Regulon — TX-HB-1709 · TX HB 1709 (AI Governance)

WHAT THIS BILL REGULATES · 11 REQUIREMENT TYPES

How Is This Bill Enforced

Enforcement Authority

Attorney general has exclusive enforcement authority. AG may issue civil investigative demands, seek injunctive relief, and assess administrative fines. Before bringing an action, the AG must provide 30 days' written notice identifying the alleged violation; if the developer or deployer cures the violation within 30 days and provides a written statement with supporting documentation, the AG may not bring the action. State licensing agencies may separately sanction licensees for Subchapter B prohibited-use violations. No private right of action.

Private Right of Action

No private right of action. Enforcement is exclusive to the designated authority.

Penalties

For uncured non-prohibited-use violations: $50,000–$100,000 per violation. For uncured prohibited-use (Subchapter B) violations or uncurable violations: $80,000–$200,000 per violation. Continuing violations after a finding: $2,000–$40,000 per day. AG may recover reasonable attorney's fees and investigation expenses. AG may seek injunctive relief. State agencies may impose monetary penalties up to $100,000 and suspend, revoke, or place on probation licenses for Subchapter B violations. Rebuttable presumption of reasonable care if Subchapter A duties are met.

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.

Statutory Text

Analysis & Obligations

Bus. & Com. Code § 551.001

Definitions

(1)–(22) Sec. 551.001. DEFINITIONS. In this chapter: (1) "Algorithmic discrimination" means any condition in which an artificial intelligence system when deployed creates an unlawful discrimination of a protected classification in violation of the laws of this state or federal law. (A) "Algorithmic discrimination" does not include the offer, license, or use of a high-risk artificial intelligence system by a developer or deployer for the sole purpose of the developer's or deployer's self-testing, for a non-deployed purpose, to identify, mitigate, or prevent discrimination or otherwise ensure compliance with state and federal law. (2) "Artificial intelligence system" means the use of machine learning and related technologies that use data to train statistical models for the purpose of enabling computer systems to perform tasks normally associated with human intelligence or perception, such as computer vision, speech or natural language processing, and content generation. (3) "Biometric identifier" means a retina or iris scan, fingerprint, voiceprint, or record of hand or face geometry. (4) "Council" means the Artificial Intelligence Council established under Chapter 553. (5) "Consequential decision" means any decision that has a material, legal, or similarly significant, effect on a consumer's access to, cost of, or terms or conditions of: (A) a criminal case assessment, a sentencing or plea agreement analysis, or a pardon, parole, probation, or release decision; (B) education enrollment or an education opportunity; (C) employment or an employment opportunity; (D) a financial service; (E) an essential government service; (F) residential utility services; (G) a health-care service or treatment; (H) housing; (I) insurance; (J) a legal service; (K) a transportation service; (L) constitutionally protected services or products; or (M) elections or voting process. (6) "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. (7) "Deploy" means to put into effect or commercialize. (8) "Deployer" means a person doing business in this state that deploys a high-risk artificial intelligence system. (9) "Developer" means a person doing business in this state that develops a high-risk artificial intelligence system or substantially or intentionally modifies an artificial intelligence system. (10) "Digital service" means a website, an application, a program, or software that collects or processes personal identifying information with Internet connectivity. (11) "Digital service provider" means a person who: (A) owns or operates a digital service; (B) determines the purpose of collecting and processing the personal identifying information of users of the digital service; and (C) determines the means used to collect and process the personal identifying information of users of the digital service. (12) "Distributor" means a person, other than the Developer, that makes an artificial intelligence system available in the market for a commercial purpose. (13) "Generative artificial intelligence" means artificial intelligence models that can emulate the structure and characteristics of input data in order to generate derived synthetic content. This can include images, videos, audio, text, and other digital content. (14) "High-risk artificial intelligence system" means any artificial intelligence system that is a substantial factor to a consequential decision. The term does not include: (A) an artificial intelligence system if the artificial intelligence system is intended to detect decision-making patterns or deviations from prior decision-making patterns and is not intended to replace or influence a previously completed human assessment without sufficient human review; (B) an artificial intelligence system that violates a provision of Subchapter B; or (C) the following technologies, unless the technologies, when deployed, make, or are a substantial factor in making, a consequential decision: [enumerated list of 19 technology exclusions]. (15) "Open source artificial intelligence system" means an artificial intelligence system that: (A) can be used or modified for any purpose without securing permission from the owner or creator; (B) can be shared for any use with or without modifications; and (C) includes information about the data used to train such system that is sufficiently detailed such that a person skilled in artificial intelligence could create a substantially equivalent system when the following are made available freely or through a non-restrictive license: (i) the same or similar data; (ii) the source code used to train and run such system; and (iii) the model weights and parameters of such system. (16) "Operational technology" means hardware and software that detects or causes a change through the direct monitoring or control of physical devices, processes, and events in the enterprise. (17) "Personal data" has the meaning assigned to it by Section 541.001, Business and Commerce Code. (18) "Risk" means the composite measure of an event's probability of occurring and the magnitude or degree of the consequences of the corresponding event. (19) "Sensitive personal attribute" means race, political opinions, religious or philosophical beliefs, ethnic orientation, mental health diagnosis, or sex. The term does not include conduct that would be classified as an offense under Chapter 21, Penal Code. (20) "Social media platform" has the meaning assigned by Section 120.001, Business and Commerce Code. (21) "Substantial factor" means a factor that is: (A) considered when making a consequential decision; (B) likely to alter the outcome of a consequential decision; and (C) weighed more heavily than any other factor contributing to the consequential decision. (22) "Intentional and substantial modification" or "Substantial modification" means a deliberate change made to an artificial intelligence system that reasonably increases the risk of algorithmic discrimination.

