Navigating State AI Laws: Texas TRAIGA and Beyond

The AI regulatory landscape shifted dramatically when Texas Governor Greg Abbott signed the Texas Responsible AI Governance Act (TRAIGA) into law on June 22, 2025. This marks a new era of state-level AI regulation that every business using AI must understand.

Understanding TRAIGA

While initially modeled after the EU AI Act, the final version of TRAIGA was significantly narrowed during legislative negotiations. However, it still imposes critical restrictions on AI development and deployment:

Prohibited AI Uses

• Behavioral manipulation: AI systems designed to exploit vulnerabilities
• Unlawful discrimination: Systems that discriminate based on protected characteristics
• Constitutional violations: AI that infringes on fundamental rights
• Social scoring: Systems that evaluate individuals for general purposes

State-by-State AI Regulations

California

Leading with comprehensive requirements:

• Mandatory AI impact assessments for high-risk uses
• Consumer notification when AI makes significant decisions
• Healthcare-specific AI regulations
• Strict data privacy requirements under CCPA

Illinois

Focused on employment and biometric data:

• Prohibitions on AI in hiring without disclosure
• Video interview AI must be disclosed to candidates
• Biometric Information Privacy Act applies to AI systems

Colorado

Comprehensive AI accountability:

• Risk assessment requirements
• Bias audits for decision-making systems
• Consumer rights to opt-out of profiling

New York

Focus on employment and bias:

• Mandatory bias audits for hiring AI
• Public disclosure of audit results
• Notification requirements for AI use in employment

Federal vs. State Approaches

The federal landscape changed with President Trump's "Removing Barriers to American Leadership in AI" Executive Order in January 2025, which takes a more permissive approach than the previous administration. This creates a patchwork where:

• Federal regulations focus on removing barriers
• States impose specific restrictions and requirements
• Businesses must comply with the strictest applicable rules

Compliance Strategies for Multi-State Operations

1. Map Your AI Uses

Document every AI system in your business:

• Customer service chatbots
• Hiring and recruitment tools
• Pricing algorithms
• Content generation systems
• Decision support tools

2. Implement Universal Best Practices

Adopt the strictest standards across all operations:

• Transparency in AI use
• Human oversight for significant decisions
• Regular bias testing
• Clear opt-out mechanisms
• Comprehensive documentation

3. State-Specific Adjustments

Customize for each jurisdiction:

• Employment AI: Follow Illinois and New York rules nationwide
• Consumer-facing AI: Apply California standards broadly
• Healthcare AI: Comply with strictest state requirements

Risk Management Framework

High-Risk AI Applications

These require maximum compliance effort:

• Employment decisions (hiring, promotion, termination)
• Credit and lending decisions
• Healthcare diagnosis or treatment
• Criminal justice applications
• Educational admissions or evaluation

Documentation Requirements

Maintain records of:

• AI system design and training data
• Testing and validation procedures
• Bias audits and results
• Compliance assessments
• Incident reports and corrections

Future-Proofing Your AI Compliance

More states are drafting AI legislation for 2025-2026. Prepare now by:

1. Building flexible compliance systems
2. Monitoring legislative developments
3. Joining industry groups for updates
4. Training staff on AI governance
5. Establishing vendor management protocols

Action Items

Protect your business from regulatory risk:

1. Audit all current AI uses
2. Map state law requirements to your operations
3. Implement transparency and oversight measures
4. Document compliance efforts
5. Review and update vendor contracts
6. Train employees on compliant AI use

The state-by-state approach to AI regulation creates complexity but also opportunity. Businesses that build robust compliance frameworks now will have competitive advantages as AI becomes more central to commerce.