As governments at all levels scramble to develop rules for self-driving cars, the US National Highway Traffic Safety Administration (NHTSA) now says it won’t overrule state regulations. This has left some industry pundits fearing further fragmentation across the US autonomous vehicle industry, as the feds let states drive the regulatory bus in many different directions.

According to Business Insider, the NHTSA announced that it will have no say in any additional state autonomous-vehicle laws that augment NHTSA’s federal regulations. Mark Rosekind, head of the NHTSA, made the statement last week, adding that his agency intends to announce federal regulations on autonomous vehicles next month.

See also: US federal government may legalize autonomous cars by July

This follows recent speculation about what role the NHTSA was looking to play with new regulations over self-driving car testing in the US, which is a fragmenting patchwork of local and federal rules.

With the feds indicating that they will mostly defer to state rules, this could lead to further industry chaos as car makers and tech firms face different regulatory hurdles in every state.

The current landscape of autonomous vehicle legislation in the US is broadly fragmented. Some states allow testing and semi-autonomous driving, while others are staunchly opposed to any testing of self-driving cars in their state, whether it be it tech players like Google and Uber or traditional car makers like GM.

Fragmented regulatory environment the biggest threat

Industry watchers say this fragmented regulatory environment poses one of the greatest barriers to developing autonomous vehicles in America. And with self-driving car makers potentially facing 50 different regulatory environments in 5o different states, industry pundits are worried the first fully autonomous vehicle will be launched outside of the US in a more unified regulatory environment.

At present New Jersey is considering a special license for those driving fully autonomous vehicles, while Florida would instead allow anyone with a standard driver’s license to pilot the new cars. Meanwhile, California proposed rules that demand a driver at all times be behind the wheel of a self-driving vehicle.

Many of these regulations not only threaten the testing environment for self-driving cars, but would likely eat into the bottom line of such ride-hailing services as Lyft and Uber, which still must incur the expense of paying drivers whether the vehicle is autonomous or not.