Section 551.001 establishes the definitional foundation for the chapter. Key terms include high-risk artificial intelligence system, defined as any AI system that is a substantial factor in a consequential decision. The substantial-factor test is unusually restrictive: the AI must be the single most heavily weighted factor in the decision and must be likely to alter its outcome. The consequential-decision definition sweeps broadly across thirteen domains. Numerous technology carve-outs exclude routine IT tools unless they become a substantial factor in a consequential decision.

Bus. & Com. Code § 551.002

Applicability of Chapter

Sec. 551.002. APPLICABILITY OF CHAPTER. This chapter applies only to a person that is not a small business as defined by the United States Small Business Administration, and: (1) conducts business, promotes, or advertises in this state or produces a product or service consumed by residents of this state; or (2) engages in the development, distribution, or deployment of a high-risk artificial intelligence system in this state.

Section 551.002 scopes the chapter to persons that are not small businesses as defined by the SBA and that either conduct business in Texas or engage in the development, distribution, or deployment of a high-risk AI system in Texas. This small-business exemption is a significant carve-out that narrows the bill's practical reach.

Bus. & Com. Code § 551.003

Developer Duties

Developer

(a) 1 A developer of a high-risk artificial intelligence system shall use reasonable care to protect consumers from any known or reasonably foreseeable risks of algorithmic discrimination arising from the intended and contracted uses of the high-risk artificial intelligence system.

(b)(1)–(6) 2 Prior to providing a high-risk artificial intelligence system to a deployer, a developer shall provide to the deployer, in writing, a High-Risk Report that consists of: (1) a statement describing how the high-risk artificial intelligence system should be used or not be used; (2) any known limitations of the system that could lead to algorithmic discrimination, the metrics used to measure the system's performance, which shall include at a minimum, metrics related to accuracy, explainability, transparency, reliability, and security set forth in the most recent version of the "Artificial Intelligence Risk Management Framework: Generative Artificial Intelligence Profile" published by the National Institute of Standards and Technology, and how the system performs under those metrics in its intended use contexts; (3) any known or reasonably foreseeable risks of algorithmic discrimination, arising from its intended or likely use; (4) a high-level summary of the type of data used to program or train the high-risk artificial intelligence system; (5) the data governance measures used to cover the training datasets and their collection, and the measures used to examine the suitability of data sources and prevent unlawful discriminatory biases; and (6) appropriate principles, processes, and personnel for the deployers' risk management policy.

(c) 3 If a high-risk artificial intelligence system is intentionally or substantially modified after a developer provides it to a deployer, a developer shall make necessary information in subsection (b) available to deployers within 30 days of the modification.

(d) 4 If a developer believes or has reason to believe, that it deployed a high-risk artificial intelligence system that does not comply with a requirement of this chapter, the developer shall immediately take the necessary corrective actions to bring that system into compliance, including by withdrawing it, disabling it, and recalling it, as appropriate. Where applicable, the developer shall inform the distributors or deployers of the high-risk artificial intelligence system concerned.

(e) 5 Where the high-risk artificial intelligence system presents risks of algorithmic discrimination, unlawful use or disclosure of personal data, or deceptive manipulation or coercion of human behavior and the developer knows or should reasonably know of that risk, it shall immediately investigate the causes, in collaboration with the deployer, where applicable, and inform the attorney general in writing of the nature of the non-compliance and of any relevant corrective action taken.

(f) 6 Developers shall keep detailed records of any generative artificial intelligence training data used to develop a generative artificial intelligence system or service, consistent with the suggested actions under GV-1.2-007 of the "Artificial Intelligence Risk Management Framework: Generative Artificial Intelligence Profile" by the National Institute of Standards and Technology, or any subsequent versions thereof.

Section 551.003 imposes the core developer obligations. Subsection (a) establishes a reasonable care standard requiring developers to protect consumers from known or reasonably foreseeable risks of algorithmic discrimination. Subsection (b) requires delivery of a written High-Risk Report to deployers before providing the system, covering intended uses, known discrimination risks, performance metrics aligned with the NIST AI RMF GenAI Profile, training data summaries, data governance measures, and recommended risk management principles. Subsection (c) requires updated information within 30 days of a substantial modification. Subsection (d) requires immediate corrective action — including withdrawal, disabling, or recall — if the developer believes a deployed system is non-compliant. Subsection (e) requires immediate investigation and written notice to the attorney general when the system presents risks of algorithmic discrimination, unlawful data disclosure, or deceptive manipulation. Subsection (f) requires detailed records of generative AI training data consistent with the NIST AI RMF GenAI Profile.

Compliance actions 6 items

Developers must use reasonable care to protect consumers from known or reasonably foreseeable risks of algorithmic discrimination arising from the intended and contracted uses of their high-risk AI systems.

H-02.1

Developers must provide deployers with a written High-Risk Report before delivering a high-risk AI system, covering intended uses, known discrimination risks, NIST AI RMF-aligned performance metrics, training data summary, data governance measures, and recommended risk management principles.

G-02.1

Developers must update and provide the High-Risk Report information to deployers within 30 days of any intentional and substantial modification to the system.

G-02.1

Developers that believe or have reason to believe a deployed high-risk AI system does not comply with this chapter must immediately take corrective action — including withdrawing, disabling, or recalling the system — and inform affected distributors and deployers.

R-01.1

Developers that know or should reasonably know their high-risk AI system presents risks of algorithmic discrimination, unlawful personal data disclosure, or deceptive manipulation must immediately investigate the causes and inform the attorney general in writing of the non-compliance and corrective actions taken.

R-01.1

Developers must maintain detailed records of all generative AI training data consistent with the NIST AI RMF GenAI Profile (GV-1.2-007).

