Bill Text: TX SB1964 | 2025-2026 | 89th Legislature | Enrolled

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Bill Title: Relating to the regulation and use of artificial intelligence systems and the management of data by governmental entities.

Sponsorship: Partisan Bill (Republican 2)

Status: (Passed) 2025-06-20 - Effective on 9/1/25 [SB1964 Detail]

Download: Texas-2025-SB1964-Enrolled.html

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S.B. No. 1964

AN ACT
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), (2-c), (6-a), and (11) to read as
follows:
(1-a) "Artificial intelligence system" means a
machine-based system that for explicit or implicit objectives
infers from provided information a method to generate outputs, such
as predictions, content, recommendations, or decisions, to
influence a physical or virtual environment with varying levels of
autonomy and adaptiveness after deployment.
(2-b) "Consequential decision" means a 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.
(2-c) "Controlling factor" means a factor that is:
(A) the principal basis for making a
consequential decision; or
(B) capable of altering the outcome of a
consequential decision.
(6-a) "Heightened scrutiny artificial intelligence
system" means an artificial intelligence system specifically
intended to autonomously make, or be a controlling factor in
making, a consequential decision. The term does not include an
artificial intelligence system intended to:
(A) perform a narrow procedural task;
(B) improve the result of a previously completed
human activity;
(C) perform a preparatory task to an assessment
relevant to a consequential decision; or
(D) detect decision-making patterns or
deviations from previous decision-making patterns.
(11) "Principal basis" means the use of an output
produced by a heightened scrutiny artificial intelligence system to
make a decision without:
(A) human review, oversight, involvement, or
intervention; or
(B) meaningful consideration by a human.
SECTION 2. 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, 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
the department.
SECTION 3. Section 2054.0965, Government Code, is amended
by amending Subsection (b) and adding Subsection (c) 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 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) 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 each system's support of the agency's
strategic plan under this subchapter; 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
2054.703.
(c) Local governments shall complete a review of the
deployment and use of heightened scrutiny artificial intelligence
systems and, on request, provide the review to the department in the
manner the department prescribes.
SECTION 4. Section 2054.137, Government Code, is amended by
adding Subsection (a-1) and amending Subsection (c) to read as
follows:
(a-1) A state agency with 150 or fewer full-time employees
may:
(1) designate a full-time employee of the agency to
serve as a data management officer; or
(2) enter into an agreement with one or more state
agencies to jointly employ a data management officer if approved by
the department.
(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
federal law.
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 a consequential decision that causes
harm to an individual who is a member of a state or federally
protected class 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 law.
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 artificial
intelligence systems.
(b) At a minimum, the artificial intelligence system code of
ethics must include guidance for the deployment and use of
artificial intelligence systems and heightened scrutiny artificial
intelligence systems that aligns with the Artificial Intelligence
Risk Management Framework (AI RMF 1.0) published by the National
Institute of Standards and Technology. The guidance must address:
(1) human oversight and control;
(2) fairness and accuracy;
(3) transparency, including consumer disclosures;
(4) data privacy and security;
(5) public and internal redress, including
accountability and liability; and
(6) the frequency of evaluations and documentation of
improvements.
(c) State agencies and local governments shall adopt the
code of ethics developed under this section.
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 local
government.
(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
must:
(1) establish accountability measures, such as
required reports describing the use of, limitations of, and
safeguards for the heightened scrutiny artificial intelligence
system;
(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; and
(B) at the time any material change is made to:
(i) the system;
(ii) the state or local data used by the
system; or
(iii) the intended use of the system;
(3) provide to local governments resources that advise
on managing, procuring, and deploying a heightened scrutiny
artificial intelligence system, including data protection measures
and employee training; and
(4) establish guidelines for:
(A) risk management frameworks, acceptable use
policies, and training employees; and
(B) mitigating the risk of unlawful harm by
contractually requiring vendors to implement risk management
frameworks when deploying heightened scrutiny artificial
intelligence systems on behalf of state agencies or local
governments.
(c) State agencies and local governments shall adopt the
standards developed under Subsection (a).
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
mitigation techniques.
(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
public Internet website.
(c) The department shall host statewide forums and training
sessions on artificial intelligence systems best practices for
state and local government employees.
(d) The department may:
(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
intelligence systems.
(b) The advisory board shall:
(1) obtain and disseminate information on artificial
intelligence systems, including use cases, policies, and
guidelines;
(2) facilitate shared resources between state
agencies;
(3) consult with the department on artificial
intelligence systems issues;
(4) identify opportunities:
(A) for state agencies to implement artificial
intelligence systems to reduce administrative burdens; and
(B) to streamline the state procurement process
for artificial intelligence systems; and
(5) recommend elimination of rules that restrict the
innovation of artificial intelligence systems.
(c) The department shall provide administrative support for
the advisory board.
(d) The advisory board is composed of eight members as
follows:
(1) six members representing state agencies,
including one member representing an agency with fewer than 150
