Texas's New AI Regulation : A Potential Blow to Innovation

Texas has always been known for its pro-business policies and as a hotspot for innovation. However, the introduction of the Texas Responsible AI Governance Act (TRAIGA), or HB 1709, might shake that reputation. This bill is among the most stringent AI regulations proposed in the U.S., matching the regulatory intensity seen in California and Europe. While aimed at mitigating AI risks, the unintended effects of TRAIGA could hinder Texas's innovation, notably impacting the $500 billion Stargate Project—the largest AI infrastructure endeavor to date.

What’s in Texas’s AI Bill?

TRAIGA adopts a risk-based regulatory model, inspired by the European Union's AI Act. It sets out strict rules for those who develop, deploy, or distribute "high-risk" AI systems, which includes AI involved in major decisions about employment, finance, health, housing, and education. The bill bans AI systems considered "unacceptable risk," like those for biometric sorting or behavior manipulation without consent. It also requires meticulous record-keeping for AI that creates content, ensuring companies are responsible for "algorithmic discrimination."

Key points of TRAIGA include :

• Impact Assessments: Mandatory for those handling high-risk AI, to evaluate potential negative effects.
• Negligence Standard: A "reasonable care" requirement, making developers and deployers liable for system failures.
• Regulatory Body: Establishment of the Texas Artificial Intelligence Council to guide and regulate AI use.
• Banned Practices: Prohibiting social scoring and manipulation tactics.

Enforcement lies with the state attorney general, who can probe violations, bring legal actions, and levy fines for noncompliance.

While some might see these steps as necessary for consumer protection against biased AI, the reality for businesses involves heavy administrative work. TRAIGA does offer exceptions for small businesses and "sandboxes" for research, but the load of compliance could be overwhelming.

A Surprising Shift for Texas

What's particularly odd is how TRAIGA mirrors regulatory strategies from California and the EU, areas often blamed for slowing down innovation. California's SB 1047 tried similar controls but was vetoed for fear of tech industry impact. Yet, TRAIGA pushes further, with even tighter regulations.

The compliance paperwork, including risk reports and yearly evaluations, will likely bog down AI development in Texas. Companies would need to revise documentation with every significant update to their systems, a frequent occurrence in tech.

This bill comes as Texas aims to lead in AI, with initiatives like the Stargate Project, a massive collaboration for AI infrastructure involving companies like OpenAI and Oracle. TRAIGA's regulatory weight might make investors think twice about Texas.

Will TRAIGA Fix What It Targets ?

The focus on algorithmic discrimination is valid, but there are already laws tackling this at state and federal levels. TRAIGA's approach might be shortsighted, especially with technology evolving so quickly.

For instance, the Chinese company DeepSeek's R1 model shows that global innovation won't wait for U.S. regulation. Over-regulating could push the U.S. out of the leadership role in AI, allowing foreign entities to dictate the direction of AI development.

Conclusion

Texas could be a leading light in AI innovation, but HB 1709 might dim that light. It signals to businesses that Texas might not be the haven for innovation it once was.

Texas lawmakers need to weigh if this bill will push businesses away, potentially losing out on the tech boom. An overly rigid approach could mean missing out on shaping the future of one of the most revolutionary technologies.