T-03.1

Bus. & Com. Code § 551.004

Distributor Duties

Distributor

7 Sec. 551.004. DISTRIBUTOR DUTIES. A distributor of a high-risk artificial intelligence system shall use reasonable care to protect consumers from any known or reasonably foreseeable risks of algorithmic discrimination. If a distributor of a high-risk artificial intelligence system knows or has reason to know that a high-risk artificial intelligence system is not in compliance with any requirement in this chapter, it shall immediately withdraw, disable, or recall as appropriate, the high-risk artificial intelligence system from the market until the system has been brought into compliance with the requirements of this chapter. The distributor shall inform the developers of the high-risk artificial intelligence system concerned and, where applicable, the deployers.

Section 551.004 imposes a parallel reasonable-care duty on distributors of high-risk AI systems. If a distributor knows or has reason to know the system is non-compliant, it must immediately withdraw, disable, or recall the system and inform the developers and, where applicable, the deployers.

Compliance actions 1 item

Distributors must use reasonable care to protect consumers from algorithmic discrimination risks and must immediately withdraw, disable, or recall any non-compliant high-risk AI system from the market, notifying affected developers and deployers.

H-02.1

Bus. & Com. Code § 551.005

Deployer Duties

Deployer

8 Sec. 551.005. DEPLOYER DUTIES. A deployer of a high-risk artificial intelligence system shall use reasonable care to protect consumers from any known or reasonably foreseeable risks of algorithmic discrimination. If a deployer of a high-risk artificial intelligence system knows or has reason to know that a high-risk artificial intelligence system is not in compliance with any requirement in this chapter, it shall immediately suspend the use of the high-risk artificial intelligence system from the market until the system has been brought into compliance with the requirements of this chapter. The deployer shall inform the developers of the high-risk artificial intelligence system concerned and, where applicable, the distributors.

Section 551.005 mirrors the distributor duty for deployers: a reasonable-care obligation to protect consumers from algorithmic discrimination, with an immediate suspension requirement upon knowledge of non-compliance and a duty to inform developers and distributors.

Compliance actions 1 item

Deployers must use reasonable care to protect consumers from algorithmic discrimination risks and must immediately suspend use of any non-compliant high-risk AI system, notifying developers and distributors.

H-02.1

Bus. & Com. Code § 551.006

Impact Assessments

DeployerDeveloper

(a)(1)–(8) 9 Sec. 551.006. IMPACT ASSESSMENTS. (a) A deployer that deploys a high-risk artificial intelligence system shall complete an impact assessment for the high-risk artificial intelligence system. A deployer, or a third-party contracted by the deployer for such purposes, shall complete an impact assessment annually and within ninety days after any intentional and substantial modification to the high-risk artificial intelligence system is made available. An impact assessment must include, at a minimum, and to the extent reasonably known by or available to the deployer: (1) a statement by the deployer disclosing the purpose, intended use cases, and deployment context of, and benefits afforded by, the high-risk artificial intelligence system; (2) an analysis of whether the deployment of the high-risk artificial intelligence system poses any known or reasonably foreseeable risks of algorithmic discrimination and, if so, the nature of the algorithmic discrimination and the steps that have been taken to mitigate the risks; (3) a description of the categories of data the high-risk artificial intelligence system processes as inputs and the outputs the high-risk artificial intelligence system produces; (4) if the deployer used data to customize the high-risk artificial intelligence system, an overview of the categories of data the deployer used to customize the high-risk artificial intelligence system; (5) any metrics used to evaluate the performance and known limitations of the high-risk artificial intelligence system; (6) a description of any transparency measures taken concerning the high-risk artificial intelligence system, including any measures taken to disclose to a consumer that the high-risk artificial intelligence system will be used; (7) a description of the post-deployment monitoring and user safeguards provided concerning the high-risk artificial intelligence system, including the oversight, use, and learning process established by the deployer to address issues arising from the deployment of the high-risk artificial intelligence system; and (8) a description of cybersecurity measures and threat modeling conducted on the system.

(b) 9 Following an intentional and substantial modification to a high-risk artificial intelligence system, a deployer must disclose the extent to which the high-risk artificial intelligence system was used in a manner that was consistent with, or varied from, the developer's intended uses of the high-risk artificial intelligence system.

(d) 10 A deployer shall maintain the most recently completed impact assessment for a high-risk artificial intelligence system, all records concerning each impact assessment, and all prior impact assessments, if any, for at least three years following the final deployment of the high-risk artificial intelligence system.

(g) 11 Except as provided in subsection (e) of this section, a developer that makes a high-risk artificial intelligence system available to a deployer shall make available to the deployer the documentation and information necessary for a deployer to complete an impact assessment pursuant to this section.

(c), (e), (f), (h) A single impact assessment may address a comparable set of high-risk artificial intelligence systems deployed by a deployer. (e) If a deployer, or a third party contracted by the deployer, completes an impact assessment for the purpose of complying with another applicable law or regulation, such impact assessment shall be deemed to satisfy the requirements established in this subsection if such impact assessment is reasonably similar in scope and effect to the impact assessment that would otherwise be completed pursuant to this subsection. (f) A deployer may redact any trade secrets as defined by Section 541.001(33), Business & Commerce Code or information protected from disclosure by state or federal law. (h) A developer that also serves as a deployer for a high-risk artificial intelligence system is not required to generate and store an impact assessment unless the high-risk artificial intelligence system is provided to an unaffiliated deployer.

Section 551.006 requires deployers to complete impact assessments for each high-risk AI system, on an annual basis and within 90 days of any intentional and substantial modification. Assessments must cover purpose and use cases, discrimination risk analysis, data categories, performance metrics, transparency measures, post-deployment monitoring, and cybersecurity threat modeling. Subsection (d) requires retention of all impact assessments and associated records for at least three years after final deployment. Subsection (g) imposes a reciprocal duty on developers to provide deployers with the documentation necessary to complete an impact assessment. A developer that also serves as deployer need not generate an assessment unless it provides the system to an unaffiliated deployer.

Compliance actions 3 items

Deployers must complete a written impact assessment for each high-risk AI system, annually and within 90 days of any substantial modification, covering purpose, discrimination risk analysis, data categories, performance metrics, transparency measures, post-deployment monitoring, and cybersecurity threat modeling. Following a modification, the deployer must disclose whether the system was used consistently with the developer's intended uses.

