WHAT THIS BILL REGULATES · 1 REQUIREMENT TYPE
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.
(1) "Artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine learning-based system that, for any explicit or implicit objective, infers from the inputs such system receives how to generate outputs, including content, decisions, predictions, and recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1)" means any machine learning-based system that, for any explicit or implicit objective, infers from the inputs such system receives how to generate outputs, including content, decisions, predictions, and recommendations, that can influence physical or virtual environments.
(2) "Consequential decisionConsequential decision"Consequential decision" means any decision that has a material, legal, or similarly significant effect on a consumer.Bus. & Com. Code § 551.001(2)" means any decision that has a material, legal, or similarly significant effect on a consumer.
This section defines the two key terms for the chapter: artificial intelligence system and consequential decision. The AI system definition is broad, encompassing any machine-learning-based system that infers from inputs how to generate outputs including content, decisions, predictions, and recommendations. The consequential decision definition is similarly expansive, capturing any decision with a material, legal, or similarly significant effect on a consumer, without enumerating specific domains such as employment, credit, or housing.
1 A private company that uses an artificial intelligence systemArtificial intelligence system"Artificial intelligence system" means any machine learning-based system that, for any explicit or implicit objective, infers from the inputs such system receives how to generate outputs, including content, decisions, predictions, and recommendations, that can influence physical or virtual environments.Bus. & Com. Code § 551.001(1) to make a consequential decisionConsequential decision"Consequential decision" means any decision that has a material, legal, or similarly significant effect on a consumer.Bus. & Com. Code § 551.001(2) shall establish a framework to govern the use of the system to ensure protection of consumers.
This section imposes the bill's sole operative obligation: any private company that uses an artificial intelligence system to make a consequential decision must establish a framework to govern the use of that system to ensure consumer protection. The provision is notably unspecific — it does not prescribe what the framework must contain, how it must be documented, or to whom it must be disclosed. The practical compliance burden is therefore minimal, though the obligation is affirmative: a covered company must have some form of governance framework in place.
2 A private company that violates this section is liable for a civil penalty not to exceed one dollar.
This section sets the enforcement mechanism for the chapter: a civil penalty not to exceed one dollar per violation. The penalty ceiling is nominal and does not designate a specific enforcement authority, leaving it unclear who may bring an action. The provision does not create a private right of action, nor does it reference the Texas Attorney General or any other agency. The one-dollar cap suggests the bill may function as a placeholder or legislative messaging vehicle rather than a meaningful enforcement regime.