Policies for the Jurisdiction of the Technology and Communications Standing Committee

WHEREAS, AI is a vastly growing field with the capacity to substantially impact many different areas of our day-to-day life including, but not limited to, employment, transportation, education, healthcare, housing, and more; and

WHEREAS, the incorporation of AI into government, society, and work can drive innovation and economic growth, create efficiencies, and improve productivity; and

WHEREAS, despite its many benefits, the use of AI also creates risks and challenges especially in areas such as elections, ethics, privacy, cybersecurity, civil rights, the financial sector, and the potential for job displacement; and

WHEREAS, state legislatures have been working closely with stakeholders from government, academia, the private sector, and labor, among other interests, in researching and developing state laws and regulations on the use and deployment of AI technologies, balancing the sometimes competing principles of encouraging innovation with protecting the public interest; and

WHEREAS, especially in light of state legislative and regulatory activity in this area, federal preemption of state AI laws and regulations could interfere with state efforts to create solutions that meet the unique needs of their residents and businesses, and undermine public trust in this new technology; and

NOW, THEREFORE, BE IT RESOLVED that the National Conference of State Legislatures encourages the federal government to collaborate with state and local governments, private sector stakeholders, and other thought leaders in efforts to develop a public awareness and education campaign to help Americans better understand AI technology and provide information regarding its benefits and risks; and

BE IT FURTHER RESOLVED that NCSL urges Congress and federal agencies to consult with states as they debate and develop AI legislation and regulations, paying particular attention to how any federal law or regulation will impact state laws governing AI. Federal laws and regulations in the AI space should set a strong baseline of rights and safety protections and support states’ ability to adopt additional protections in their own laws to keep pace with and respond to rapid AI technological advances; and

BE IT FURTHER RESOLVED that NCSL urges Congress and federal agencies to ensure that federal AI legislation and regulation does not usurp states’ ability to legislate and regulate in areas that traditionally rest under the oversight of states and local governments; and

BE IT FURTHER RESOLVED that NCSL urges the federal government to invest in research initiatives with the National Science Foundation, the National Institute of Standards and Technology, and other appropriate organizations to conduct thorough and ongoing research on AI technologies, and to share those findings with their counterparts in state government; and

BE IT FINALLY RESOLVED that a copy of this resolution be sent to the President of the United States, all members of Congress, and all relevant federal and state officials.

WHEREAS, it should be an important goal of federal policy to ensure that development and deployment of advanced AI systems is conducted responsibly and does not generate social costs that exceed the social benefits of the technology; and

WHEREAS, advanced AI systems may generate risks of harm that would exceed the ability of their creators or deployers to compensate the victims; and

WHEREAS, it is crucial that any victims of harms caused by advanced AI systems receive compensation; and

WHEREAS, requiring liability insurance commensurate with each technology’s risk level will provide an economic incentive for advanced AI system developers to take appropriate precautions to avoid the occurrence of damage; and

NOW, THEREFORE, BE IT RESOLVED that NCSL requests that Congress works with state insurance regulators to encourage the insurance industry to develop liability insurance for the deployer of advanced AI systems, with coverage requirements set based on an assessment of the system’s potential hazardous capabilities.

The ability to access and maintain reliable, affordable high-speed Internet is essential to the success of families, businesses, and government services. Congress created the Affordable Connectivity Program (ACP) in 2021 to make broadband service and connected devices available to lower-income households at discounted prices from providers that opt to participate in the program.

Until its termination in May 2024 because of insufficient funding, the ACP enabled more than 23 million low-income American households to connect to online educational resources, gain employment opportunities, access vital services such as telehealth and government assistance, and participate in our civic life. The ACP has also helped close the digital divide as many of these 23 million Americans reside in rural communities, military communities, and communities of color.

In addition to impacts on broadband adoption, the end of the ACP is also impeding the success of other ongoing federal and state investments to close the digital divide through the construction of new infrastructure to help reach those in unserved and underserved parts of the country. If residents can no longer afford their internet service, the end of the ACP could undermine the billion-dollar investments providers, governments, and taxpayers are making in new infrastructure. Finally, the program’s lapse is also disrupting the stability of customer bases of internet service providers as households are unable to afford the costs of getting and staying connected.