H-02.3

Deployers must retain all impact assessments, associated records, and prior assessments for at least three years following final deployment of the high-risk AI system.

H-02.10

Developers must provide deployers with all documentation and information necessary for the deployer to complete an impact assessment.

G-02.1

Bus. & Com. Code § 551.007

Disclosure of a High-Risk AI System to Consumers

DeployerDeveloper

(a)(1)–(8), (b)–(e) 12 Sec. 551.007. DISCLOSURE OF A HIGH-RISK ARTIFICIAL INTELLIGENCE SYSTEM TO CONSUMERS. (a) A deployer or developer that deploys, offers, sells, leases, licenses, gives, or otherwise makes available a high-risk artificial intelligence system that is intended to interact with consumers shall disclose to each consumer, before or at the time of interaction: (1) that the consumer is interacting with an artificial intelligence system; (2) the purpose of the system; (3) that the system may or will make a consequential decision affecting the consumer; (4) the nature of any consequential decision in which the system is or may be a substantial factor; (5) the factors to be used in making any consequential decisions; (6) contact information of the deployer; (7) a description of: (A) any human components of the system; (B) any automated components of the system; and (C) how human and automated components are used to inform a consequential decision; and (8) a declaration of the consumer's rights under Section 551.108. (b) Disclosure is required under subsection (a) of this section regardless of whether it would be obvious to a reasonable person that the person is interacting with an artificial intelligence system. (c) All disclosures under subsection (a) shall be clear and conspicuous and written in plain language, and avoid the use of a dark pattern as defined by 541.001, Business & Commerce Code. (d) All disclosures under subsection (a) may be linked to a separate webpage of the developer or deployer. (e) Any requirement in this section that may conflict with state or federal law may be exempt.

Section 551.007 imposes a comprehensive pre-interaction disclosure obligation on deployers and developers that make consumer-facing high-risk AI systems available. Consumers must be told they are interacting with AI, the system's purpose, whether it may make a consequential decision, the nature and factors of that decision, contact information, the human and automated components of the system, and the consumer's appeal rights under § 551.108. Subsection (b) makes disclosure unconditional — it is required even when it would be obvious that the consumer is interacting with AI. Disclosures must be clear, conspicuous, in plain language, and free of dark patterns.

Compliance actions 1 item

Deployers and developers must disclose to consumers, before or at the time of interaction with a high-risk AI system, that they are interacting with AI, the system's purpose, whether it may make a consequential decision, the nature and factors of that decision, deployer contact information, the human and automated components of the system, and the consumer's appeal rights — regardless of whether the AI nature would be obvious.

T-01.1

Bus. & Com. Code § 551.008

Risk Identification and Management Policy

DeployerDeveloper

(a)(1)–(2) 13 Sec. 551.008. RISK IDENTIFICATION AND MANAGEMENT POLICY. (a) A developer or deployer of a high-risk artificial intelligence system shall, prior to deployment, assess potential risks of algorithmic discrimination and implement a risk management policy to govern the development or deployment of the high-risk artificial intelligence system. The risk management policy shall: (1) specify and incorporate the principles and processes that the developer or deployer uses to identify, document, and mitigate, in the development or deployment of a high-risk artificial intelligence system: (A) known or reasonably foreseeable risks of algorithmic discrimination; and (B) prohibited uses and unacceptable risks under Subchapter B; and (2) be reasonable in size, scope, and breadth, considering: (A) guidance and standards set forth in the most recent version of the "Artificial Intelligence Risk Management Framework: Generative Artificial Intelligence Profile" published by the National Institute of Standards and Technology; (B) any existing risk management guidance, standards or framework applicable to artificial intelligence systems designated by the Banking Commissioner or Insurance Commissioner, if the developer or deployer is regulated by the Department of Banking or Department of Insurance; (C) the size and complexity of the developer or deployer; (D) the nature, scope, and intended use of the high-risk artificial intelligence systems developed or deployed; and (E) the sensitivity and volume of personal data processed in connection with the high-risk artificial intelligence systems.

(b)–(c) 13 A risk management policy implemented pursuant to this section may apply to more than one high-risk artificial intelligence system developed or deployed, so long as the developer or deployer complies with all of the forgoing requirements and considerations in adopting and implementing the risk management policy with respect to each high-risk artificial intelligence system covered by the policy. (c) A developer or deployer may redact or omit any trade secrets as defined by Section 541.001(33), Business & Commerce Code or information protected from disclosure by state or federal law.

Section 551.008 requires developers and deployers to assess algorithmic discrimination risks and implement a risk management policy before deploying a high-risk AI system. The policy must cover risk identification, documentation, and mitigation for both discrimination risks and Subchapter B prohibited uses. It must be proportionate to the entity's size, the system's nature and scope, and the sensitivity of personal data processed. The NIST AI RMF GenAI Profile is the primary safe-harbor framework, supplemented by any standards designated by the Banking Commissioner or Insurance Commissioner for regulated entities.

Compliance actions 1 item

Developers and deployers must, prior to deployment, assess potential algorithmic discrimination risks and implement a risk management policy that identifies, documents, and mitigates discrimination risks and Subchapter B prohibited uses, calibrated to the NIST AI RMF GenAI Profile, the entity's size and complexity, the system's scope and intended use, and the sensitivity of personal data processed.

