Colorado Artificial Intelligence Act (SB 205) – Comprehensive Legislative Framework for AI Regulation in Colorado

Colorado Becomes First State to Enact Comprehensive Artificial Intelligence Regulation

On May 17, Colorado Governor Jared Polis made history by signing into law the Colorado Artificial Intelligence Act (SB 205), which establishes a groundbreaking legislative framework to regulate artificial intelligence (AI) tools. This move positions Colorado as the first state in the nation to enact such comprehensive regulations.

The law, which goes into effect immediately, applies to developers and deployers of “high-risk artificial intelligence systems” operating in Colorado. These terms are broad and could encompass companies based outside of Colorado that interact with Colorado residents or contract with Colorado entities.

A high-risk AI system is defined as one that plays a significant role in making consequential decisions, such as those related to education, employment, financial services, healthcare, housing, insurance, or legal services. The law aims to protect consumers from algorithmic discrimination, which occurs when an AI system results in unlawful differential treatment or impact that disadvantages a member of a protected class.

Developers and deployers of high-risk AI systems are required to take reasonable care to mitigate risks of algorithmic discrimination. They must disclose information about their systems, including training data and risk mitigation efforts, and update this information regularly on their websites.

Additionally, developers and deployers must notify the Colorado Attorney General and deployers of their AI tools within 90 days of discovering or receiving a credible report of algorithmic discrimination. They are also mandated to implement risk management policies, conduct annual impact assessments, and provide consumers with information about the use of AI systems in consequential decisions.

Enforcement of the law falls under the purview of the state Attorney General, who can seek injunctive relief and civil penalties for violations. Developers and deployers can defend against liability by promptly addressing violations and demonstrating compliance with recognized risk management frameworks.

The Colorado Artificial Intelligence Act sets a precedent for AI regulation in the United States, signaling a proactive approach to addressing the ethical and legal implications of AI technology. As other states and jurisdictions grapple with similar issues, Colorado’s pioneering legislation may serve as a model for future regulatory efforts in this rapidly evolving field.