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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
artificial intelligence; state agencies; rules
Purpose
Outlines requirements for budget units to identify opportunities for the use of artificial intelligence (AI) system solutions and reduce barriers to AI system innovation. Requires the Director of the Arizona Department of Administration (ADOA) to submit a report on the implementation and effectiveness of AI systems by budget units, by December 1 of each year.
Background
The federal National Artificial Intelligence Initiative Act of 2020 (Act) codified the establishment of a national AI initiative and associated federal offices and committees. The Act directed the U.S. Secretary of Commerce, in coordination with other federal agencies, including the National Institute of Standards and Technology, the U.S. Department of Energy and the U.S. Department of Homeland Security, to establish guidelines and best practices for developing safe, secure and trustworthy AI systems, with the aim of promoting consensus industry standards (15 U.S.C. §§ 9401 et seq).
Executive Order 14179 deems that it is the policy of the United States to sustain and enhance AI to promote economic competitiveness and national security. The Executive Order directed various federal agencies and individuals to develop an AI action plan and identify actions taken pursuant to Executive Order 14110 that conflict with this policy (Exec. Order No. 14179). Executive Order 14365 deems that it is the policy of the United States to achieve a minimally burdensome national policy framework for AI. The Executive Order directed the establishment of an AI Litigation Task Force for the purpose of evaluating and challenging state laws inconsistent with this policy and restricted funding to the states under the federal Broadband Equity Access and Development Program (Exec. Order 14365).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Requires the Director of ADOA (Director) to require each budget unit to:
a) identify opportunities to implement AI system solutions that reduce administrative burdens;
b) eliminate regulations that unnecessarily restrict AI system innovation;
c) streamline procurement processes to enable the adoption of AI systems;
d) establish enterprise AI system governance to ensure consistent, efficient and appropriate use of AI to better achieve internal and external objectives;
e) review existing regulations affecting AI system development to identify instances of regulatory capture or negative impacts on competition and innovation; and
f) modify or eliminate any AI system regulation that creates unreasonable barriers to AI system innovation.
2. Requires each budget unit, in implementing an AI system, to:
a) focus on reducing costs and improving service delivery;
b) use existing staff and resources without creating new administrative bodies; and
c) not create new regulatory requirements that are solely applicable to private sector AI system development.
3. Prohibits a budget unit from adopting rules specifically regulating AI systems or computational resources unless the:
a) Legislature provides an express statutory delegation to address a specific harm;
b) rule is the least restrictive means available to achieve the statutory objective;
c) benefit of the rule clearly outweighs impacts on innovation and competition; and
d) rule does not create a barrier to market entry or an advantage to an incumbent firm.
4. Requires any emergency or temporary rule that specifically regulates AI systems or computational resources to be approved by the Legislature.
5. Specifies that each emergency or temporary rule that is in effect at the beginning of a legislative session must receive a ratifying vote in order for the rule to remain in effect at the conclusion of the legislative session.
6. Directs the Legislature to schedule a vote on the floor of each legislative chamber to ratify all emergency or temporary rules within the first 30 days of the legislative session.
7. Prohibits the Legislature from requiring more than a simple majority vote to ratify an emergency or temporary rule.
8. Requires the Director to submit a report regarding the implementation and effectiveness of AI systems by budget units during the preceding fiscal year to the President of Senate, Speaker of the House of Representatives and the Governor, by December 1 of each year.
9. Requires the report to:
a) identify each budget unit that implemented an AI system during the preceding fiscal year;
b) describe the function or administrative process to which the AI system was applied;
c) include, as practicable, quantitative and qualitative measures of government efficiency resulting from the AI system for reductions in processing time or backlogs, cost savings or cost avoidance and improvements in service delivery or output quality; and
d) identify any regulatory, procurement or operational barriers that were encountered and that limited the effective use of the AI system.
10. Requires a copy of the report to be submitted to the Secretary of State.
11. Defines AI system as any machine learning-based system that can, for a given set of objectives, generate outputs such as content, predictions, recommendations or decisions influencing physical or virtual environments.
12. Defines computational resource as any tool, technology, system or infrastructure, whether digital, analog or quantum, that facilitates computation, data processing, storage, transmission, manipulation or use of information.
13. Defines content as any digitally generated, manipulated or synthesized text, image, audio or video recording, three-dimensional model or interactive element or any combination thereof that can be produced as output by an AI system.
14. Becomes effective on the general effective date.
House Action
AII 2/05/26 DPA 4-2-0-1
3rd Read 2/25/26 31-22-7
Prepared by Senate Research
March 13, 2026
LMM/KS/ci