Summary: you're technically correct, but flash and modulate are two very different things, according to federal law. Federal law wins: states can't override federal law, and
modulators are legal in all states!
Now, the long version...
You're right - flashing lights are illegal in most states. But what does the term "flashing" mean?
Federal regulations
defines "Flash" as "a cycle of activation and deactivation of a lamp by automatic means continuing until stopped either automatically or manually."
But modulators don't flash! They... well, modulate! And the term "modulate" is defined, in absolutely no uncertain terms, by federal regulation
Title 49 CFR, Part 571.108, section 7.9.4.
States and political subdivisions
cannot make modulators illegal, according to
Chapter 301, Section 30103, under Preemption.
In response to a question concerning the rights of a state to make modulators illegal, the NHTSA Acting Chief Counsel,
John Womack, told Signal Dynamics that states cannot make them illegal. Period.
When states or political subdivisions have a law saying modulators are illegal (or the officer issues a ticket for "flashing lights"), as long as you have a modulator that meets federal specifications, a little thing called the United States Constitution says they lose. It's commonly called
the Supremacy Clause.
States
are allowed to adopt their own law, as long as it is
identical to the federal law. Check the American Motorcyclists Association list of state laws to
see if modulators are specifically mentioned for your state.
I know the state of
Washington has a specific law, but it differs from federal law. So if you got a ticket in Washington for having your modulator hooked-up to your low beams, federal law preempts, you win (if you have a good lawyer). Washington law says modulators are legal at night - federal law says
no, they are not legal at night!
I've seen many posts saying that in the state of New York they are illegal. Odd, the
NY DMV says they ARE legal, specifically!
I live in Ohio, and the AMA sites says Ohio has a law allowing modulators. I searched, I couldn't find the exact Ohio law, so I contacted the AMA legal-eagle types, and they gave me the number of the law. I looked it up, Ohio "references" FMVSS 571.108,
thereby "adopting" it into Ohio law.
Hope this helps.
Live to ride. Blink to live! Enjoy the ride.