WHAT THIS BILL REGULATES · 7 REQUIREMENT TYPES
How Is This Bill Enforced
Verbatim statutory text on the left; plain-language analysis and a per-section checklist on the right. Numbered markers cross-link to the matching checklist row.
(b-1) 1 For purposes of Subsection (b), an individual has not been informed of and has not provided consent for the capture or storage of a biometric identifier of an individual for a commercial purpose based solely on the existence of an image or other media containing one or more biometric identifiers of the individual on the Internet or other publicly available source unless the image or other media was made publicly available by the individual to whom the biometric identifiersBiometric identifier"Biometric identifier" means a retina or iris scan, fingerprint, voiceprint, or record of hand or face geometry.Bus. & Com. Code § 503.001(a)(2) relate.
(e)(2)–(3) This section does not apply to: (2) the training, processing, or storage of biometric identifiersBiometric identifier"Biometric identifier" means a retina or iris scan, fingerprint, voiceprint, or record of hand or face geometry.Bus. & Com. Code § 503.001(a)(2) involved in developing, training, evaluating, disseminating, or otherwise offering artificial intelligence models or systems, unless a system is used or deployed for the purpose of uniquely identifying a specific individual; or (3) the development or deployment of an artificial intelligence model or system for the purposes of: (A) preventing, detecting, protecting against, or responding to security incidents, identity theft, fraud, harassment, malicious or deceptive activities, or any other illegal activity; (B) preserving the integrity or security of a system; or (C) investigating, reporting, or prosecuting a person responsible for a security incident, identity theft, fraud, harassment, a malicious or deceptive activity, or any other illegal activity.
(f) 2 If a biometric identifierBiometric identifier"Biometric identifier" means a retina or iris scan, fingerprint, voiceprint, or record of hand or face geometry.Bus. & Com. Code § 503.001(a)(2) captured for the purpose of training an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) is subsequently used for a commercial purpose not described by Subsection (e), the person possessing the biometric identifierBiometric identifier"Biometric identifier" means a retina or iris scan, fingerprint, voiceprint, or record of hand or face geometry.Bus. & Com. Code § 503.001(a)(2) is subject to: (1) this section's provisions for the possession and destruction of a biometric identifierBiometric identifier"Biometric identifier" means a retina or iris scan, fingerprint, voiceprint, or record of hand or face geometry.Bus. & Com. Code § 503.001(a)(2); and (2) the penalties associated with a violation of this section.
Section 2 of the Act amends the existing biometric identifier statute (§ 503.001) in three significant ways. First, it adds a new subsection (b-1) clarifying that consent for biometric capture cannot be inferred merely from the existence of biometric identifiers in publicly available images or media, unless the individual themselves made the data publicly available. Second, it carves out from biometric requirements the training, processing, or storage of biometric identifiers used in developing AI models or systems — unless the system is used to uniquely identify a specific individual. Third, it creates a re-entry provision: if biometric data originally captured for AI training is subsequently used for a non-exempt commercial purpose, the full biometric identifier requirements and penalties reattach.
(a)(2) 3 assisting the controller with regard to complying with requirements relating to the security of processing personal data, and if applicable, the personal data collected, stored, and processed by an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1), as that term is defined by Section 551.001, and to the notification of a breach of security of the processor's system under Chapter 521, taking into account the nature of processing and the information available to the processor;
Section 3 of the Act amends the Texas Data Privacy and Security Act's processor obligations to expressly include AI system data. Processors must now assist controllers with security requirements applicable to personal data collected, stored, and processed by an artificial intelligence system, in addition to existing general data security obligations.
In this subtitle: (1) "Artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1)" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments. (2) "ConsumerConsumer"Consumer" means an individual who is a resident of this state acting only in an individual or household context. The term does not include an individual acting in a commercial or employment context.Bus. & Com. Code § 551.001(2)" means an individual who is a resident of this state acting only in an individual or household context. The term does not include an individual acting in a commercial or employment context. (3) "CouncilCouncil"Council" means the Texas Artificial Intelligence Council established under Chapter 554.Bus. & Com. Code § 551.001(3)" means the Texas Artificial Intelligence CouncilCouncil"Council" means the Texas Artificial Intelligence Council established under Chapter 554.Bus. & Com. Code § 551.001(3) established under Chapter 554.
