AI Regulations: Texas’ Sweeping AI Bill and the Vatican’s Policy

A Texas bill that seeks to rein in harms from artificial intelligence (AI) is being lambasted as rivaling the regulatory heavy-handedness of California and Europe, despite its reputation as a pro-business, conservative state.

“The proposed bill, introduced as HB 1709, is one of the most aggressive AI regulatory efforts yet seen in the United States, rivaling even California and Europe in its scope,” wrote James Broughel, a senior fellow at the libertarian think tank Competitive Enterprise Institute, in Forbes this week.

HB 1709 sets a framework for the ethical and transparent use of AI systems in Texas. It monitors AI based on the level of risks it poses, especially in areas like healthcare, finance and legal services. The bill also requires developers, deployers and distributors of AI systems to prevent algorithmic discrimination, ensure data security and do annual impact assessments.

It bans AI systems that pose an “unacceptable risk,” such as manipulating human behavior to influence decision-making, scoring people based on their social behavior, capturing their biometric information using AI and others.

The bill mandates plenty of record-keeping, from a ‘high-risk’ report to notifications for any regulation violations, whether intentional or not. Fines range from $50,000 to $200,000 per violation, depending on the severity, or $2,000 to $40,000 per day if the AI system stays in continuous operation.

Broughel said this risk-based approach was likely inspired by the European Union’s AI Act. The Texas bill also borrows from California’s SB 1047 for putting heavy requirements on AI companies. (California Gov. Gavin Newsom ultimately vetoed the bill.)

The Texas bill “doubles down on this approach, introducing even stricter standards in some cases,” Broughel said. The bill requires compliance reports, which are an “immense administrative burden and undoubtedly slow the pace of AI development in Texas.” Companies need to update documentation whenever they make a “substantial” modification to their AI systems, which could happen often given that AI is fast-moving, he said.

PYMNTS reached out to the office of Rep. Giovanni Capriglione, R-Southlake, who authored the bill, for comment, but has not yet received a response.

Broughel further argued that while the Texas bill might aim to protect its state from AI harms, “its potential unintended consequences could derail innovation in Texas, including the $500 billion Stargate Project — an initiative touted as the largest AI infrastructure effort in history.”

Stargate is a joint project from OpenAI, SoftBank, Oracle and MGX to build AI infrastructure. The four are also equity funders. The project plans to build 500,000-square-foot data centers devoted to AI training and inference. Technical partners are Microsoft, Nvidia, Arm and Oracle.

Even The Vatican Has an AI Policy

The rise of AI is leading to concerns worldwide — even at the Vatican.

The religious body has published its AI guidelines in the report, “Decree No. DCCII of the Pontifical Commission for the Vatican City State” (as translated from Italian.) It issued guidelines for the ethical and responsible use of AI within the Vatican City State. The rules went into effect on Jan. 1.

The Vatican wants to ensure that the governance framework leads to responsible AI use and that any technological advancements in AI would respect human dignity, transparency and ethical considerations.

Key points of the policy are:

AI must respect human dignity, the common good and maintain an anthropocentric approach.

Discriminatory AI uses, subliminal manipulation and systems that could harm Vatican security must be prohibited.

Establishes guidelines for AI use in health care, cultural heritage preservation, administrative procedures and judicial activities

Requires transparency in AI systems and protection of personal data

Creates a five-member AI Commission to oversee implementation and monitor risks

Judges must retain exclusive decision-making power in legal interpretation and case decisions.

AI content must be labeled, and Vatican City State maintains exclusive rights to AI-created content within its territory.