Relating to regulation of the use of artificial intelligence systems in this state; providing civil penalties.

89(R) HB 149 - Enrolled version - Bill Text

H.B. No. 149

AN ACT

relating to regulation of the use of artificial intelligence

systems in this state; providing civil penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. This Act may be cited as the Texas Responsible

Artificial Intelligence Governance Act.

SECTION 2. Section 503.001, Business & Commerce Code, is

amended by amending Subsections (a) and (e) and adding Subsections

(b-1) and (f) to read as follows:

(a) In this section
:

(1)

"Artificial intelligence system" has the meaning

assigned by Section 551.001.

(2) "Biometric
[
, "biometric
] identifier" means a

retina or iris scan, fingerprint, voiceprint, or record of hand or

face geometry.

(b-1)

For purposes of Subsection (b), an individual has not

been informed of and has not provided consent for the capture or

storage of a biometric identifier of an individual for a commercial

purpose based solely on the existence of an image or other media

containing one or more biometric identifiers of the individual on

the Internet or other publicly available source unless the image or

other media was made publicly available by the individual to whom

the biometric identifiers relate.

(e) This section does not apply to
:

(1)
voiceprint data retained by a financial

institution or an affiliate of a financial institution, as those

terms are defined by 15 U.S.C. Section 6809
;

(2)

the training, processing, or storage of biometric

identifiers involved in developing, training, evaluating,

disseminating, or otherwise offering artificial intelligence

models or systems, unless a system is used or deployed for the

purpose of uniquely identifying a specific individual; or

(3)

the development or deployment of an artificial

intelligence model or system for the purposes of:

(A)

preventing, detecting, protecting against,

or responding to security incidents, identity theft, fraud,

harassment, malicious or deceptive activities, or any other illegal

activity;

(B)

preserving the integrity or security of a

system; or

(C)

investigating, reporting, or prosecuting a

person responsible for a security incident, identity theft, fraud,

harassment, a malicious or deceptive activity, or any other illegal

activity
.

(f)

If a biometric identifier captured for the purpose of

training an artificial intelligence system is subsequently used for

a commercial purpose not described by Subsection (e), the person

possessing the biometric identifier is subject to:

(1)

this section's provisions for the possession and

destruction of a biometric identifier; and

(2)

the penalties associated with a violation of this

section.

SECTION 3. Section 541.104(a), Business & Commerce Code, is

amended to read as follows:

(a) A processor shall adhere to the instructions of a

controller and shall assist the controller in meeting or complying

with the controller's duties or requirements under this chapter,

including:

(1) assisting the controller in responding to consumer

rights requests submitted under Section 541.051 by using

appropriate technical and organizational measures, as reasonably

practicable, taking into account the nature of processing and the

information available to the processor;

(2) assisting the controller with regard to complying

with
requirements
[
the requirement
] relating to the security of

processing personal data
, and if applicable, the personal data

collected, stored, and processed by an artificial intelligence

system, as that term is defined by Section 551.001,
and to the

notification of a breach of security of the processor's system

under Chapter 521, taking into account the nature of processing and

the information available to the processor; and

(3) providing necessary information to enable the

controller to conduct and document data protection assessments

under Section 541.105.

SECTION 4. Title 11, Business & Commerce Code, is amended by

adding Subtitle D to read as follows:

SUBTITLE D.

ARTIFICIAL INTELLIGENCE PROTECTION

CHAPTER 551.

GENERAL PROVISIONS

Sec. 551.001. DEFINITIONS. In this subtitle:

(1)

"Artificial intelligence system" means any

machine-based system that, for any explicit or implicit objective,

infers from the inputs the system receives how to generate outputs,

including content, decisions, predictions, or recommendations,

that can influence physical or virtual environments.

(2)

"Consumer" means an individual who is a resident

of this state acting only in an individual or household context.

The term does not include an individual acting in a commercial or

employment context.

(3)

"Council" means the Texas Artificial Intelligence

Council established under Chapter 554.

Sec.

551.002.

