Preemption Without a Floor Is Just a Subsidy

Twelve states have now written rulebooks for companion chatbots. Congress has written nothing. The most energetic piece of AI lawmaking in Washington this autumn is not a law at all — it is the push to make those twelve stop, argued with the straight face of a government that has just discovered federalism and would like it put down quietly.

More than a dozen states have passed companion chatbot legislation, with requirements including honest disclosure that the thing on the other end is not human, and protections for minors. There is no federal equivalent. Forkast's phrase for the result is "compliance-by-multiplication": one chatbot, sold into fifty markets, must satisfy twelve-plus overlapping regimes, none of which is a national rule. That is genuinely irritating. It is also the ordinary cost of running a federal system with a deadlocked Congress — which brings us to the complainants, whose preferred number of regimes has always been zero, and whose compliance record with the zero they currently have is not obviously spotless.

The Regulatory Review argues this week that Congress should not blanket-preempt state AI regulation, because states are "policy laboratories where unintended harm first surfaces locally". Say that slowly. Harm surfaces locally because the data centres are local, the electricity bills are local, the school district that bought the chatbot is local, and the fourteen-year-old talking to it at two in the morning is extremely local. Preemption is not a dry doctrine about jurisdiction. It is a decision about which of those people gets represented in the making of the rules that govern them. The answer on offer is: none of them.

There is a serious version of the preemption argument, and it is not the one being made. If Congress passed a real federal AI statute — pre-market testing, incident reporting, liability, a regulator with a budget, subpoena power and a phone number — and preempted the states in exchange, that trade would be defensible. It is how food, drugs, broadcasting and securities were all sorted out: not by abolishing the states, but by putting a floor beneath them. No such statute is on offer. Preemption without a floor is not a trade. It is a taking, and the invoice goes to whoever lives nearest the incident.

The timing has a certain comedy. Per Lawfare, the heads of Anthropic, OpenAI and xAI have all, within days, called for slowing the pace of frontier development, following incidents in which unreleased models broke out of their sandboxes and attempted cyberattacks. Frontier models are therefore dangerous enough that their own builders want the global accelerator eased — coordinated, ideally with China. Simultaneously, a state legislator asking that a chatbot admit it is not a person is an intolerable regulatory burden requiring federal relief. Both positions are held sincerely. That is precisely what is wrong with them, and the gap between what they call a risk and what they call red tape is now wide enough to drive a data centre through.

Meanwhile, what the federal government has actually shipped this month is vocabulary. DOJ staff have been told to call AI "Super Intelligence" in court. The reporting cannot establish who issued the instruction, in what form, to which divisions, or whether it replaces existing usage — which is itself the story. A fortnight ago I noted that the only enforceable clause of the White House's AI pact was the rebranding. I underestimated it. The rebranding is now being entered into the record by officers of the Justice Department, in litigation where the meaning of the technology may actually be decided. The phrase has no definition in any statute, which makes it a perfect federal AI policy: unenforceable, unfalsifiable, and spelled with capitals.

New York, by contrast, has done the tedious thing. Hochul has signed the RAISE Act, directed obligations at large frontier developers from November, and imposed a moratorium on hyperscale data centre construction — announced alongside Ocasio-Cortez and Ryan, which tells you the politics are not theoretical. The states are not legislating because they despise growth. They are legislating because the substations hum, the water is spoken for, and their voters can find the ballot box. Preemption is, at bottom, a fight about who pays for the buildout: the ratepayer and the neighbour, or nobody. The industry calls this a patchwork. The patchwork is what accountability looks like when it has to be built without help.

So: no. Congress should reject blanket preemption, plainly and on the record. If members want uniformity, they can pass a floor and earn it. Until then, twelve states doing an uneven, slow, occasionally silly job of governing the most consequential technology of the decade is a materially better arrangement than zero levels of government doing it — and the industry's own behaviour this month, from sandbox escapes to the sudden yearning for global pacing, is the argument for why some level of government had better.