Navigating the Evolving Landscape of U.S. AI Regulations

Author: Negar Modirrousta (Head of Compliance)

Introduction

Artificial intelligence (AI) presents many potential benefits and challenges in the private and public sectors. In the United States, there has been broad debate about how to harness the opportunities of AI technologies, such as through enhanced operations and worker efficiency, while minimizing potential problems, such as bias and inaccuracies in AI-generated output.

Generally, proponents of comprehensive federal AI regulations assert that such regulations would lead to less legal uncertainty for AI developers and improve the public’s trust in AI systems, thus supporting AI innovation. Opponents of broad federal AI regulation assert that the AI industry is already taking steps to self-regulate and that additional regulation would stifle innovation and competitiveness at a time when international competition in AI is accelerating, which could lead to negative economic and national security outcomes. Other analysts have criticized such characterizations as presenting a false dichotomy between regulation and innovation and instead support a mixture of targeted, flexible approaches depending on the AI technology and its application.

AI and Regulations in the U.S:

Like many technologies, AI isn’t inherently good or bad it’s a tool whose impact depends on how it’s used. It can boost productivity, speed up scientific breakthroughs, and strengthen cybersecurity responses. But it also brings risks, including potential job displacement, threats to civil liberties from biased or inappropriate uses, and privacy concerns tied to surveillance tools like facial recognition technologies.

Supporters of stronger AI regulations argue that these measures are essential to reducing the dangers of unpredictable or unsafe AI systems. According to the International Organization for Standardization, a safe AI system should avoid harming people, property, or the environment under defined conditions (Source: iso/iec ts 5723:2022). Advocates believe regulations can help prevent discriminatory outcomes, clarify who is responsible when AI fails, and provide stability and predictability for innovation.

Those opposed to new regulations counter that existing laws are sufficient and that creating new rules too soon could hinder technological progress. They point out that it’s difficult to craft effective regulations for fast-moving, wide-ranging technologies like AI. Critics also warn that additional regulatory burdens could stifle innovation, especially for startups and smaller companies, and ultimately weaken the United States’ competitive edge. Research suggests that while the U.S. still leads in producing top AI models, China is rapidly narrowing the gap.

Congress and the Administration may approach AI policy from several angles focusing on safety, security, or accelerating innovation, possibly paired with voluntary commitments from industry. These priorities can be blended in different ways, but one constant remains: ensuring AI aligns with human goals and values is technically challenging, culturally dependent, and still an active area of research.

A September 2024 report from Stanford University’s Cyber Policy Center summed up the regulatory dilemma: AI regulation is urgent, but also unpredictable, and if poorly designed could do more harm than good. Still, waiting for complete certainty before acting may leave governments unable to prevent serious or existential risks.

Ultimately, policymakers have the ability to shape the technical, social, legal, and ethical boundaries of AI. Their challenge is to encourage innovation while protecting civil rights, civil liberties, and privacy. At a time of rapid technological change, these efforts may need to evolve frequently or include built-in mechanisms for regular review and flexibility.

Federal Laws Addressing AI

While Members of Congress have introduced hundreds of bills including the term artificial intelligence since the 115^th Congress, fewer than 30 have been enacted as of May 2025. Of those, nearly half consisted of AI-focused provisions either in appropriations or national defense authorization legislation. Arguably the most expansive law was the National Artificial Intelligence Initiative Act of 2020.

The act include:

1. codified the American AI Initiative;
2. established a National Artificial Intelligence Initiative Office to support federal AI activities, which was launched in January 2021 under the first Biden Administration
3. established an interagency committee at the Office of Science and Technology Policy to coordinate federal programs and activities in support of the law, and
4. established a National AI Advisory Committee, which produced over 30 reports between 2022 and 2024, including recommendations for the current Trump Administration.

The act also directed AI activities at selected federal science agencies, including National Science Foundation (NSF) support for a network of National AI Research Institutes. Other laws have also focused on federal AI research and development (R&D). For example, the CHIPS and Science Act  included numerous AI-related provisions directing certain federal science agencies to support AI R&D activities and the development of technical standards and guidelines related to safe and trustworthy AI systems. Since the law was enacted, various federal programs established by the act have provided grants in support of AI R&D, such as the NSF’s Regional Innovation Engines program and the Economic Development Administration’s Regional Technology and Innovation Hubs program.