Section 551.001 provides the foundational definitions for the entire Subtitle D (Artificial Intelligence Protection), including the definition of artificial intelligence system, consumer, and the Texas AI Council. These definitions apply across Chapters 552 (substantive obligations), 553 (sandbox), and 554 (council).
This subtitle applies only to a person who: (1) promotes, advertises, or conducts business in this state; (2) produces a product or service used by residents of this state; or (3) develops or deploys an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) in this state.
Section 551.002 defines the territorial scope of Subtitle D. The subtitle applies to any person who conducts business in Texas, produces products or services used by Texas residents, or develops or deploys an AI system in Texas.
This subtitle shall be broadly construed and applied to promote its underlying purposes, which are to: (1) facilitate and advance the responsible development and use of artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1); (2) protect individuals and groups of individuals from known and reasonably foreseeable risks associated with artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1); (3) provide transparency regarding risks in the development, deployment, and use of artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1); and (4) provide reasonable notice regarding the use or contemplated use of artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) by state agencies.
Section 551.003 is a legislative-purpose and construction provision directing broad construction to advance responsible AI development, individual protection from foreseeable risks, transparency, and notice of government AI use. It creates no independent compliance obligation.
In this chapter: (1) "DeployerDeployer"Deployer" means a person who deploys an artificial intelligence system for use in this state.Bus. & Com. Code § 552.001(1)" means a person who deploys an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) for use in this state. (2) "DeveloperDeveloper"Developer" means a person who develops an artificial intelligence system that is offered, sold, leased, given, or otherwise provided in this state.Bus. & Com. Code § 552.001(2)" means a person who develops an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) that is offered, sold, leased, given, or otherwise provided in this state. (3) "Governmental entityGovernmental entity"Governmental entity" means any department, commission, board, office, authority, or other administrative unit of this state or of any political subdivision of this state, that exercises governmental functions under the authority of the laws of this state. The term does not include: (A) a hospital district created under the Health and Safety Code or Article IX, Texas Constitution; or (B) an institution of higher education, as defined by Section 61.003, Education Code, including any university system or any component institution of the system.Bus. & Com. Code § 552.001(3)" means any department, commission, board, office, authority, or other administrative unit of this state or of any political subdivision of this state, that exercises governmental functions under the authority of the laws of this state. The term does not include: (A) a hospital district created under the Health and Safety Code or Article IX, Texas Constitution; or (B) an institution of higher education, as defined by Section 61.003, Education Code, including any university system or any component institution of the system.
Section 552.001 defines the key covered-entity terms for Chapter 552: deployer, developer, and governmental entity. Governmental entity excludes hospital districts and institutions of higher education.
This chapter may not be construed to: (1) impose a requirement on a person that adversely affects the rights or freedoms of any person, including the right of free speech; or (2) authorize any department or agency other than the Department of Insurance to regulate or oversee the business of insurance.
Section 552.002 contains two construction provisions: the chapter may not be construed to adversely affect constitutional rights including free speech, and it may not authorize any agency other than the Department of Insurance to regulate the business of insurance. These are savings clauses, not affirmative obligations.
This chapter supersedes and preempts any ordinance, resolution, rule, or other regulation adopted by a political subdivision regarding the use of artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1).
Section 552.003 preempts all local government regulation of AI systems, superseding any ordinance, resolution, rule, or other regulation adopted by a political subdivision.
