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As artificial intelligence (AI) becomes increasingly embeddedinto products, services, and business decisions, state and locallawmakers have been considering and passing a range of lawsaddressing AI. These vary from laws that promote AI to moreregulatory approaches that impose obligations on AI in specificareas. In a development that parallels the evolution of privacylaws, states and localities have moved ahead with initiatives ontheir own. However, unlike in privacy, where a set of legislativeapproaches has been debated for years, approaches to dealing withAI have been far more varied and scattershot. This kind of apatchwork approach, if it continues, may create issues withmanaging regulatory compliance for many uses of AI acrossjurisdictions.

States and Localities Are Beginning to Move Forward with aPiecemeal Approach to AI

In 2021, five jurisdictions Alabama, Colorado, Illinois,Mississippi, and New York City enacted legislationspecifically directed at the use of AI. Their approaches varied,from creating bodies to study the impact of AI to regulating theuse of AI in contexts where governments have been concerned aboutincreased risk of harm to individuals.

Some of these laws have focused on promoting AI. For instance,Alabama's law establishes a council to review and advise theGovernor, the legislature, and other interested parties on the useand development of advanced technology and AI in the state. TheMississippi law implements a mandatory K-12 curriculum thatincludes instruction in AI.

Conversely, some laws are more regulatory and skeptical of AI.For example, Illinois has adopted two AI laws onethatdevelopsa task force to study the impactof emerging technologies, including AI, on the future of work andanother thatmandatesnotice, consent, and reportingobligations for employers that use AI in hiring. Under existingIllinois law, an employer that asks applicants to record videointerviews and uses an AI analysis must: (1) notify the applicantthat AI may be used to analyze the applicant's video interviewand consider the applicant's fitness for the position; (2)provide each applicant with information explaining how the AI worksand what general types of characteristics the AI uses to evaluateapplicants; and (3) obtain consent from the applicant. The law alsolimits the sharing of the videos and extends to applicants a rightto delete the videos. A 2021 amendment imposes reportingrequirements on an employer that relies solely upon an AI analysisof a video interview to determine whether an applicant will beselected for an in-person interview. The state Department ofCommerce and Economic Opportunity is required to annually analyzecertain demographic data reported and report to the Governor andGeneral Assembly whether the data discloses a racial bias in theuse of AI.

Colorado's law takes a sectoral approach,prohibitinginsurers from using anyinformation sources as well as any algorithms or predictive modelsin a way that produces unfair discrimination. Unfair discriminationincludes "the use of one or more external consumer data andinformation sources, as well as algorithms or predictive modelsusing external consumer data and information sources, that have acorrelation to race, color, national or ethnic origin, religion,sex, sexual orientation, disability, gender identity, or genderexpression, and that use results in a disproportionately negativeoutcome for such classification or classifications, which negativeoutcome exceeds the reasonable correlation to the underlyinginsurance practice, including losses and costs forunderwriting." This law comes in addition to Colorado'scomprehensive privacy law, theColorado Privacy Act, set to go into effect onJuly 1, 2023, which provides consumers with a right to opt out ofthe processing of their personal data for purposes of targetedadvertising, the sale of personal data, or automated profiling infurtherance of decisions that produce legal or similarlysignificant effects.

In late 2021, New York City notablyenacteda specific algorithmicaccountability law, becoming the first jurisdiction in the UnitedStates to require algorithms used by employers in hiring orpromotion to be audited for bias. New York City's law bars AIhiring systems that do not pass annual audits checking for race- orgender-based discrimination. The bill would require the developersof such AI tools to disclose the job qualifications andcharacteristics that will be used by the tool and would provideemployment candidates the option of choosing an alternative processfor employers to review their application. The law imposes fines onemployers or employment agencies of up to $1,500 per violation.

California's Privacy Regulations May Also TargetAI

California's California Privacy Protection Agency (CPPA), the new agency charged with rulemakingand enforcement authority over the California Privacy Rights Act(CPRA), is expected to issue regulations governing AI by 2023. Thestatute specifically addresses a consumer's right to understandand opt out of automating decision-making technologies such as AIand machine learning. In particular, the agency is charged with"[i]ssuing regulations governing access and opt-out rightswith respect to businesses' use of automated decisionmakingtechnology, including profiling and requiring businesses'response to access requests to include meaningful information aboutthe logic involved in those decisionmaking processes, as well as adescription of the likely outcome of the process with respect tothe consumer."

In September 2021, the CPPAreleasedan Invitation for PreliminaryComments on Proposed Rulemaking (Invitation) and accepted commentsthrough November 8, 2021. The Invitation to comment issued by theCPPA asked four questions regarding interpretation of theagency's automated decision-making rulemaking authority:

While the statute calls for final rules to be adopted by July2022, at a February 17 CPPA board meeting, Executive DirectorAshkan Soltani announced that draft regulations will be delayed. Aswe've previouslydiscussed, this effort in California toregulate certain automated decision-making processes may open thedoor to greater regulation of AI and should be watchedclosely.

Even as the federal governmentlooks more closelyat AI, some states andlocalities appear to be poised to jump ahead. Indeed, many otherstates continue to debate AI proposals in 2022. Companiesdeveloping and deploying AI should continue to monitor this area asthe regulatory landscape develops.

2022 Wiley Rein LLP

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States And Localities Begin To Focus On Use Of Artificial Intelligence - New Technology - United States - Mondaq