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A First for AI: A Close Look at The Colorado AI Act

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Relevant for those tracking AI governance developments; Colorado's AI Act represents a landmark state-level regulatory approach that may influence federal policy and other states, making it a key reference for AI deployment compliance and algorithmic accountability debates.

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Summary

This Future of Privacy Forum analysis examines Colorado's SB 24-205, the first comprehensive state AI law in the US, which imposes obligations on developers and deployers of high-risk AI systems to prevent algorithmic discrimination. The piece breaks down key provisions including risk assessments, transparency requirements, and consumer rights, while highlighting implementation challenges and industry concerns.

Key Points

  • Colorado's AI Act (SB 24-205) is the first US state law broadly regulating high-risk AI, focusing on preventing algorithmic discrimination in consequential decisions.
  • The law distinguishes between 'developers' and 'deployers' of AI systems, assigning different compliance obligations to each party in the AI supply chain.
  • High-risk AI systems are those making or substantially informing consequential decisions in areas like employment, housing, education, credit, and healthcare.
  • Covered entities must conduct impact assessments, implement risk management policies, and provide consumers with disclosure and appeal rights.
  • The Act has a delayed effective date (2026) and may be amended, reflecting ongoing tension between innovation concerns and consumer protection goals.

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Colorado Artificial Intelligence ActPolicy53.0

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A First for AI: A Close Look at The Colorado AI Act 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 

 
 
 
 
 
 
 
 
 

 
 
 

 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
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 July 11, 2024 

 
 
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 Tatiana Rice 
 Senior Director for U.S. Legislation 

 
 
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 Samuel Adams 
 

 
 
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 Colorado made history on May 17, 2024 when Governor Polis signed into law the Colorado Artificial Intelligence Act (“CAIA”) , the first law in the United States to comprehensively regulate the development and deployment of high-risk artificial intelligence (“AI”) systems. The law will come into effect on February 1, 2026, preceding the March, 2026 effective date of (most of) the European Union’s AI Act .

 

 To help inform public understanding of the law, the Future of Privacy Forum released a Policy Brief summarizing and analyzing key CAIA elements, as well as identifying significant observations about the law. 

 

 In the Brief, FPF provides the following analysis and observations: 

 1. Broader Potential Scope of Regulated Entities: Unlike state data privacy laws, which typically apply to covered entities that meet certain thresholds, the CAIA applies to any person or entity that is a developer or deployer of a high-risk AI system . A high-risk AI system, under the Act, refers to AI systems that make or are a substantial factor in making consequential decisions , including any legal or material decision affecting an individual’s access to critical life opportunities such as education, employment, insurance, healthcare, and more. Additionally, one section of the law applies to any entity offering or deploying any consumer-facing AI system. Therefore, despite a detailed list of exclusions, including a narrow exemption for small deployers, the law has broad applicability to a variety of businesses and sectors in Colorado.

 2. Role-Specific Obligations: The CAIA apportions role-specific obligations for deployers and developers, akin to controllers and processors under data privacy regimes. Deployers , who directly interact with consumers and control how the AI system is utilized, take on more responsibilities than developers, including the following: 

 
 Maintaining a Risk Management Policy & Program that governs their deployment of high-risk AI systems. It must be updated and reviewed regularly, specify the principles, processes, and personnel used to identify and mitigate algorithmic discrimination, and “be reasonable” in comparison to recognized frameworks such as the NIST Artificial Intelligence Risk Management Framework (NIST AI RMF). 

 Conduct Impact Assessments annually, which must inc

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