What the Federal AI Action Plan Means for U.S. Businesses

Written By: Matthew Gross

**Attorney Advertising: Prior results do not guarantee future outcomes**

 

On July 23, 2025, the federal government released a 28-page Artificial Intelligence Action Plan (“Action Plan”) aimed at accelerating domestic AI innovation and competitiveness. Issued under Executive Order 14179, the Action Plan calls for sweeping changes across federal funding, permitting, procurement, and export regulation. While the policy’s rhetoric emphasizes national leadership in AI, its practical significance lies in how it alters the responsibilities and operating environment for businesses working with AI technologies.[1]

 

Federal Funding Linked to State Regulatory Alignment

One of the most concrete features of the Action Plan is its linkage of federal AI funding to the regulatory climate in which a business operates. The Action Plan authorizes the Office of Management and Budget and the Department of Commerce to assess whether state and local laws “unreasonably burden AI innovation.” If they do, federal agencies may deny grants or cooperative agreements to recipients in those jurisdictions.[2] This provision applies not only to state governments, but also to academic institutions, companies, and nonprofits located in those states or doing business with them. Entities seeking federal funding must therefore account for local regulatory regimes in their compliance strategies.

 

Procurement Conditions for ‘Unbiased’ AI Systems

The Action Plan further directs the General Services Administration, Department of Defense, and other procurement agencies to update their acquisition standards for AI systems. Within 180 days, each agency must adopt procurement rules ensuring that AI used in federal operations is “free from ideological training or bias.”[3] While the Action Plan does not define these terms, it requires contractors to certify compliance as a condition of award. In practical terms, vendors of large language models, content recommendation engines, or other decision-making systems must review their training data, system design, and outputs to confirm they meet the neutrality standards imposed by the Action Plan. These requirements may also extend to subcontractors and downstream data providers.[4]

 

Streamlined Permitting for Data and Chip Infrastructure

On the infrastructure side, the Action Plan invokes multiple statutory authorities to expedite the construction of data centers and semiconductor fabrication facilities. It directs the Council on Environmental Quality to issue categorical exclusions under the National Environmental Policy Act for qualifying AI infrastructure projects.[5] The Department of the Interior and Department of Energy are similarly tasked with granting right-of-way and land use approvals on an accelerated timeline.[6] The stated objective is to reduce permitting timelines from years to months. Developers seeking to build or expand high-capacity computing facilities will find that projects deemed “strategic to U.S. AI competitiveness” may be prioritized for expedited review.

 

Workforce Development Provisions

Recognizing labor constraints in the data center and semiconductor sectors, the Action Plan directs the Department of Labor to launch a National AI Trades Workforce Initiative. This includes funding for apprenticeships and training programs for electricians, HVAC technicians, and systems engineers.[7] Grants will be distributed to qualifying educational institutions and private-sector partners who commit to placing graduates in AI-related infrastructure projects. Participating employers may be required to report hiring and wage data to maintain eligibility.

 

Export Requirements and Geographic Traceability for Chips

To address security concerns, the Action Plan orders the Department of Commerce to establish export controls requiring that advanced AI chips include geographic traceability features. These features must enable manufacturers and regulators to verify that chips remain in approved jurisdictions after sale.[8] The controls apply to chips above a specified processing threshold and are intended to prevent diversion to foreign military programs or adversarial research labs. Businesses that manufacture, distribute, or integrate these chips will be subject to new documentation, audit, and reporting obligations under the Export Administration Regulations. Additional licensing requirements may apply when exporting to countries of concern.[9]

 

Encouragement of Open-Source Model Releases

Although most provisions in the Action Plan are regulatory or incentive-based, it also includes a directive encouraging federal agencies to prioritize research partnerships that use open-source foundation models.[10] Specifically, the Office of Science and Technology Policy is tasked with publishing guidance on the governance of “open-weight” models, which are those that publicly disclose their trained model parameters, allowing others to download, inspect, and fine-tune them. By contrast, “closed-weight” models keep those parameters proprietary, limiting external visibility and reuse. Under the Plan, agencies awarding AI-related grants must now explain when and why they permit the use of closed-weight systems. While not mandatory, this preference signals a shift in federal funding strategy toward increased transparency and reproducibility. Organizations relying on proprietary models may encounter competitive disadvantages in future government solicitations unless exceptions are formally justified.

 

Conclusion

The Artificial Intelligence Action Plan marks a material shift in how AI development is regulated and incentivized in the United States. It ties federal support to state-level regulatory alignment, imposes neutrality requirements on federal contractors, fast-tracks the buildout of AI infrastructure, and introduces traceability requirements for high-performance chips. In parallel, it promotes open-source participation as a condition of federal research collaboration.

 

For businesses that are deploying AI technologies or evaluating how best to integrate them, the new forthcoming federal Action Plan signals that legal and regulatory considerations will now accompany technical design from the outset. Compliance with federal procurement criteria, awareness of state-level regulatory constraints, and export control planning will no longer be peripheral concerns. These issues will increasingly shape which projects are eligible for public funding, which contracts are competitively viable, and which infrastructure can proceed without delay.

 

Smaller firms and early-stage startups may be especially vulnerable to unintentional misalignment with these evolving requirements. Oversights in areas such as certification disclosures, subcontracting relationships, or chip distribution protocols may have outsized consequences both in terms of lost opportunities and regulatory exposure.

At The Beckage Firm, we help businesses of all sizes interpret and navigate this evolving landscape. Whether you’re building your first AI-enabled product, evaluating state regulations for funding eligibility, or need guidance on procurement and data governance obligations, our team offers practical, tailored counsel rooted in deep experience at the intersection of law, technology, and risk.

We don’t just help you react to the rules—we help you plan ahead.

Let us be your partner in making confident, compliant, and forward-thinking AI decisions.

 

[1] Reuters, Artificial Intelligence Action Plan (July 23, 2025), https://www.reuters.com/legal/litigation/white-house-unveils-artificial-intelligence-policy-plan-2025-07-23/.
[2] Jarrett Renshaw & Alexandra Alper, Trump Administration to Supercharge AI Sales to Allies, Loosen Environmental Rules, Reuters (July 24, 2025), https://www.reuters.com/legal/government/trump-administration-supercharge-ai-sales-allies-loosen-environmental-rules-2025-07-23/.
[3] Lauren Feiner, Justine Calma, Hayden Field & Adi Robertson, Breaking Down Trump’s Big Gift to the AI Industry, Verge (July 25, 2025), https://www.theverge.com/policy/713788/trump-ai-action-plan-explainer.
[4] Id.
[5] Id.
[6] Renshaw & Alper, supra note 2.
[7] Reuters, supra note 1.
[8] Stephen Nellis, Trump Administration Recommends Location Verification for AI Chips, Reuters (July 24, 2025), https://www.reuters.com/world/china/trump-administration-recommends-location-verification-ai-chips-2025-07-24/.
[9] Id.
[10] Feiner et al., supra note 3.