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February 26, 2025

Business, industry groups raise concerns about CT’s efforts to regulate artificial intelligence

MARK PAZNIOKAS / CTMIRROR.ORG Sen. James Maroney (left) listens to House Speaker Matt Ritter. Maroney, a Democrat, has led the way in pushing for new regulations on AI.
By David Krechevsky

With the use of artificial intelligence (AI) growing in all aspects of the public’s life, the state legislature’s General Law Committee is holding a public hearing Wednesday on a bill to both regulate and promote the development of AI systems.

“An Act Concerning Artificial Intelligence” is Senate Bill 2. The low number reflects the importance placed on it by legislative leaders.

The bill has been co-sponsored by 23 state senators and eight members of the House, including mostly Democrats. The co-sponsors include state Sen. James Maroney, who has taken the lead on AI legislation. 

The stated purpose of the bill is to establish various regulatory requirements for AI systems, but also to promote their development through an “AI regulatory sandbox program” within the state Department of Economic and Community Development (DECD).

The bill would also require DECD to “establish a confidential computing cluster” and conduct a CT AI Symposium, among other mandates.

The 62-page bill also addresses education and workforce development, requiring the state Board of Regents for Higher Education to establish a Connecticut AI Academy; establishing a Connecticut Technology Advisory Board; modifying the Technology Talent and Innovation Fund Advisory Committee; establishing an AI systems fellowship program; and creating an AI task force.

Vahid Behzadan, co-founder of the Connecticut AI Alliance (CAIA) and an assistant professor of computer science and data science at the University of New Haven, submitted testimony supporting the bill in advance of the public hearing. 

“Given the increasing role of AI in Connecticut’s economy and public services, this bill represents a meaningful advancement in ensuring that AI systems deployed in our state are safe, fair, and beneficial to all residents.” 

The regulatory framework proposed in the bill, Behzadan states, “represents a step toward balancing consumer protection with the flexibility needed for continued AI innovation and business development.”

On the regulatory front, the bill sets out several consumer protections. It requires, for example, a developer of a high-risk artificial intelligence system to use “reasonable care” to protect consumers from any known or reasonably foreseeable risks of “algorithmic discrimination.”

It also requires developers of a general-purpose AI model to create and maintain technical documentation of the model, including what testing that was performed. It also requires disclosures to consumers interacting with an AI system. 

DECD Commissioner Daniel O’Keefe also submitted testimony in advance, opposing parts of the bill while supporting others.

“Sections 1-10 broadly focus on regulation, taking an approach that will have many unintended adverse consequences for the Connecticut economy,” O’Keefe states. “Sections 11-27 focus on promoting AI development in Connecticut, an important goal that I support.”

He states that Sections 1-10 of the bill create new and complex statutory requirements governing the use of AI systems.

“DECD appreciates the intent to protect consumers, as it is an important public goal and the cognizance of the General Law Committee,” he states. “However, being early in regulating a rapidly evolving emergent category with significant economic potential presents its own risks. Rather than being a state that welcomes innovation, we become the only state in the region that resists it.”

He states that existing state laws already address concerns specified in the bill, including fraud and discrimination, and it would be better to build on those statutes instead of creating new ones.

“Even the most carefully crafted regulations, with the very best of intentions, can create an unintended chilling effect for businesses and innovators,” he states.

O’Keefe is supportive, though, of the bill’s intent to support AI development in the state, but suggests the committee should consider Gov. Ned Lamont’s proposed AI bill, S.B. 1249. 

Lamont’s bill would establish a new venture fund dedicated to investing in AI and quantum technology startups at Connecticut Innovations (CI), the state’s venture investment arm; expand the state’s Open Data Portal by directing agencies to release AI-ready datasets; and direct multiple executive branch agencies to collaborate on a proposal for an AI “regulatory sandbox” focused on applications in insurance, finance and health services.

“DECD supports the economic development spirit of Senate Bill 2, and offers to work with the proponents to refine the language” of certain sections of the bill, O’Keefe said.

Industry reaction

Christopher Davis, vice president of public policy for the Connecticut Business & Industry Association (CBIA), also submitted testimony with mixed reviews of S.B. 2. 

He states that while CBIA “appreciates the committee’s recognition of the importance of ensuring ethical and responsible use of AI and the need to embrace AI to help grow our state’s economy,” the organization does have some concerns “about the regulatory burdens” imposed by the bill, “particularly on small businesses.”

CBIA is concerned, Davis states, about “the chilling effect that broad, comprehensive state-specific regulations on the use of AI by businesses could have on innovation, entrepreneurship, and investment in Connecticut-based employers.”

Davis said the committee should consider exempting small businesses from “all of the regulatory requirements” in the first 10 sections of the bill.

CBIA is not the only organization seeking to exempt specific businesses from the regulatory requirements of the bill. 

The Connecticut Hospital Association submitted testimony seeking to exempt hospitals from them as well, stating that it believes “the bill is
unworkable with respect to the new requirements on health care.”
 

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