On May 17, 2024, Colorado Senate Bill 24-205 was signed into law, marking a significant milestone as Colorado became the first state in the U.S. to enact comprehensive legislation aimed at regulating the deployment and development of artificial intelligence (AI) systems. This groundbreaking law, known as the Colorado Artificial Intelligence Act, introduces stringent requirements to ensure transparency, accountability, and fairness in the use of high-risk AI systems, with full enforcement beginning on February 1, 2026.
Key Provisions and Requirements
Definition and Scope. The law specifically targets "high-risk AI systems," defined as AI systems that make or significantly influence consequential decisions impacting consumers in critical areas such as employment, housing, financial services, healthcare, and government services. A consequential decision is one that has a significant effect on an individual’s legal rights or access to essential services.
Obligations for Developers and Deployers. Both AI developers and deployers must adhere to several new obligations:
Risk Management and Impact Assessments. Developers and deployers are required to implement robust risk management policies and conduct regular impact assessments of their AI systems. These assessments must evaluate and document potential risks of algorithmic discrimination and outline measures to mitigate these risks.
Transparency and Disclosure.
The law mandates that developers disclose detailed information about their AI systems, including the types of data used, foreseeable limitations, and any known risks of algorithmic discrimination. This information must be made publicly accessible and reported to the Colorado Attorney General.
Deployers must inform consumers when an AI system is being used to make consequential decisions about them and provide avenues for consumers to appeal decisions or correct erroneous data.
3. Exemptions and Exclusions. The legislation includes certain exemptions for small businesses and specific sectors such as insurance and healthcare, provided they meet specific criteria and are subject to other stringent regulations.
Enforcement and Compliance
The Colorado Attorney General is granted exclusive enforcement authority, treating violations as unfair and deceptive trade practices. This includes the power to issue additional rules to ensure effective implementation of the law. Businesses must begin preparing now, as compliance will likely require substantial adjustments to existing AI practices and protocols.
Implications for Businesses and Consumers
The Colorado AI Act aims to protect consumers from the harms of algorithmic bias while promoting responsible AI innovation. For businesses, this means a need for greater diligence in AI development and deployment processes. Companies will need to invest in compliance infrastructure and seek specialized guidance to navigate the new requirements effectively.
Consumer advocates have praised the law for its potential to reduce AI-driven discrimination, although some industry groups have raised concerns about the broad definitions and potential burdens on innovation. As Colorado moves forward with this pioneering legislation, it may set a precedent for other states and possibly influence future federal regulations.
For more detailed guidance and to ensure compliance, businesses operating in Colorado or utilizing AI technologies that impact Colorado residents should seek specialized legal advice.