(b)–(e) 4 A governmental agency that makes available an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) intended to interact with consumersConsumer"Consumer" means an individual who is a resident of this state acting only in an individual or household context. The term does not include an individual acting in a commercial or employment context.Bus. & Com. Code § 551.001(2) shall disclose to each consumerConsumer"Consumer" means an individual who is a resident of this state acting only in an individual or household context. The term does not include an individual acting in a commercial or employment context.Bus. & Com. Code § 551.001(2), before or at the time of interaction, that the consumerConsumer"Consumer" means an individual who is a resident of this state acting only in an individual or household context. The term does not include an individual acting in a commercial or employment context.Bus. & Com. Code § 551.001(2) is interacting with an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1). (c) A person is required to make the disclosure under Subsection (b) regardless of whether it would be obvious to a reasonable consumerConsumer"Consumer" means an individual who is a resident of this state acting only in an individual or household context. The term does not include an individual acting in a commercial or employment context.Bus. & Com. Code § 551.001(2) that the consumerConsumer"Consumer" means an individual who is a resident of this state acting only in an individual or household context. The term does not include an individual acting in a commercial or employment context.Bus. & Com. Code § 551.001(2) is interacting with an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1). (d) A disclosure under Subsection (b): (1) must be clear and conspicuous; (2) must be written in plain language; and (3) may not use a dark pattern, as that term is defined by Section 541.001. (e) A disclosure under Subsection (b) may be provided by using a hyperlink to direct a consumerConsumer"Consumer" means an individual who is a resident of this state acting only in an individual or household context. The term does not include an individual acting in a commercial or employment context.Bus. & Com. Code § 551.001(2) to a separate Internet web page.
(f) 5 If an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) is used in relation to health care service or treatment, the provider of the service or treatment shall provide the disclosure under Subsection (b) to the recipient of the service or treatment or the recipient's personal representative not later than the date the service or treatment is first provided, except in the case of emergency, in which case the provider shall provide the required disclosure as soon as reasonably possible.
Section 552.051 imposes AI identity disclosure obligations. Governmental agencies deploying consumer-facing AI must disclose to each consumer before or at the time of interaction that the consumer is interacting with an AI system. The disclosure must be clear, conspicuous, in plain language, and may not use dark patterns. This obligation is unconditional — it applies regardless of whether a reasonable consumer would recognize the AI. A separate provision extends the requirement to healthcare AI, requiring disclosure to patients or their representatives no later than the date of first service, with an emergency exception.
6 A person may not develop or deploy an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) in a manner that intentionally aims to incite or encourage a person to: (1) commit physical self-harm, including suicide; (2) harm another person; or (3) engage in criminal activity.
Section 552.052 prohibits any person from developing or deploying an AI system in a manner that intentionally aims to incite or encourage a person to commit self-harm (including suicide), harm another person, or engage in criminal activity. The prohibition is intent-based — it requires that the AI system intentionally aim to incite or encourage the prohibited conduct.
7 A governmental entityGovernmental entity"Governmental entity" means any department, commission, board, office, authority, or other administrative unit of this state or of any political subdivision of this state, that exercises governmental functions under the authority of the laws of this state. The term does not include: (A) a hospital district created under the Health and Safety Code or Article IX, Texas Constitution; or (B) an institution of higher education, as defined by Section 61.003, Education Code, including any university system or any component institution of the system.Bus. & Com. Code § 552.001(3) may not use or deploy an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) that evaluates or classifies a natural person or group of natural persons based on social behavior or personal characteristics, whether known, inferred, or predicted, with the intent to calculate or assign a social score or similar categorical estimation or valuation of the person or group of persons that results or may result in: (1) detrimental or unfavorable treatment of a person or group of persons in a social context unrelated to the context in which the behavior or characteristics were observed or noted; (2) detrimental or unfavorable treatment of a person or group of persons that is unjustified or disproportionate to the nature or gravity of the observed or noted behavior or characteristics; or (3) the infringement of any right guaranteed under the United States Constitution, the Texas Constitution, or state or federal law.
Section 552.053 prohibits governmental entities from using or deploying an AI system that evaluates or classifies individuals based on social behavior or personal characteristics — whether known, inferred, or predicted — with the intent to calculate or assign a social score that results in detrimental treatment disproportionate to the behavior, unrelated to the context in which it was observed, or infringing on constitutional or statutory rights.
