Trump’s AI Executive Order Chokes Virginia’s AI Oversight Bills, But Congress Steps In

Virginia’s effort to regulate artificial intelligence ran headfirst into a Trump administration roadblock that threatens to withhold critical federal broadband funding from states with “onerous AI laws.” Signed in December 2025, the executive order warned that states passing strict AI rules risk losing millions in Broadband Equity, Access and Deployment (BEAD) funds — more than $800 million for Virginia alone.

The fallout was swift. Ambitious state bills aimed at protecting minors from manipulative AI chatbots and curbing AI’s unchecked use in health insurance claims evaluation stalled in the General Assembly. Del. Cliff Hayes, chair of the House Communications, Technology and Innovation Committee, acknowledged the chilling effect during hearings, noting lawmakers must avoid jeopardizing federal funds.

One bill, HB 635, would have restricted AI chatbots’ interactions that have been linked to self-harm and suicide, especially among young users. Another, SB 796, focused specifically on minors’ use of AI companions. Both were postponed, with lawmakers directing the Joint Committee on Technology and Science to study the issues further.

Del. Michelle Maldonado openly blamed the Trump administration for this legislative gridlock, calling the executive order “inappropriate” and “unfair” for stifling state-level AI protections.

The executive order also tasked the Department of Commerce with reviewing state AI laws for conflicts with federal regulations or constitutional issues, signaling a federal preemption push. Virginia lawmakers like Hayes stressed the importance of protecting BEAD funding, effectively tying their hands.

Yet, federal lawmakers from Virginia are moving to fill the void. Rep. Morgan Griffith, a senior member of the House Energy and Commerce Committee, co-sponsored the SECURE Data Act to standardize AI data privacy protections across states. The bill would require disclosure of AI use in consequential decisions and parental consent for processing data of minors under 16.

Sen. Mark Warner meanwhile secured bipartisan committee approval for the GUARD Act, which would ban AI companies from offering digital companions to minors and criminalize AI products that provide sexual content or solicit minors. Warner highlighted the mental and physical health risks AI chatbots pose to children and called for clear guardrails.

This clash between Trump’s authoritarian overreach and state efforts to regulate AI highlights a broader pattern: the administration weaponizing federal funding to suppress local accountability measures. While Virginia’s legislature hesitates under threat, its federal delegation is pushing for national AI safeguards, underscoring the urgent need for democratic oversight in the AI era.

Virginia’s AI regulatory future remains uncertain, but one thing is clear: Trump’s executive order is a blunt tool designed to stifle state innovation and protect industry interests at the expense of public safety and democratic governance. The fight over AI is just beginning.