California Sets AI Policy Blueprint as Federal Ban Threatens State Regulation

California Issues Frontier AI Policy Study Amid Federal Moratorium Debate

California has released its final report on Frontier AI Policy nearly a year after Governor Gavin Newsom convened a group of academic experts to study safe and ethical AI governance. The report offers clear regulatory principles focused on transparency and risk mitigation, providing insight into how state leaders may regulate AI in the near future—unless federal lawmakers impose restrictions.

Currently, there is a federal proposal tied to President Donald Trump’s spending package that includes a 10-year moratorium on state-level AI regulations. This pause aims to centralize AI governance but conflicts with states like California that are actively exploring regulatory frameworks.

Balancing Innovation and Safety

The California report emphasizes that well-crafted policies can protect consumers while allowing states to respond to specific local needs. It suggests maintaining federal pathways to ensure consistent protections across states without stifling innovation.

Key regulatory principles outlined in the report include:

• Striking a balance between risks and rewards of AI technology
• Implementing evidence-based, comprehensive, yet flexible policymaking
• Increasing transparency and protecting whistleblowers
• Establishing post-deployment impact reporting systems
• Defining clear thresholds for policy interventions

Defining AI Risks

The report categorizes AI risks into three types:

• Malicious risks: Harm caused by intentional misuse such as fraud, non-consensual pornographic content, and cyberattacks.
• Malfunction risks: Unintended consequences arising from legitimate AI uses.
• Systemic risks: Broader societal impacts including labor market disruptions, privacy violations, and copyright infringement.

While experts differ on how likely severe harms from AI are, the report stresses the importance of governance that accounts for early design decisions and evolving challenges.

California’s Ongoing AI Initiatives

California has been proactive in AI regulation and deployment. In September 2023, Governor Newsom signed Executive Order N-12-23, directing state agencies to evaluate the risks and benefits of generative AI. The state also initiated pilot projects in May 2024 across multiple departments, which were expanded in April 2025.

These actions position California as a potential model for AI governance that balances innovation with public safety. For government officials, understanding these developments is crucial as states may soon face increased pressure to regulate AI technologies effectively.

For those interested in further AI training and policy insights, explore relevant resources at Complete AI Training.