The National Conference of State Legislatures urges Congress to prioritize the continuity and sustainability of the ACP or a similarly robust program to ensure that low-income American families can continue to afford high-speed internet service.

The 1967 Bellas Hess and the 1992 Quill Supreme Court decisions denied states the authority to collect sales and use taxes by out-of-state sellers that have no physical presence or nexus in the taxing states, and urged Congress to address the issue of remote sales tax collection. It is estimated in various studies that state and local governments are losing between $8 billion to $35 billion a year in uncollected sales taxes from remote transactions and that annual losses will continue to grow as more commerce is conducted online. Congress’ failure over the last 26 years to address the issues raised by the Supreme Court in 1992, resulted in an effort by states to require remote sales tax collection based on economic presence. The first case ready for review by the Supreme Court, South Dakota v. Wayfair, resulted in the Court overturning its previous decisions in Bellas Hess and Quill, which allowed states to require remote sellers to collect sales taxes for purchases made by their residents. The Wayfair decision by the Supreme Court has made the need for congressional action unnecessary.

Having state tax sovereignty returned to the states for sales tax collection, states now have the obligation to act with fairness and transparency in administering the remote sales tax collection system. The responsibility will be on states to ensure that the burden to collect sales taxes by remote sellers is no greater than the burden on in state sellers if states are to avoid a preemptive federal framework imposed by Congress. States must work together as partners in the collection of sales taxes or face a call from sellers for federal intervention. Action by state tax departments regarding remote sales tax collection without the consent of the elected policymakers in the state legislature and executive branch should be avoided.

NCSL recognizes that 24 states have enacted legislation to join the Streamlined Sales and Use Tax Agreement (SSUTA), which was recognized by the Supreme Court in the majority opinion as a viable way for states to collect remote sales taxes. While it is an option for the remaining 21 states that have a sales tax, it is not mandatory. However, those 21 states should consider joining SSUTA or consider enacting legislation to work with SSUTA for: a central registration system for remote sellers, a central system for the certification of Certified Software Providers (CSPs), ensure that remote sellers are provided the same compensation as in-state sellers, provide a publicly available taxability and exemption table, and, provide a rates and boundary database in an easily downloadable format.

States won a victory in the U.S. Supreme Court and now they have a responsibility to ensure that sellers are treated with fairness and as good corporate citizens. States should follow the Golden Rule of state tax policy: “Do unto taxpayers in other states as you would have them do unto your taxpayers.” Any state that implements remote sales tax collection irresponsibly will only jeopardize the ability of other states to require remote sales tax collection.

Moreover, NCSL will oppose unnecessary federal legislation that preempts the states’ authority, as granted by the Supreme Court, to collect sales taxes from remote sellers.

Deployment and Adoption

Internet connectivity is essential to the success of families, businesses, and government services. NCSL urges Congress and the administration to invest in universal internet connectivity, provide flexibility to states in federal programs and funding, and initiate proactive, meaningful engagement and consultation with states during the process of program development and implementation. NCSL also encourages prioritization of anchor institutions in federal funding and programs, as these schools, libraries, and hospitals are often cornerstones of community access. NCSL further recognizes the special challenges of middle and last mile deployment and encourages Congress and the administration to provide support to communities working towards universal service.

Federal funding and deployment programs should also address affordability and access among rural, unserved, and minority communities. NCSL urges Congress and the administration to provide targeted resources for reducing the digital divide, such as digital inclusion funding, training, and digital literacy. NCSL further encourages funding for tribal connectivity.

NCSL urges investment in wireless connectivity and facilities deployment, especially in unserved and underserved communities. NCSL further encourages investment in telecommunications workforce and advanced communications technology education and training.

Mapping and Data Collection

Fair, efficient deployment of internet services is dependent on accurate mapping of speeds, adoption rates, and coverage. NCSL encourages the federal government to ensure readily available data and technical support for accurate mapping. We also urge Congress and the administration to provide sufficient funding for mapping and to continue to provide easy-to-use, free online maps available to states and consumers. NCSL recognizes the importance of protecting states’ ability to do their own data collection and ensure accuracy of deployment maps.

Technology and Smart Communities

Telecommunications technologies are constantly evolving, and states are finding increasingly innovative ways to deploy connected devices. NCSL encourages additional federal investment in the development of smart communities. We further urge federal support for emerging telecommunications technologies, including those with applications in telehealth, agriculture, smart infrastructure, and transportation. NCSL also recognizes the need for investment in devices and connectivity equipment for anchor institutions.