APPLICABILITY OF SUBTITLE. This subtitle

applies only to a person who:

(1)

promotes, advertises, or conducts business in this

state;

(2)

produces a product or service used by residents of

this state; or

(3)

develops or deploys an artificial intelligence

system in this state.

Sec.

551.003.

CONSTRUCTION AND APPLICATION OF SUBTITLE.

This subtitle shall be broadly construed and applied to promote its

underlying purposes, which are to:

(1)

facilitate and advance the responsible

development and use of artificial intelligence systems;

(2)

protect individuals and groups of individuals from

known and reasonably foreseeable risks associated with artificial

intelligence systems;

(3)

provide transparency regarding risks in the

development, deployment, and use of artificial intelligence

systems; and

(4)

provide reasonable notice regarding the use or

contemplated use of artificial intelligence systems by state

agencies.

CHAPTER 552.

ARTIFICIAL INTELLIGENCE PROTECTION

SUBCHAPTER A.

GENERAL PROVISIONS

Sec. 552.001. DEFINITIONS. In this chapter:

(1)

"Deployer" means a person who deploys an

artificial intelligence system for use in this state.

(2)

"Developer" means a person who develops an

artificial intelligence system that is offered, sold, leased,

given, or otherwise provided in this state.

(3)

"Governmental entity" means any department,

commission, board, office, authority, or other administrative unit

of this state or of any political subdivision of this state, that

exercises governmental functions under the authority of the laws of

this state.

The term does not include:

(A)

a hospital district created under the Health

and Safety Code or Article IX, Texas Constitution; or

(B)

an institution of higher education, as

defined by Section 61.003, Education Code, including any university

system or any component institution of the system.

Sec.

552.002.

CONSTRUCTION OF CHAPTER. This chapter may

not be construed to:

(1)

impose a requirement on a person that adversely

affects the rights or freedoms of any person, including the right of

free speech; or

(2)

authorize any department or agency other than the

Department of Insurance to regulate or oversee the business of

insurance.

Sec.

552.003.

LOCAL PREEMPTION. This chapter supersedes

and preempts any ordinance, resolution, rule, or other regulation

adopted by a political subdivision regarding the use of artificial

intelligence systems.

SUBCHAPTER B. DUTIES AND PROHIBITIONS ON USE OF ARTIFICIAL

INTELLIGENCE

Sec.

552.051.

DISCLOSURE TO CONSUMERS. (a)

In this

section, "health care services"

means services related to human

health or to the diagnosis, prevention, or treatment of a human

disease or impairment provided by an individual licensed,

registered, or certified under applicable state or federal law to

provide those services.

(b)

A governmental agency that makes available an

artificial intelligence system intended to interact with consumers

shall disclose to each consumer, before or at the time of

interaction, that the consumer is interacting with an artificial

intelligence system.

(c)

A person is required to make the disclosure under

Subsection (b) regardless of whether it would be obvious to a

reasonable consumer that the consumer is interacting with an

artificial intelligence system.

(d) A disclosure under Subsection (b):

(1) must be clear and conspicuous;

(2) must be written in plain language; and

(3)

may not use a dark pattern, as that term is defined

by Section 541.001.

(e)

A disclosure under Subsection (b) may be provided by

using a hyperlink to direct a consumer to a separate Internet web

page.

(f)

If an artificial intelligence system is used in relation

to health care service or treatment, the provider of the service or

treatment shall provide the disclosure under Subsection (b) to the

recipient of the service or treatment or the recipient's personal

representative not later than the date the service or treatment is

first provided, except in the case of emergency, in which case the

provider shall provide the required disclosure as soon as

reasonably possible.

Sec.

552.052.

MANIPULATION OF HUMAN BEHAVIOR. A person may

not develop or deploy an artificial intelligence system in a manner

that intentionally aims to incite or encourage a person to:

(1) commit physical self-harm, including suicide;

(2) harm another person; or

(3) engage in criminal activity.

Sec.

552.053.