(b) 8 A governmental entityGovernmental entity"Governmental entity" means any department, commission, board, office, authority, or other administrative unit of this state or of any political subdivision of this state, that exercises governmental functions under the authority of the laws of this state. The term does not include: (A) a hospital district created under the Health and Safety Code or Article IX, Texas Constitution; or (B) an institution of higher education, as defined by Section 61.003, Education Code, including any university system or any component institution of the system.Bus. & Com. Code § 552.001(3) may not develop or deploy an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) for the purpose of uniquely identifying a specific individual using biometric dataBiometric data"Biometric data" means data generated by automatic measurements of an individual's biological characteristics. The term includes a fingerprint, voiceprint, eye retina or iris, or other unique biological pattern or characteristic that is used to identify a specific individual. The term does not include a physical or digital photograph or data generated from a physical or digital photograph, a video or audio recording or data generated from a video or audio recording, or information collected, used, or stored for health care treatment, payment, or operations under the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. Section 1320d et seq.).Bus. & Com. Code § 552.054(a) or the targeted or untargeted gathering of images or other media from the Internet or any other publicly available source without the individual's consent, if the gathering would infringe on any right of the individual under the United States Constitution, the Texas Constitution, or state or federal law.
(c) A violation of Section 503.001 is a violation of this section.
Section 552.054 restricts governmental entities from developing or deploying AI systems to uniquely identify specific individuals using biometric data or through targeted or untargeted gathering of images from the Internet or publicly available sources without individual consent, where such gathering would infringe on the individual's constitutional or statutory rights. It also incorporates by reference any violation of § 503.001 (the biometric identifier statute) as a violation of this section.
(a)–(b) 9 A person may not develop or deploy an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) with the sole intent for the artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) to infringe, restrict, or otherwise impair an individual's rights guaranteed under the United States Constitution. (b) This section is remedial in purpose and may not be construed to create or expand any right guaranteed by the United States Constitution.
Section 552.055 prohibits any person from developing or deploying an AI system with the sole intent to infringe, restrict, or impair an individual's U.S. Constitutional rights. The section is explicitly remedial and does not create or expand constitutional rights. This provision is a statement of principle with an extremely high intent bar ('sole intent').
(b)–(c) 10 A person may not develop or deploy an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) with the intent to unlawfully discriminate against a protected classProtected class"Protected class" means a group or class of persons with a characteristic, quality, belief, or status protected from discrimination by state or federal civil rights laws, and includes race, color, national origin, sex, age, religion, or disability.Bus. & Com. Code § 552.056(a)(3) in violation of state or federal law. (c) For purposes of this section, a disparate impact is not sufficient by itself to demonstrate an intent to discriminate.
(d)–(e) This section does not apply to an insurance entityInsurance entity"Insurance entity" means: (A) an entity described by Section 82.002(a), Insurance Code; (B) a fraternal benefit society regulated under Chapter 885, Insurance Code; or (C) the developer of an artificial intelligence system used by an entity described by Paragraph (A) or (B).Bus. & Com. Code § 552.056(a)(2) for purposes of providing insurance services if the entity is subject to applicable statutes regulating unfair discrimination, unfair methods of competition, or unfair or deceptive acts or practices related to the business of insurance. (e) A federally insured financial institutionFinancial institution"Financial institution" has the meaning assigned by Section 201.101, Finance Code.Bus. & Com. Code § 552.056(a)(1) is considered to be in compliance with this section if the institution complies with all federal and state banking laws and regulations.
Section 552.056 prohibits any person from developing or deploying an AI system with the intent to unlawfully discriminate against a protected class in violation of state or federal law. Critically, disparate impact alone is not sufficient to demonstrate discriminatory intent. The section carves out insurance entities subject to existing unfair-discrimination statutes and provides a compliance safe harbor for federally insured financial institutions that comply with all federal and state banking laws.
(1) 11 A person may not: (1) develop or distribute an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) with the sole intent of producing, assisting or aiding in producing, or distributing: (A) visual material in violation of Section 43.26, Penal Code; or (B) deep fake videos or images in violation of Section 21.165, Penal Code;
(2) 12 intentionally develop or distribute an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) that engages in text-based conversations that simulate or describe sexual conduct, as that term is defined by Section 43.25, Penal Code, while impersonating or imitating a child younger than 18 years of age.
Section 552.057 prohibits developing or distributing AI systems with the sole intent of producing CSAM (visual material in violation of Penal Code § 43.26) or deepfake videos or images in violation of Penal Code § 21.165 (non-consensual intimate imagery). It separately prohibits intentionally developing or distributing AI systems that engage in text-based conversations simulating or describing sexual conduct while impersonating a child under 18.
