【特集】Emerging Technologies and the Challenges for the U.S. Legal System

The Fragmented Approach to Rulemaking

The U.S. legal system is facing an unprecedented challenge in regulating emerging technologies such as blockchain and AI. Rather than relying on Congress, the front line for creating laws for new technologies is now state legislatures, state agencies, and judges in state and federal courts. This fragmented approach to rulemaking is the result of three legal trends: congressional inaction, the decline of the Chevron doctrine, and regulation by enforcement. As a consequence, complying with regulatory requirements has become increasingly difficult for industries such as blockchain, and other emerging industries like artificial intelligence could face similar challenges. Non-lawyers should care about these issues because the regulatory landscape can greatly impact innovation and consumer protection.

Trend One: Congressional Inaction

Congress has failed to create a cohesive legislative framework for decentralized technologies and artificial intelligence, leaving a regulatory gap. While proposals are being made, important legal decisions related to digital assets are increasingly being left to the courts. State legislatures have taken it upon themselves to regulate blockchain and digital asset companies, resulting in fragmentation and increased costs for businesses. Until federal leadership emerges, judges and state actors will continue to bear the burden of making these decisions.

Trend Two: Decline of the Chevron Doctrine

The Chevron doctrine has long dictated that courts defer to federal agencies' expertise when making legal decisions. However, the Supreme Court's recent decision to consider overturning the Chevron doctrine suggests a potential end to this era of deference. If overturned, courts will have more power to establish binding precedent without relying on agency expertise. This could lead to even greater fragmentation as different jurisdictions may have conflicting rulings on important legal and policy issues, making compliance more challenging.

Trend Three: Regulation by Enforcement

Agencies increasingly turn to courts to establish policies through enforcement actions, rather than going through the traditional rulemaking process. This trend is particularly notable in the context of digital assets and securities regulation, where the SEC, for example, has relied heavily on enforcement. Agencies appear to be abdicating their own authority, leaving judges to make decisions on crucial legal issues. This reliance on enforcement instead of the rulemaking process further consolidates power in the judiciary.

Managing the Power Shift

To effectively manage this power shift and create clear and consistent rules, there are several steps that should be taken. State legislators should allocate more funds for training themselves and state agencies on decentralized technologies and AI. Law schools should educate lawmakers and decision-makers through conferences, interdisciplinary trainings, and opportunities for judges and state policymakers to audit classes. Hiring unbiased computer scientists and technical experts as advisers can provide invaluable expertise. Eliminating silos and fostering a broader learning community among federal, state, and local governments can ensure a more diverse range of perspectives is considered in lawmaking related to new technologies.

The U.S. legal system must rise to the challenge posed by emerging technologies to remain a leader in innovation and maintain effective regulation. By preparing for the new era through improved tech education, integrating technical experts, and breaking down silos, courts and state officials can navigate this shifting landscape and create a regulatory framework that is responsive to the needs of the future.

Technologies Legal System