Colorado has become the first state to pass legislation (SB24-205) regulating the use of artificial intelligence (AI) within the United States.  This legislation is designed to address the influence and implications, ethically, legally, and socially, of AI technology across various sectors.

Any person doing business in Colorado, including developers or deployers of high-risk AI systems that are intended to interact with consumers.  The bill defines a high-risk AI system as any AI system that is a substantial factor in making a consequential decision.  Notably it does not include (among others) anti-fraud technology that doesn’t use facial recognition, anti-malware, data storage, databases, video games, and chat features so long as they do not make consequential decisions.

The bill includes a comprehensive framework governing the use of AI within government, education, and business with a focus on promoting ethical standards, transparency, and accountability in AI development and deployment.  The bill requires disclosure for the use of AI in decision-making processes, sets out ethical standards to guide AI development, and provides mechanisms of recourse and oversight in cases of AI-related biases or errors.  These recourse mechanisms include opportunities for consumers to correct any incorrect personal data processed by a high-risk AI system as well as an opportunity to appeal an adverse decision made by a system with human review (if possible).  The disclosure requirements will apply to developers, requiring a publicly available statement that describes methods used to manage risks of algorithmic discrimination.  

The bill requires the development of several compliance mechanisms if an entity uses high-risk AI systems.  These include impact assessments, risk management policies and programs, and annual review of the high-risk systems.  These mechanisms are designed to promote transparency in the development and use of these systems.

The passage of this bill positions Colorado at the forefront of AI regulation in the US, setting a precedent for other states and jurisdictions grappling with similar challenge