(a)–(b) The attorney general has exclusive authority to enforce this chapter, except to the extent provided by Section 552.106. (b) This chapter does not provide a basis for, and is not subject to, a private right of action for a violation of this chapter or any other law.
Section 552.101 establishes that the attorney general has exclusive enforcement authority over Chapter 552, except for the supplemental state-agency sanctions under § 552.106. It explicitly bars any private right of action for violations of the chapter or any other law based on this chapter.
13 The attorney general shall create and maintain an online mechanism on the attorney general's Internet website through which a consumerConsumer"Consumer" means an individual who is a resident of this state acting only in an individual or household context. The term does not include an individual acting in a commercial or employment context.Bus. & Com. Code § 551.001(2) may submit a complaint under this chapter to the attorney general.
Section 552.102 requires the attorney general to create and maintain an online complaint mechanism on its website for consumers to submit complaints under this chapter. Section 8 of the Act requires this to be operational by September 1, 2026.
(a)–(b) 14 If the attorney general receives a complaint through the online mechanism under Section 552.102 alleging a violation of this chapter, the attorney general may issue a civil investigative demand to determine if a violation has occurred. The attorney general shall issue demands in accordance with and under the procedures established under Section 15.10. (b) The attorney general may request from the person reported through the online mechanism, pursuant to a civil investigative demand issued under Subsection (a): (1) a high-level description of the purpose, intended use, deployment context, and associated benefits of the artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) with which the person is affiliated; (2) a description of the type of data used to program or train the artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1); (3) a high-level description of the categories of data processed as inputs for the artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1); (4) a high-level description of the outputs produced by the artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1); (5) any metrics the person uses to evaluate the performance of the artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1); (6) any known limitations of the artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1); (7) a high-level description of the post-deployment monitoring and user safeguards the person uses for the artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1), including, if the person is a deployerDeployer"Deployer" means a person who deploys an artificial intelligence system for use in this state.Bus. & Com. Code § 552.001(1), the oversight, use, and learning process established by the person to address issues arising from the system's deployment; or (8) any other relevant documentation reasonably necessary for the attorney general to conduct an investigation under this section.
Section 552.103 grants the attorney general civil investigative demand authority upon receipt of a complaint. The attorney general may request a defined list of documentation including system descriptions, training data types, input/output categories, performance metrics, known limitations, and post-deployment monitoring and safeguard descriptions.
(a)–(b) If the attorney general determines that a person has violated or is violating this chapter, the attorney general shall notify the person in writing of the determination, identifying the specific provisions of this chapter the attorney general alleges have been or are being violated. (b) The attorney general may not bring an action against the person: (1) before the 60th day after the date the attorney general provides the notice under Subsection (a); or (2) if, before the 60th day after the date the attorney general provides the notice under Subsection (a), the person: (A) cures the identified violation; and (B) provides the attorney general with a written statement that the person has: (i) cured the alleged violation; (ii) provided supporting documentation to show the manner in which the person cured the violation; and (iii) made any necessary changes to internal policies to reasonably prevent further violation of this chapter.
Section 552.104 establishes a mandatory 60-day notice-and-cure period before the attorney general may bring an enforcement action. If the person cures the violation and provides a written statement with supporting documentation and internal policy changes within 60 days, the attorney general may not bring an action.
(a)–(f) A person who violates this chapter and does not cure the violation under Section 552.104 is liable to this state for a civil penalty in an amount of: (1) for each violation the court determines to be curable or a breach of a statement submitted to the attorney general under Section 552.104(b)(2), not less than $10,000 and not more than $12,000; (2) for each violation the court determines to be uncurable, not less than $80,000 and not more than $200,000; and (3) for a continued violation, not less than $2,000 and not more than $40,000 for each day the violation continues. (b) The attorney general may bring an action in the name of this state to: (1) collect a civil penalty under this section; (2) seek injunctive relief against further violation of this chapter; and (3) recover attorney's fees and reasonable court costs or other investigative expenses. (c) There is a rebuttable presumption that a person used reasonable care as required under this chapter. (d) A defendant in an action under this section may seek an expedited hearing or other process, including a request for declaratory judgment, if the person believes in good faith that the person has not violated this chapter. (e) A defendant in an action under this section may not be found liable if: (1) another person uses the artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) affiliated with the defendant in a manner prohibited by this chapter; or (2) the defendant discovers a violation of this chapter through: (A) feedback from a developerDeveloper"Developer" means a person who develops an artificial intelligence system that is offered, sold, leased, given, or otherwise provided in this state.Bus. & Com. Code § 552.001(2), deployerDeployer"Deployer" means a person who deploys an artificial intelligence system for use in this state.Bus. & Com. Code § 552.001(1), or other person who believes a violation has occurred; (B) testing, including adversarial testing or red-team testing; (C) following guidelines set by applicable state agencies; or (D) if the defendant substantially complies with the most recent version of the "Artificial Intelligence Risk Management Framework: Generative Artificial Intelligence Profile" published by the National Institute of Standards and Technology or another nationally or internationally recognized risk management framework for artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1), an internal review process. (f) The attorney general may not bring an action to collect a civil penalty under this section against a person for an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) that has not been deployed.