SOCIAL SCORING. A governmental entity may

not use or deploy an artificial intelligence system that evaluates

or classifies a natural person or group of natural persons based on

social behavior or personal characteristics, whether known,

inferred, or predicted, with the intent to calculate or assign a

social score or similar categorical estimation or valuation of the

person or group of persons that results or may result in:

(1)

detrimental or unfavorable treatment of a person

or group of persons in a social context unrelated to the context in

which the behavior or characteristics were observed or noted;

(2)

detrimental or unfavorable treatment of a person

or group of persons that is unjustified or disproportionate to the

nature or gravity of the observed or noted behavior or

characteristics; or

(3)

the infringement of any right guaranteed under the

United States Constitution, the Texas Constitution, or state or

federal law.

Sec.

552.054.

CAPTURE OF BIOMETRIC DATA. (a)

In this

section, "biometric data"

means data generated by automatic

measurements of an individual's biological characteristics.

The

term includes a fingerprint, voiceprint, eye retina or iris, or

other unique biological pattern or characteristic that is used to

identify a specific individual.

The term does not include a

physical or digital photograph or data generated from a physical or

digital photograph, a video or audio recording or data generated

from a video or audio recording, or information collected, used, or

stored for health care treatment, payment, or operations under the

Health Insurance Portability and Accountability Act of 1996 (42

U.S.C. Section 1320d et seq.).

(b)

A governmental entity may not develop or deploy an

artificial intelligence system for the purpose of uniquely

identifying a specific individual using biometric data or the

targeted or untargeted gathering of images or other media from the

Internet or any other publicly available source without the

individual's consent, if the gathering would infringe on any right

of the individual under the United States Constitution, the Texas

Constitution, or state or federal law.

(c)

A violation of Section 503.001 is a violation of this

section.

Sec.

552.055.

CONSTITUTIONAL PROTECTION. (a)

A person may

not develop or deploy an artificial intelligence system with the

sole intent for the artificial intelligence system to infringe,

restrict, or otherwise impair an individual's rights guaranteed

under the United States Constitution.

(b)

This section is remedial in purpose and may not be

construed to create or expand any right guaranteed by the United

States Constitution.

Sec.

552.056.

UNLAWFUL DISCRIMINATION. (a)

In this

section:

(1)

"Financial institution"

has the meaning assigned

by Section 201.101, Finance Code.

(2) "Insurance entity" means:

(A)

an entity described by Section 82.002(a),

Insurance Code;

(B)

a fraternal benefit society regulated under

Chapter 885, Insurance Code; or

(C)

the developer of an artificial intelligence

system used by an entity described by Paragraph (A) or (B).

(3)

"Protected class" means a group or class of

persons with a characteristic, quality, belief, or status protected

from discrimination by state or federal civil rights laws, and

includes race, color, national origin, sex, age, religion, or

disability.

(b)

A person may not develop or deploy an artificial

intelligence system with the intent to unlawfully discriminate

against a protected class in violation of state or federal law.

(c)

For purposes of this section, a disparate impact is not

sufficient by itself to demonstrate an intent to discriminate.

(d)

This section does not apply to an insurance entity for

purposes of providing insurance services if the entity is subject

to applicable statutes regulating unfair discrimination, unfair

methods of competition, or unfair or deceptive acts or practices

related to the business of insurance.

(e)

A federally insured financial institution is considered

to be in compliance with this section if the institution complies

with all federal and state banking laws and regulations.

Sec.

552.057.

CERTAIN SEXUALLY EXPLICIT CONTENT AND CHILD

PORNOGRAPHY. A person may not:

(1)

develop or distribute an artificial intelligence

system with the sole intent of producing, assisting or aiding in

producing, or distributing:

(A)

visual material in violation of Section

43.26, Penal Code; or

(B)

deep fake videos or images in violation of

Section 21.165, Penal Code; or

(2)

intentionally develop or distribute an artificial

intelligence system that engages in text-based conversations that

simulate or describe sexual conduct, as that term is defined by

Section 43.25, Penal Code, while impersonating or imitating a child

younger than 18 years of age.

SUBCHAPTER C.

ENFORCEMENT

Sec.

552.101.

ENFORCEMENT AUTHORITY. (a)

The attorney

general has exclusive authority to enforce this chapter, except to

the extent provided by Section 552.106.

