Trump's AI Order Stalls Virginia AI Regulation Bills
Virginia lawmakers passed limited AI legislation this year while shelving several bills tied to child safety and insurance claims. The stalled measures fell victim to a December executive order in which President Donald Trump threatened to withhold more than $800 million in broadband funding from states with "onerous AI laws."
The blocked bills would have restricted chatbot interactions with minors, required transparency in how insurers use AI for claims decisions, and set guardrails around AI use in mental health treatment. The funding threat - tied to the federal Broadband Equity, Access and Deployment program - created a "chilling effect," according to lawmakers who supported the measures.
What Stalled and Why
The House Communications, Technology and Innovation Committee postponed action on HB 635, which would have restricted companion chatbots' interactions that have led to self-harm and suicide. The same committee stalled SB 796, a similar Senate bill targeting minors specifically.
Del. Michelle Maldonado, D-Manassas, who introduced the House measure, said the Trump administration's threat directly blocked progress. "We have seen the administration go after them," she said during committee discussion. "It's inappropriate. It's unfair."
The committee also deferred SB 586, which would have required health insurers to disclose how they use AI in claims management and prohibited relying on it exclusively for decisions. Committee chair Del. Cliff Hayes, D-Chesapeake, outlined three requirements for future bills: they cannot conflict with Virginia's existing consumer data law, cannot cost taxpayers without budget provisions, and cannot jeopardize the $800 million in BEAD funding.
Sen. Saddam Salim, D-Falls Church, who sponsored the insurance bill, said lawmakers are using the executive order as a "smoke screen" and moving too cautiously. "We're going at a walking pace," he said, "whereas the industry is going 120 miles an hour."
Federal Lawmakers Push Forward
While Virginia stalled, members of the state's congressional delegation advanced AI bills at the federal level. Sen. Mark Warner, D-Va., and Rep. Morgan Griffith, R-Salem, are working to fill gaps in state regulation through federal legislation.
The Senate Judiciary Committee unanimously advanced Warner's Guidelines for User Age-verification and Responsible Dialogue Act on Thursday. The GUARD Act would ban AI companies from providing digital companions to minors and require disclosure that the companions are not human and lack professional credentials. It would also create criminal penalties for using AI to solicit minors or provide sexual content.
"AI chatbots put the mental and physical health of young people at risk," Warner said. "It is time to put clear guardrails in place to protect children from manipulative or dangerous chatbot interactions and hold tech companies accountable."
Griffith co-sponsored the SECURE Data Act, introduced in April. The bill would standardize data privacy protections, grant consumers rights to access and delete personal data, and require disclosure when AI is used for "consequential decision making." It also mandates parental consent to process data for anyone 15 and younger.
Griffith specifically highlighted AI's use in health insurance. "Health insurers are increasingly using AI to process and automate prior authorization decisions," he said in a statement. "In cases of a denial of a medical procedure or treatment, there should be immediate medical review by a qualified medical professional."
The Federal Framework Question
Trump's executive order directs the Commerce Department to identify state AI laws that conflict with federal regulations, require AI models to alter outputs, or create First Amendment issues. The administration released legislative recommendations for a national AI policy framework meant to replace "a patchwork of conflicting state laws."
No comprehensive federal AI bill has been introduced yet, though Rep. Jay Obernolte, R-California, is drafting one. Sen. Marsha Blackburn, R-Tenn., has circulated a draft bill separately.
Warner, who helped draft the 2021 Infrastructure Investment and Jobs Act that created BEAD, called the administration's approach a "gross overreach of federal power." He said the threat to withhold funds contradicts Congress's intent to close the broadband gap. "I remain unsurprised at this administration's lack of respect for and understanding of the law," he said in an April statement.
What Virginia Did Pass
The General Assembly unanimously passed HJ 32, requiring the nonpartisan Joint Legislative Audit and Review Commission to study AI policies at Virginia colleges and universities and develop a model policy for institutional use.
Lawmakers also unanimously approved creation of an AI safety advisory board under the Virginia Information Technologies Agency and expanded the Division of Consumer Counsel's duties to include programs addressing AI fraud and abuse.
A consumer data protection bill, SB 85, passed the Senate but died in the House. The House also killed bills related to law enforcement's use of AI in investigations and forensic laboratory accreditation before the crossover deadline.
For those working in government, understanding how federal AI policy shapes state action is essential. AI Learning Path for Policy Makers provides context on how AI regulation develops and affects governance decisions.
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