SB 1964

relating to the regulation and use of artificial intelligence
systems and the management of data by governmental entities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Section 2054.003, Government Code, is amended by
adding Subdivisions (1-a), (2-b), (6-a), and (6-b) to read as
(1-a)  "Artificial intelligence system" means a
machine-based system that, for explicit or implicit objectives,
infers, from the input it receives, how to generate outputs such as
predictions, content, recommendations, or decisions that can
influence physical or virtual environment. Different artificial
intelligence systems vary in their levels of autonomy and
(2-b) "Controlling factor" means a factor that is:
(i)  the principal basis for making any
decision that has a material legal or similarly significant effect
on the provision, denial, or conditions of a person's access to a
(ii)  capable of altering the outcome of a
any decision that has a material legal or similarly significant
effect on the provision, denial, or conditions of a person's access
(iii)  is generated by an artificial
(6-a)  "Heightened scrutiny artificial intelligence
system" means an artificial intelligence system that is
specifically intended to autonomously make, or be a substantial
controlling factor in making, any decision that has a material
legal or similarly significant effect on the provision, denial, or
conditions of a person's access to a government service. The term
does not include an artificial intelligence system intended to:
(i)  perform any narrow procedural task;
(ii)  improve the result of a previously
(iii)  perform a preparatory task to an
assessment relevant to a any decision that has a material legal or
similarly significant effect  on the provision, denial, or
conditions of a person's access to a government service; or
(iv)  detect decision-making patterns or
deviations from previous decision-making patterns
(6-b) "Principal basis" means the use of an output of a
heightened scrutiny  artificial intelligence system to make a
(A)  human review, oversight, involvement, or
(B)  meaningful consideration by a human.
SECTION 2.  Section 2054.068(b), Government Code, is amended
(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, artificial intelligence systems, including
heightened scrutiny  artificial intelligence systems, 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
SECTION 3.  Section 2054.0965, Government Code, is amended
by amending Subsection (b) and adding Subsection (c) to read as
(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 and
(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
(B)  the state strategic plan for information
(C)  the agency's business objectives, mission,
(5)  agency information necessary to support the state
goals for interoperability and reuse; [and]
(6)  an inventory and identification of the artificial
intelligence systems and heightened scrutiny  artificial
intelligence systems deployed by the agency, including an
evaluation of the purpose of and risk mitigation measures for each
system and an analysis of how each system supports the agency's
strategic plan under Subchapter E; and
(7)  confirmation by the agency of compliance with
state statutes, rules, and standards relating to information
resources and artificial intelligence systems, including the
artificial intelligence system code of ethics developed under
Section 2054.702, and minimum standards developed under Section
(c)  Local governments shall complete a review of the
deployment and use of a heightened scrutiny  artificial
intelligence system and provide the review to the department, in a
manner described by the department.
SECTION 4.  Section 2054.137, Government Code, is amended by
adding Subsection (a-1) and amending Subsection (c) to read as
(a-1)  A state agency with 150 or fewer full-time employees
(1)  designate a full-time employee of the agency to
serve as a data management officer; or
(2)  enter into an agreement with another state agency
or agencies to jointly employ a data management officer if approved
(c)  In accordance with department guidelines, the data
management officer for a state agency shall annually post on the
Texas Open Data Portal established by the department under Section
2054.070 at least three high-value data sets as defined by Section
2054.1265.  The high-value data sets may not include information
that is confidential or protected from disclosure under state or
SECTION 5.  Chapter 2054, Government Code, is amended by
adding Subchapter S to read as follows:
SUBCHAPTER S.  ARTIFICIAL INTELLIGENCE
Sec. 2054.701.  DEFINITION.  In this subchapter, "unlawful
harm" means any condition in which the use of an artificial
intelligence system results in any decision that has a material
legal or similarly significant effect on an individual who is a
member of a state or federally protected class's denial, or
conditions of a government service in violation of law.  The term
does not include a developer's or deployer's offer, license, or use
of a heightened scrutiny  artificial intelligence system for the
sole purpose of testing the system before deployment to identify,
mitigate, or otherwise ensure compliance with state and federal
Sec. 2054.702.  ARTIFICIAL INTELLIGENCE SYSTEM CODE OF
ETHICS.  (a)  The department by rule shall establish an artificial
intelligence system code of ethics for use by state agencies and
local governments that procure, develop, deploy, or use a
heightened scrutiny artificial intelligence system.
