Navigating AI Policy: States Set the Stage for New Legislation

As prefiling begins, lawmakers across the country revive unfinished debates and introduce new proposals on artificial intelligence, from consumer protections to sector-specific regulations.

Prefiling is underway in a number of state legislatures, with many others set to begin the process in November and December. Unfinished conversations from last session will likely drive these introductions: expect to see more on AI. Over the past few legislative sessions, states—with one or two exceptions—have basically stuck to the edges of AI regulation. Though grand all-encompassing AI bills were introduced and discussed, nearly all of those failed with states instead focusing on sector specific policies, deepfakes and discrimination protections.

In Maryland, Delegate Caylin Young has indicated that he wants to keep the AI conversation going in his state. A priority for him and others is safety and maximizing the benefits, “I see AI as transformational. I see it like the wheel, like electricity, like the computer and the semiconductor.” Young had sponsored legislation focused on schools in the last session and expects to continue those conversations next year. In April, the Maryland General Assembly approved creating a workgroup to make recommendations for regulations to protect consumers against abuses when AI is used in employment, housing and other fields. The conversations between those members of the working group will also likely translate into policy proposals.

These types of working groups are not unique to Maryland. A number of other states have set-up similar working groups, and recently a new multi-state legislative group has formed to share ideas as well. State lawmakers and staff met on September 25 to convene the first time for the State AI Policy Forum, hosted by Princeton’s Center for Information Technology Policy. The forum continues the conversations and efforts of the Multistate AI Policymaker Working Group, which Connecticut Sen. James Maroney (D) convened in September of 2023. That group would eventually draw 200-plus lawmakers from 48 states. 

As these conversations continue and states prepare for their upcoming sessions, many are already translating discussion into action. Across the country, governors are signing new measures and committees are holding hearings to define how AI will be regulated in practice.

Governor’s Actions on Legislation

Five bills were signed this week in California and Wisconsin. 

In California, Governor Newsom (D) signed four bills including:

• SB480 -  which authorizes an autonomous vehicle to be equipped with automatic driving system (ADS) marker lamps in accordance with specified standards, commencing on January 1, 2026
• AB979 – which regulates how generative AI is utilized on large hosting/online platforms
• AB325 – which prohibits a person from using or distributing a common pricing algorithm if the person coerces another person to set or recommend prices or commercial terms of products or services in the jurisdiction of the state. It also prohibits a person from using or distributing a common pricing algorithm as part of a contract, combination in the form of a trust, or conspiracy to restrain trade or commerce
• SB 253 – which gives regulations to the Committee of Bar Examiners on a number of issues including requiring the Committee to provide notice if artificial intelligence is used in creating questions for the bar examination or grading of the examination.

In Wisconsin, Governor Evers (D) signed SB 33 which prohibits posting, publishing, distributing, or exhibiting a synthetic intimate representation of an identifiable person with the intent to coerce, harass, or intimidate that person.

Recent action on bills

Hearings were held in a number of states on AI: Two in Massachusetts, one in Ohio, one in Pennsylvania, and one in Florida. The Florida hearing stands out for arguments that were made by the Insurance Industry on AI’s use. Industry representatives argued that generative AI is helping to process claims and detect fraud, adding that AI – which is designed to help, not replace the human workforce – is just as subject to the Florida Insurance Code as the human workers are. Therefore, they argued, Florida law already regulates AI usage in the insurance industry. We expect similar arguments to be made in other states, as well as more introductions on the AI’s use in the Insurance Industry; in Pennsylvania, HB1925 was introduced which would provide new regulations for how AI is utilized and reported by insurers, hospitals and clinicians.

Another notable introduction was in South Dakota, where Draft 132 would provide standardized definitions for AI. Though a rather mundane bill, the implications are huge. AI legislation usually shares one thing in common: inconsistent definitions of what AI is. Depending on how narrow or broadly written the bill is, AI could end up subjecting a variety of products to regulation unintentionally.