Colorado Weakens AI Disclosure Rules, Pushes Implementation to 2027
Colorado lawmakers introduced a bill Friday that would strip away transparency requirements from the state's AI regulation law, replacing mandatory developer disclosures with simpler notice-and-appeal protections for consumers.
Senate Bill 189 eliminates the requirement that companies creating AI systems disclose how their technology works to regulators and the public. Instead, organizations using AI for consequential decisions - like hiring, loans, and housing - would only have to tell consumers that AI was involved and provide a way to appeal.
The bill also delays the law's start date to January 2027 from June, giving the legislature and industry more time to negotiate. Colorado's original AI law, passed in 2024, sparked immediate backlash from tech companies who called it too strict.
A Compromise Nobody Fully Backs
Senate Majority Leader Robert Rodriguez, a Denver Democrat who wrote the original law, acknowledged the new bill represents a significant retreat. "This one is more of a notice bill," he said, compared to the original law's broader transparency demands.
Rodriguez said the three-year effort to rewrite the law reflects a genuine compromise. "I'm not happy with everything in the bill," he said. "But I think you could say a lot of the groups aren't happy with everything in the bill, and at the end of the day, I think that is an important place for us to start."
The working group behind the bill included recommendations from Gov. Jared Polis's office. Under the new framework, AI developers must provide information to companies and agencies about how their systems work, potential harms, training materials, and limitations. Organizations deploying the AI would then handle consumer notifications and appeals.
What Remains Protected
Consumers would still be able to:
- Request human review of AI decisions
- Access the information (such as credit scores) used by AI systems
- Appeal consequential decisions
Organizations must retain records for at least three years. The Colorado Attorney General's Office would enforce the law.
Industry and Advocates React
Consumer groups including the AFL-CIO, AARP Colorado, and the ACLU said they're "cautiously optimistic" about the bill. "It provides a path to hold developers and businesses using AI accountable when the technology makes consequential decisions for everyday Coloradans," said Dennis Dougherty, who leads the AFL-CIO in Colorado.
Bryan Leach, CEO of Denver-based shopping app Ibotta, called the bill "a marked improvement over the original bill." He criticized one provision, however: a three-year window allowing companies to fix violations without facing civil penalties. Leach argued this grace period should be permanent.
Rodriguez rejected that argument. The right-to-cure provision, he said, expires after three years. "It's not an eternal get-out-of-jail-free card," he said.
Federal Lawsuit Complicates Timeline
The U.S. Department of Justice joined a lawsuit filed by Elon Musk's xAI company in April challenging Colorado's existing law as unconstitutional. The DOJ argued the law "constrains the information that AI systems convey" and places "onerous" requirements on developers and deployers that burden small businesses and startups.
A federal judge agreed to delay the case while the Attorney General's Office completes rules on the law and considers xAI's request to block implementation pending the lawsuit's outcome.
The other main sponsors of Senate Bill 189 are Senate President James Coleman, House Majority Leader Monica Duran, and Assistant House Majority Leader Jennifer Bacon - all Democrats.
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