Hawaiʻi Falls Behind as States Push Ahead on AI Rules

Hawaiʻi's AI Law Gap: Practical Takeaways for Legal Teams

States are moving on AI. A new nonpartisan report from the Council of State Governments puts California, Texas, and New York at the front, while smaller states notch meaningful, targeted wins. Hawaiʻi, by contrast, is mostly absent - high activity, low outcomes.

The headline: Hawaiʻi introduced the most AI-related bills in 2025, but every tracked measure stalled. For in-house counsel, government attorneys, and compliance leaders, that means uncertainty in the near term - and a larger workload later when a backlog of issues returns next session.

Council of State Governments guidance is straightforward: use AI to augment human judgment, mandate disclosures in consequential decisions, and enforce against harmful practices. The gap is execution.

What Leading States Did (And Why It Matters Legally)

• Texas: Set transparency rules for AI in state agencies. This sets procurement expectations, documentation duties, and disclosure obligations.
• California: Built risk management standards and whistleblower protections for advanced model developers - a signal that internal reporting channels and retaliation policies need to be AI-aware.
• New York: Prohibited rental algorithms using competitor data. That's a template for sector-specific algorithm rules with antitrust and UDAP exposure.
• North Carolina: Created an AI Leadership Council to advise agencies - a model governance layer many jurisdictions will copy.
• Illinois: Required clear disclosure when consumers interact with AI in commercial transactions - think scripts, UI labels, and recordkeeping.
• Wisconsin: Barred AI depictions used to coerce - expanding digital impersonation and exploitation risk.
• Colorado: Adjusted its 2024 AI and algorithmic discrimination law to keep transparency but drop risk assessments - signaling states are iterating fast.

Where Hawaiʻi Stalled

The council tracked roughly 23 AI-related bills in Hawaiʻi last session. None passed; most were carried over to the session beginning Jan. 21. Among the casualties: a statewide data and AI governance center, consumer chatbot disclosure requirements, an algorithmic discrimination prohibition for eligibility decisions, and an Aloha Intelligence Institute at UH.

Some partial movement occurred. The institute received $2 million via the state budget for workforce development, driven by Senate Ways and Means Chair Donovan Dela Cruz. A separate bill created a data sharing and governance working group in the Office of Enterprise Technology Services to improve school-to-work outcomes - but it barely mentions AI, and its report isn't due until late 2026.

What Lawmakers Are Saying

"Right now, Hawaiʻi does not have a cohesive strategy for how we approach artificial intelligence," said Rep. Andrew Takuya Garrett. He pushed to establish a Hawaiʻi Artificial Intelligence Advisory Council and argues the state needs a coordinated framework, not piecemeal bills.

Sen. Karl Rhoads led Hawaiʻi's 2024 law against "materially deceptive media" (deepfakes) in elections and previously authored a 2021 privacy law targeting AI-generated sexual exploitation. His 2025 bill to curb discriminatory algorithmic decision-making failed. "It's so complicated that it's hard to know whether you're even asking the right questions," he said.

Rep. Trish La Chica backed disclosure when chatbots are used in consumer interactions and plans to reintroduce it, along with algorithmic discrimination protections in healthcare. Her position: kids and parents should clearly know when they are interacting with AI systems, and people should not face silent, automated denials of care.

Local Practice Is Outpacing State Policy

Counties are already deploying AI. Honolulu uses chatbots for customer service, launched CivCheck to speed permitting, and HPD is exploring body cam transcription. The Honolulu Charter Commission may ask voters to limit AI use for transparency.

Courts are reacting as well. The Hawaiʻi Supreme Court is weighing stronger safeguards after complaints about AI-generated, fictional filings. Expect tighter attestations, citation verification, and potential sanctions guidance.

Current Statutes On The Books

• 2024: Two laws passed - a UH program to develop AI wildfire forecasting, and a ban on reckless distribution of deceptive deepfakes in state elections (now being challenged).
• 2021: Privacy violation for posting or threatening to post AI-generated intimate images or videos.

Federal Crosswinds And Preemption Risk

Drafts of the One Big Beautiful Bill Act once considered a 10-year moratorium on state AI action; the final law removed it but sparked fresh debate over state authority. A subsequent executive order added more questions about federal limits and scope.

Sen. Brian Schatz responded that Congress must act fast but should not block states from protecting the public in the meantime. Bottom line for counsel: track preemption and supremacy arguments early - procurement, disclosures, and sector-specific rules could be tested.

What Legal Teams In Hawaiʻi Should Do Now

• Inventory AI use: systems, vendors, models, datasets, decision points, human review. Tie each to a lawful purpose, data source, and retention plan.
• Adopt disclosure protocols: clear labels and scripts when chatbots or automated systems interact with the public or make consequential recommendations.
• Mitigate discrimination risk: conduct bias testing for eligibility, housing, education, employment, lending, and healthcare use cases; document models, features, and overrides.
• Strengthen procurement: add audit rights, transparency terms, incident reporting, training data representations, IP/indemnity for synthetic content, and termination triggers.
• Set up governance: create an AI review board, RACI for approvals, model risk tiers, and incident playbooks. Include whistleblower protections and non-retaliation channels.
• Prepare for records and discovery: preserve prompts, outputs, model versions, and human-in-the-loop notes for administrative records and litigation.
• Coordinate with data sharing efforts: align with the state's ETS working group to reduce siloed data and clarify legal bases for inter-agency access.

A Realistic Path For Hawaiʻi's Next Session

• Stand up a Hawaiʻi AI Advisory Council with agency, judiciary, UH, and public seats to centralize guidance and publish model policies.
• Enact consumer AI disclosure in high-impact contexts and require plain-language notices.
• Pass an algorithmic discrimination statute covering government and key sectors with safe harbors for documented testing and human review.
• Issue statewide procurement standards and a model AI addendum for public contracts.
• Fund third-party audits and sandbox pilots through UH/public-private partnerships.
• Adopt the council's principle: AI should augment, not replace, human judgment.

Why This Matters For Your Practice

• Government counsel: Expect charter amendments, court rules, and procurement policies to move before statutes catch up.
• In-house counsel: Build controls now; retrofitting after rulemaking will be pricier and riskier.
• Litigators: Be ready for challenges on disclosures, bias, deceptive practices, and administrative records involving automated decisions.
• Privacy and security: Tie AI workflows to data minimization, retention, and access governance already on your books.

Hawaiʻi doesn't need to be Silicon Valley to protect residents and give agencies clear rules. It needs coordination, pragmatic statutes, and enforceable standards that reflect how AI is actually being used - today.

Sources and further reading: The Council of State Governments' analysis of state AI action is a useful benchmark. Explore CSG. For legal and policy teams upskilling on practical AI workflows, see a curated set of role-based courses at Complete AI Training.