G-01.1

Bus. & Com. Code § 551.009

Relationships Between AI Parties

(1)–(3) Sec. 551.009. RELATIONSHIPS BETWEEN ARTIFICIAL INTELLIGENCE PARTIES. Any distributor or deployer, shall be considered to be a developer of a high-risk artificial intelligence system for the purposes of this chapter and shall be subject to the obligations and duties of a developer under this chapter in any of the following circumstances: (1) they put their name or trademark on a high-risk artificial intelligence system already placed in the market or put into service; (2) they intentionally and substantially modify a high-risk artificial intelligence system that has already been placed in the market or has already been put into service in such a way that it remains a high-risk artificial intelligence system under this chapter; or (3) they modify the intended purpose of an artificial intelligence system which has not previously been classified as high-risk and has already been placed in the market or put into service in such a way that the artificial intelligence system concerned becomes a high-risk artificial intelligence system in accordance with this chapter of a high-risk artificial intelligence system.

Section 551.009 provides that any distributor or deployer that white-labels a high-risk AI system, intentionally and substantially modifies one, or repurposes a non-high-risk system into a high-risk system becomes a developer for purposes of the chapter and assumes all developer obligations.

Bus. & Com. Code § 551.010

Digital Service Provider and Social Media Platform Duties

Deployer

14 Sec. 551.010. DIGITAL SERVICE PROVIDER AND SOCIAL MEDIA PLATFORM DUTIES REGARDING ARTIFICIAL INTELLIGENCE SYSTEMS. A digital service provider as defined by Section 509.001(2), Business & Commerce Code or a social media platform as defined by Section 120.001(1), Business & Commerce Code, shall require advertisers on the service or platform to agree to terms preventing the deployment of a high-risk artificial intelligence system on the service or platform that could expose the users of the service or platform to algorithmic discrimination or prohibited uses under Subchapter B.

Section 551.010 requires digital service providers and social media platforms to contractually bind their advertisers against deploying high-risk AI systems on the platform that could expose users to algorithmic discrimination or prohibited uses. This is a contractual-obligation mandate rather than a technical control requirement.

Compliance actions 1 item

Digital service providers and social media platforms must contractually require advertisers to agree to terms preventing the deployment of high-risk AI systems on the platform that could expose users to algorithmic discrimination or Subchapter B prohibited uses.

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Bus. & Com. Code § 551.011

Reporting Requirements

DeployerDeveloper

(a) 15 Sec. 551.011. REPORTING REQUIREMENTS. (a) A deployer must notify, in writing, the council, the attorney general, or the director of the appropriate state agency that regulates the deployer's industry, and affected consumers as soon as practicable after the date on which the deployer discovers or is made aware that a deployed high-risk artificial intelligence system has caused algorithmic discrimination of an individual or group of individuals.

(b) 16 If a developer discovers or is made aware that a deployed high-risk artificial intelligence system is using inputs or providing outputs that constitute a violation of Subchapter B, the deployer must cease operation of the offending system as soon as technically feasible and provide notice to the council and the attorney general as soon as practicable and not later than the 10th day after the date on which the developer discovers or is made aware of the unacceptable risk.

Section 551.011 establishes two reporting triggers. Subsection (a) requires deployers to notify the AI Council, the attorney general, the relevant sector regulator, and affected consumers as soon as practicable after discovering that a deployed high-risk AI system has caused algorithmic discrimination. Subsection (b) requires developers that discover a system is producing Subchapter B-violating inputs or outputs to cease operations as soon as technically feasible and notify the Council and AG within 10 days.

Compliance actions 2 items

Deployers must notify in writing the AI Council, the attorney general or the appropriate sector regulator, and affected consumers as soon as practicable after discovering that a deployed high-risk AI system has caused algorithmic discrimination.

R-01.1

Developers that discover a deployed high-risk AI system is producing Subchapter B-violating inputs or outputs must cease the system's operation as soon as technically feasible and notify the AI Council and attorney general within 10 days of discovery.

R-01.1

Bus. & Com. Code § 551.051

Manipulation of Human Behavior to Circumvent Informed Decision-Making

DeployerDeveloper

17 Sec. 551.051. MANIPULATION OF HUMAN BEHAVIOR TO CIRCUMVENT INFORMED DECISION-MAKING. An artificial intelligence system shall not be developed or deployed that uses subliminal techniques beyond a person's consciousness, or purposefully manipulative or deceptive techniques, with the objective or the effect of materially distorting the behavior of a person or a group of persons by appreciably impairing their ability to make an informed decision, thereby causing a person to make a decision that the person would not have otherwise made, in a manner that causes or is likely to cause significant harm to that person or another person or group of persons.

Section 551.051 prohibits the development or deployment of AI systems that use subliminal techniques, or purposefully manipulative or deceptive techniques, to materially distort behavior and impair informed decision-making in a manner that causes or is likely to cause significant harm.

Compliance actions 1 item

No person may develop or deploy an AI system that uses subliminal, purposefully manipulative, or deceptive techniques to materially distort behavior, impair informed decision-making, and cause or likely cause significant harm.

CP-01.1

Bus. & Com. Code § 551.052

Social Scoring

DeployerDeveloper

18 Sec. 551.052. SOCIAL SCORING. An artificial intelligence system shall not be developed or deployed for the evaluation or classification of natural persons or groups of natural persons based on their social behavior or known, inferred, or predicted personal characteristics with the intent to determine a social score or similar categorical estimation or valuation of a person or groups of persons.

Section 551.052 prohibits AI systems for evaluating or classifying persons based on social behavior or personal characteristics to determine a social score or similar categorical valuation.

Compliance actions 1 item

No person may develop or deploy an AI system that evaluates or classifies individuals based on social behavior or personal characteristics to assign a social score or similar categorical valuation.

S-02.1

Bus. & Com. Code § 551.053

Capture of Biometric Identifiers Using AI

DeployerDeveloper

19 Sec. 551.053. CAPTURE OF BIOMETRIC IDENTIFIERS USING ARTIFICIAL INTELLIGENCE. An artificial intelligence system developed with biometric identifiers of individuals and the targeted or untargeted gathering of images or other media from the internet or any other publicly available source shall not be deployed for the purpose of uniquely identifying a specific individual. An individual is not considered to be informed nor to have provided consent for such purpose pursuant to Section 503.001, Business and Commerce Code, based solely upon the existence on the internet, or other publicly available source, of an image or other media containing one or more biometric identifiers.