(b)

This chapter does not provide a basis for, and is not

subject to, a private right of action for a violation of this

chapter or any other law.

Sec.

552.102.

INFORMATION AND COMPLAINTS. The attorney

general shall create and maintain an online mechanism on the

attorney general's Internet website through which a consumer may

submit a complaint under this chapter to the attorney general.

Sec.

552.103.

INVESTIGATIVE AUTHORITY. (a)

If the

attorney general receives a complaint through the online mechanism

under Section 552.102 alleging a violation of this chapter, the

attorney general may issue a civil investigative demand to

determine if a violation has occurred.

The attorney general shall

issue demands in accordance with and under the procedures

established under Section 15.10.

(b)

The attorney general may request from the person

reported through the online mechanism, pursuant to a civil

investigative demand issued under Subsection (a):

(1)

a high-level description of the purpose, intended

use, deployment context, and associated benefits of the artificial

intelligence system with which the person is affiliated;

(2)

a description of the type of data used to program

or train the artificial intelligence system;

(3)

a high-level description of the categories of data

processed as inputs for the artificial intelligence system;

(4)

a high-level description of the outputs produced

by the artificial intelligence system;

(5)

any metrics the person uses to evaluate the

performance of the artificial intelligence system;

(6)

any known limitations of the artificial

intelligence system;

(7)

a high-level description of the post-deployment

monitoring and user safeguards the person uses for the artificial

intelligence system, including, if the person is a deployer, the

oversight, use, and learning process established by the person to

address issues arising from the system's deployment; or

(8)

any other relevant documentation reasonably

necessary for the attorney general to conduct an investigation

under this section.

Sec.

552.104.

NOTICE OF VIOLATION; OPPORTUNITY TO CURE.

(a)

If the attorney general determines that a person has violated

or is violating this chapter, the attorney general shall notify the

person in writing of the determination, identifying the specific

provisions of this chapter the attorney general alleges have been

or are being violated.

(b)

The attorney general may not bring an action against the

person:

(1)

before the 60th day after the date the attorney

general provides the notice under Subsection (a); or

(2)

if, before the 60th day after the date the attorney

general provides the notice under Subsection (a), the person:

(A) cures the identified violation; and

(B)

provides the attorney general with a written

statement that the person has:

(i) cured the alleged violation;

(ii)

provided supporting documentation to

show the manner in which the person cured the violation; and

(iii)

made any necessary changes to

internal policies to reasonably prevent further violation of this

chapter.

Sec.

552.105.

CIVIL PENALTY; INJUNCTION.

(a)

A person who

violates this chapter and does not cure the violation under Section

552.104 is liable to this state for a civil penalty in an amount of:

(1)

for each violation the court determines to be

curable or a breach of a statement submitted to the attorney general

under Section 552.104(b)(2), not less than $10,000 and not more

than $12,000;

(2)

for each violation the court determines to be

uncurable, not less than $80,000 and not more than $200,000; and

(3)

for a continued violation, not less than $2,000

and not more than $40,000 for each day the violation continues.

(b)

The attorney general may bring an action in the name of

this state to:

(1) collect a civil penalty under this section;

(2)

seek injunctive relief against further violation

of this chapter; and

(3)

recover attorney's fees and reasonable court costs

or other investigative expenses.

(c)

There is a rebuttable presumption that a person used

reasonable care as required under this chapter.

(d)

A defendant in an action under this section may seek an

expedited hearing or other process, including a request for

declaratory judgment, if the person believes in good faith that the

person has not violated this chapter.

(e)

A defendant in an action under this section may not be

found liable if:

(1)

another person uses the artificial intelligence

system affiliated with the defendant in a manner prohibited by this

chapter; or

(2)

the defendant discovers a violation of this

chapter through:

(A)

feedback from a developer, deployer, or other

person who believes a violation has occurred;

(B)

testing, including adversarial testing or

red-team testing;

(C)

following guidelines set by applicable state

agencies; or

(D)

if the defendant substantially complies with

the most recent version of the "Artificial Intelligence Risk

Management Framework: Generative Artificial Intelligence Profile"

published by the National Institute of Standards and Technology or

another nationally or internationally recognized risk management

framework for artificial intelligence systems, an internal review

process.

