A Quick & Easy Guide to California’s Suite of Proposed AI Regulations

Introduction

The private sector is eager to adopt the streamlined utopia offered by artificial intelligence paired with healthy skepticism. In 2024, the California Legislature proposed approximately 31 bills to regulate a wide array of artificial intelligence applications in businesses, schools, advertising, impact assessments, community colleges, AI-watchdog working groups, court filing disclosures, new watermarking standards to mitigate deepfake misinformation, etc. These bills now have until August 13, 2024 to be passed in each house. California’s Governor, Gavin Newsom, will then have until September 30, 2024 to sign or veto.

What Businesses Need to Know

New Regulatory Requirements

Businesses of all sizes need to evaluate their unique deployment of artificial intelligence and automated decision-making technologies both in their software products and internal operations. California’s main mechanism for regulation is transparency. Businesses should prepare to not only evaluate their AI deployments, but also disclose their practices as highlighted in the below proposals.

• AB 3048 — CCPA of 2018: Opt-Out Preference Signal: This bill requires browsers to include settings that enable consumers to send opt-out preference signals. SMBs operating online platforms will need to ensure their digital properties can recognize and respond to these signals, potentially requiring updates to websites or digital services to maintain compliance.
• AB 3204 — Data Digesters: Businesses that use personal information to train AI would need to register with the California Privacy Protection Agency (CPPA). This could impact SMBs that are leveraging AI for data analysis or service improvements, introducing new registration requirements and potentially oversight by the CPPA.
• SB 892 — Public Contracts: AI Services: Safety, Privacy, & Nondiscrimination Standards: Businesses providing AI services to the state may be required to meet established safety, privacy, and nondiscrimination standards. This could include a review and possible overhaul of AI systems to ensure they comply with the new standards, affecting contracts with public entities.
• SB 896 — AI Accountability Act: Requires state agencies or departments using generative AI to clearly disclose AI interaction to users and mandates risk evaluations for automated decision-making systems. Businesses involved in providing generative AI solutions or services to state agencies may need to adjust their offerings to ensure clear disclosure and compliance with risk evaluation requirements.
• AB 2930 — Automated Decision-Making Technology: Developers and deployers must perform impact assessments and notify subjects of consequential decisions. If such results indicate discrimination, such algorithms are prohibited.

What Healthcare Providers & Insurers Should Lookout for

Physicians are working to prevent AI from derailing the goal of promoting patient welfare. The California Senate Health Committee introduced the Physicians Make Decisions Act (Senate Bill 1120), an amendment to Section 1367.01 of the Health and Safety Code relating to healthcare coverage and insurance under Section 10123.135 of the Insurance Code.

This bill would require a health care service plan or health insurer to ensure that a licensed physician supervises the use of artificial intelligence decision-making tools when those tools are used to inform decisions to approve, modify, or deny requests by providers for authorization prior to, or concurrent with, the provision of health care services to enrollees or insureds. The bill would also require algorithms, artificial intelligence, and other software tools used for utilization review or utilization management decisions to comply with specified requirements, including that they be fairly and equitably applied. Because a willful violation of these provisions by a health care service plan would be a crime, this bill would impose a state-mandated local program.

Promoted Populations & Sectors

These remaining proposals, watered down in a comprehensive tracker published by the International Association of Privacy Professionals (IAPP), represent a pivot towards addressing the challenges and ethical considerations that AI introduces to privacy, consumer rights, and the broader legal framework:

1. Child and Minor Protection:
   • AB 1949: Amends the CCPA to prohibit the sale or sharing of personal information of consumers under 18 without authorization and requires regulations on opt-out preference signals for age verification.
   • SB 976: Prohibits social media platforms from providing addictive features to minors without parental consent.
   • SB 1444: Requires social media platforms to provide third-party safety software access for managing children’s online interactions.
2. Education and Youth:
   • AB 801: Requires the deletion of student information by online services upon request.
   • SB 970 & AB 1824: Focus on generative AI technology warnings and disclosure requirements for AI-generated content, respectively.
3. Consumer Privacy Enhancements:
   • AB 3048: Requires browsers to enable consumers to send opt-out preference signals.
   • SB 1076: Amends the California Delete Act, focusing on the deletion mechanism for consumers’ requests processed by data brokers.
   • AB 2426 & AB 2877: Focus on consumer protection in digital content and enhancing qualifications for California Privacy Protection Agency (CPPA) board members.
4. AI Governance and Transparency:
   • AB 3204: Requires businesses using personal information for AI training to register with the CPPA.
   • SB 892: Establishes safety, privacy, and nondiscrimination standards for AI services.
   • SB 893: Creates the California AI Research Hub.
   • SB 896: Mandates state agencies to disclose AI interactions and evaluate AI systems for risk before adoption.
5. Workplace Privacy:
   • AB 2013 & AB 2058: Relate to the transparency and regulation of commercial algorithms and AI-enabled medical devices, although not directly workplace privacy, they suggest an environment for future legislation in this direction.
6. Legal and Regulatory Framework:
   • AB 1791, AB 3050, & AB 2811: These bills focus on implementing standards and disclosures for AI technologies and legal professional disclosures.
7. Specific Use Cases and Technologies:
   • SB 1047 & SB 1235: Address safety determinations for frontier AI models and establish a working group to advise on AI and deepfakes.

Closing

Hall Booth Smithwill continuously monitor the development of California’s AI regulation in order to help our clients anticipate and comply with cutting edge regulations. Reach out to our Data Privacy & Cybersecurity team for a compliance evaluation. For a more detailed look into each bill, they can be found at the California Legislative Information website.

Disclaimer

This material is provided for informational purposes only. It is not intended to constitute legal advice nor does it create a client-lawyer relationship between Hall Booth Smith, P.C. and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions. Prior results do not guarantee a similar outcome.