With the moratorium language removed, states began moving ahead with their own approaches, setting up the precise fragmented regulatory landscape that Richards warns against.
Forging Ahead with Fragmentation Without a federal moratorium in place, the Chamber
continues to advocate for risk-based policies that protect innovation and small businesses. New Mexico House Bill 60 and Nebraska Legislative Bill 642, for example, aimed to ensure that AI usage is ethical and responsible. The Chamber commended the laudable goal, but it also had concerns with how the legislation conflicted with current state laws. The New Mexico legislation ultimately did not pass, and the Nebraska legislation has stalled in committee.
Although those bills have failed to gain traction, local and state laws continue to be passed and will serve as informative case studies on the benefits and detriments of fragmented regulation. New York City has Local Law 144 that went into effect in 2023 to regulate the use of automated employment decision tools. In June, the California Civil Rights Council secured approval for regulations that protect against employment discrimination related to artificial intelligence and automated hiring systems. These regulations, which are set to go into effect on Oct. 1, 2025, are intended to prevent situations such as a hiring algorithm that rejects women applicants because it is trained to screen for job seekers that mimic the existing features of a company’s male-dominated workforce. Although unintended, such a situation could reinforce existing biases and contribute to discriminatory outcomes, according to the California Civil Rights Council, making employers liable for violating the state’s civil rights laws. With the passage of Senate Bill 205 in 2024, Colorado became one of the first states to enact full-scale, statewide AI regulations. The law requires developers of high-risk artificial intelligence systems, such as those used to make employment or credit decisions, to use reasonable care to protect consumers from any known or reasonably foreseeable risks of
18 FEDA News & Views
discrimination stemming from algorithms. “Colorado’s bill does not go into effect until Feb. 1, 2026, so there’s still a roll-up time for that,” Richards said. “But I think it’s notable that one of the biggest state policymakers asking for a moratorium was Jared Polis, who is the governor of Colorado.”
In a statement published on the day he signed the bill, Polis expressed reservations about how it could stymie AI development in Colorado. “I am concerned about the impact this law may have on an industry fueling critical technological advancements across our state for consumers and enterprises alike,” Polis said. “Government regulation applied at the state level across the country could stifle innovation and deter competition in an open market.” Despite his misgivings, Polis explained that the guardrails and lengthy timeline for implementation included in the bill were enough to earn his signature. Still, he hoped the passage of Senate Bill 205 would highlight the importance of having a conversation about AI regulations at the national level.
Current State of Federal Law When it comes to AI oversight, Richards emphasized
the Chamber is not opposed to all regulation. Rather, it is in favor of smart governance guided by risk analysis, particularly given that many existing laws already address AI-related issues. “We understand there are already rules and regulations on the books when it comes to artificial intelligence,” Richards explained. “Even people like Lina Khan (former chair of the Federal Trade Commission) have indicated that AI was not developing in a legal vacuum. We have been calling for enforcement of current laws but obviously where gaps exist, there need to be rules and regulations put in place that are risk-based.” A good example of targeted, sensible legislation is
the TAKE IT DOWN Act, which prohibits deepfake and exploitative AI-generated images. That bill was signed into law this past May with the full support of business advocacy groups like the U.S. Chamber. Richards notes that the organization is closely following bipartisan work to see what kind of consensus on similar measures can emerge federally.
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