AI - February 2025 Regulatory Report

Legislative Trends in Artificial Intelligence (AI)

As artificial intelligence (AI) technologies rapidly evolve, lawmakers across the United States are actively working to establish regulatory frameworks that address both their potential and risks. Legislative activity has intensified, with numerous AI-related bills advancing through the legislative process. For compliance professionals, staying informed is essential as new regulations take shape. This overview highlights key trends emerging in AI legislation at both the federal and state levels.

Federal Trends: Balancing Security, Innovation, and Compliance

At the federal level, lawmakers are striving to balance security and innovation while addressing critical concerns such as algorithmic bias, data privacy, and the potential misuse of AI in national security and personal privacy. These efforts aim to create a regulatory landscape that fosters responsible AI development while mitigating risks.

State Trends: Expanding AI Regulations

Meanwhile, states are taking a proactive approach by advancing AI regulations across multiple sectors. Consumer protection laws are being introduced to combat algorithmic discrimination, emphasizing transparency and accountability for AI developers. Industry-specific regulations are also emerging, particularly in healthcare, finance, insurance, and employment, where new rules mandate disclosures and impact assessments. Additionally, states are enacting laws to regulate chatbots and generative AI, aiming to prevent deceptive practices and misinformation.

Beyond consumer protection and industry regulations, lawmakers are also focusing on AI’s broader implications. To address the technology’s increasing energy demands, proposed legislation includes reporting requirements for developers and data centers. Public safety measures, such as mandatory risk assessments, third-party audits, and liability frameworks for high-risk AI models, are also gaining traction.

Cross-Cutting Trends: Transparency, Ethics, and Industry Regulations

Across both federal and state levels, transparency and ethical AI development remain central themes. New regulations are introducing AI disclosure mandates and penalties for non-compliance, reinforcing the need for accountability. As AI governance expands, compliance teams must proactively update policies and reporting frameworks to ensure adherence to evolving legal standards. Organizations that stay ahead of these regulatory shifts will be better positioned to navigate the complex AI landscape.

Highlights of Proposed Law:

Federal: 

AI in Security and Defense
Federal 119 H.R. 1734, (02/27/2025) Introduced
A proposal requiring annual assessments of terrorism threats, focusing on terrorist use of generative AI.

AI & Privacy
Federal S. 146 and H.R. 633 (02/14/25) Received in the House
Legislative proposal designed to combat nonconsensual intimate visual depictions, especially those created through AI and other technological methods like digital forgeries.

State: 

AI Governance & Oversight
Illinois HB 3529 (02/17/25) Referred to Rules Committee
Establishes AI governance principles for businesses in Illinois, requiring transparency, accountability, and public disclosure, with penalties for noncompliance.

Illinois HB 3567 (02/18/25) Referred to Rule Committee
Mandates continuous human oversight for automated decision-making systems used by Illinois state agencies in areas affecting public welfare, with required impact assessments and transparency measures. 

AI Political Transparency
New York S02414 (01/17/25) Introduced
‍Enacts the "Political Artificial Intelligence Disclaimer (PAID) Act," which mandates disclosures for political communications created using synthetic media.

AI Public Safety
Kansas HB 2313 (02/20/25) Referred to Committee on Federal and State Affairs
Prohibiting the use of the artificial intelligence platform DeepSeek and other artificial intelligence platforms of concern on state-owned devices and on any state network. 

AI & Infrastructure:
Connecticut HB 1291 (02/13/25) Introduced
Establishes energy and water efficiency requirements for AI data centers, including reporting mandates, sustainability metrics, and public disclosure.

Minnesota SF 1879 (02/27/25) Referred to Energy, Utilities, Environment and Climate Exempts cryptocurrency and AI data centers from certain energy savings goals to support the growth of these sectors by reducing regulatory energy consumption burdens.

Washington HB 1481 (01/21/25)  Introduced
Explores the role of nuclear energy in supporting the state's decarbonization goals and addressing the growing electricity demand driven by AI applications. 

AI & Chatbots
New York A00222/S05668 (02/28/25) Consumer Affairs and Protection
Amends the General Business Law to hold chatbot proprietors liable for misleading or harmful information, requiring accurate information, user notifications, self-harm prevention, minor protection, and regulatory oversight.

AI & Protection of Minors
Maryland HB0005 (01/08/25) Introduced

Criminalizes AI-generated child pornography and its distribution.

AI & Consumer Protection
Idaho HB 127 (02/04/25) Introduced
Requires clear disclosure when AI technologies interact with consumers, grants consumers the right to sue for noncompliance, and imposes penalties for violations.

AI & Education
Iowa HF 252 (02/20/25) Subcommittee Recommends Passage
Incorporates AI and computational thinking into teacher preparation programs. 

AI & Healthcare
Oklahoma HB1915 (02/04/25) Referred to Rules
Regulates AI in Oklahoma healthcare, requiring FDA compliance, physician oversight, quality assurance, and governance. 

Nevada AB295  (02/25/25) Introduced‍

Regulates AI use in prior authorization, requiring oversight, timely responses, transparency, and reporting. It applies to insurers, Medicaid, and self-insured plans, with exemptions for certain managed care programs.

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