Colorado’s ongoing effort to put guardrails around how companies and governments use AI for some of their most consequential decisions ran into a snag in the final days of the legislative session.
Lawmakers have been awaiting a bill that would refine the groundbreaking AI regulations they passed last year. But when that new legislation was finally introduced late last week, it quickly became clear that it faced significant opposition. On Monday, the lead sponsor asked his colleagues to vote it down after its first committee hearing.
Senate Majority Leader Robert Rodriguez of Denver said he’d worked on Senate Bill 318 behind the scenes for months. He aimed to address concerns the industry and Gov. Jared Polis have with the current law.
“This bill was an improvement in some places,” he said. “The bill was moving in the direction that we needed for policy. And it's disappointing that I couldn't get it over the finish line.”
But opponents said even with Rodriguez’s proposed changes, the underlying policy would still be unworkable and vague, and would stifle innovation with burdensome requirements.
Days before the hearing, Rodriguez told CPR News he would kill the bill if he felt like there was a danger that his colleagues might amend it in ways he wouldn’t support.
A bold step in AI policy leaves many unanswered issues
Last year Colorado became the first state in the nation to try to put rules around how companies and governments use AI to evaluate people for things like college admissions, hiring, loans and insurance policies.
The new law requires companies and some government agencies to inform people when an AI system is used in decision-making. And it allows people, if they think the technology has treated them unfairly, to file an appeal and correct their data, or to file a complaint. It also sets up a process for the Attorney General’s Office to investigate bad actors.
Even as they passed the law last year, lawmakers viewed it as just a starting point. They delayed implementation of the policy until February, 2026, and set up a taskforce to work on the issue in the meantime, with the idea that they would pass revisions to the policy this session.
When he signed the original bill Polis asked lawmakers to focus their regulations on the software developers who create AI systems, rather than small companies that use them. Polis also warned the law could be used to target those employing AI even when its application is not intentionally discriminatory.
“I want to be clear in my goal of ensuring Colorado remains home to innovative technologies and our consumers are able to fully access important AI-based products,” he wrote.
Polis, Rodriguez and Attorney General Phil Weiser also signed a letter in June saying they would revise the law to protect consumers and recognize Colorado’s leadership in the AI sector and minimize unintended consequences, “well before the February 2026 deadline for implementation of the law.”
“We are confident that this collaboration will support a thriving technology sector in Colorado that puts consumers and innovation first,” they wrote.
But so far it doesn’t appear to have worked out that way.
Revisions fail to win over opponents
The bill Rodriguez introduced last week contained 36 pages of tweaks to the existing law. It tried to define which types of AI systems are covered and which aren’t, created exemptions for smaller AI developers and eliminated some reporting requirements for developers, among many other things. It also pushed the implementation of the law back to Jan. 1, 2027.
Those changes, though, did not allay the business community’s underlying opposition.
“This is so irrational and so unenforceable,” said Bryan Leach, an entrepreneur and the CEO and founder of Denver-based Ibotta, an app that lets users get digital rewards on a variety of purchases. While Leach said his company won’t be immediately impacted, he called the AI policy the most anti-business bill he’s seen in 20 years.
“(Colorado has) less than 2 percent of the nation's population, yet we're the only ones regulating AI. It's as if Colorado tried to regulate the internet in 1994 by itself, stifling growth and creativity,” Leach told CPR News.
Opponents note that similar AI regulation attempts have failed in states across the country.
“We have other states that have tried to follow suit and they have either been postponed indefinitely or their governor has vetoed them. That is a big concern to us in Colorado's competitiveness,” said Brittany Morris Saunders, the CEO of the Colorado Technology Association.
But Rodriguez said those other efforts failed because the tech industry has never been regulated before and fights like a bully to prevent it from happening.
He compares the industry to kids running with scissors. “It's very, very powerful groups of individuals, venture capital, that have a lot of power in this state and this political climate,” he told CPR News.
He said he feels a sense of responsibility as a lawmaker in the only state that’s managed to pass this kind of AI regulation and doesn’t want to set up a model for the country unless it truly protects consumers.
Rodriguez said polling shows that people's distrust and dislike of AI is increasing.
“It's going to start taking their jobs. It's making decisions on their lives. There is a place where people don't trust it. And the whole core of trust is transparency and knowledge. And it doesn't seem like the industry's grasped that yet.”
What happens next?
By killing his bill this week, Rodriguez makes it more likely that the 2024 law will take effect without modifications early next year.
But some of Colorado’s top officials are urging lawmakers to find a way to push that back. After the hearing on Monday, Gov. Polis, Attorney General Phil Weiser, Denver Mayor Mike Johnston and several Democratic members of the state’s Congressional delegation sent lawmakers a letter asking them to introduce a new bill before they adjourn to extend the implementation deadline to January, 2027.
“With just hours remaining in the 2025 legislative session, it is clear that more time is needed to continue important stakeholder work to ensure that Colorado’s artificial intelligence regulatory law is effective and implementable,” states the letter.
However the options in the final days of the session are limited. Colorado’s constitution requires a minimum of three days to pass a bill, meaning the clock ran out Monday night.
Another remaining option would be to find a bill on a close-enough topic and try to amend it to add a section pushing back the implementation deadline, but that kind of Hail Mary move seems unlikely.
Some members of industry are hoping the governor might use a special session to delay the law’s implementation, but that too would be an extraordinary move.
Companies question what the law would mean for them
Some of the biggest concerns with Colorado’s law — that were not placated by Rodriguez’s bill — hinge on the information AI developers must disclose about the inner workings of their systems. They also worry the law isn’t precise enough about what kinds of AI involvement in decision-making it applies to.
Jon Nordmark is the CEO of Iterate.ai based in Highlands Ranch. His company both provides AI for large companies like Ulta Beauty and e.l.f. Cosmetics and also uses the technology internally for things like hiring.
For instance, he says right now his company has 4 openings and 4,000 applicants. AI will be crucial to winnowing that pool down to a manageable number of relevant resumes.
“The way the law is written today, if any of those candidates believe that they were discriminated against, because we've used AI to either choose who to interview or choose who to hire, or (it played) into that decision somehow, they can appeal to us for a rationale as to why they weren't interviewed or hired.”
In that scenario, Nordmark said, it’s not clear how his company would get the data to explain the AI system’s processes. But that’s exactly why supporters of the bill say it’s necessary.
“It is crucial that workers and consumers understand when and how AI systems are used in decisions that can alter the course of their lives and careers,” said Alexandra Reeve Givens, President of the Center for Democracy & Technology in a statement.
Reeve Givens praised Rodriguez for setting his new bill aside in order to protect the underlying policy.
“Senator Rodriguez and his colleagues in the General Assembly did the right thing by refusing to eliminate or delay the bare minimum of protections that Colorado’s workers and consumers should be willing to accept,” said Reeve Givens.
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