Section 551.053 prohibits deploying AI systems trained on biometric identifiers gathered from the internet or other publicly available sources for the purpose of uniquely identifying a specific individual. It also clarifies that publicly available biometric data does not constitute consent under Texas's biometric privacy statute (§ 503.001).

Compliance actions 1 item

No person may deploy an AI system trained on biometric identifiers gathered from the internet or other publicly available sources for the purpose of uniquely identifying a specific individual. Publicly available biometric data does not constitute consent under the Texas biometric privacy statute.

S-02.2

Bus. & Com. Code § 551.054

Categorization Based on Sensitive Attributes

DeployerDeveloper

20 Sec. 551.054. CATEGORIZATION BASED ON SENSITIVE ATTRIBUTES. An artificial intelligence system shall not be developed or deployed with the specific purpose of inferring or interpreting, sensitive personal attributes of a person or group of persons using biometric identifiers, except for the labeling or filtering of lawfully acquired biometric identifier data.

Section 551.054 prohibits developing or deploying AI systems with the specific purpose of inferring or interpreting sensitive personal attributes using biometric identifiers, except for labeling or filtering lawfully acquired biometric data.

Compliance actions 1 item

No person may develop or deploy an AI system with the specific purpose of inferring or interpreting sensitive personal attributes (race, political opinions, religious beliefs, ethnic orientation, mental health diagnosis, or sex) using biometric identifiers, except for labeling or filtering lawfully acquired biometric data.

D-01.5

Bus. & Com. Code § 551.055

Utilization of Personal Attributes for Harm

DeployerDeveloper

21 Sec. 551.055. UTILIZATION OF PERSONAL ATTRIBUTES FOR HARM. An artificial intelligence system shall not utilize characteristics of a person or a specific group of persons based on their race, color, disability, religion, sex, national origin, age, or a specific social or economic situation, with the objective, or the effect, of materially distorting the behavior of that person or a person belonging to that group in a manner that causes or is reasonably likely to cause that person or another person harm.

Section 551.055 prohibits AI systems from exploiting protected characteristics or socioeconomic vulnerability to materially distort behavior in a manner causing or likely to cause harm. This is distinct from § 551.051 (subliminal manipulation) in that it specifically targets exploitation of group-level characteristics.

Compliance actions 1 item

No person may use an AI system to exploit a person's or group's race, color, disability, religion, sex, national origin, age, or socioeconomic situation to materially distort their behavior in a manner that causes or is reasonably likely to cause harm.

CP-01.1

Bus. & Com. Code § 551.056

Certain Sexually Explicit Videos, Images, and Child Pornography

DeployerDeveloper

22 Sec. 551.056. CERTAIN SEXUALLY EXPLICIT VIDEOS, IMAGES, AND CHILD PORNOGRAPHY. An artificial intelligence system shall not be developed or deployed that produces, assists, or aids in producing, or is capable of producing unlawful visual material in violation of Section 43.26, Penal Code or an unlawful deep fake video or image in violation of Section 21.165, Penal Code.

Section 551.056 prohibits developing or deploying AI systems that produce or assist in producing unlawful visual material (child pornography under Penal Code § 43.26) or unlawful deepfake videos or images (non-consensual intimate imagery under Penal Code § 21.165).

Compliance actions 1 item

No person may develop or deploy an AI system that produces, assists in producing, or is capable of producing child sexual abuse material (Penal Code § 43.26) or non-consensual deepfake intimate imagery (Penal Code § 21.165).

S-02.4

Bus. & Com. Code § 551.108

Consumer Rights and Remedies

Deployer

23 Sec. 551.108. CONSUMER RIGHTS AND REMEDIES. A consumer may appeal a consequential decision made by a high-risk artificial intelligence system which has an adverse impact on their health, safety, or fundamental rights, and shall have the right to obtain from the deployer clear and meaningful explanations of the role of the high-risk artificial intelligence system in the decision-making procedure and the main elements of the decision taken.

Section 551.108 grants consumers the right to appeal a consequential decision made by a high-risk AI system that adversely impacts their health, safety, or fundamental rights, and to obtain clear and meaningful explanations of the AI system's role in the decision-making procedure and the main elements of the decision.

Compliance actions 1 item

Deployers must provide consumers the right to appeal adverse consequential decisions made by high-risk AI systems and to obtain clear and meaningful explanations of the AI system's role in the decision and the main elements of the decision taken.

H-01.1

Bus. & Com. Code § 551.101

Construction and Application

(a)–(b) Sec. 551.101. CONSTRUCTION AND APPLICATION. (a) This chapter shall be broadly construed and applied to promote its underlying purposes, which are: (1) to facilitate and advance the responsible development and use of artificial intelligence systems; (2) to protect individuals and groups of individuals from known, and unknown but reasonably foreseeable, risks, including unlawful algorithmic discrimination; (3) to provide transparency regarding those risks in the development, deployment, or use of artificial intelligence systems; and (4) to provide reasonable notice regarding the use or considered use of artificial intelligence systems by state agencies. (b) this chapter does not apply to the developer of an open source artificial intelligence system, provided that: (1) the system is not deployed as a high-risk artificial intelligence system and the developer has taken reasonable steps to ensure that the system cannot be used as a high-risk artificial intelligence system without substantial modifications; and (2) the weights and technical architecture of the system are made publicly available.

Section 551.101 sets forth the chapter's construction rules and the open-source AI exemption. Subsection (a) states the chapter's purposes (responsible AI, consumer protection, transparency, state-agency notice). Subsection (b) exempts developers of open-source AI systems from the chapter if the system is not deployed as a high-risk AI system, the developer has taken reasonable steps to prevent high-risk use without substantial modification, and the weights and technical architecture are publicly available.

