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Colorado becomes first state with sweeping artificial intelligence regulations

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Colorado becomes first state with sweeping artificial intelligence regulations

May 20, 2024 | 5:19 pm ET
By Sara Wilson
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Colorado becomes first state with sweeping artificial intelligence regulations
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Colorado Gov. Jared Polis speaks during a news conference about a bipartisan property tax reduction bill on May 6, 2024, at the Colorado Capitol. (Quentin Young/Colorado Newsline)

Colorado is the first state in the country to create a regulatory framework for artificial intelligence after Gov. Jared Polis signed Senate Bill 24-205 into law Friday evening.

The bill sets guardrails for companies that develop and use AI in an attempt to mitigate consumer harm and discrimination.

Polis, a Democrat, wrote in a signing statement that he signed the bill with reservations and hopes the conversation around AI regulation will continue at both the state and federal levels.

“While the guardrails, long timeline for implementation and limitations contained in the final version are adequate for me to sign this legislation today, I am concerned about the impact this law may have on an industry that is fueling critical technological advancements across our state for consumers and enterprises alike,” he wrote.

The law will not take effect until 2026.

It was sponsored by Senate Majority Leader Robert Rodriguez of Denver, Rep. Brianna Titone of Arvada and Rep. Manny Rutinel of Commerce City, all Democrats, and passed in the final days of the most recent legislative session, which concluded May 8.

The law imposes requirements on developers and deployers on so-called high-risk AI systems, such as those involved in making consequential decisions related to hiring, banking and housing. Developers and deployers will have a responsibility to avoid algorithmic discrimination and report any instances to the attorney general’s office. There are also reporting requirements from developers to consumers.

“Laws that seek to prevent discrimination generally focus on prohibiting intentional discriminatory conduct. Notably, this bill deviates from that practice by regulating the results of AI system use, regardless of intent, and I encourage the legislature to reexamine this concept as the law is finalized before it takes effect in 2026,” Polis wrote.

Polis wrote that AI regulation should be considered at the federal level, versus a patchwork of state-level policies. A similar bill in Connecticut, which was crafted with input from human resources software Workday, failed during that state’s legislative session this year.

Congress has yet to pass any bills regulating AI, but Senate Majority Leader Chuck Schumer, a New York Democrat, released a roadmap for potential policy born from the work of the Bipartisan Senate AI Working Group earlier this month.

Colorado’s legislation drew opposition from the technology industry and businesses that use AI. They were primarily worried about it stifling innovation in a nascent field.

“It’s a very wide-reaching bill. It’s really challenging to wrap our heads around all the things we might inadvertently do that we might not think about,” said Logan Cerkovnik, the founder and CEO of Denver-based Thumper.ai. “It’s certainly a well-intentioned bill, but as we think about how the major social changes we’re trying for in the bill are supposed to work.”

“Are we shifting from actual discrimination to the risk of discrimination before it happens?” he added.

His company plans to soon offer different tools, such as large language models, and he questions whether they should restrict the consumer use to automatically prevent banks from uploading loan applications or employers from uploading resumes — two instances where AI can show bias and discrimination.

“Maybe they get into some sort of trouble later on and try to say that our company has liability because we gave them a general purpose tool and they misused it,” he said.

Cerkovnik said there’s room for industry input to improve the legislation before it takes effect. That could include sharpening over-broad definitions and having an expert commission in charge of regulatory enforcement instead of the attorney general’s office.

Polis wrote in his signing statement that stakeholders, including industry leaders, need to take the next two years to “fine tune the provisions and ensure that the final product does not hamper development and expansion of new technologies in Colorado that can improve the lives of individuals across our state.”

“It is critical that such discussions among stakeholders be based on a robust understanding of how the AI industry is developing, the impact of creating a separate anti-discrimination framework for AI systems only, and what our country is doing as a whole to adapt to this change in our society.”