Section 552.105 establishes tiered civil penalties for violations and provides several affirmative defenses. Curable violations carry penalties of $10,000–$12,000 per violation; uncurable violations $80,000–$200,000 per violation; continued violations $2,000–$40,000 per day. The attorney general may also seek injunctive relief and recover attorney's fees and costs. The section creates a rebuttable presumption that the person used reasonable care. Key defenses include third-party misuse and discovery of violations through adversarial testing, red-team testing, compliance with state agency guidelines, or substantial compliance with the NIST AI RMF or another nationally or internationally recognized AI risk management framework.
(a)–(b) A state agency may impose sanctions against a person licensed, registered, or certified by that agency for a violation of Subchapter B if: (1) the person has been found in violation of this chapter under Section 552.105; and (2) the attorney general has recommended additional enforcement by the applicable agency. (b) Sanctions under this section may include: (1) suspension, probation, or revocation of a license, registration, certificate, or other authorization to engage in an activity; and (2) a monetary penalty not to exceed $100,000.
Section 552.106 authorizes state agencies to impose supplemental sanctions — including license suspension, probation, revocation, and monetary penalties up to $100,000 — on licensees found in violation of Chapter 552, but only after the attorney general has found a violation under § 552.105 and recommended additional enforcement.
In this chapter: (1) "Applicable agency" means a department of this state established by law to regulate certain types of business activity in this state and the people engaging in that business, including the issuance of licenses and registrations, that the department determines would regulate a program participantProgram participant"Program participant" means a person whose application to participate in the program is approved and who may test an artificial intelligence system under this chapter.Bus. & Com. Code § 553.001(4) if the person were not operating under this chapter. (2) "Department" means the Texas Department of Information Resources. (3) "Program" means the regulatory sandbox program established under this chapter that allows a person, without being licensed or registered under the laws of this state, to test an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) for a limited time and on a limited basis. (4) "Program participantProgram participant"Program participant" means a person whose application to participate in the program is approved and who may test an artificial intelligence system under this chapter.Bus. & Com. Code § 553.001(4)" means a person whose application to participate in the program is approved and who may test an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) under this chapter.
Section 553.001 provides definitions for the regulatory sandbox program, including applicable agency, department (DIR), program, and program participant.
(a)–(e) The department, in consultation with the councilCouncil"Council" means the Texas Artificial Intelligence Council established under Chapter 554.Bus. & Com. Code § 551.001(3), shall create a regulatory sandbox program that enables a person to obtain legal protection and limited access to the market in this state to test innovative artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) without obtaining a license, registration, or other regulatory authorization. (b) The program is designed to: (1) promote the safe and innovative use of artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) across various sectors including healthcare, finance, education, and public services; (2) encourage responsible deployment of artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) while balancing the need for consumerConsumer"Consumer" means an individual who is a resident of this state acting only in an individual or household context. The term does not include an individual acting in a commercial or employment context.Bus. & Com. Code § 551.001(2) protection, privacy, and public safety; (3) provide clear guidelines for a person who develops an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) to test systems while certain laws and regulations related to the testing are waived or suspended; and (4) allow a person to engage in research, training, testing, or other pre-deployment activities to develop an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1). (c) The attorney general may not file or pursue charges against a program participantProgram participant"Program participant" means a person whose application to participate in the program is approved and who may test an artificial intelligence system under this chapter.Bus. & Com. Code § 553.001(4) for violation of a law or regulation waived under this chapter that occurs during the testing period. (d) A state agency may not file or pursue punitive action against a program participantProgram participant"Program participant" means a person whose application to participate in the program is approved and who may test an artificial intelligence system under this chapter.Bus. & Com. Code § 553.001(4), including the imposition of a fine or the suspension or revocation of a license, registration, or other authorization, for violation of a law or regulation waived under this chapter that occurs during the testing period. (e) Notwithstanding Subsections (c) and (d), the requirements of Subchapter B, Chapter 552, may not be waived, and the attorney general or a state agency may file or pursue charges or action against a program participantProgram participant"Program participant" means a person whose application to participate in the program is approved and who may test an artificial intelligence system under this chapter.Bus. & Com. Code § 553.001(4) who violates that subchapter.