Bus. & Com. Code § 551.102–551.107

Enforcement, Investigation, Cure, Penalties, and State Agency Actions

§ 551.102–§ 551.107 Sec. 551.102. ENFORCEMENT AUTHORITY. The attorney general has authority to enforce this chapter. Excluding violations of Subchapter B, researching, training, testing, or the conducting of other pre-deployment activities by active participants of the sandbox program, in compliance with Chapter 552, does not subject a developer or deployer to penalties or actions. Sec. 551.103. INTERNET WEBSITE AND COMPLAINT MECHANISM. The attorney general shall post on the attorney general's Internet website: (1) information relating to: (A) the responsibilities of a developer, distributor, and deployer under Subchapter A; and (B) an online mechanism through which a consumer may submit a complaint under this chapter to the attorney general. Sec. 551.104. INVESTIGATIVE AUTHORITY. (a) If the attorney general has reasonable cause to believe that a person has engaged in or is engaging in a violation of this chapter, the attorney general may issue a civil investigative demand. The attorney general shall issue such demands in accordance with and under the procedures established under Section 15.10. (b) The attorney general may request, pursuant to a civil investigative demand issued under Subsection (a), that a developer or deployer of a high-risk artificial intelligence system disclose their risk management policy and impact assessments required under Subchapter A. The attorney general may evaluate the risk management policy and impact assessments for compliance with the requirements set forth in Subchapter A. (c) The attorney general may not institute an action for a civil penalty against a developer or deployer for artificial intelligence systems that remain isolated from customer interaction in a pre-deployment environment. Sec. 551.105. NOTICE OF VIOLATION OF CHAPTER; OPPORTUNITY TO CURE. Before bringing an action under Section 551.106, the attorney general shall notify a developer, distributor, or deployer in writing, not later than the 30th day before bringing the action, identifying the specific provisions of this chapter the attorney general alleges have been or are being violated. The attorney general may not bring an action against the developer or deployer if: (1) within the 30-day period, the developer or deployer cures the identified violation; and (2) the developer or deployer provides the attorney general a written statement that the developer or deployer: (A) cured the alleged violation; (B) notified the consumer, if technically feasible, and the council that the developer or deployer's violation was addressed, if the consumer's contact information has been made available to the developer or deployer and the attorney general; (C) provided supportive documentation to show how the violation was cured; and (D) made changes to internal policies, if necessary, to reasonably ensure that no such further violations are likely to occur. Sec. 551.106. CIVIL PENALTY; INJUNCTION. (a) The attorney general may bring an action in the name of this state to restrain or enjoin the person from violating this chapter and seek injunctive relief. (b) The attorney general may recover reasonable attorney's fees and other reasonable expenses incurred in investigating and bringing an action under this section. (c) The attorney general may assess and collect an administrative fine against a developer or deployer who fails to timely cure a violation or who breaches a written statement provided to the attorney general, other than those for a prohibited use, of not less than $50,000 and not more than $100,000 per uncured violation. (d) The attorney general may assess and collect an administrative fine against a developer or deployer who fails to timely cure a violation of a prohibited use, or whose violation is determined to be uncurable, of not less than $80,000 and not more than $200,000 per violation. (e) A developer or deployer who was found in violation of and continues to operate with the provisions of this chapter shall be assessed an administrative fine of not less than $2,000 and not more than $40,000 per day. (f) There is a rebuttable presumption that a developer, distributor, or deployer used reasonable care as required under this chapter if the developer, distributor, or deployer complied with their duties under Subchapter A. Sec. 551.107. ENFORCEMENT ACTIONS BY STATE AGENCIES. A state agency may sanction an individual licensed, registered, or certified by that agency for violations of Subchapter B, including: (1) the suspension, probation, or revocation of a license, registration, certificate, or other form of permission to engage in an activity; and (2) monetary penalties up to $100,000.

Sections 551.102 through 551.107 establish the enforcement framework. The attorney general has exclusive enforcement authority (§ 551.102), must maintain a public website with information about AI party responsibilities and an online consumer complaint mechanism (§ 551.103), may issue civil investigative demands and request risk management policies and impact assessments (§ 551.104), must provide 30-day pre-suit notice and opportunity to cure before bringing an action (§ 551.105), and may seek injunctive relief and assess administrative fines tiered by violation severity (§ 551.106). A rebuttable presumption of reasonable care applies when a party has complied with Subchapter A duties. State licensing agencies may independently sanction licensees for Subchapter B violations (§ 551.107).

Bus. & Com. Code § 551.151–551.152

Construction of Chapter; Local Preemption

§ 551.151–§ 551.152 Sec. 551.151. CONSTRUCTION OF CHAPTER. This chapter may not be construed as imposing a requirement on a developer, a deployer, or other person that adversely affects the rights or freedoms of any person, including the right of free speech. Sec. 551.152. LOCAL PREEMPTION. This chapter supersedes and preempts any ordinance, resolution, rule, or other regulation adopted by a political subdivision regarding the use of high-risk artificial intelligence systems.

Section 551.151 provides a free-speech savings clause. Section 551.152 expressly preempts all local ordinances and regulations regarding the use of high-risk AI systems.

Bus. & Com. Code § 541.051(b) (as amended)

Consumer Personal Data Rights — AI-Related Amendments

Deployer

§ 541.051(b)(5) 24 know if the consumer's personal data is or will be used in any artificial intelligence system and for what purposes;

§ 541.051(b)(6)(C) 25 the sale of personal data for use in artificial intelligence systems prior to being collected;

§ 541.101(a)(3) 26 for purposes of protecting the unauthorized access, disclosure, alteration, or destruction of data collected, stored, and processed by artificial intelligence systems, shall establish, implement, and maintain, reasonable administrative, technical, and physical data security practices that are appropriate to the volume and nature of the data collected, stored, and processed by artificial intelligence systems.