(f)

The attorney general may not bring an action to collect

a civil penalty under this section against a person for an

artificial intelligence system that has not been deployed.

Sec.

552.106.

ENFORCEMENT ACTIONS BY STATE AGENCIES. (a)

A

state agency may impose sanctions against a person licensed,

registered, or certified by that agency for a violation of

Subchapter B if:

(1)

the person has been found in violation of this

chapter under Section 552.105; and

(2)

the attorney general has recommended additional

enforcement by the applicable agency.

(b) Sanctions under this section may include:

(1)

suspension, probation, or revocation of a license,

registration, certificate, or other authorization to engage in an

activity; and

(2) a monetary penalty not to exceed $100,000.

CHAPTER 553. ARTIFICIAL INTELLIGENCE REGULATORY SANDBOX PROGRAM

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 553.001. DEFINITIONS. In this chapter:

(1)

"Applicable agency" means a department of this

state established by law to regulate certain types of business

activity in this state and the people engaging in that business,

including the issuance of licenses and registrations, that the

department determines would regulate a program participant if the

person were not operating under this chapter.

(2)

"Department" means the Texas Department of

Information Resources.

(3)

"Program" means the regulatory sandbox program

established under this chapter that allows a person, without being

licensed or registered under the laws of this state, to test an

artificial intelligence system for a limited time and on a limited

basis.

(4)

"Program participant" means a person whose

application to participate in the program is approved and who may

test an artificial intelligence system under this chapter.

SUBCHAPTER B. SANDBOX PROGRAM FRAMEWORK

Sec.

553.051.

ESTABLISHMENT OF SANDBOX PROGRAM. (a) The

department, in consultation with the council, shall create a

regulatory sandbox program that enables a person to obtain legal

protection and limited access to the market in this state to test

innovative artificial intelligence systems without obtaining a

license, registration, or other regulatory authorization.

(b) The program is designed to:

(1)

promote the safe and innovative use of artificial

intelligence systems across various sectors including healthcare,

finance, education, and public services;

(2)

encourage responsible deployment of artificial

intelligence systems while balancing the need for consumer

protection, privacy, and public safety;

(3)

provide clear guidelines for a person who develops

an artificial intelligence system to test systems while certain

laws and regulations related to the testing are waived or

suspended; and

(4)

allow a person to engage in research, training,

testing, or other pre-deployment activities to develop an

artificial intelligence system.

(c)

The attorney general may not file or pursue charges

against a program participant for violation of a law or regulation

waived under this chapter that occurs during the testing period.

(d)

A state agency may not file or pursue punitive action

against a program participant, including the imposition of a fine

or the suspension or revocation of a license, registration, or

other authorization, for violation of a law or regulation waived

under this chapter that occurs during the testing period.

(e)

Notwithstanding Subsections (c) and (d), the

requirements of Subchapter B, Chapter 552, may not be waived, and

the attorney general or a state agency may file or pursue charges or

action against a program participant who violates that subchapter.

Sec.

553.052.

APPLICATION FOR PROGRAM PARTICIPATION. (a)

A person must obtain approval from the department and any

applicable agency before testing an artificial intelligence system

under the program.

(b)

The department by rule shall prescribe the application

form. The form must require the applicant to:

(1)

provide a detailed description of the artificial

intelligence system the applicant desires to test in the program,

and its intended use;

(2)

include a benefit assessment that addresses

potential impacts on consumers, privacy, and public safety;

(3)

describe the applicant's plan for mitigating any

adverse consequences that may occur during the test; and

(4)

provide proof of compliance with any applicable

federal artificial intelligence laws and regulations.

Sec.

553.053.

DURATION AND SCOPE OF PARTICIPATION. (a) A

program participant approved by the department and each applicable

agency may test and deploy an artificial intelligence system under

the program for a period of not more than 36 months.

