The Hidden Costs of AI Preemption | The Regulatory Review

An article published by The Regulatory Review under the headline 'The Hidden Costs of AI Preemption' argues that Congress should not pass a blanket preemption of state AI regulation. The piece is dated October 7, 2026. It contends that states serve as 'policy laboratories where unintended harm first surfaces locally.' The piece's position is that federal AI law should not displace state regulation wholesale, and the headline describes the costs of that preemption as hidden.

The article's stated concern is the cost of federal AI law that places obligations on states or localities. It identifies those obligations as audits, reporting, enforcement, and oversight. Wherever federal AI law imposes such requirements, the article argues, the funding to carry them out must accompany them. Without that funding, the piece says, the requirements amount to unfunded mandates. The article states that this funding requirement applies regardless of which form the obligation takes.

The piece treats preemption and unfunded mandates as two parts of the same problem. A blanket preemption would remove state authority to regulate AI, while federally imposed duties without funding would leave states and localities responsible for work they lack the resources to perform. The article's argument is directed at how federal AI law should be designed relative to state authority. Its conclusion is that Congress should refrain from blanket preemption and should attach funding to any obligations it imposes on states or localities under federal AI law.