Colorado Legislature Passes Artificial Intelligence Bill; Awaits Governor’s Signature

The Colorado legislature passed the Colorado Artificial Intelligence Act (SB 205), a bill mandating that private companies operating within the state report any known or reasonably foreseeable risk of algorithmic discrimination to the state’s Attorney General within 90 days of discovering the issue or receiving a credible report.

Focus on consequential decisions: The bill applies if AI, in any capacity, influences "consequential decisions" that could affect residents of Colorado. defines a consequential decision as any decision "that substantially impacts legal rights or has a similarly significant effect on the provision or denial of services to any consumer." This includes decisions related to employment opportunities, educational enrollment, financial or lending services, healthcare, housing, insurance, or legal services.

Right to human review: The bill permits consumers to challenge, through human review where technically possible, any adverse consequential decision that results from the use of a high-risk artificial intelligence system.

Outlook: If signed into law, the bill will take effect on February 1, 2026, or two years after its passage. Additionally, through a separate piece of legislation (HB 1468), Colorado legislators have established a work group to further examine the provisions of the bill. This approach gives the legislature an additional session to propose amendments if necessary. The bill also authorizes (but does not obligate) the Colorado Attorney General’s office to engage in rulemaking. This method is reminiscent of the California Consumer Privacy Act’s implementation, where the legislature postponed enforcement and introduced several amendments in a subsequent legislative session.