(b)

The department may extend a test under this chapter if

the department finds good cause for the test to continue.

Sec.

553.054.

EFFICIENT USE OF RESOURCES.

The department

shall coordinate the activities under this subchapter and any other

law relating to artificial intelligence systems to ensure efficient

system implementation and to streamline the use of department

resources, including information sharing and personnel.

SUBCHAPTER C. OVERSIGHT AND COMPLIANCE

Sec.

553.101.

COORDINATION WITH APPLICABLE AGENCY. (a)

The department shall coordinate with all applicable agencies to

oversee the operation of a program participant.

(b)

The council or an applicable agency may recommend to the

department that a program participant be removed from the program

if the council or applicable agency finds that the program

participant's artificial intelligence system:

(1) poses an undue risk to public safety or welfare;

(2) violates any federal law or regulation; or

(3)

violates any state law or regulation not waived

under the program.

Sec.

553.102.

PERIODIC REPORT BY PROGRAM PARTICIPANT. (a)

A program participant shall provide a quarterly report to the

department.

(b) The report shall include:

(1)

metrics for the artificial intelligence system's

performance;

(2)

updates on how the artificial intelligence system

mitigates any risks associated with its operation; and

(3)

feedback from consumers and affected stakeholders

that are using an artificial intelligence system tested under this

chapter.

(c)

The department shall maintain confidentiality regarding

the intellectual property, trade secrets, and other sensitive

information it obtains through the program.

Sec.

553.103.

ANNUAL REPORT BY DEPARTMENT. (a) The

department shall submit an annual report to the legislature.

(b) The report shall include:

(1)

the number of program participants testing an

artificial intelligence system in the program;

(2)

the overall performance and impact of artificial

intelligence systems tested in the program; and

(3)

recommendations on changes to laws or regulations

for future legislative consideration.

CHAPTER 554. TEXAS ARTIFICIAL INTELLIGENCE COUNCIL

SUBCHAPTER A. CREATION AND ORGANIZATION OF COUNCIL

Sec.

554.001.

CREATION OF COUNCIL. (a) The Texas

Artificial Intelligence Council is created to:

(1)

ensure artificial intelligence systems in this

state are ethical and developed in the public's best interest;

(2)

ensure artificial intelligence systems in this

state do not harm public safety or undermine individual freedoms by

finding issues and making recommendations to the legislature

regarding the Penal Code and Chapter 82, Civil Practice and

Remedies Code;

(3)

identify existing laws and regulations that impede

innovation in the development of artificial intelligence systems

and recommend appropriate reforms;

(4)

analyze opportunities to improve the efficiency

and effectiveness of state government operations through the use of

artificial intelligence systems;

(5)

make recommendations to applicable state agencies

regarding the use of artificial intelligence systems to improve the

agencies'

efficiency and effectiveness;

(6)

evaluate potential instances of regulatory

capture, including undue influence by technology companies or

disproportionate burdens on smaller innovators caused by the use of

artificial intelligence systems;

(7)

evaluate the influence of technology companies on

other companies and determine the existence or use of tools or

processes designed to censor competitors or users through the use

of artificial intelligence systems;

(8)

offer guidance and recommendations to the

legislature on the ethical and legal use of artificial intelligence

systems;

(9)

conduct and publish the results of a study on the

current regulatory environment for artificial intelligence

systems;

(10)

receive reports from the Department of

Information Resources regarding the regulatory sandbox program

under Chapter 553; and

(11)

make recommendations for improvements to the

regulatory sandbox program under Chapter 553.

(b)

The council is administratively attached to the

Department of Information Resources, and the department shall

provide administrative support to the council as provided by this

section.

(c)

The Department of Information Resources and the council

shall enter into a memorandum of understanding detailing:

(1)

the administrative support the council requires

from the department to fulfill the council's purposes;

(2)

the reimbursement of administrative expenses to

the department; and

(3)

any other provisions necessary to ensure the

efficient operation of the council.

Sec.

554.002.