Federal Funding and Cooperation

The federal government, including Congress, the Federal Communications Commission, National Telecommunications and Information Administration, and the U.S. Department of Agriculture, must work in close partnership with states to reach universal adoption. NCSL recognizes the essential leadership role of state policymakers and regulators as many states have created broadband offices, task forces, commissions, agencies, or frameworks. It is essential that federal regulatory agencies participate in meaningful engagement and consultation with states in the development and implementation of federal programs. NCSL encourages state legislature representation on federal advisory committees and boards that oversee broadband and consumer protection issues.

NCSL urges Congress and the administration to provide predictable, stable, and sufficient funding for internet connectivity programs. If Congress enacts financing opportunities, NCSL supports state flexibility in financing options in addition to sufficient program funding. We further emphasize the importance of partnership and communication in funding decisions.

NCSL encourages responsible, nimble, and fair federal spectrum management as well as meaningful engagement and consultation with states when determining the best use for spectrum.

Taxation

NCSL recognizes that communications tax policies should encourage a level playing field between communications service providers, enhance economic development, and avoid discrimination between new and existing providers. Other than the prohibition of taxes on internet access, NCSL opposes federal action that preempts the ability of states to determine their own tax policies in all areas, including communications services, unless where specifically supported by other NCSL policies.

The Internet defies a detailed one-size-fits-all approach to public policy and regulation. America's federal and state lawmakers, as well as policy makers from other countries should be guided by principles that foster the Internet's development while protecting the security and privacy of individual users.

Our nation's state legislatures are well-aware of the impact that access to the Internet and electronic commerce have on the economic vitality of our states and communities. State legislatures also recognize that the marketplace for electronic commerce is global, not just in the United States. State legislatures share the concern of many in Congress that ill-conceived over-regulation and taxation of the Internet and electronic commerce services could harm our nation's ability to compete globally. However, state legislatures also recognize that they have an obligation to act, when and if necessary, to protect the general welfare of their constituents. As the use of the Internet continues to expand, any future or existing regulations must be balanced against market forces in a competitive and technologically neutral manner, as government must not choose the winners or losers of the digital age.

Nothing in this policy statement is to be construed as limiting or affecting the right of any state to regulate alcohol according to its local norms and standards pursuant to the 21st Amendment.

NCSL opposes unnecessary or unwarranted federal legislation or regulation that would impede efforts by states to promote access to the Internet, enhance competition or increased consumer choice, or ensure the security of personal information of consumers conducting electronic commerce transactions.

The National Conference of State Legislatures (NCSL) supports the following principles in formulating laws and regulations that impact the Internet and electronic commerce:

Data Privacy, Security and Online Safety

With the proliferation of data online, including the internet of things and mobile devices, the regulation of the collection, sales, and transmission of consumer data is increasingly a priority for state and federal lawmakers. NCSL recognizes the importance of consumer data privacy and security protections, as well as the role of the states as leaders in establishing those protections for their constituents.

In response to many high-profile security breaches and violations of consumer privacy, data privacy and security have become the subject of increasing regulation, most notably the General Data Protection Regulation (GDPR) in Europe. States and the federal government are working to protect against data breaches, mishandling of data, and non-transparent sale of consumer data in a way that balances myriad competing interests and allows for innovation while safeguarding the rights of consumers.

With regard to children and adolescents, the internet poses certain increased risks as they may not be able to recognize dangerous situations online. Strong privacy laws combined with online safety laws could be a critical part of alleviating the mental health harms facing young people. States have enacted comprehensive privacy, security, and online safety laws in the past few years and will not hesitate to act to protect the privacy, security, and mental health of their residents, particularly their children and adolescents.

NCSL opposes blanket state preemption in federal data privacy and security legislation. However, because of the interstate nature of the internet and data transmission, NCSL recognizes there may be a need for uniformity in the regulatory environment.

NCSL strongly urges Congress to engage in regular and meaningful consultation with state lawmakers when considering federal privacy and security legislation, including legislation aimed at protecting children and adolescents. State lawmakers should be included in hearings, review of draft language, principle setting, and other Congressional activity intended to impact state regulatory regimes.

