AI Regulation (Updated to 2025)

United StatesStates

A Decentralized and Market-Driven Approach

Over the past several years, the US has proposed an AI regulatory approach that is primarily decentralized, drawing on a combination of federal guidance, state law, and industry-led standard setting. Prioritizing innovation in the economy, the US is developing an AI regulatory policy that seeks to accommodate advancement while holding ethical objectives constant.

Overview of AI Regulation and Governance in the United States

RISK-BASED APPROACH

The United States uses a sectoral and risk-based approach for its AI regulation, aimed at promoting AI innovation while addressing ethical, social, and security risks. Instead of a uniform regulation for AI, such as in the EU, the U.S. employs a patchwork of regulations, agency-specific guidance documents, and voluntary best practices to regulate AI technologies. This fragmented approach enables industries to customize approaches to compliance, making them more internationally competitive.

The Blueprint for an AI Bill of Rights (2022) serves as a cornerstone for ethical AI principles in the U.S., emphasizing transparency, fairness, privacy, and accountability. Federal agencies, such as the Federal Trade Commission (FTC), the National Institute of Standards and Technology (NIST), and the Department of Defense (DoD), alongside state governments, have implemented a variety of sector-specific rules to address risks in critical areas like healthcare, finance, and public safety. 

On the other hand, the United States participates in international standard-setting bodies, such as the OECD and G7, therefore maintaining internationally compatible and competitive AI governance.

Key Regulations and Governance Aspects
1. What Does It Involve?

The U.S. regulatory approach leans towards voluntary standards as opposed to rigid rules in order to encourage ethical AI innovation and use and maintain industry’s support of its measures, and core principles of a proposed AI Bill of Rights include:

  • Safe and Effective Systems: AI systems should be reliable, robust, and secure. They must be both safe and effective, and they must be safe and secure in focus.
  • Algorithmic Discrimination Protections: Stakeholders must work to prevent and mitigate potential biases in these systems. These promoting ir recognising the avoid such biases in the treatment of marginalized populations. 
  • Data Privacy: Individuals must have greater control over their data, and AI systems must process data transparently and securely. 
  • Transparency: Those who design and deploy AI systems are responsible for enterprise governance and for providing a sufficient understanding of the technology and its application to ensure stakeholders can meaningfully engage with so those affected can understand whether it may be beneficial to use it.
  • Human Alternatives and Oversight: Some decisions are too important to delegate even to the most advanced machine learning system. These decisions require human intervention. For example, it is essential that critical decisions regarding (e.g. granting of a loan, medical, legal cases) involve individuals and include in the decision-making process a recourse to human judgment.
2. Who Is Impacted?
  • AI developers and deployers, particularly in high-stakes applications like healthcare, criminal justice, and consumer finance. 
  • Federal and state agencies utilizing AI technologies in public services. 
3. When Is It Due?

These principles are already being applied as guidelines, with adoption accelerating across industries and public institutions. 

4. Cost of Non-Compliance

While penalties are not explicitly tied to the Blueprint, organizations risk reputational harm, regulatory scrutiny, and exclusion from federal contracts for failing to meet ethical AI expectations. 

What's Next for AI Regulation in the United States?

What's Next for AI Regulation in the United States?

An overview of upcoming federal legislation and its implications for various stakeholders.

Federal AI Regulation Initiatives

  • Comprehensive Federal AI Legislation: Proposed laws will address AI-specific risks—including bias, liability, and automated decision-making. This could align with the AI Bill of Rights and unify state-level inconsistencies.
  • Generative AI Regulation: Policies addressing misinformation, deepfakes, and intellectual property protection in generative AI are expected to emerge.
  • Enhanced Liability Frameworks: Clear guidelines on liability for harm caused by autonomous vehicles or algorithmic decisions are under discussion.
  • Expansion of the NIST AI RMF: Future updates will focus on industry-specific applications, providing more detailed guidance on fairness, bias prevention, and cybersecurity.
  • State-Level Innovation: States such as California, New York, and Illinois are likely to expand AI-specific legislation, increasing accountability and transparency requirements.
  • Investment in Workforce Development: Initiatives to train a skilled AI workforce and raise public awareness about AI technologies are expected to grow.

Implications for Stakeholders

  • For Businesses and Developers:
    Compliance Challenges: High-risk applications must meet rigorous standards, including risk assessments and data governance.
    Opportunities: Federal and state funding for R&D offers financial incentives for AI innovation.
  • For Consumers:
    Enhanced Protections: Stronger privacy rights and transparency measures build trust in AI systems.
    Empowerment: Consumers gain more control over automated decisions affecting their lives.
  • For International Collaborators:
    Harmonized Standards: U.S. alignment with global frameworks facilitates smoother cross-border collaborations.
    Collaborative Opportunities: Partnerships in sectors like healthcare and defense offer mutual innovation benefits.
  • For Startups and SMEs:
    Support Systems: Grants, contracts, and innovation hubs provide opportunities to scale.
    Market Potential: Growing demand for ethical and innovative AI solutions drives market expansion.

© 2024 U.S. AI Regulation Initiatives. All rights reserved.

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