Welcome to the Dual State of AI Regulation

The Trump Admin's normative and the prerogative state of frontier AI governance

Late Tuesday night, news broke that the US government (USG) had allowed frontier AI lab Anthropic’s Fable model to be released to the public again. It reversed export controls that had been imposed on that model along with the more powerful Mythos model shortly after their public release, forcing them to be removed from the market. After two weeks of negotiation between the US government and Anthropic, none of which may ever be made public, the public will be allowed to access the models again. Whether the government had legitimate security concerns or was just punishing a public enemy remains unknown. We are currently living in a “dual state” of AI regulation due to the Trump administration’s secrecy, lawlessness, and corruption.

The net result of this is that the Trump administration has now established an entirely non-public de facto licensing system for frontier AI models, as demonstrated by the USG’s request and OpenAI’s agreement to limit the rollout of their latest ChatGPT 5.6 model to approved customers. Many many others from across the spectrum have shared this licensing diagnosis. That is not a good or sustainable method for handling frontier AI governance, and I am working on a longer piece on policy solutions for my day job.

But for now I want to call attention to the impossible to ignore fact that while it is possible that the administration acted in good faith and heeded its “deep state” experts in taking action against Anthropic, the secrecy of the process along with the Trump administration’s lawlessness, corruption, and history of retaliating against its enemies, makes that impossible to trust or verify. Even if Congress steps in and writes badly needed new laws, this administration’s dual state will be an inescapable part of the next few years of frontier AI governance.

The Dual State and the Trump Administration

In January of this year, as federal agents flooded the streets of Minneapolis and killed unarmed Americans, David French wrote in the New York Times about the concept of “the dual state.” This phrase emanated from German-Jewish lawyer Ernst Fraenkel who used it to describe how Nazi Germany maintained two states at the same time, one of laws and one lawless. Citing Aziz Huq’s prescient piece in the Atlantic highlighting the Trump administration’s version of the dual state, French describes the two components of the dual state, the normative and the prerogative state:

The two components of the dual state are the normative state — the seemingly normal world that you and I inhabit, where, as Huq writes, the “ordinary legal system of rules, procedures and precedents” applies — and the prerogative state, which is marked (in Fraenkel’s words) by “unlimited arbitrariness and violence unchecked by any legal guarantees.”

“The key here,” Huq writes, “is that this prerogative state does not immediately and completely overrun the normative state. Rather, Fraenkel argued, dictatorships create a lawless zone that runs alongside the normative state.”

French used the concept of the dual state to describe the interaction between the U.S. government’s immigration agents and Renee Good (and later Alex Pretti):

But if you interact with ICE, suddenly you risk coming up against the full force of the prerogative state. One of the most heartbreaking aspects of the ICE agent’s video of the fatal encounter between Renee Good and ICE is that it’s plain that Good thinks she’s still in the normative state. She has no idea of the peril she’s in.

[. . .] But she wasn’t in the normative state. She had crossed over the border to the prerogative state, and in that state you can be shot dead recklessly, irresponsibly and perhaps even illegally, and no one will pay the price. Your killer might even be rewarded with more than $1 million in donations from friends and allies.

The Trump administration is a dual state generally, and its sharpest and most violent edge has come in our citizens’ interactions with federal immigration agents. But the Trump administration’s prerogative state is not just about state-sanctioned violence but about the pervasive corruption and retaliation that President Trump and his administration have embodied.

I think sometimes people think that those of us with personal and professional disagreements with the President have our critiques dismissed or downplayed because many want to believe that we are still living in the normative and not the prerogative state.

So I will dispense with any hyperbole and note that when it comes to corruption, literally yesterday, President Trump’s latest financial disclosure showed he made more than $2.2 billion in 2025, the first year of his second term as President, including $1.4 billion from cryptocurrency. My employer CAP has previously totaled over $2.6 billion that President Trump has personally accrued from cryptocurrency, legal settlements, and more since 2024. President Trump has also used the entirety of the federal government to persecute his enemies. He has issued executive orders targeting big law firms, stripped security clearances, pushed for indictments of his enemies like former FBI Director James Comey, and the list goes on and on. All of these are examples of how it’s very possible that the government’s actions against AI models may be extractive or punitive.

The Dual State of AI Regulation

Very specifically when it comes to AI policy, the dual state is a useful concept in understanding the Trump administration’s potential actions. The press and many AI governance, safety, and legal experts have scrambled to make sense of the stories provided (leaked) to the press to justify the administration’s actions (and reactions) to Anthropic. For the most part, they have treated the government’s statements and actions as credible, with the benefit of the doubt that would be accorded to previous administrations acting in our national interest.

I have written at length about the Trump administration’s unprecedented attacks on Anthropic, including the Department of War’s designation of Anthropic as a “supply chain risk,” continued court battles to defend that designation, Secretary Hegseth’s initial tweet of an even broader threat that would destroy the company, and President Trump’s calling them a “RADICAL LEFT, WOKE COMPANY.”

You could easily argue with this evidence that the Trump administration considers Anthropic an adversary and was retaliating against them by slapping export controls on their Fable and Mythos models. Without any transparency or public process, it’s impossible to disprove.

Anthropic, by virtue of its vulnerability to the USG on a number of fronts, has to pretend that it’s in the normative state when dealing with the Trump administration. And who knows, maybe they were negotiating with the normative state.

But in this new secretive Trump administration licensing regime, companies like Anthropic and OpenAI don’t have that much leverage against a government that not only has tools like export controls (which may not survive legal scrutiny) but many other mechanisms to impact these companies, particularly to throw up roadblocks on their path to IPO.

The best rule of thumb for examining AI governance from the executive branch now? Don’t analyze government policy as if it comes only from the normative state. The prerogative state governs AI, and far more, in the Trump administration and will continue to do so for the next few years.