Additional laws have directed individual federal agencies including the General Services Administration (GSA) and OMB to support the use of AI across the federal government:

The AI in Government Act of 2020 : created within GSA an AI Center of Excellence to facilitate federal adoption of AI and collect and make public information regarding federal programs, pilots, and other initiatives. The act required OMB to issue a memorandum to federal agencies regarding the development of AI policies; approaches for removing barriers to using AI technologies; and best practices for identifying, assessing, and mitigating any discriminatory impact or bias and any unintended consequences of using AI.

The Advancing American AI Act : required OMB to  incorporate additional considerations when developing guidance for using AI in the federal government (2) develop an initial means to ensure that federal contracts for acquiring AI address privacy, civil rights and liberties, and the protection of government data and information; and (3) require the head of each federal agency (except the Department of Defense) to prepare and maintain an inventory of current and planned AI use cases.

Other AI-related laws focused on certain aspects of AI training and sector-specific use. None established broad regulatory authorities for the development or use of AI or prohibitions on AI use.

the US White House Office of Science and Technology Policy (OSTP) released a Blueprint for an AI Bill of Rights  along with several Related agency actions. The document provides an important framework for how government, technology companies, and citizens can work together to ensure more accountable AI. 

Here’s what’s key to understand about the new guidelines, both what they cover, what they don’t and what other work is being done in for AI accountability.

Biden’s Executive Order and the AI Bill of Rights:

Why is an AI Bill of Rights needed?                                             

The need to resolve issues around the Responsible Use of Artificial Intelligence (AI) has become increasingly important for countries, citizens, and businesses over the last eight years. Approximately 60 countries now have National AI Strategies and many have, or are creating, policies which allow for responsible use of a technology which can bring huge benefits but, without adequate governance, can do significant harm to individuals and our society. Blueprint for an AI Bill of Rights

How is the U.S ensuring the responsible use of technology?

Since 2018 the European Union has been leading steps to advance the design, development and deployment of AI in its region whilst seeking to protect its citizens from misuse. The EU AI Act, due in 2024, will bethe culmination of that work. There has been much discussion about how the USA would respond to this new legislative framework. Likewise, China has been developing its own regulatory regime for the use of AI. Whilst much has been written about the AI Arms Race and technological decoupling between the US and China, the underlying question is whether this is the beginning of path-departing technological regimes and governance mechanisms internationally. The EU-US Trade and Technology Council points to new efforts aimed at ensuring greater alignment across the Atlantic, while the focus of the EU and China on greater regulation of algorithms, suggests that the US is lagging behind in terms of rule-setting for the digital economy. There are also a number of international efforts to set out best practices in the use of AI. For example the Global Partnership on AI was formed in 2020 and includes both the EU and the USA. UNESCO and the OECD have also set principles for proper use of AI and at the World Economic Forum we have been creating scalable and accessible frameworks for good governance of AI by governments and business since 2017.

What’s in the ‘Blueprint for an AI Bill of Rights’?

The Blueprint contains five principles, each of which includes a technical companion that provides guidance for responsible implementation of the principles, which as released are as follows:

1. Safe and Effective Systems: You should be protected from unsafe or ineffective systems.
2. Algorithmic Discrimination Protections: You should not face discrimination by algorithms and systems should be used and designed in an equitable way.
3. Data Privacy: You should be protected from abusive data practices via built-in protections and you should have agency over how data about you is used.
4. Notice and Explanation: You should know that an automated system is being used and understand how and why it contributes to outcomes that impact you.
5. Alternative Options: You should be able to opt out, where appropriate, and have access to a person who can quickly consider and remedy problems you encounter.

The intent of the blueprint is to “help guide the design, use, and deployment of automated systems to protect the American Public.” The principles are non-regulatory and non-binding: a “Blueprint,” as advertised, and not yet an enforceable “Bill of Rights” with the legislative protections.

What the Bill Does:

 1) Provides a baseline requirement that companies assess the impacts of automating critical decision-making, including decision processes that have already been automated.

 2) Requires the Federal Trade Commission (FTC) to create regulations providing structured guidelines for assessment and reporting.

 3)  Ensures that companies that make critical decisions and those that build the technology are responsible for assessing the impact of decision processes.

 4) Requires reporting of select impact-assessment documentation to the FTC.

