New Rules: Washington Moves on AI Legislation, Workforce, and Digital Assets

There were new rules, and big plans in DC last week. Congress dropped a proposal on AI, the EEOC is changing Biden-era plans, and the SEC is taking steps to regulate crypto. Each story reflects a broad articulation of federal priorities and strategies that will have implications for businesses and other key stakeholders for years to come - reshaping the trajectory of policy related to technology, workforce and digital assets.

In this edition:

House Releases Great American AI Act Discussion Draft: 3-Year State Preemption, Federal Audit Mandate
EEOC Votes Out Strategic Enforcement Plan: Disparate Impact Eliminated, DEI Programs Stay in Crosshairs
SEC Publishes Draft FY2026–2030 Strategic Plan: Digital Assets First, Enforcement Rollback, ESG Under Review

Artificial Intelligence: The Great American AI Act of 2026

WHAT HAPPENED

Reps. Jay Obernolte (R-CA) and Lori Trahan (D-MA) released a 269-page discussion draft of the Great American AI Act on June 4, 2026, proposing the first comprehensive federal AI governance framework and the most consequential preemption of state AI law in U.S. history. The bill's core mechanism is a three-year sunset preemption of state laws "specifically regulating the development" of AI models. State authority over AI deployment and use is explicitly preserved, and state attorneys general retain enforcement authority over federalized standards.

The draft 269-page bill text tackles everything from federalization of AI to deterring fraud, promoting free speech, protecting the workforce, and enhancing cybersecurity. The bill follows President Trump's June 2 executive order establishing voluntary federal agency reviews of frontier AI models. Opposition has been swift: Americans for Responsible Innovation called preemption "a generational mistake" that exchanges state progress for a federal ceiling.

NetChoice flagged that the aggressive audit and data-sharing regime could expose trade secrets. The bill is a discussion draft and formal markup has not been scheduled.

BUSINESS RISK

Operations: Large frontier AI developers face the most immediate compliance design pressure with the Independent Verification Organization (IVO) audit framework, catastrophic risk assessment protocols, and incident reporting timelines will require purpose-built compliance infrastructure. The three-year preemption sunset also creates a planning paradox as companies that build to the federal standard may find themselves in a gap when both the federal preemption and the state laws it displaced either expire or are reimposed simultaneously. Enterprise AI buyers and deployers face a cleaner near-term path: the bill explicitly preserves state deployment and use regulations, meaning California's deployment rules, New York's algorithmic accountability provisions, and Illinois's AI-in-hiring rules remain in force regardless of what happens with the federal framework.

Workforce: The whistleblower protection provisions that cover employees and contractors who report "AI violations" (defined broadly as breaches of federal law related to AI development, deployment, or operation) will require HR policy updates before any final bill passes. The Labor Department AI Workforce Research Hub and expanded employment impact data collection signal ongoing Congressional attention to AI-driven workforce displacement. Companies developing AI should treat workforce impact documentation as a future regulatory disclosure obligation and not just an internal metric.

Reputation: Companies that have publicly positioned against state AI regulations while privately supporting federal preemption will face scrutiny if that alignment becomes visible. The bill's three-state preemption list is specific and named — companies in California, New York, and Illinois with advocacy positions on those laws should ensure their public posture is consistent with their Congressional engagement.

DO THIS WEEK

→ Assess your product and service risks. Map your AI product and service portfolio against the bill's frontier model definition ($500M revenue threshold) and catastrophic risk categories to determine whether mandatory audit and reporting obligations apply.

→ Do not stand down on state compliance obligations. State deployment regulations remain in effect until and unless a final bill passes; treat the discussion draft as a planning guide, not as reprieve for compliance with state laws.

→ Understand the legislative trajectory of the proposal. Engage government affairs on congressional timeline and markup scheduling. This is a discussion draft, and the amendment period is where the preemption scope, audit standards, and penalty thresholds will be set. Monitor how key stakeholder groups respond to different aspects of the proposal as this may shape the outcome of the legislation.