COUNCIL MEMBERSHIP. (a) The council is

composed of seven members as follows:

(1)

three members of the public appointed by the

governor;

(2)

two members of the public appointed by the

lieutenant governor; and

(3)

two members of the public appointed by the speaker

of the house of representatives.

(b)

Members of the council serve staggered four-year terms,

with the terms of three or four members expiring every two years.

(c)

The governor shall appoint a chair from among the

members, and the council shall elect a vice chair from its

membership.

(d)

The council may establish an advisory board composed of

individuals from the public who possess expertise directly related

to the council's functions, including technical, ethical,

regulatory, and other relevant areas.

Sec.

554.003.

QUALIFICATIONS. Members of the council must

be Texas residents and have knowledge or expertise in one or more of

the following areas:

(1) artificial intelligence systems;

(2) data privacy and security;

(3) ethics in technology or law;

(4) public policy and regulation;

(5)

risk management related to artificial

intelligence systems;

(6)

improving the efficiency and effectiveness of

governmental operations; or

(7) anticompetitive practices and market fairness.

Sec.

554.004.

STAFF AND ADMINISTRATION. The council may

hire an executive director and other personnel as necessary to

perform its duties.

SUBCHAPTER B. POWERS AND DUTIES OF COUNCIL

Sec.

554.101.

ISSUANCE OF REPORTS. (a) The council may

issue reports to the legislature regarding the use of artificial

intelligence systems in this state.

(b) The council may issue reports on:

(1)

the compliance of artificial intelligence systems

in this state with the laws of this state;

(2)

the ethical implications of deploying artificial

intelligence systems in this state;

(3)

data privacy and security concerns related to

artificial intelligence systems in this state; or

(4)

potential liability or legal risks associated with

the use of artificial intelligence systems in this state.

Sec.

554.102.

TRAINING AND EDUCATIONAL OUTREACH. The

council shall conduct training programs for state agencies and

local governments on the use of artificial intelligence systems.

Sec.

554.103.

LIMITATION OF AUTHORITY. The council may

not:

(1)

adopt rules or promulgate guidance that is binding

for any entity;

(2)

interfere with or override the operation of a

state agency; or

(3)

perform a duty or exercise a power not granted by

this chapter.

SECTION 5. Section 325.011, Government Code, is amended to

read as follows:

Sec. 325.011. CRITERIA FOR REVIEW. The commission and its

staff shall consider the following criteria in determining whether

a public need exists for the continuation of a state agency or its

advisory committees or for the performance of the functions of the

agency or its advisory committees:

(1) the efficiency and effectiveness with which the

agency or the advisory committee operates;

(2)(A) an identification of the mission, goals, and

objectives intended for the agency or advisory committee and of the

problem or need that the agency or advisory committee was intended

to address; and

(B) the extent to which the mission, goals, and

objectives have been achieved and the problem or need has been

addressed;

(3)(A) an identification of any activities of the

agency in addition to those granted by statute and of the authority

for those activities; and

(B) the extent to which those activities are

needed;

(4) an assessment of authority of the agency relating

to fees, inspections, enforcement, and penalties;

(5) whether less restrictive or alternative methods of

performing any function that the agency performs could adequately

protect or provide service to the public;

(6) the extent to which the jurisdiction of the agency

and the programs administered by the agency overlap or duplicate

those of other agencies, the extent to which the agency coordinates

with those agencies, and the extent to which the programs

administered by the agency can be consolidated with the programs of

other state agencies;

(7) the promptness and effectiveness with which the

agency addresses complaints concerning entities or other persons

affected by the agency, including an assessment of the agency's

administrative hearings process;

(8) an assessment of the agency's rulemaking process

and the extent to which the agency has encouraged participation by

the public in making its rules and decisions and the extent to which

the public participation has resulted in rules that benefit the

public;

(9) the extent to which the agency has complied with:

(A) federal and state laws and applicable rules

regarding equality of employment opportunity and the rights and

privacy of individuals; and

(B) state law and applicable rules of any state

agency regarding purchasing guidelines and programs for

historically underutilized businesses;

(10) the extent to which the agency issues and

enforces rules relating to potential conflicts of interest of its

employees;

