States Gear Up to Make AI Regulation More Confusing

It might seem odd to consider that a 1959 Supreme Court ruling about state regulations on truck mud flaps could provide insight into the use of artificial intelligence in commercial real estate. However, that is where things stand.

The Bibb v. Navajo Freight Lines involved a trucking company and the state of Illinois. Trucks often sport large panels, called mud flaps, behind their wheels to help keep rocks from getting thrown back at traffic. At the time, there was another type of device that the state favored. Drivers would have to pull over, take off the flaps, and put on the other type of device to avoid getting a ticket.

Ultimately, the Court agreed with the plaintiffs because regulation of interstate commerce is a power reserved for the federal government. Illinois had overstepped its authority and illustrated how state regulations can come into conflict.

This is why large companies frequently prefer single federal regulations rather than a myriad of state ones. Even if there isn’t direct conflict, there can be an exhausting set of different requirements that are difficult to simultaneously satisfy.

BSA, a software industry trade group, said that in the wake of generative AI, there is a “wave of AI legislation building,” with 2024 alone having seen 693 new bills filed by 45 states — up from the 300 filed in 2023 — and this is likely still the early part. The organization says that hundreds of additional bills are likely to come in 2025 before the ones in 2024 are settled. One Texas lawmaker already has an expansive one ready for the coming year, according to Pluribus News, which covers state-level public policy. In addition to legislatures, governors are writing executive orders to start initiatives and direct AI policy.

The lack of a single model of regulation could become complex because vendors of software could be held responsible for a wide range of actions and uses of software. These include so-called deepfakes, unauthorized digital replicas, requiring diversity of examples in data, and directing government use.

Vendors will have to balance the development of technology to address meeting all the demands. Then companies that use such software in different states will have to ensure it works correctly in each jurisdiction. That includes CRE companies that operate in different states.