OPINION:
The California Legislature just passed a bill that would effectively crush AI innovation by making developers liable for “harmful” uses of their models. Illinois’s governor just signed a bill preventing employers from using AI to make hiring more efficient. With state lawmakers haphazardly interfering in interstate commerce using technologies they clearly do not understand, Congress must step in and preempt these ill-considered AI bills as it did with internet taxes in 1998.
Artificial Intelligence has the potential to revolutionize multiple sectors of the economy and give American workers unprecedented productivity gains. A 2018 McKinsey study found that AI could add $13 trillion to global GDP by 2030. Document processing will be more efficient; first drafts can be generated instantaneously, and code can be written by machine. Thanks to AI, everything from better predicting natural disasters to medical breakthroughs will save lives. That is, if we let it.
So far, Congress has not rushed to regulate. Members have exhibited rare humility in admitting what they don’t know and refrained from passing sweeping laws that would crush AI development, at least for now. State lawmakers, on the other hand, are pursuing several reckless proposals.
The California bill would be especially destructive because the Golden State still accounts for the largest share of the tech industry. Onerous regulations imposed there could hit the entire country. Other states passing contradictory regulations would create an inefficient patchwork of state laws, making it impossible to do business with AI in the United States.
Recognizing this, Rep. Zoe Lofgren, a Democrat representing part of Silicon Valley, publicly wrote to the bill’s sponsor to warn about the potential consequences of such a law. If letters prove insufficient, however, Congress has another tool at its disposal to rein in these state attempts to interfere with AI progress: federal preemption.
Though AI models may be developed in Silicon Valley, they do not stay there and will be increasingly used across multiple states. Chatbots like OpenAI’s ChatGPT, Google’s Gemini, and Microsoft’s New Bing almost immediately crossed state lines for global use. AI development is plainly interstate commerce, which the federal government is empowered to regulate by the commerce clause of the U.S. Constitution.
If Congress enacted a federal preemption of AI regulation, claiming for itself the exclusive right to regulate AI development, it would overrule any California law that would discourage innovation nationwide and prevent a patchwork of state laws that would be impossible for developers to navigate. Congress should exercise this power to ensure all Americans can benefit from AI breakthroughs.
Not only is federal preemption both constitutional and good policy, but it also has precedent from the Internet Tax Freedom Act. Signed into law by President Bill Clinton in 1998 as part of the omnibus package that year, the bill imposed a three-year moratorium on any state or federal agency imposing taxes or fees on internet service, and it has since been made permanent. Congress recognized the possibility of rent-seeking of state, local, and federal jurisdictions off the growing internet economy and acted decisively to keep internet access and online commerce cheap and available to most Americans.
Like the Internet Tax Freedom Act, a federal AI preemption bill would stop bad state laws without requiring Congress to impose its own regulations. Congress can preempt states by claiming exclusive jurisdiction over interstate commerce and then choosing not to regulate it.
Congress would not be precluded from passing any regulations in the future as they may be periodically required. For example, the NO FAKES Act, which clarifies the use of AI in copyrighted material, could still be an incremental measure addressing a specific AI capability without imposing sweeping liabilities on developers or opening the door for states to do so.
Congress should replicate the success of the Internet Tax Freedom Act’s success in AI to preempt state legislatures’ worst anti-innovation instincts. It would prevent bad laws, avoid a patchwork of incompatible state regulations, and allow Congress to address incremental concerns as they arise. It is both constitutional and precedented. If the United States wishes to remain on the cutting edge of technology, Congress should act now to keep it that way.
• James Erwin is the Federal Affairs Manager for Telecommunications at Americans for Tax Reform and Executive Director of Digital Liberty.
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