(b)  At a minimum, the artificial intelligence system code of
ethics must include the following principles for state agencies to
guide the adoption of heightened scrutiny  artificial intelligence
systems and that align with the National Institute of Standards and
Technology's Artificial Intelligence Risk Management Framework on:
(1)  Human oversight and control;
(5)  Data privacy and security;
(6)  Accountability and liability;
(7)  Continuous evaluation and improvement;
Sec. 2054.703.  MINIMUM STANDARDS FOR HEIGHTENED SCRUTINY
ARTIFICIAL INTELLIGENCE SYSTEMS.  (a)  The department by rule shall
develop minimum risk management and governance standards for the
development, procurement, deployment, and use of heightened
scrutiny   artificial intelligence systems by a state agency or
(b)  The minimum standards must be consistent with the
Artificial Intelligence Risk Management Framework (AI RMF 1.0)
published by the National Institute of Standards and Technology and
(1)  establish accountability measures, such as
required reports describing the use of, limitations of, and
safeguards for the heightened scrutiny  artificial intelligence
(2)  require the assessment and documentation of the
heightened scrutiny  artificial intelligence system's known
security risks, performance metrics, and transparency measures:
(A)  before deploying the system;
(C)  at the time any material change is made to:
(ii)  the state or local data used by the
(iii)  the intended use of the system;
(3)  provide resources to local governments to advise
on the management of heightened scrutiny  artificial intelligence
system procurement and deployment, data protection measures, and
(A)  risk management frameworks, acceptable use
policies, and training employees; and
(B)  mitigating the risk of unlawful harm by
contractually requiring third party vendors to implement risk
management system frameworks when deploying heightened scrutiny
artificial intelligence systems on behalf of state agencies or
(c)  State agencies and local governments shall both adopt
the code of ethics developed under Section 2054.702 and the
standards developed under Subsection (b).
Sec. 2054.704.  EDUCATIONAL OUTREACH PROGRAM.  (a)  The
department shall develop educational materials on artificial
intelligence systems to promote the responsible use of the systems
and awareness of the risks and benefits of system use, explain
consumer rights in relation to the systems, and describe risk
(b)  The department shall develop training materials for
state and local government employees and the general public.  The
training materials must be made available on the department's
(c)  The department shall host statewide forums and training
sessions on artificial intelligence systems best practices for
state and local government employees.
(1)  use money appropriated to the department to
produce materials required by this section; and
(2)  contract with a vendor to produce those materials.
Sec. 2054.705.  PUBLIC SECTOR ARTIFICIAL INTELLIGENCE
SYSTEMS ADVISORY BOARD.  (a)  A public sector artificial
intelligence systems advisory board is established to assist state
agencies in the development, deployment, and use of artificial
(b)  The advisory board shall obtain and disseminate
information on artificial intelligence systems, including use
cases, policies, and guidelines, facilitate shared resources
between state agencies, and consult with the department on
artificial intelligence systems issues.
(c)  The department shall provide administrative support for
(d)  The advisory board is composed of eight members as
(1)  six members representing state agencies,
including one member representing an agency with fewer than 150
employees, appointed by the governor; and
(2)  two public members, appointed by the governor or
the governor's designee, with technology expertise.
(e)  Advisory board members serve two-year terms. Advisory
board members may be reappointed.
(f)  Advisory board members are not entitled to compensation
or reimbursement of expenses for service on the advisory board.
(g)  The advisory board shall direct state agencies to:
(1)  Identify opportunities to implement AI solutions
that reduce administrative burdens;
(2)  Recommend the elimination of regulations that
unnecessarily restrict AI innovation; and
(3)  Identify opportunities to streamline procurement
processes to enable AI adoption.
Sec. 2054.706.  ARTIFICIAL INTELLIGENCE SYSTEM SANDBOX
PROGRAM.  (a)  In this section:
(1)  "Eligible entity" means an eligible customer under
(2)  "Program" means the program established by this
section that is designed to allow temporary testing of an
artificial intelligence system in a controlled, limited manner
without requiring full compliance with otherwise applicable
(3)  "Vendor" means a person registered with the
department as a contractor to provide commodity items under Section
(b)  The department shall establish and administer a program
to support eligible entities in contracting with vendors to engage
in research, development, training, testing, and other
pre-deployment activities related to artificial intelligence
systems to effectively, efficiently, and securely assist the entity
in accomplishing its public purposes.
(c)  The department shall create an application process for
vendors to apply to participate in the program.  The application
(1)  a detailed description of the artificial
intelligence system proposed for participation in the program and
(2)  a risk-assessment of the system that addresses
potential impacts on the public; and
(3)  a plan for mitigating any adverse consequences
discovered during the system's testing phase.
(d)  A vendor participating in the program shall, with
oversight by the department, provide eligible entities with secure
access to an artificial intelligence system used in the program.
(e)  The department shall provide to vendors and eligible
entities participating in the program detailed guidelines
regarding the exemption from compliance with otherwise applicable
regulations provided by the program.
(f)  The eligible entities and vendors shall submit
quarterly reports to the department that include:
(1)  performance measures for the artificial
(2)  risk mitigation strategies implemented during
(3)  feedback on program effectiveness and efficiency;
(4)  any additional information the department
(g)  Not later than November 30 of each even-numbered year,
the department shall produce an annual report and submit the report
to the legislature summarizing:
(1)  the number of eligible entities and vendors
participating in the program and the program outcomes; and
(2)  recommendations for legislative or other action.