employees, appointed by the governor or the governor's designee;
and
(2) two public members with expertise in technology,
appointed by the governor or the governor's designee.
(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.
Sec. 2054.706. ARTIFICIAL INTELLIGENCE SYSTEM SANDBOX
PROGRAM. (a) In this section:
(1) "Eligible entity" means an eligible customer under
Section 2054.0525.
(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
regulations.
(3) "Vendor" means a person registered with the
department as a contractor to provide commodity items under Section
2157.068.
(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
process must include:
(1) a detailed description of the artificial
intelligence system proposed for participation in the program and
the system's intended use;
(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
intelligence system;
(2) risk mitigation strategies implemented during
system testing;
(3) feedback on program effectiveness and efficiency;
and
(4) any additional information the department
requests.
(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
Subchapter L.
(i) The department shall share information and resources
for the program with any other department program established to
allow a person, without holding a license or certificate of
registration under the laws of this state, to test an artificial
intelligence system for a limited time and on a limited basis.
Sec. 2054.707. DISCLOSURE REQUIREMENTS. A state agency
that procures, develops, deploys, or uses a public-facing
artificial intelligence system shall provide clear disclosure of
interaction with the system to the public as provided by the
artificial intelligence system code of ethics established under
Section 2054.702. The disclosure is not required if a reasonable
person would know the person is interacting with an artificial
intelligence system.
Sec. 2054.708. IMPACT ASSESSMENTS. (a) A state agency that
deploys or uses a heightened scrutiny artificial intelligence
system or a vendor that contracts with a state agency for the
deployment or use of a heightened scrutiny artificial intelligence
system shall conduct a system assessment that outlines:
(1) risks of unlawful harm;
(2) system limitations; and
(3) information governance practices.
(b) The state agency or vendor shall make a copy of the
assessment available to the department on request.
(c) An impact assessment conducted under this section is
confidential and not subject to disclosure under Chapter 552. The
state agency or department may redact or withhold information as
confidential under Chapter 552 without requesting a decision from
the attorney general under Subchapter G, Chapter 552.
(d) The department shall take actions necessary to ensure
the confidentiality of information submitted under this section,
including restricting access to submitted information to only
authorized personnel and implementing physical, electronic, and
procedural protections.
Sec. 2054.709. ENFORCEMENT. (a) If a state agency or
vendor becomes aware of a violation of this subchapter, 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 web page established under Section
2054.710; and
(2) determine whether to bring an action to enjoin a
violation of this subchapter.
(c) If the attorney general, in consultation with the
department, determines that a vendor violated this subchapter, the
attorney general shall provide the vendor with a written notice of
the violation.
(d) If a vendor fails to respond or cure the violation
before the 31st day after the date the vendor receives the written
notice under Subsection (c), the state agency shall provide the
vendor with a notice of intent to void the contract. The vendor may
respond and seek to cure the violation before the 31st day after the
date the vendor receives the notice of intent.
(e) If the vendor fails to cure the violation before the
31st day after the date the vendor receives the notice of intent to
void the contract under Subsection (d), the state agency may void
the contract without further obligation to the vendor.
(f) If the department determines that a vendor has had more
than one contract voided under Subsection (e), 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. 2054.710. ARTIFICIAL INTELLIGENCE SYSTEM COMPLAINT
WEB PAGE. (a) The attorney general shall, in collaboration with
the department, establish a web page 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 web page created under
Subsection (a) must be distributed to the department.
(c) A person who submits a complaint on the web page created
under Subsection (a) may request an explanation from the
department.
(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) If the attorney general, in consultation with the
department, determines that the complaint is substantiated and a
violation of this subchapter occurred, the attorney general may
seek enforcement under Section 2054.709.
(f) 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. 2054.711. STANDARDIZED NOTICE. (a) Each state agency
and local government deploying or using an artificial intelligence
system that is public-facing or that is a controlling factor in a
consequential decision 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
include:
(1) general information about the system and data
sources the system uses; and
(2) measures taken to maintain compliance with
information privacy laws and ethics standards.
(c) For the purposes of this section, any health care
service by an academic medical center, state owned hospital, public
hospital or hospital district organized under Article IX of the
Texas Constitution or under Texas Health and Safety Code may
satisfy their disclosure requirements by including a generalized
statement in the patient consent forms that an artificial
intelligence system may be used in the course of their treatment.
Sec. 2054.712. 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.
Sec. 2054.713. RULES. The department shall adopt rules to
implement this subchapter.
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 2054.711, Government Code, as added by this
Act.
(b) As soon as practicable after the effective date of this
Act, the office of the attorney general shall establish the web page
as required by Section 2054.710, Government Code, as added by this
Act.
SECTION 7. This Act takes effect September 1, 2025.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1964 passed the Senate on
April 28, 2025, by the following vote: Yeas 31, Nays 0; and that
the Senate concurred in House amendments on May 30, 2025, by the
following vote: Yeas 30, Nays 1.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1964 passed the House, with
amendments, on May 28, 2025, by the following vote: Yeas 104,
Nays 6, one present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor