ICLE Scholars Argue Federal Preemption Key to AI Innovation
PORTLAND, Ore. (Oct. 27, 2025) – Imposing prescriptive regulations on artificial intelligence (AI) prematurely would risk stifling the technology before its possibilities are even known, scholars from the International Center for Law & Economics (ICLE) conclude in comments to the White House Office of Science and Technology Policy (OSTP).
Authored by ICLE Senior Scholars Eric Fruits and Ben Sperry and Director of Innovation Policy Kristian Stout, the comments recommend a policy of strategic forbearance and highlight that federal regulatory mismatches and state-level market fragmentation remain the primary barriers to the deployment of beneficial AI.
- Federal Regulatory Mismatch: Existing federal rules often embed human-centric assumptions that are structurally incompatible with adaptive, autonomous AI systems. Examples include the Federal Aviation Administration’s pilot-certification rules, vehicle-control standards promulgated by the National Highway Traffic Safety Administration, and the Food and Drug Administration’s premarket-approval process for continuously learning algorithms.
- State-Level Fragmentation: A growing patchwork of conflicting state and local AI regulations (e.g., those implemented in Colorado, California and New York City) creates substantial economic burdens and extraterritorial effects, forcing developers to comply with the most restrictive state law as a de facto national standard.
Stout shared the following comment:
“The federal agencies should clarify how existing, technology-neutral laws apply to AI systems, while using administrative flexibility to permit real-world experimentation. Only after we gather that empirical evidence can we craft precise, targeted rules. State-level regulatory inconsistency is the greatest immediate threat to that process, and targeted federal preemption is essential to maintaining a coherent national market for innovation.”
The full comments can be downloaded here. To interview Kristian, contact Jim Fellinger at [email protected].
About ICLE
The International Center for Law & Economics is a nonprofit, nonpartisan research center working with a roster of more than one-hundred academic affiliates and research centers from around the globe. ICLE scholars promote the use of law and economics methodologies to inform public policy debates.