AI vs. State Borders

By Colton Collins '27

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Introduction

Over the past year, more than a thousand AI-related bills have been introduced across the United States. (1) The U.S. Chamber of Commerce attributes this surge to the growing importance of regulating artificial intelligence for safety and transparency. (2) These concerns are legitimate. However, the proliferation of state-level artificial intelligence statutes raises a constitutional dilemma rooted in the Commerce Clause, which grants Congress the power to regulate interstate commerce. (3) Artificial intelligence systems are designed to operate across state lines, relying on unified training, deployment, and governance structures, so state-by-state regulatory frameworks raise the constitutional question of when state regulation becomes interstate control.

This Article asks whether state efforts to regulate artificial intelligence exceed the constitutional limits imposed by the Dormant Commerce Clause. This Article examines the doctrinal foundations of the Dormant Commerce Clause, applies that doctrine to modern state AI statutes, and evaluates the constitutional and economic implications of state regulation that imposes burdens on interstate commerce. Artificial intelligence is inherently borderless, so this inquiry is not merely theoretical but rather goes to the core constitutional balance between state police power and federal authority over national markets.

Limits on State AI Regulation

When a state law affects interstate commerce, courts apply the balancing test articulated in Pike v. Bruce Church, Inc. to determine whether the law’s burden on interstate commerce is “clearly excessive” in relation to its putative local benefits. (4) Pike governs state statutes that do not discriminate against interstate commerce but produce cross-border effects. (5) The test reflects the Supreme Court’s recognition that even well-intentioned state laws may become unconstitutional when their practical consequences extend beyond state borders.

The scope of what state laws may be considered unconstitutional was further defined in Healy v. Beer Institute, where the Court held that states may not enact statutes that regulate commerce occurring wholly outside their borders, regardless of whether those statutes produce in-state effects. (6) This principle prevents states from projecting regulatory power beyond their territorial limits and imposing national compliance obligations through local law.  In Brown-Forman, the Court similarly invalidated state regulation that forced out-of-state businesses to alter their nationwide pricing structures to comply with a single state’s requirements. (7) The Supreme Court most recently reaffirmed these limits in National Pork Producers Council v. Ross, clarifying that Pike’s balancing framework remains operative for non-discriminatory but burdensome state laws and reaffirming Healy’s prohibition on extraterritorial regulation. (8) 

Pike, Healy, and Brown-Forman establish a two-part constitutional rule on state regulation: states may not directly control out-of-state conduct, and they may not impose interstate burdens that are clearly excessive in relation to their local benefits. This constitutional rule is outcome-based because artificial intelligence algorithms are developed and controlled as national products, and statutes that compel changes to model training, risk, or reporting operate outside state jurisdiction. Compliance with a single state’s regulation framework requires nationwide restructuring, and that regulation implicates both extraterritoriality rules and Pike’s burden framework.

Legislative Application

California’s Frontier AI Framework and Colorado’s Algorithmic Discrimination and Reasonable Care Act serve as case studies illustrating how state AI regulations impose interstate burdens that raise Dormant Commerce Clause concerns.

California’s Frontier AI Framework

California Senate Bill 53 requires artificial intelligence developers operating in California to publish a frontier AI framework and detailed transparency reports, including risk assessments, mitigation strategies, and third-party evaluations. (9) The legislature intended the law to promote transparency and to assess risks associated with advanced AI systems. (10) These requirements apply to nationwide AI developers seeking access to California’s market, effectively imposing uniform compliance obligations across state lines. 

AI systems are developed and governed through uniform processes and are typically implemented at the organizational level. Governance, reporting, and risk management are structured across the company rather than by the state because compliance with California’s framework requires developers to restructure systems nationally, not just within California.

The burdens imposed by California Senate Bill 53 are real and national in scope because the compliance regulations require restructuring across the organization, which extends beyond California’s borders. Pike requires courts to weigh demonstrable interstate burden against California’s state and local transparency and safety interests. The constitutional question is whether the nationwide restructuring required by SB 53 is clearly excessive when weighed against the asserted benefits. 

Colorado’s Algorithmic Discrimination and Reasonable Care Act

Colorado’s Algorithmic Discrimination and Reasonable Care Act imposes similar constitutional pressures. The statute requires developers of high-risk artificial intelligence systems to exercise “reasonable care” to prevent foreseeable risks of algorithmic discrimination, including disclosures, annual reviews, and public transparency obligations. (11) Preventing discrimination is a legitimate local interest, but the means Colorado employs to advance that interest impose nationwide compliance obligations on systems that operate across state lines.

