The Texas Legislature passed House Bill 149, the Texas Responsible Artificial Intelligence Governance Act (TRAIGA), marking a significant step in regulating artificial intelligence (AI) across commercial and public sectors. Awaiting Governor Greg Abbott’s signature, the bill, if enacted, will take effect January 1, 2026, positioning Texas as the fourth state after Colorado, Utah, and California to implement AI-specific legislation and Captain Compliance to be the first company to offer AI governance solutions for TRAIGA to businesses that deal with Texas data subjects. With 78% of U.S. businesses using AI in some capacity, TRAIGA aims to balance innovation with consumer protection, setting a precedent for state-level AI governance.
What TRAIGA Addresses For AI Compliance
TRAIGA addresses growing concerns about AI’s societal impact, from privacy violations to algorithmic bias, while fostering innovation through a regulatory sandbox. The bill’s passage, with strong bipartisan support (146-3 in the House), reflects Texas’s proactive stance on emerging technologies, Texans are praising its “comprehensive yet innovation-friendly” approach. However, a looming federal moratorium on state AI laws could preempt TRAIGA, making its fate uncertain but as of now we can expect it to be live next year.
- Consumer Protections: Bans harmful AI practices like social scoring and unauthorized biometric data use.
- Industry Clarity: Provides clear rules for AI developers and deployers, reducing litigation risks.
- Innovation Support: Establishes a sandbox program to test AI systems safely.
- National Influence: Texas’s business-friendly environment and tech hub status amplify TRAIGA’s impact.
Key Provisions of House Bill 149
Detailed on the Texas Legislature’s website, TRAIGA introduces a multifaceted framework under the Business and Commerce Code, focusing on transparency, ethical use, and accountability. Key provisions include:
- AI System Definitions: Defines an AI system as a machine-based system that generates outputs like content, decisions, or predictions based on inputs, applicable to any business developing or deploying AI in Texas.
- Prohibited Uses: Bans AI systems that:
- Engage in social scoring by government entities.
- Unlawfully capture biometric data (e.g., facial or voice recognition) without explicit consent, including untargeted internet scraping.
- Intentionally discriminate against protected classes (e.g., race, sex, disability), though disparate impact alone isn’t sufficient to prove violation.
- Produce deepfake child exploitation material or text-based simulations impersonating minors, per Penal Code Sections 21.165 and 43.26.
- Government Transparency: Requires state agencies to disclose when consumers interact with AI systems, though private businesses are exempt from this mandate.
- Consumer Rights: Grants individuals the right to appeal adverse AI-driven decisions affecting health, welfare, or rights, with clear explanations of the AI’s role.
- Texas AI Council: Establishes a 10-member advisory body under the Texas Department of Information Resources to evaluate AI’s societal impact, identify regulatory barriers, and recommend policies, without rulemaking authority.
- Regulatory Sandbox: Creates a program for companies to test AI innovations in a controlled environment, free from immediate penalties, to encourage responsible development.
- Enforcement: Grants the Texas Attorney General exclusive authority to impose civil penalties ($10,000–$200,000 per violation) after a 60-day cure period, with no private right of action for consumers.
Context and Challenges
Introduced by Rep. Giovanni Capriglione (R-Southlake), TRAIGA evolved from a 43-page proposal targeting “high-risk” AI systems to a streamlined 31-page bill focusing on government use and specific commercial prohibitions. The original version included broader speech protections and small business exemptions, which were removed to reduce regulatory burden, as noted in a Transparency Coalition analysis. Critics, including the Texas Policy Research Foundation, argue that TRAIGA’s vague language on discrimination and intent could chill innovation or infringe on free speech, while its 20 new state employees and $8.1 million fiscal impact through 2027 raise concerns about government overreach.
A significant hurdle is a proposed federal moratorium in the 2025 budget reconciliation bill, passed by the U.S. House on May 22, 2025, which would block state AI laws for 10 years. Opposed by 40 state attorneys general, including Texas’s Ken Paxton, this moratorium could nullify TRAIGA if enacted, as reported by Regulatory Oversight.
Implications for Businesses and Consumers
TRAIGA’s passage has far-reaching effects for Texas’s tech ecosystem and residents:
- For Businesses:
- Compliance Requirements: Developers and deployers must ensure AI systems avoid prohibited practices, particularly around biometric data and discrimination.
- Innovation Opportunities: The regulatory sandbox offers a safe space to test AI, benefiting startups and tech giants in Austin’s tech hub.
- Legal Risks: Non-compliance could lead to hefty fines, though the 60-day cure period provides flexibility.
- For Consumers:
- Enhanced Protections: Safeguards against manipulative AI and unauthorized data use bolster privacy.
- Transparency Gaps: Private businesses aren’t required to disclose AI interactions, potentially limiting consumer awareness.
- Appeal Rights: Individuals can challenge harmful AI decisions, empowering Texans against opaque algorithms.
Actionable Steps for Compliance
To prepare for TRAIGA’s potential enactment, businesses should take these steps:
- Audit AI Systems: Review AI deployments for compliance with biometric data and discrimination prohibitions.
- Implement Consent Mechanisms: Ensure explicit user consent for biometric data collection, avoiding un-targeted scraping.
- Leverage the Sandbox: Apply to the regulatory sandbox program to test innovative AI systems without immediate penalties.
- Train Staff: Educate employees on TRAIGA’s requirements and ethical AI use, aligning with Texas AI Council recommendations.
- Monitor Federal Developments: Track the federal moratorium’s progress, as it could preempt TRAIGA’s enforcement.
Why Act Now
With Texas hosting over 1,500 tech firms and 17% of U.S. AI startups (CBRE, 2025), TRAIGA’s framework could shape national AI policy. The bill’s emphasis on ethical governance aligns with public sentiment—62% of Texans support regulating AI to protect privacy (YouGov, 2025). However, the federal moratorium threat and Governor Abbott’s decision by June 22, 2025, create urgency. Businesses must act swiftly to align with TRAIGA’s requirements or risk penalties and reputational damage. We have also covered the huge increases in Texas enforcement to protect consumers highlighting numerous data privacy fines and lawsuits and this will only increase from here.
For more details, review the full bill text at Texas Legislature HB 149 or follow updates on the Texas Department of Information Resources website. Stay proactive to navigate Texas’s evolving AI landscape and book a demo below to learn how Captain Compliance can help with TRAIGA’s AI compliance requirements.
