TITLE: Texas Lawmakers Oppose Trump Order on State AI Regulations

Texas lawmakers are resisting a recent executive order from President Donald Trump that could jeopardize billions in federal funding for the state over its artificial intelligence regulations.

The order, signed on Dec. 11, 2025, directs federal agencies to withhold broadband expansion funds from states that enact what it describes as 'onerous' AI laws conflicting with national policy. Texas, which received $3.3 billion for broadband infrastructure under the federal BEAD program, faces potential cuts as its comprehensive AI governance law, House Bill 149, is scheduled to take effect on Jan. 1, 2026.

State Sen. Angela Paxton, R-McKinney, voiced strong opposition on Friday via social media, emphasizing the need for state-level protections. 'I don’t think we should stop moving on our policies to protect our kids, consumers, privacy, and infrastructure the way we see fit in Texas before there is meaningful federal legislation,' Paxton posted on X. 'We can’t be handcuffed by the federal government.'

Paxton, who previously led a bipartisan group of 16 state senators in a November letter to U.S. Sens. Ted Cruz and John Cornyn, reiterated concerns that federal intervention would halt progress on critical issues. The letter argued that a moratorium on state AI laws would undermine efforts to prevent child pornography, safeguard data privacy, combat discrimination and hold technology companies accountable.

'If an AI moratorium is put in place, our important work... will be rendered moot,' the senators wrote. 'Surely we can all agree that these kinds of state protections do not interfere with legitimate innovation and are reasonable and appropriate.'

The Texas Responsible Artificial Intelligence Governance Act, or House Bill 149, establishes a broad framework for AI oversight. It defines AI systems expansively, prohibits misuse of biometric data and mandates disclosure when government agencies use AI in consumer interactions. The law bans AI applications designed to promote self-harm, crime, unlawful discrimination, government social scoring or the creation and distribution of harmful or sexually exploitative content, including deepfakes.

Additionally, it creates a statewide AI regulatory sandbox for testing emerging technologies and forms the Texas Artificial Intelligence Council to provide policy advice on ethical AI use.

Federal Pushback and Senatorial Divide

Supporters of the executive order, including Sen. Cruz, argue that fragmented state regulations could hinder U.S. competitiveness in AI development. Cruz, who stood beside Trump during the signing ceremony, advocated for withholding funds from states pursuing AI rules. In July, he warned that such measures would 'strangle AI deployment.'

During the Oval Office event, Cruz framed the issue as a global race. 'We don’t want China’s values of surveillance and centralized control by the communist government governing AI,' he said. 'We want American values of free speech, individual liberty and respecting the individual.'

The executive order goes further by creating an AI Litigation Task Force within the U.S. Department of Justice to challenge state laws deemed incompatible with federal policy. The secretary of commerce will evaluate state legislation for conflicts, potentially leading to court battles. An exception is carved out for state laws focused on 'child safety protections,' though the scope of this carve-out remains under debate.

Texas Attorney General Ken Paxton did not join a letter from 36 attorneys general, organized by the National Association of Attorneys General, opposing broad federal preemption. The NAAG letter warned that overriding state authority would slow responses to AI risks and urged Congress to pursue collaborative federal regulation instead of a 'blanket ban' that could harm public safety and innovation.

Broader Implications for States and Industry

Advocates for state autonomy, such as Brendan Steinhouser, CEO of the Alliance for Secure AI, praised Texas' AI policy advancements. 'Federal preemption would undo this good work, restricting lawmakers from making good policy decisions for Texans,' Steinhouser said. 'This would be a massive disservice to our children, families, and workers. Federalism is a core constitutional principle of this country. If we want to advance AI, the states need the freedom to legislate policies that protect their citizens.'

The senators' letter highlighted states' agility in addressing crises, contrasting it with slower federal processes. 'The states must not be handcuffed during a crisis, awaiting the federal government to do what states can and should do for themselves,' it stated.

As the Jan. 1 deadline approaches, the standoff underscores tensions between federal uniformity and state innovation in regulating rapidly evolving technologies. Texas officials have not detailed contingency plans for potential funding losses, but the issue has drawn national attention amid growing AI adoption across sectors like healthcare, finance and public services.

OpenAI and xAI, prominent AI developers, did not respond to requests for comment on the potential impacts.

The executive order stems from Trump's broader agenda to streamline AI policy under federal control, aiming to bolster U.S. leadership while curbing what administration officials call regulatory overreach at the state level. Legal challenges are anticipated, with the task force poised to target laws like Texas' that impose disclosure requirements or content restrictions on AI outputs.

For Texas, the $3.3 billion in BEAD funds supports expanding high-speed internet to underserved rural and urban areas, a priority for economic development and digital equity. Losing access could delay projects and exacerbate the digital divide, according to state broadband officials.

Paxton's advocacy reflects a rare bipartisan consensus in the Texas Legislature on AI governance, with the November letter including Democrats and Republicans. This unity contrasts with national divides, where tech industry groups often lobby against state-level rules to avoid a patchwork of compliance burdens.

As Congress considers federal AI legislation, the Texas case may serve as a test for balancing innovation with safeguards. Industry analysts predict that without swift federal action, more states could follow Texas' lead, prompting further executive or judicial interventions.