Testimony In Opposition to LB 642, “The Artificial Intelligence Consumer Protection Act”

Testimony from:

Adam Thierer, Senior Research Fellow, R Street Institute

Testimony In Opposition to LB 642, “The Artificial Intelligence Consumer Protection Act”

February 6, 2025

Judiciary Committee

Chair Bosn and Members of the Committee:

My name is Adam Thierer and I am Resident Senior Fellow in the Technology and Innovation program at the R Street Institute.  The R Street Institute is a nonprofit, nonpartisan public policy research organization. Our mission is to engage in policy research and outreach to promote free markets and limited, effective government in emerging technology, among other areas.

LB 642, “The Artificial Intelligence Consumer Protection Act,” is of interest to our organization because the U.S. finds itself in heated competition with China for global leadership in artificial intelligence (AI) and advanced computational systems.^[1] The policies our nation establishes today will have important ramifications for “the great tech rivalry” of our time.^[2] With many experts worried that “China will soon lead the U.S. in tech,” Congress is still crafting a national policy framework for AI to ensure that America stays in the lead.^[3] Our public policies must create an innovation culture that is conducive to greater AI investment and entrepreneurialism.^[4]

Unfortunately, LB 642 would undermine these objectives. The bill adopts the same top-down approach used by the European Union for digital technology policy, which has decimated tech innovation, investment, and competition across Europe.^[5]

LB 642 would preemptively regulate algorithmic innovators based on the incorrect belief that AI systems are by their very nature dangerous or discriminatory. The bill contains open-ended regulatory terminology—“consequential decisions,” “substantial factors,” “high-risk” applications—that entrepreneurs will need to wait for bureaucrats to constantly reinterpret as part of a regulatory permitting process that will slow the pace in innovation.

The compliance costs associated with this paperwork-intensive regulatory system will also likely be quite burdensome for the small- and mid-sized. Only larger tech companies will have enough staff and resources to handle the complexities of this process.

There are better ways for Nebraska to address AI issues. In particular, while concerns about AI misuse are understandable, the federal government and all U.S. states including Nebraska already have many civil rights laws and consumer protection regulations in place that address those problems.

For these reasons, I encourage you to reject LB 642.

Thank you,

Adam Thierer
Resident Senior Fellow, Technology and Innovation
R Street Institute