris Van Hollen, and Richard Blumenthal sent letters to Google, Microsoft, Amazon, Meta, and three other companies.
In these letters, lawmakers expressed concern that consumers are experiencing higher utility bills due to tech companies' increased power usage.
In their letter, the senators wrote:
“We write in light of alarming reports that tech companies are passing on the costs of building and operating their data centers to ordinary Americans, as AI data centers’ energy usage has caused residential electricity bills to skyrocket in nearby communities.”
While most of the companies did not respond to the inquiry, Digital Reality did release a statement emphasizing its commitment “to working with all elected officials to continue to invest in the digital infrastructure.”
While these Senators have not implied that there will be any additional actions taken following these inquiries, these letters bring to light a significant problem that has been gaining momentum in recent months.
THE KNOWLEDGE
As AI usage has only continued to expand, there has been greater emphasis placed on the impacts this technology will have on energy grids over the coming years. In response to these needs, utility providers have been working to expand grid capacity rapidly. While funding initiatives have helped offset these costs, the senators are concerned that these investments are increasingly being passed on to consumers and other businesses.
These concerns are not unfounded. In May 2025, the MIT Technology Review published its study on AI’s energy footprint. In this study, researchers found that AI’s energy consumption doubled from 2017 to 2023, with a 2024 estimate showing that data centers account for roughly 4.4% of total US electricity consumption. While this usage growth is significant, new projections from the Lawrence Berkeley National Laboratory found that by 2028, over half of the electricity going to data centers will be used for AI, and that AI alone could consume as much energy as 22% of all US households.
This rapid increase in energy consumption has already begun to have an impact on citizens. In the PJM electricity market, data centers accounted for a $9.3 billion increase for the 2025-2026 capacity market. Due to this substantial increase, residential bills are expected to increase by $18 a month in Western Maryland and an additional $16 a month in Ohio.
Beyond costs, lawmakers and analysts have also raised concerns about how AI-driven electricity demands could impact emissions. Due to AI data centers requiring constant, high-load power, these sites depend heavily on firm energy sources, such as natural gas, rather than intermittent renewables, like wind or solar. As a result, these centers have been found to carry a carbon intensity roughly 48% higher than the US average.
While several major technological companies have announced commitments to increase nuclear power sourcing, many of these projects are not expected to fully materialize for decades. In the meantime, critics argue that near-term grid expansions will likely result in consumers facing increased costs alongside increased carbon emissions.
THE IMPACT
While these letters are only the early stage of a formal inquiry, they raise the potential of increased federal scrutiny over how AI-driven energy demand is managed. As AI becomes more deeply entrenched in the economy, conversations about the infrastructure required to support it will become unavoidable.
For areas hosting AI data centers, the outcomes of these conversations will have significant impacts. Rising utility prices, grid reliability, and future regulator efforts will likely be at the forefront of how lawmakers and regulators address the tension between AI growth and energy capacity.
This Week's Caveat Podcast: Cyber lessons from the frontlines.
In this week's episode, Dave Bittner and Ben Yelin sit down with Caleb Barlow to discuss lessons learned from the conflicts that have been occurring in both Ukraine and Gaza, including threats that have emerged against GPS.
OTHER NOTEWORTHY STORIES
US government launches a campaign to hire new AI and tech roles.
What: US government launches a campaign to hire 1,000 people for federal engineering positions.
Why: On Monday, the US government launched a new hiring effort to recruit engineers, with a focus on those who have AI expertise, for two-year positions. Hired engineers will be tasked with tackling specific projects inside government agencies, alongside building a digital platform for the Trump administration’s child saving accounts.
Scott Kupor, the director of the US Office of Personnel Management, stated that the government aims to “get the benefit of really smart people working on some of the world’s most complex and difficult problems.” The government is looking to have the first round of hiring concluded by March 31, 2026.
DEC 15, 2025 | Source: Reuters
UK will begin regulating cryptoassets in 2027.
What: Britain’s finance ministry stated that the nation will begin regulating crypto assets in October 2027.
Why: On Monday, the United Kingdom (UK) announced that firm and proportionate rules will come into effect in 2027 over cryptoassets. With these laws, the UK aims to give greater legal clarity regarding regulatory position and boost consumer confidence that these assets are protected.
Chancellor of the Exchequer, Rachel Reeves, stated:
“By giving firms clear rules of the road, we are providing the certainty they need to invest, innovate, and create high-skilled jobs here in the UK, while giving millions strong consumer protections and locking dodgy actors out.”
This effort is part of a larger strategy to bring cryptoassets into the scope of similar rules for other regulated financial products.
DEC 15, 2025 | Source: Gov.UK
US freezes $42 billion trade pact with UK.
What: The US pauses the Tech Prosperity Deal with the UK over tax disputes.
Why: On Tuesday, the Trump administration announced it is pausing a proposed trade deal with the UK. The deal, originally announced in September, aimed to encourage major technology companies, such as Google and Microsoft, to invest substantially in the UK to support data center and digital infrastructure funding.
However, the future of this deal has been paused over the UK’s Digital Services Tax (DST). For context, this tax is a 2% tax on large social media platforms and search engines, which raised the UK 800 million pounds from 2024 to 2025.
DEC 16, 2025 | Source: The Register