States vs. Federal Government: Who Should Regulate AI?

The AI regulation debate intensifies

The question of who should regulate artificial intelligence is becoming increasingly urgent as the technology advances faster than policy can keep pace. Michael Pastor, Dean of Technology Law at New York Law School, recently outlined the competing interests in this debate: technology developers, state governments, and federal lawmakers each have different perspectives on how AI should be governed.

Pastor noted that while AI represents a distinct technological shift, the regulatory dilemma mirrors past crossroads with the internet and social media. The core tension remains between protecting innovation and establishing necessary guardrails.

Virginia pushes for federal action

Virginia Governor Abigail Spanberger has taken a clear stance, calling on Congress to establish federal AI regulations. In a letter to congressional leaders, Spanberger argued that the technology's rapid development creates risks individual states cannot adequately address on their own.

Her concerns span multiple domains: data privacy vulnerabilities, potential workforce displacement, cybersecurity threats, and the substantial energy and resource demands of AI systems. Spanberger's position is that a national framework is essential rather than leaving oversight fragmented across state legislatures or delegated primarily to technology companies themselves.

The case for state-level regulation

Pastor's analysis acknowledges both advantages and drawbacks to state-level AI regulation in the absence of federal action. States can move more quickly than Congress and tailor rules to local needs and industries. However, a patchwork of state laws could create compliance burdens for companies operating nationally and potentially lead to inconsistent protections for citizens depending on where they live.

The debate also touches on the frequently invoked concern about "stifling innovation." Pastor emphasized the importance of understanding what this phrase actually means in practice—a term often used to resist regulation but one that requires careful examination of trade-offs between technological progress and public protection.

Why it matters

The regulatory vacuum around AI is creating real consequences as the technology becomes embedded in critical systems from healthcare to criminal justice. Without clear federal standards, companies face uncertainty about compliance requirements, while citizens receive uneven protections. The longer this debate continues without resolution, the more difficult it becomes to establish effective oversight of AI systems already deployed at scale.

Other state technology developments

Colorado officials have rescinded over $100 million in Broadband Equity, Access, and Deployment funding to Maverix Broadband, Inc. following a monthslong investigation into whistleblower complaints. The Colorado Broadband Office froze the funding after finding evidence of financial mismanagement, including payments for services and materials never received and unpaid vendors.

In New York, state Chief Information Officer Dru Rai unexpectedly departed after serving since 2023. Deputy CIO Jenson Jacob, who joined in September 2025, has been named acting CIO. The Office of Information Technology Services declined to provide details about Rai's departure.

These developments were first reported by StateScoop.