Section 553.051 directs the Department of Information Resources, in consultation with the Texas AI Council, to create a regulatory sandbox program that allows persons to test innovative AI systems without licensure for up to 36 months. The sandbox provides legal protection from attorney general and state agency charges for violations of waived laws during the testing period. However, the duties and prohibitions in Chapter 552, Subchapter B (disclosure, manipulation, social scoring, biometrics, discrimination, sexually explicit content) may NOT be waived under the sandbox.
(a)–(b) A person must obtain approval from the department and any applicable agency before testing an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) under the program. (b) The department by rule shall prescribe the application form. The form must require the applicant to: (1) provide a detailed description of the artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) the applicant desires to test in the program, and its intended use; (2) include a benefit assessment that addresses potential impacts on consumersConsumer"Consumer" means an individual who is a resident of this state acting only in an individual or household context. The term does not include an individual acting in a commercial or employment context.Bus. & Com. Code § 551.001(2), privacy, and public safety; (3) describe the applicant's plan for mitigating any adverse consequences that may occur during the test; and (4) provide proof of compliance with any applicable federal artificial intelligence laws and regulations.
Section 553.052 sets out application requirements for sandbox participation, including a description of the AI system and its intended use, a benefit assessment addressing consumer, privacy, and public safety impacts, a mitigation plan for adverse consequences, and proof of federal AI law compliance.
(a)–(b) A program participantProgram participant"Program participant" means a person whose application to participate in the program is approved and who may test an artificial intelligence system under this chapter.Bus. & Com. Code § 553.001(4) approved by the department and each applicable agency may test and deploy an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) under the program for a period of not more than 36 months. (b) The department may extend a test under this chapter if the department finds good cause for the test to continue.
Section 553.053 limits sandbox participation to 36 months, with the Department of Information Resources authorized to extend for good cause.
(a)–(c) 15 A program participantProgram participant"Program participant" means a person whose application to participate in the program is approved and who may test an artificial intelligence system under this chapter.Bus. & Com. Code § 553.001(4) shall provide a quarterly report to the department. (b) The report shall include: (1) metrics for the artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1)'s performance; (2) updates on how the artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) mitigates any risks associated with its operation; and (3) feedback from consumersConsumer"Consumer" means an individual who is a resident of this state acting only in an individual or household context. The term does not include an individual acting in a commercial or employment context.Bus. & Com. Code § 551.001(2) and affected stakeholders that are using an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) tested under this chapter. (c) The department shall maintain confidentiality regarding the intellectual property, trade secrets, and other sensitive information it obtains through the program.
Section 553.102 requires sandbox program participants to submit quarterly reports to the Department of Information Resources covering AI system performance metrics, risk-mitigation updates, and consumer/stakeholder feedback. The department must maintain confidentiality of intellectual property, trade secrets, and other sensitive information.
(a)–(b) The department shall submit an annual report to the legislature. (b) The report shall include: (1) the number of program participantsProgram participant"Program participant" means a person whose application to participate in the program is approved and who may test an artificial intelligence system under this chapter.Bus. & Com. Code § 553.001(4) testing an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) in the program; (2) the overall performance and impact of artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) tested in the program; and (3) recommendations on changes to laws or regulations for future legislative consideration.