High-risk AI systems are engineered and deployed as nationally conforming products. Colorado frames this bill's requirements as governing only in-state AI harms. Still, the compliance obligations operate at the AI’s system level, therefore cannot be reconfigured for each state without affecting the design, its governance, and its human oversight. This national tension brings the statue under Pike’s balancing framework. 

Colorado’s statute is a closer constitutional question than California’s framework. Under Pike, the inquiry is comparative because courts must assess whether the overall interstate burden imposed by compliance is clearly excessive in relation to the state’s asserted antidiscrimination interest. The constitutional analysis hinges on the proportionality between the burden and the benefit.

Nationwide Compliance Costs

The unitary nature of AI development and deployment magnifies these interstate burdens. AI training is a unified process that cannot be conducted on a state-by-state basis because no AI lab has the resources to train models to comply with dozens of distinct regulatory regimes. (12) Fragmented state regulation imposes compliance costs that are compounding, reshaping how AI systems are developed nationwide.

The Business Roundtable similarly warns that fragmented state regulation creates a broken and complex regulatory landscape that negatively affects innovation and service delivery. (13) The U.S. Chamber Technology Engagement Center reports that 50% of small businesses use AI, and 77% of those businesses believe technological limitations would negatively affect them. (14) These effects extend beyond developers to consumers and the national economy, underscoring that state-level AI regulations impose interstate burdens that are likely to be excessive relative to their speculative local benefits.

The overall effect of fragmented national AI frameworks is not just heightened compliance costs, but also regulatory fragmentation within a market that functions as a unified ecosystem. Developers must comply with the most restrictive state requirements, allowing any single state to shape national standards. The Commerce Clause asserts an allocation of authority: nationwide regulations belong to Congress rather than to a patchwork of the states. 

Conclusion

States have enacted a growing number of artificial intelligence statutes in response to safety and transparency concerns, prompting this Article to ask whether those efforts exceed the constitutional limits imposed by the Dormant Commerce Clause. Under Pike, the courts weigh validatable interstate burdens against the asserted local interests and invalidate statutes whose burdens are clearly excessive. Judicial enforcement of Pike’s balancing framework preserves the constitutional distinction between state police power and federal authority over national industries, ensuring that technologies operating at the national level are not subject to fragmented state patchworks.

Endnotes

1. Bradley, Neil. “Let America Lead on AI.” U.S. Chamber of Commerce, June 30, 2025. https://www.uschamber.com/technology/ai-laws-impact-on-business.

2. Ibid. 

3. U.S. Constitution, art. I, § 8, cl. 3.

4. Pike v. Bruce Church, Inc., 397 U.S. 137 (1970).

5. Ibid., 142.

6. Healy v. Beer Institute, 491 U.S. 324 (1989).

7. Brown-Forman Distillers Corp. v. New York State Liquor Authority, 476 U.S. 573 (1986).

8. National Pork Producers Council v. Ross, 598 U.S. 356 (2023).

9. California Senate Bill 53. Frontier AI Framework. 2025–26 Reg. Sess. (Cal. 2025). To be codified at Cal. Gov’t Code §§ 11640–11649.

10. Ibid. 

11. Colorado Senate Bill 24-205. Consumer Protections for Artificial Intelligence. 74th Gen. Assemb., Reg. Sess. (Colo. 2024). To be codified at Colo. Rev. Stat. §§ 6-1-1401 et seq.

12. Chilson, Neil, and Kevin Frazier. “When Might State AI Laws Run Afoul of Pike?” Harvard Journal on Legislation Digest, October 10, 2025.https://jolt.law.harvard.edu/digest/when-might-state-ai-laws-run-afoul-of-pike.

13. Business Roundtable. “Business Roundtable Response to the Request for Information on the Development of an AI Action Plan.” March 14, 2025. https://www.businessroundtable.org/business-roundtable-response-to-the-request-for-information-on-the-development-of-an-ai-action-plan.

14. U.S. Chamber Technology Engagement Center. “Empowering Small Business: The Impact of Technology on U.S. Small Business.” 2025. https://www.uschamber.com/technology/empowering-small-business-the-impact-of-technology-on-u-s-small-business.