SB 1047 Pushes Tech Innovation out of CA

WHO OPPOSES SB 1047?

Additional Organizations

“It would slow innovation, thwart advancements in safety and security, and undermine California’s economic growth. The bill’s technically infeasible requirements will chill innovation in the field of AI and lower access to the field’s cutting edge, thereby directly contradicting the bill’s stated purpose”
— AI Alliance

• Association of National Advertisers
• California Chamber of Commerce
• Civil Justice Association of California
• R. Street Institute

“We believe that SB 1047, if enacted in its current form, would have a chilling effect on AI research and development in California and potentially across the United States. It could slow down progress in a field that holds immense promise for advancing scientific understanding, improving medicine, and driving economic growth.”
—Coalition letter signed by American Consumer Institute, International Center for Law & Economics, Digital First Project, and more

WHAT’s WRONG WITH SB 1047?

SB 1047 stifles innovation and discriminates against AI startup developers

• SB 1047 regulates “frontier models” – the foundational tools that startups and new players in AI use to build the next great application – and holds them to different standards than “derivative models,” favored by large companies.


• For example, under the bill, non-derivative models must report any safety incident affecting that covered model and any derivative version of that covered model, creating burdensome requirements for non-derivative models.


• This unequal application of onerous regulations means the largest players in tech are given an unfair advantage, unburdened by costly compliance required by those using open source and startup frontier models.


• As Chamber of Progress Legal Counsel Jess Miers notes in her analysis of the bill, “these requirements expose new model developers to severe penalties and enforcement actions while demanding substantial upfront investment in compliance and monitoring infrastructure — long before determining the viability of their products.”

Vague requirements make SB 1047 impossible to navigate

• Under SB 1047, anyone developing a covered model must affirm that their model “does not have a hazardous capability and will not come close to possessing a hazardous capability.”


• This requires certifying safety before they have even begun testing the model. Testing is meant to discover vulnerabilities and allow developers to fine tune a product, but SB 1047 requires companies to affirm their product without an understanding of it capabilities.


• Worse, the certification applies not just to potential harm caused by a model, but of harms caused by any user of any app built using that model. In effect, SB 1047 forces developers to imagine every conceivable negative outcome of anyone using their tool in the future – an impossible task that, if not met, could result in being charged with perjury.


• Writing in The Orange County Register, Dean Ball – a fellow at George Mason University’s Mercatus Center breaks down the impact of the bill’s misplaced criminal liability:





Imagine a model such as ChatGPT and cyberattacker whose goal is to hack into an urban wastewater treatment plant by sending a phishing email to steal passwords. The attacker, a skilled coder who speaks broken English, tasks the model with writing a professional-sounding email posing as the plant’s IT director. All the malicious code is his own, but AI provided the email. 


Even with surveillance, how would the model or its developer know the intent of this seemingly innocuous piece of language? What if the email were instead used as an example to illustrate the correct defense to phishing? AI companies and developers in this situation might be investigated for perjury—a criminal offense. It’s like prosecuting Ford because a Mustang was used in a bank heist.

Threats of perjury are a surefire way to force developers to flee California

• Despite complaints from Sen. Wiener that SB 1047 doesn’t threaten prison, the bill text is clear: Under the law, developers must “submit to the Frontier Model Division a certification under penalty of perjury.”


• California law penalizes perjury with up to four years in prison.
  
  

SB 1047 is questionably constitutional and will require costly defense in court

• The Supreme Court has consistently recognized electronic communications – including programming language – as protected speech under the First Amendment, established in landmark cases like Reno v. ACLU and Brown v. Entertainment Merchants Association.


• SB 1047 introduces a form of unconstitutional prior restraint on the creation of speech – in this case, code. As such, if passed this bill will soon be among the growing list of California legislation challenged on First Amendment grounds.


• Will Rinehart, a senior fellow at the American Enterprise Institute focused on the political economy of technology and innovation, warned CA lawmakers in The Dispatch of the impact of the “probably illegal” SB 1047, cautioning that:



Policymakers need to ensure that their legislative solutions are precisely tailored to address clearly defined problems, rather than imposing broad requirements because those mandates can reverberate back into the industry with distorting effects.