Section 553.103 requires the Department of Information Resources to submit an annual report to the legislature on the sandbox program, covering the number of participants, overall AI system performance and impact, and regulatory reform recommendations.
(a) The Texas Artificial Intelligence CouncilCouncil"Council" means the Texas Artificial Intelligence Council established under Chapter 554.Bus. & Com. Code § 551.001(3) is created to: (1) ensure artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) in this state are ethical and developed in the public's best interest; (2) ensure artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) in this state do not harm public safety or undermine individual freedoms by finding issues and making recommendations to the legislature regarding the Penal Code and Chapter 82, Civil Practice and Remedies Code; (3) identify existing laws and regulations that impede innovation in the development of artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) and recommend appropriate reforms; (4) analyze opportunities to improve the efficiency and effectiveness of state government operations through the use of artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1); (5) make recommendations to applicable state agencies regarding the use of artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) to improve the agencies' efficiency and effectiveness; (6) evaluate potential instances of regulatory capture, including undue influence by technology companies or disproportionate burdens on smaller innovators caused by the use of artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1); (7) evaluate the influence of technology companies on other companies and determine the existence or use of tools or processes designed to censor competitors or users through the use of artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1); (8) offer guidance and recommendations to the legislature on the ethical and legal use of artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1); (9) conduct and publish the results of a study on the current regulatory environment for artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1); (10) receive reports from the Department of Information Resources regarding the regulatory sandbox program under Chapter 553; and (11) make recommendations for improvements to the regulatory sandbox program under Chapter 553.
Section 554.001 establishes the Texas Artificial Intelligence Council, administratively attached to the Department of Information Resources. The council's mandate includes ensuring ethical AI development, identifying regulatory impediments to innovation, analyzing government AI opportunities, evaluating regulatory capture and anticompetitive practices, providing legislative guidance, studying the regulatory environment, and overseeing the sandbox program. The council is advisory only — it cannot adopt binding rules or override state agencies.
The councilCouncil"Council" means the Texas Artificial Intelligence Council established under Chapter 554.Bus. & Com. Code § 551.001(3) shall conduct training programs for state agencies and local governments on the use of artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1).
Section 554.102 requires the council to conduct training programs for state agencies and local governments on the use of AI systems. This is a government-internal obligation on the council, not a compliance duty on regulated entities.
The councilCouncil"Council" means the Texas Artificial Intelligence Council established under Chapter 554.Bus. & Com. Code § 551.001(3) may not: (1) adopt rules or promulgate guidance that is binding for any entity; (2) interfere with or override the operation of a state agency; or (3) perform a duty or exercise a power not granted by this chapter.
Section 554.103 expressly limits the council's authority: it may not adopt binding rules or guidance, interfere with or override state agency operations, or perform duties or exercise powers not granted by Chapter 554.
(15) 16 an assessment of the agency's use of artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1), as that term is defined by Section 551.001, Business & Commerce Code, in its operations and its oversight of the use of artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) by persons under the agency's jurisdiction, and any related impact on the agency's ability to achieve its mission, goals, and objectives, made using information available from the Department of Information Resources, the attorney general, or any other appropriate state agency.
Section 5 of the Act amends the sunset review criteria in Government Code § 325.011 to add a new criterion (15) requiring the Sunset Advisory Commission to assess each state agency's use of AI systems in its operations, its oversight of AI use by persons under the agency's jurisdiction, and any related impact on the agency's ability to achieve its mission.
(b)(5) 17 an evaluation of the use or considered use of artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1), as defined by Section 551.001, Business & Commerce Code, by each state agency.
Section 6 of the Act amends Government Code § 2054.068(b) to require the Department of Information Resources to collect from each state agency an evaluation of the agency's use or considered use of artificial intelligence systems, as part of the department's existing information technology infrastructure data collection.
(b)(2) 18 an inventory of the agency's major databases, artificial intelligence systemsArtificial intelligence system"Artificial intelligence system" means any machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1), as defined by Section 551.001, Business & Commerce Code, and applications;
Section 7 of the Act amends Government Code § 2054.0965(b) to add AI systems to the list of items state agencies must inventory in their periodic information resources reviews. Agencies must now include AI systems alongside major databases and applications in their inventories.