Zooming in on AI - #9: Understanding California's New AI Legislation

AI and education

On September 28, 2024, Governor Newsom signed Assembly Bill 2885, “Artificial intelligence,” into law. Pursuant to this bill, a uniform definition of AI, defined as “engineered or machine-based system with varying levels of autonomy that can infer from input to generate outputs that influence physical or virtual environments,” is established under various California laws. Key provisions of existing laws relating to AI that are affected by this uniform definition include:

• Government Operations Agency: Requires the Secretary of Government Operations to create a plan to evaluate the impact of AI-generated or manipulated deepfakes on state government, businesses and residents (see (Section 11547.5 of the Government Code); 
• Department of Technology: Requires the Department of Technology to conduct a comprehensive inventory of high-risk automated decision systems used by state agencies, which rely on machine learning and AI to assist or replace human decision-making (see Section 11546.45.5 of the Government Code);
• Local Agencies: Requires each local agency to report publicly on economic development subsidies and any job losses or replacements due to AI or automation (see Section 53083.1 of the Government Code);
• California Online Community College: Utilizes AI and related technologies to build student support systems and industry-valued online education programs (see Section 75002 of the Education Code); and 
• Social Media Companies: Required to submit semiannual reports to the Attorney General detailing how content on their platforms is managed, including the role of AI in such management (see Section 22675 of the Business and Professions Code).

California AI transparency act

On September 19, 2024, Governor Newsom signed Senate Bill No. 942, “California AI Transparency Act,” into law. Under this bill, which comes into effect on January 1, 2026, new regulations for generative AI are created to ensure transparency in AI-generated content. Key provisions include:

• AI Detection Tools: Any person that creates codes, or otherwise produces a generative artificial intelligence system that has over 1,000,000 monthly visitors or users and is publicly accessible within the geographic boundaries of the state (Covered Providers) must offer a free, publicly accessible AI detection tool that meets specified criteria.
• Disclosures: Covered Providers using any AI system that can generate derived synthetic content, including text, images, video and audio that emulates the structure and characteristics of such system’s training data (GenAI System) must offer users the option to include a manifest disclosure in AI-generated content (images, videos, audio, or combinations) that clearly and conspicuously identifies the content as AI-generated. Covered Providers must also include a latent disclosure in AI-generated content when technically feasible that conveys information about such content's origin, either directly or through a link to a permanent website.
• License Revocation: If a third-party licensee modifies any GenAI System such that it can no longer provide these disclosures: (i) Covered Providers must revoke the applicable license to the GenAI System within 96 hours; and (ii) such third-party licensee must cease using such GenAI System.
• Penalties: Violations by Covered Providers can result in civil penalties of $5,000 per incident, while third-party licensees can face civil actions, including injunctive relief and attorney's fees, if they continue using a revoked GenAI System.

Conclusion

The enactment of California AI-related legislation is a clear example of how states are taking proactive steps to regulate certain uses of AI. In the absence of federal legislation, it’s reasonable to expect that other states will enact similar legislation.

Footnotes

[1] “Artificial intelligence system or service” means a machine-based system or service that can, for a given set of human-defined objectives, generate content and make predictions, recommendations, or decisions influencing a real or virtual environment.