If Congress develops a national standard, NCSL strongly encourages consultation with states and recognition of state expertise in addressing the varied interests of each state’s unique constituency. In any federal legislation, NCSL urges Congress to prioritize transparency and informed privacy decisions, to carefully consider the best method for consumer notice, disclosure, and consent, and to ensure increased safeguards to protect the privacy, security and mental health of children and adolescents. NCSL further encourages Congress to consider issues of third-party access and sales, disposal of data, consumer rights to control data, and the burden of protecting consumer data. States have also engaged in significant deliberation over the applicability of consumer protections to various data types, including how to define personal data and how categories of data collectors or sellers should be regulated. NCSL supports recognition by Congress of states’ expertise on these issues and opposes any legislation that preempts state law without meaningful consideration of state priorities or established consumer protections.

NCSL also recognizes the rapidly evolving nature of data collection and urges Congress to consider biometric data, location data, and technologies like facial recognition and artificial intelligence when considering federal legislation.

States must retain the right to establish their own legal rights of action, enforcement regimes, and oversight authority. NCSL urges Congress to protect the right of the states to enforce data privacy provisions in any federal legislation.

Telemarketing

NCSL recognizes the increase in telemarketing activity, telemarketing fraud, fraudulent mass texts, and robocalls across the nation and the work of the Consumer Financial Protection Bureau and Federal Communications Commission on expanding consumer rights in this area. NCSL urges Congress to pass legislation to protect consumers from harassing, predatory, and fraudulent telemarketing activity, including requiring telephone service providers to, at no cost to the customer:

1. Make robocall and text mitigation technology available to any customer;
2. Implement call and text authentication technology to identify likely spoofed calls and texts; and
3. Offer call and text blocking technology.

Free Speech

The Internet allows people to communicate and share ideas with others with an ease never before possible. Federal government policy should rigorously protect freedom of speech and expression on the Internet, but not restrict states or local governments from oversight protecting freedom of speech. New technologies should adequately enable individuals, families and schools to protect themselves and students from communications and materials they deem offensive or inappropriate. State law enforcement, with federal assistance and resources, must be able to enforce criminal statutes against predators that use the Internet to harm or abuse children.

Self-Governance

NCSL requests that Congress to maintain the current self-governance approach that allows the competitive marketplace to drive broadband and broadband-related applications development and deployment. Congress should avoid adopting new mandates and provide the Federal Communications Commission (FCC) with defined and limited authority to oversee, but not proactively intervene in, the broadband Internet marketplace consistent with principles that focus on assessing whether the market continues to ensure that consumers can:

1. Receive meaningful information regarding their broadband service plans;
2. Have access to their choice of legal Internet content, recognizing the limits on bandwidth and quality of service of their service plan;
3. Run applications of their choice, subject to the needs of law enforcement and the limits on bandwidth limits and quality of service of their service plans, as long as they do not harm the provider’s network or interfere with other consumers’ use of the broadband service; and
4. Be permitted to attach any devices they choose to their broadband connection at the consumer’s premise, so long as they operate within the limits on bandwidth and quality of service of their service plans and do not harm the provider’s network, interfere with other consumers’ use of the broadband service, or enable theft of services.

Growth

Public policies must be designed to foster continuing expansion of useful and affordable bandwidth, encourage development of innovative technologies and promote broad universal access. Federal and state governments must work together to ensure that all Americans, regardless of where they live, have competitive access to high-speed broadband technologies. Government must work to guarantee open and competitive markets for broadband services.

Information Technology

Information technology (IT) is a global industry. A strong American IT industry enhances and strengthens the economic well-being of our states and nation. States and the federal government must work together to ensure a climate that allows America’s IT companies to continue to perform research and technology development, to generate innovative new products and services and to solve customer problems. States must have the unfettered ability to continue to seek ways to use IT to better the lives of their residents. Therefore, NCSL opposes any attempt by the federal government to restrict or penalize states’ efforts to utilize information technology services and products that allow states to provide more efficient government services to residents at lower costs to taxpayers.

Internet Gambling

Congress must respect the sovereignty of states to allow or to prohibit Internet gambling by their residents.

The Wire Act of 1961 prohibits using an interstate wire communication to transmit bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest. The law also made it illegal to use interstate wire communications transmissions to provide remuneration for winning bets or wagers or for information assisting in the placing of bets or wagers.