 5) Requires the FTC to publish an annual anonymized aggregate report on trends and to establish a repository of information where consumers and advocates can review which critical decisions have been automated by companies along with information such as data sources, high level metrics and how to contest decisions, where applicable.      6) Adds resources to the FTC to hire 75 staff and establishes a Bureau of Technology to enforce this Act and support the Commission in the technological aspects of its functions. Endorsements: Access Now, Accountable Tech, Aerica Shimizu Banks, Anti-Defamation League, Center for Democracy and Technology (CDT), Color of Change, Consumer Reports, Encode Justice, EPIC, Fight for the Future, IEEE, Montreal AI Ethics Institute, National Hispanic Media Coalition, New America’s Open Technology Institute, Vera and US PIRG.

The White House’s Blueprint for an AI Bill of Rights outlines concerns about AI systems that significantly affect Americans’ rights, opportunities, or access to essential services. It clarifies that the Blueprint applies only to impactful automated systems, not most industrial or operational AI. It highlights high-risk areas such as lending, hiring, and surveillance similar to categories in the upcoming EU AI Act.

Algorithmic Accountability Act of 2023

The Algorithmic Accountability Act of 2023, introduced but not enacted, would require companies to evaluate the impacts of the AI systems they build or use, increase transparency around where and how these systems operate, and help consumers make informed decisions. The Act responds to growing evidence that AI systems can cause harm, such as biased tenant-screening tools or flawed medical decision systems often due to poor data quality or inadequate testing. Rather than creating new agencies or heavy licensing requirements, the Act offers a targeted approach that focuses on revealing where automated decision-making is used and ensuring companies assess risks like bias, safety issues, performance gaps, and unfair outcomes.

Why the Act Is Needed

AI systems from advanced generative models to basic automated rules are now used in decisions involving healthcare, credit, employment, housing, education, and other essential areas. While these tools can offer major benefits, they also introduce new risks, especially when systems rely on faulty, biased, or incomplete data.

Research and reporting have documented serious harms:

A healthcare algorithm incorrectly flagged patients due to data mixing, leading some to be denied necessary pain medication.

A tenant-screening system allegedly produced discriminatory outcomes for Black and Hispanic applicants by over-relying on historical credit data and disregarding housing-voucher usage.

These problems highlight the absence of consistent impact evaluations and safeguards in systems that influence critical life outcomes.

Approach of the Act

Unlike proposals that would create new regulatory bodies or introduce broad liability frameworks, this bill takes a focused approach. It addresses systems already in use and aims to clarify responsibilities for companies and regulators. Currently, both the public and regulators lack visibility into where automated decision systems are deployed and how they function.

Key Provisions

The bill would:

1)Require impact assessments for automated systems involved in critical decision-making, including systems already operational.

2)Direct the Federal Trade Commission (FTC) to issue regulations specifying how assessments must be conducted and reported.

3)Assign responsibility to both companies that deploy automated decision systems and companies that build the underlying technology.

4)Mandate reporting of selected assessment materials to the FTC to support oversight and enforcement.

Overall, The Algorithmic Accountability Act of 2023 establishes federal requirements for companies to evaluate the impacts of the AI and automated systems they develop or deploy. The bill aims to increase transparency around when AI is used in decisions that materially affect people, and to give consumers clearer insight into those interactions. the goal is to provide oversight, protect the public, and give companies clearer guidance on responsible AI deployment.

Conclusion

AI legislation in the US differs significantly from that in other parts of the world. So far, the focus has primarily been on innovation, government AI use, and reinforcing “traditional American values.” 

For organizations operating within (and with) the US, navigating the myriad of AI legislation and proposals can be challenging. Nevertheless, it’s essential to keep an eye on what is needed for US AI compliance, especially during a period with so much change.

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Resources:

1. https://www.congress.gov/crs-product/R48555, 06/04/2025, Harris, Laurie
2. https://www.whitehouse.gov/wp-content/uploads/2025/07/Americas-AI-Action-Plan.pdf, JULY 2025, THE WHITE HOUSE
3. https://www.kennedyslaw.com/en/thought-leadership/article/2025/key-insights-into-ai-regulations-in-the-eu-and-the-us-navigating-the-evolving-landscape/, 21/01/2025, Dr. Nathalie Moreno/ Amanda McAllister Novak
4. https://www.nightfall.ai/ai-security-101/algorithmic-accountability-act#:~:text=The%20Algorithmic%20Accountability%20Act