(11) the extent to which the agency complies with

Chapters 551 and 552 and follows records management practices that

enable the agency to respond efficiently to requests for public

information;

(12) the effect of federal intervention or loss of

federal funds if the agency is abolished;

(13) the extent to which the purpose and effectiveness

of reporting requirements imposed on the agency justifies the

continuation of the requirement; [
and
]

(14) an assessment of the agency's cybersecurity

practices using confidential information available from the

Department of Information Resources or any other appropriate state

agency
; and

(15)

an assessment of the agency's use of artificial

intelligence systems, as that term is defined by Section 551.001,

Business & Commerce Code, in its operations and its oversight of the

use of artificial intelligence systems by persons under the

agency's jurisdiction, and any related impact on the agency's

ability to achieve its mission, goals, and objectives, made using

information available from the Department of Information

Resources, the attorney general, or any other appropriate state

agency
.

SECTION 6. Section 2054.068(b), Government Code, is amended

to read as follows:

(b) The department shall collect from each state agency

information on the status and condition of the agency's information

technology infrastructure, including information regarding:

(1) the agency's information security program;

(2) an inventory of the agency's servers, mainframes,

cloud services, and other information technology equipment;

(3) identification of vendors that operate and manage

the agency's information technology infrastructure; [
and
]

(4) any additional related information requested by

the department
; and

(5)

an evaluation of the use or considered use of

artificial intelligence systems, as defined by Section 551.001,

Business & Commerce Code, by each state agency
.

SECTION 7. Section 2054.0965(b), Government Code, is

amended to read as follows:

(b) Except as otherwise modified by rules adopted by the

department, the review must include:

(1) an inventory of the agency's major information

systems, as defined by Section 2054.008, and other operational or

logistical components related to deployment of information

resources as prescribed by the department;

(2) an inventory of the agency's major databases
,

artificial intelligence systems, as defined by Section 551.001,

Business & Commerce Code,
and applications;

(3) a description of the agency's existing and planned

telecommunications network configuration;

(4) an analysis of how information systems,

components, databases, applications, and other information

resources have been deployed by the agency in support of:

(A) applicable achievement goals established

under Section 2056.006 and the state strategic plan adopted under

Section 2056.009;

(B) the state strategic plan for information

resources; and

(C) the agency's business objectives, mission,

and goals;

(5) agency information necessary to support the state

goals for interoperability and reuse; and

(6) confirmation by the agency of compliance with

state statutes, rules, and standards relating to information

resources.

SECTION 8. Not later than September 1, 2026, the attorney

general shall post on the attorney general's Internet website the

information and online mechanism required by Section 552.102,

Business & Commerce Code, as added by this Act.

SECTION 9. (a) Notwithstanding any other section of this

Act, in a state fiscal year, a state agency to which this Act

applies is not required to implement a provision found in another

section of this Act that is drafted as a mandatory provision

imposing a duty on the agency to take an action unless money is

specifically appropriated to the agency for that fiscal year to

carry out that duty. The agency may implement the provision in that

fiscal year to the extent other funding is available to the agency

to do so.

(b) If, as authorized by Subsection (a) of this section, the

state agency does not implement the mandatory provision in a state

fiscal year, the state agency, in its legislative budget request

for the next state fiscal biennium, shall certify that fact to the

Legislative Budget Board and include a written estimate of the

costs of implementing the provision in each year of that next state

fiscal biennium.

SECTION 10. This Act takes effect January 1, 2026.

______________________________

______________________________

President of the Senate

Speaker of the House

I certify that H.B. No. 149 was passed by the House on April

23, 2025, by the following vote: Yeas 146, Nays 3, 1 present, not

voting; and that the House concurred in Senate amendments to H.B.

No. 149 on May 30, 2025, by the following vote: Yeas 121, Nays 17,

2 present, not voting.

______________________________

Chief Clerk of the House

I certify that H.B. No. 149 was passed by the Senate, with

amendments, on May 23, 2025, by the following vote: Yeas 31, Nays

0.

______________________________

Secretary of the Senate

APPROVED: __________________

Date

__________________

Governor