In 2018, the Supreme Court’s ruling in Murphy vs. National Collegiate Athletic Assn. allowed states to legalize and regulate sports betting for the first time, and many states have passed or are considering legislation that allows online gaming. Additionally, states currently engage in online gaming markets, interstate online poker pools, online lottery sales, and interstate lottery pools, among other online gaming activities. States and bettors also use the internet for marketing and payment processing. Some states currently utilize technology that restricts sportsbooks and users to operate within state lines.

The Department of Justice has issued several memos on the application of the Wire Act that may impact the ability of states to operate and regulate a variety of online betting and gaming activities. In 2019, the Office of Legal Counsel in the Department of Justice issued a revision of their 2011 opinion. The revision stated that the restrictions in the Wire Act apply to any form of gambling that crosses state lines, and may impact many currently legal state gambling activities, including the passing of data through intermediaries. The revision creates uncertainty in the regulatory environment and may cause disruption in state markets as litigation follows.

NCSL recognizes the importance of state sovereignty in the operation and regulation of online gaming and the importance of a predictable and stable regulatory environment. NCSL encourages Congress and the Department of Justice to engage in regular and meaningful consultation of state lawmakers and regulators when considering bills, opinions, or other actions that may disrupt current state markets or affect the ability of states to regulate online gaming. NCSL recognizes that states are best suited to regulate online gambling and encourages the Department of Justice to revise its current interpretation of the Wire Act to recognize state sovereignty in regulating these activities and provide market stability.

NCSL also urges Congress to clarify the Wire Act to protect the ability of states to operate and regulate online gambling activities as they see fit, including currently legal activities threatened by the revision of the OLC opinion. NCSL further recognizes that the Wire Act contains language that is out of date and does not reflect the reality that states, markets, consumers, and regulators operate in the age of the internet and digital commerce. NCSL supports a revision of the Wire Act that updates the Act to more accurately represents current technology and communications capabilities.

Electronic Commerce and Taxation

Government policies should create a workable infrastructure in which electronic commerce can flourish. Policy makers must resist any temptation to apply tax policy to the Internet in a discriminatory or multiple manner that hinders growth. Government tax systems should treat transactions, including telecommunications and electronic commerce, in a competitively neutral and non-discriminatory manner. The federal government and America’s industries should work with state legislatures in ensuring equal tax treatment of all forms of commerce and should encourage state efforts to achieve simplification and uniformity through the streamlining of state and local sales and telecommunications tax systems.

NCSL supports the reform of the discriminatory taxation of communications services and believes that if state and local governments were to take such action, the need for the federal moratorium on Internet access would cease to exist.

Video Franchise Reform

Innovation and convergence of existing technologies are radically expanding communications and information services, blurring distinctions between telephone, Internet services, cable, wireless and satellite. These rapid changes often outpace abilities of federal, state and local regulatory regimes to adapt. It is important that video regulatory policy assure that like services are treated alike, investment is encouraged, and services are in a non-discriminatory manner.

State Administration Will Preserve State Authority

Local jurisdictions are the creation of either state constitutions or law. The powers that these political subdivisions of the state exercise were granted to them over time by state legislatures. Those local jurisdictions that have franchise authority have it as a result of state legislation or the state constitution. Therefore, any attempt by Congress to preempt current local franchise authority is a preemption of state sovereignty.

While NCSL rarely advocates for the consideration of legislation in state legislatures, NCSL has at times, when states are facing a crisis or a serious threat of federal preemption, urged state legislatures to take action. NCSL endorses efforts that remove barriers to entry for or inequity of regulation among video competitors and foster additional consumer choices in the video marketplace ultimately ensuring competitive neutrality.

Government should encourage competition and consumer choices for broadband and video services and promote the deployment of broadband services and technologies, as well as including options for public-private partnerships where applicable.

Fees and Taxation of Video Providers

Franchise fees today are levied, imposed or collected as a percentage of gross revenues, used for general revenue purposes and not based on the actual direct and identifiable costs of any benefit to the entity that pays the fee. To the extent such fees are intended as payment for use of public rights-of-way, that fee should be limited to the actual, direct and identifiable cost of such use, and that portion of the fee should be applied only to those who use the rights-of-way. Franchise fees should be collected and administered by one central agency per state.