WHAT TO WATCH NEXT

Congressional markup scheduling — the bill needs NDAA or standalone vehicle; watch for House Science and HASC action through July
California, New York, and Illinois legislative and AG responses, which will signal whether state enforcement escalates as preemption pressure mounts
CAISI director appointment and initial guidance on IVO licensing standards, which will define the practical audit burden

Capital Markets: SEC Draft Strategic Plan Brings Enforcement Changes, Digital Asset Reset, ESG Review

WHAT HAPPENED

The Securities and Exchange Commission published its Draft Strategic Plan for Fiscal Years 2026-2030 for public comment on June 2, 2026, with a comment deadline of July 2. The plan, released under Chairman Paul Atkins, represents the most significant reorientation of SEC strategic priorities in decades and signals a broad deregulatory reset across enforcement, digital assets, and ESG disclosure. On enforcement, the plan explicitly commits the agency to focus on "violations of established law such as fraud and manipulation" rather than "expanding regulatory reach through ad hoc enforcement actions," which is a direct rebuke of the Biden-era regulation-by-enforcement approach that used enforcement actions to set policy without formal rulemaking. On digital assets, the plan designates crypto and distributed ledger technology as a top strategic priority, committing to "a rational, coherent, and principled" regulatory framework rather than litigation-first oversight. On ESG, a December 2025 executive order directs the SEC to consider rescinding rules and guidance related to shareholder proposals, particularly those implicating DEI and ESG policies, and to review proxy advisor rules — signals that the climate disclosure rule finalized under Gensler and ESG-related proxy mechanisms are under active review. The plan also commits to periodic retrospective review of existing rules, EDGAR modernization, and adoption of AI and blockchain for regulatory oversight. The public comment period closes July 2 — just three weeks away.

BUSINESS RISK & MORE

The biggest operational risk is inconsistency: climate, cyber, AI, human capital, and governance disclosures may face less near-term SEC pressure, but they still need to be accurate, defensible, and aligned across public filings, sustainability reports, proxy materials, and investor presentations. Workforce and governance teams should also review any proxy advisor language, ESG-based voting policies, and activist-risk assumptions that depended on the prior direction of SEC policy. Reputation risk remains sensitive because stakeholders will read actions differently with some seeing it as regulatory relief, while others viewing it as reduced transparency. Organizations looking to engage with the SEC should submit a public comment by July 2 (either directly or through industry associations) on provisions material to your business; the comment period on a strategic plan is unusually high-leverage because it can shape enforcement resource allocation.

Workforce: EEOC Replaces Strategic Enforcement Plan — Disparate Impact Out, DEI Programs Targeted

WHAT HAPPENED

The EEOC voted on June 5, 2026 to approve a new National Enforcement Plan (NEP) for fiscal years 2025-2029, formally rescinding and replacing the Biden-era Strategic Enforcement Plan. The name change from "Strategic" to "National" reflects a structural centralization that gives the agency authority to reassign matters across district offices and withdraw local enforcement plans, consolidating enforcement direction at the top.

The substantive changes are more consequential. The agency will eliminate disparate impact enforcement "to the maximum degree possible," meaning that it will not commence or continue litigation advancing disparate impact claims. This follows the October 31, 2025 directive closing all pending charges that relied solely on disparate impact theory. The NEP explicitly targets DEI programs as a potential form of intentional discrimination. Employers should continue to expect heightened scrutiny of diversity hiring targets, voluntary affirmative action programs, and any employment practice using race, sex, or other protected characteristics as factors in hiring, promotion, or development decisions.

BUSINESS RISK & MORE

Although the EEOC is shifting away from disparate impact and affirmative-action-style enforcement, the law has not changed. Hiring pipelines, promotion frameworks, succession planning, and pay practices still need a documented, neutral rationale tied to business need, especially where decisions involve demographic data, workforce analytics, or automated employment tools. HR, legal, and government relations teams should quickly audit DEI-related programs, update internal documentation, and make sure every employment decision can be explained without relying on protected-class considerations. Reputation risk remains high as employees, investors, plaintiffs’ lawyers, and regulators will all read the same developments differently. Companies should avoid overcorrecting publicly while quietly tightening internal controls. The EEOC’s position may influence federal enforcement, state-level discrimination regimes, private litigation strategy, and whether past or pending disparate impact matters require a different legal posture.

The Trendline

This week’s trendline is simple: Washington is writing new rules for how companies govern technology, people, and markets. The AI proposal, EEOC enforcement shift, and SEC strategic reset all point toward a more centralized federal posture, but not a simpler risk environment. For business leaders, the right move is not to wait for final rules. It is to tighten governance now, document decision-making, align public disclosures with internal practices, and make sure legal, HR, compliance, investor relations, and government affairs are working from the same playbook. The compliance burden may shift, but the expectation of accountability is not going away.

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