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webLegal analysis of Colorado's landmark 2024 AI Act, relevant to practitioners navigating U.S. state-level AI regulation and organizations building or deploying high-risk AI systems.
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Summary
Analysis of Colorado's SB 24-205, one of the first U.S. state laws targeting algorithmic discrimination in high-risk AI systems. The article outlines the law's requirements for developers and deployers, including risk assessments, impact statements, and consumer notifications, offering practical compliance guidance.
Key Points
- •Colorado's AI Act requires developers and deployers of high-risk AI systems to implement risk management policies and conduct impact assessments to prevent algorithmic discrimination.
- •The law defines 'high-risk AI systems' as those making consequential decisions in areas like employment, housing, education, credit, and healthcare.
- •Deployers must notify consumers when AI is used in consequential decisions and provide mechanisms to appeal or correct adverse outcomes.
- •Developers must provide documentation enabling deployers to conduct required risk assessments, creating a shared compliance responsibility across the AI supply chain.
- •The law serves as a model for emerging state-level AI regulation in the U.S., offering compliance lessons applicable beyond Colorado.
Cited by 1 page
| Page | Type | Quality |
|---|---|---|
| Colorado Artificial Intelligence Act | Policy | 53.0 |
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New Colorado AI Act Targeting 'Algorithmic Discrimination' Provides AI Compliance Lessons | Katten Muchin Rosenman LLP
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Advisory
New Colorado AI Act Targeting 'Algorithmic Discrimination' Provides AI Compliance Lessons
July 11, 2024
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Starting February 1, 2026, businesses must comply with requirements of the Colorado AI Act (the Act) ( SB 205 ) if they use artificial intelligence (AI) tools to make "consequential" decisions about Colorado consumers' education, employment, financial or lending services, essential government services, health care, housing, insurance or legal services.
The new law focuses on addressing "algorithmic discrimination" by high-risk AI systems. But it also requires that any AI system that interacts with consumers (even if not high-risk) must disclose to consumers that they are interacting with an AI system, unless that would be obvious to a reasonable person.
The Colorado Attorney General has exclusive authority to enforce the Act. There is no private right of action.
Colorado Gov. Jared Polis suggested in his signing statement that he has "reservations" about the new law, and that the Act should be amended between now and its 2026 entry into force. The governor also called upon the federal government to enact legislation for "a cohesive federal approach."
Under the Act, algorithmic discrimination is any condition in which the use of an Artificial Intelligence System (AI System) results in a differential treatment to an individual or group of individuals based on their actual or perceived age, color, disability, ethnicity, genetic information, limited proficiency in the English language, national origin, race, religion, reproductive health, sex, veteran status or any other classification protected under Colorado law or federal law.
The Act applies when an AI System makes or is a "substantial factor" in making "consequential decisions." A consequential decision "has material, legal or similarly significant effect on the provision, denial or the cost of terms to any Colorado resident on (a) education enrollment/opportunity, (b) employment/employment opportunity, (c) financial/lending service, (d) essential government service, (e) health care services, (f) housing, (g) insurance or (h) a legal service." A substantial factor means that the system (i) assists in making a consequential decision, (ii) can alter the outcome of a consequential decision and (iii) is generated by an AI System.
Duties imposed by the new law differ for "developers" and "deployers" of AI Systems. A developer means an entity that either develops or intentionally and substantially modifies 1 an AI System. A deployer is an entity that uses an AI System in commerce but doe
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