§ 541.102(a)(6) 27 if applicable, an acknowledgement of the collection, use, and sharing of personal data for artificial intelligence purposes;

Section 4 of the Act amends the Texas Data Privacy and Security Act (Chapter 541) to add two new consumer rights: the right to know if personal data is or will be used in any AI system and for what purposes, and the right to opt out of the sale of personal data for use in AI systems prior to collection. It also adds a new controller duty to implement security practices specifically for data collected, stored, and processed by AI systems, and requires privacy notices to acknowledge AI-related data use.

Compliance actions 4 items

Controllers must honor consumer requests to know whether their personal data is or will be used in any AI system and for what purposes.

D-01.1

Controllers must honor consumer requests to opt out of the sale of their personal data for use in AI systems prior to collection.

D-01.3

Controllers must establish, implement, and maintain reasonable administrative, technical, and physical data security practices appropriate to the volume and nature of data collected, stored, and processed by AI systems.

D-01.4

Controllers must include in their privacy notice an acknowledgement of the collection, use, and sharing of personal data for AI purposes, where applicable.

D-01.1

Bus. & Com. Code § 503.001(c-3) (as amended)

Biometric Identifier Exception for AI Training

Developer

(c-3) 28 (c-3) This section does not apply to the training, processing, or storage of biometric identifiers involved in machine learning or artificial intelligence systems, unless performed for the purpose of uniquely identifying a specific individual. If a biometric identifier captured for the purpose of training an artificial intelligence system is subsequently used for a commercial purpose, the person possessing the biometric identifier is subject to this section's provisions for the possession and destruction of a biometric identifier and the associated penalties.

Section 3 of the Act amends Texas's Capture or Use of Biometric Identifier Act (CUBI) to exempt biometric identifiers used for machine learning or AI training from CUBI's requirements, unless the processing is for the purpose of uniquely identifying a specific individual. If a biometric identifier initially captured for AI training is subsequently used for a commercial purpose, the full CUBI framework re-applies.

Compliance actions 1 item

Persons who capture biometric identifiers for AI training are exempt from CUBI requirements unless the processing is for uniquely identifying an individual; if such biometric data is subsequently used for a commercial purpose, full CUBI compliance (including possession, destruction, and penalty provisions) re-applies.

D-01.8

Gov't Code § 325.011 (as amended)

Sunset Review — AI Assessment Criterion

Government

(15) 29 an assessment, using information available from the Department of Information Resources, the Attorney General, or any other appropriate state agency, of the agency's use of artificial intelligence systems, high-risk artificial intelligence systems, in its operations and its oversight of the use of artificial intelligence systems by entities or persons under the agency's jurisdiction, and any related impact on the agency's ability to achieve its mission, goals, and objectives.

Section 6 of the Act adds a new criterion (item 15) to the Sunset Advisory Commission's review criteria, requiring an assessment of each state agency's use of AI systems (including high-risk AI) in its operations, its oversight of AI use by regulated entities, and any impact on the agency's mission.

Compliance actions 1 item

The Sunset Advisory Commission must assess each state agency's use of AI systems (including high-risk AI) in operations and oversight, and the impact on the agency's mission, using information from DIR, the AG, or other appropriate agencies.

PS-01.1

Gov't Code § 2054.068(b) (as amended)

DIR Information Collection — AI Evaluation

Government

(5) 30 an evaluation of the use, or considered use, of artificial intelligence systems and high-risk artificial intelligence systems by each state agency.

Section 7 adds a requirement that the Department of Information Resources collect from each state agency an evaluation of the use, or considered use, of AI systems and high-risk AI systems.

Compliance actions 1 item

The Department of Information Resources must collect from each state agency an evaluation of its use or considered use of AI systems and high-risk AI systems.

PS-01.1

Gov't Code § 2054.0965(b) (as amended)

DIR Deployment Review — AI Inventory

Government

(2) (as amended) 31 an inventory of the agency's major databases, artificial intelligence systems, and applications;

Section 8 amends DIR's information resources deployment review to require an inventory of each agency's AI systems alongside its databases and applications.

Compliance actions 1 item

State agencies must include an inventory of their AI systems in the DIR information resources deployment review.

PS-01.1

Public Sector Procurement restrictions · government use

3 items

PS-01.1

The Department of Information Resources must collect from each state agency an evaluation of its use or considered use of AI systems and high-risk AI systems.

PS-01.1

State agencies must include an inventory of their AI systems in the DIR information resources deployment review.

Transparency AI identity disclosure · periodic reminders

2 items

T-03.1

Developers must maintain detailed records of all generative AI training data consistent with the NIST AI RMF GenAI Profile (GV-1.2-007).

T-01.1

Safety Harmful content prevention · self-harm escalation

3 items

S-02.1

No person may develop or deploy an AI system that evaluates or classifies individuals based on social behavior or personal characteristics to assign a social score or similar categorical valuation.

S-02.2

S-02.4

Data Controls Data sale restrictions · deidentification

6 items

D-01.5

D-01.1

Controllers must honor consumer requests to know whether their personal data is or will be used in any AI system and for what purposes.

D-01.3

Controllers must honor consumer requests to opt out of the sale of their personal data for use in AI systems prior to collection.

D-01.4

D-01.1

Controllers must include in their privacy notice an acknowledgement of the collection, use, and sharing of personal data for AI purposes, where applicable.

D-01.8

Deceptive Conduct AI-generated likeness · consent requirements

2 items

CP-01.1

Human Oversight Decision review · appeal pathways

6 items

H-02.1

H-02.3

H-02.10

Deployers must retain all impact assessments, associated records, and prior assessments for at least three years following final deployment of the high-risk AI system.

H-01.1

Governance Risk management · accountability programs

4 items

G-02.1

Developers must update and provide the High-Risk Report information to deployers within 30 days of any intentional and substantial modification to the system.

G-02.1

Developers must provide deployers with all documentation and information necessary for the deployer to complete an impact assessment.

G-01.1