(h)  Notwithstanding Section 2054.383, the department may
operate the program as a statewide technology center under
Sec. 2054.707.  DISCLOSURE REQUIREMENTS.  (a)  A state
agency that procures, develops, deploys, or uses an artificial
intelligence system shall provide clear disclosure of the system to
the public as provided by the artificial intelligence system code
of ethics established under Section 2054.702.
(b)  A vendor contracting with a state agency to deploy or
operate an artificial intelligence system must also provide the
disclosure required under Subsection (a).
Sec. 2054.708.  IMPACT ASSESSMENTS.  (a)  A state agency that
deploys or uses an artificial intelligence system or a vendor that
contracts with a state agency for the deployment or use of a system
shall conduct a semiannual system assessment that outlines:
(3)  information governance practices;
(b)  The state agency or vendor shall submit make available a
copy of the assessment to the department upon request.
(c)  The impact assessments created under this section are
confidential and not subject to disclosure under Chapter 552. The
state agency or department may redact or withhold the information
as confidential under Chapter 552 without requesting a decision
from the attorney general under Subchapter G, Chapter 552.
(d)  The Department shall take all necessary steps to ensure
the confidentiality of Submitted Information, including but not
limited to, restricting access to submitted information to
authorized personnel only and implementing physical, electronic,
and procedural safeguards to protect submitted information.
Sec. 2054.710.  ENFORCEMENT.  (a)  If a state agency or
vendor is made aware that a violation of this subchapter has
occurred, the agency or vendor shall report the violation to the
department, if applicable, and the attorney general.
(b)  The attorney general shall:
(1)  review a report submitted under this section or a
complaint reported through the webpage established under Section
(2)  determine whether to bring an action to enjoin a
(c)  If the attorney general determines that a vendor
violated this subchapter, the attorney general shall provide the
vendor with a written notice of the violation. The vendor shall have
30 days from the date of the notice to cure the violation.
(d)  If the vendor fails to cure the violation within the
30-day period specific in subsection (c), the state agency may void
the contract without further obligation to the vendor. The state
agency shall provide the vendor with a 30-day notice of its intent
to void the contract, during which time the vendor may address any
remaining issues to the satisfaction of the state agency.
(e)  If the vendor does not satisfactorily address the issues
within the 30-day notice period specified in subsection (d), the
state agency may void the contract without further obligation to
(d)  If the department determines that a vendor has had more
than one contract voided under Subsection (c), the department shall
refer the matter to the comptroller.  Using procedures prescribed
by Section 2155.077, the comptroller may bar the vendor from
participating in a state agency contract.
Sec. 2054.711.  ARTIFICIAL INTELLIGENCE SYSTEM COMPLAINT
WEBPAGE.  (a)  The attorney general shall, in collaboration with the
department, establish a webpage on the attorney general's Internet
website that allows a person to report a complaint relating to
artificial intelligence systems, including:
(1)  instances of an artificial intelligence system
allegedly unlawfully infringing on the person's constitutional
rights or financial livelihood; or
(2)  the use of an artificial intelligence system that
allegedly results in unlawful harm.
(b)  A complaint submitted on the webpage created under
Subsection (a) must be distributed to the department.
(c)  A person who submits a complaint on the webpage created
under Subsection (a) may request from the department an explanation
as provided by Section 2054.702(b)(1)(D).
(d)  The attorney general shall post on the attorney
general's Internet website information that:
(1)  educates persons regarding the risks and benefits
of artificial intelligence systems; and
(2)  explains a person's rights in relation to
artificial intelligence systems.
(e)  Not later than November 30 of each even-numbered year,
the attorney general shall submit to the legislature a report
summarizing the complaints received under this section, the
resolutions of the complaints, and any enforcement actions taken.
Sec. 2054.712.  STANDARDIZED NOTICE.  (a) Each state agency
and local government that deploys or uses an artificial
intelligence system that the public directly accesses or that is a
controlling factor in a any decision that has a material legal or
similarly significant effect  on the provision, denial, or
conditions of a person's access to a government service shall
include a standardized notice on all related applications, Internet
websites, and public computer systems.
(b)  The department shall develop a form that agencies must
use for the notice required under Subsection (a).  The form must
(1)  general information about the system;
(2)  information about the data  sources the system
(3)  measures taken to maintain compliance with
information privacy laws and ethics standards.
Sec. 2054.713.  RULES.  The department shall adopt rules to
SECTION 6.  (a)  As soon as practicable after the effective
date of this Act, the Department of Information Resources shall:
(1)  adopt rules necessary to implement Subchapter S,
Chapter 2054, Government Code, as added by this Act; and
(2)  develop the outreach program and form required by
Sections 2054.704 and 2054.712, Government Code, as added by this
(b)  As soon as practicable after the effective date of this
Act, the office of the attorney general shall establish the webpage
as required by Section 2054.711, Government Code, as added by this
SECTION 7.  This Act takes effect September 1, 2025.