Artificial Intelligence: Government’s Regulatory Role

Introduction

Artificial Intelligence (AI) technologies are transforming economies, societies, and legal frameworks worldwide. While the United States is at the forefront of AI research and innovation, it is struggling with how to allow rapid development while implementing reasonable regulations on this powerful technology. This overview examines the evolving AI legislative landscapes in the US, highlighting key proposals, enacted laws, regulatory debates, and the broader implications for businesses, individuals, and policymakers.

The Federal Landscape

The United States does not currently have a comprehensive federal law dedicated solely to AI. However, the US government is rapidly developing policy frameworks and legislative proposals to address the technology’s risks and potential.

Executive Orders and National Frameworks

In October 2023, President Biden issued a landmark Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence, directing federal agencies to create standards for AI safety, security, privacy, civil rights, and innovation. This order established a comprehensive federal framework for overseeing AI development and deployment, aiming to maximize the benefits of AI while minimizing risks to national security, the economy, and society.

Key provisions included requiring AI developers to share safety test results with the government, setting standards for watermarking AI-generated content, and promoting responsible AI use in critical infrastructure and national security. The order also empowered federal agencies to appoint Chief AI Officers and form AI Governance Boards to implement risk management practices and develop guidelines for acquiring and using AI systems.

However, on January 20, 2025, President Trump signed an Executive Order rescinding Biden’s directive. Three days later, on January 23, 2025, President Trump issued a new Executive Order titled “Removing Barriers to American Leadership in Artificial Intelligence,” which establishes a fundamentally different approach focused on reducing regulatory constraints and promoting AI innovation. The Trump order directs the development of an AI Action Plan within 180 days and mandates a review of all policies established under the Biden order to identify potential obstacles to AI innovation.

While Trump rescinded the Biden AI Executive Order, much of the foundational work and reports generated by federal agencies under the previous order remain available and continue to inform both private sector and government approaches to AI governance.

Congressional Initiatives

Several bills related to AI governance have been introduced in Congress, reflecting a bipartisan recognition of the need for regulation, but none have yet passed as sweeping federal law. Notable proposals include:

• The Algorithmic Accountability Act of 2025, which was introduced in Congress and would require companies to assess and mitigate risks of algorithmic discrimination and harm.
• The National AI Initiative Act of 2020 focused on AI research, standards, and education.
• Ongoing discussions around creating a federal agency or commission dedicated to AI oversight.

Sector-Specific Regulations

US regulatory action is proceeding fastest in sectors such as consumer protection, finance, healthcare, and employment:

• The Federal Trade Commission (FTC) has taken law enforcement actions against companies for engaging in unfair or deceptive AI practices.
• The Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA) are developing frameworks for AI in medical devices and healthcare delivery.
• The Equal Employment Opportunity Commission (EEOC) is investigating the use of AI in hiring and workplace management to prevent discrimination.

State-Level Action

In the absence of broad federal AI laws, US states are increasingly active in legislating on AI and related technologies. Key examples include:

Leading State Legislation

California: Proposals to regulate AI in employment, privacy, and deepfakes. California’s Consumer Privacy Act (CCPA) includes some provisions for automated decision-making.

Colorado: Colorado has enacted two significant AI-related laws:

• SB 21-169 (2021): Specifically focused on protecting consumers from unfair discrimination in insurance practices using AI and big data systems. This law requires insurers to test their algorithms and predictive models to ensure they do not discriminate based on protected characteristics.
• SB 24-205 (2024): The comprehensive Colorado Artificial Intelligence Act, which makes Colorado the first US state to pass comprehensive consumer protection legislation specifically targeting AI systems. This law, effective February 1, 2026, regulates “high-risk” AI systems and requires both developers and deployers to use reasonable care to prevent algorithmic discrimination.

Illinois: Illinois has been a pioneer in AI employment regulation with multiple laws:

• The Biometric Information Privacy Act (BIPA) imposes strict requirements on the collection and use of biometric data.
• The Artificial Intelligence Video Interview Act (effective January 1, 2020) requires employers using AI to analyze video interviews to provide notice, obtain consent, and offer data deletion rights to applicants.
• HB 3773 (2024) amends the Illinois Human Rights Act to explicitly prohibit discriminatory use of AI in employment decisions and requires notice to employees when AI is used for employment purposes.

US States with Emerging AI Legislation

As of 2025, numerous US states have introduced or are considering legislation related to artificial intelligence. The landscape of pending bills is dynamic, with new proposals and amendments emerging regularly as policymakers attempt to address the opportunities and risks associated with AI technologies. However, the specific status and content of pending legislation varies significantly and continues to evolve.

States actively exploring AI legislation include:

• California: Comprehensive bills on AI transparency, accountability, and generative AI regulation
• New York: Legislation targeting AI in employment, housing, and public safety with anti-discrimination focus
• Texas: Proposals regarding AI in law enforcement, data privacy, and public services
• Massachusetts: Comprehensive AI oversight bills including government AI task forces and impact assessments
• Connecticut: Government AI procurement and automated decision-making transparency requirements
• Maryland: AI impact in education and cybersecurity, plus algorithmic accountability measures
• New Jersey: Proposals concerning AI in elections, employment, and consumer protection
• Virginia: AI-driven surveillance and data privacy regulations

Note: The specific content and status of these bills can change rapidly. For the most current details, readers should consult official state legislative trackers and government websites.

Key Regulatory Themes and Challenges

Primary Areas of Focus

1. Algorithmic Accountability: Preventing discrimination and ensuring fairness in AI decision-making
2. Transparency and Disclosure: Requiring clear communication about AI use, particularly in hiring and consumer interactions
3. Privacy Protection: Safeguarding personal data used in AI systems
4. Sector-Specific Safety: Targeted regulations for high-risk applications in healthcare, finance, and employment
5. Government Use: Establishing standards for AI procurement and deployment in public services

Regulatory Challenges

• Fragmented Approach: Lack of federal coordination creates a complex patchwork of varying state requirements
• Rapid Technological Change: AI development outpaces regulatory frameworks
• Political Shifts: Recent executive order changes demonstrate how AI policy can shift dramatically with administration changes
• Innovation vs. Regulation Balance: Ongoing tension between fostering innovation and implementing necessary safeguards
• Enforcement Mechanisms: Many state laws lack clear enforcement provisions or private rights of action

Implications and Future Outlook

For Businesses

Companies operating across multiple states face compliance challenges with varying AI regulations. The lack of federal standards creates uncertainty and potential competitive disadvantages for businesses attempting to navigate multiple jurisdictions. The recent federal policy shift toward deregulation may increase the importance of state-level compliance.

For Policymakers

The current approach requires careful coordination between federal and state levels to avoid conflicting requirements while ensuring adequate protection for consumers and society. The Trump administration’s new approach emphasizes removing regulatory barriers while maintaining competitive advantages.

For Innovation

The regulatory uncertainty, combined with recent policy reversals, creates challenges for AI developers seeking clear guidance on compliance requirements and acceptable practices. However, the new federal approach may provide more flexibility for innovation while states continue to fill regulatory gaps.

Conclusion

The United States AI regulatory landscape remains in flux, characterized by state-level innovation in the absence of comprehensive federal legislation. Recent political changes, including the rescission of Biden’s AI Executive Order and the introduction of Trump’s new AI framework, highlight the volatility of AI policy. As AI technologies continue to evolve rapidly, the need for coordinated regulatory frameworks becomes increasingly urgent, requiring balanced approaches that protect societal interests while maintaining America’s competitive edge in AI innovation. The current trajectory suggests continued state-level leadership and experimentation until federal policy provides clearer direction and comprehensive legislation.