A Shifting Landscape From Federal to State Leadership
Over the past two years, federal efforts to regulate artificial intelligence (AI) have taken two sharply different paths, first toward structured oversight under the Biden administration, then toward deregulation under the Trump administration. The shift toward a free-market deregulation approach has placed responsibility of the future of AI regulation—at least for the near-term—primarily in the hands of the states.
Biden’s Vision: General Principles for Responsible AI
On October 30, 2023, President Biden signed Executive Order 11410, titled “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence.” This directive laid out recommendations for a comprehensive federal approach to AI regulation based on eight central principles:
- Safety and security: encourages development of processes to understand and mitigate risks;
- Innovation and competition: promotes attraction and retention of AI talent and leadership in the US, including through ensuring smooth immigration or work permit processes for foreign nationals and upholding US IP laws to protect and encourage innovation;
- Worker support: aims to balance human worker elimination against innovation;
- Consideration of AI Bias and civil rights: necessitates processes to prevent discrimination by AI programs;
- Consumer protection: minimize harm to consumers;
- Privacy: ensure collection, use, and retention of user data are not compromised through implementation of AI;
- Federal use of AI: encourages government use of AI with adoption of safeguards to minimize risk;
- International leadership: ensures U.S. becomes an international leader in AI development without isolating itself from other nations.
Over 50 federal agencies were directed to take more than 100 actions to bring these principles to life, with a clear focus on collaborative governance across sectors.
Changes Under Trump: A Dramatic Shift Toward Deregulation
Just days after his inauguration, on January 23, 2025, President Trump rescinded Biden’s order with Executive Order 14179, “Removing Barriers to American Leadership in Artificial Intelligence.” This marked a significant shift in regulatory philosophy: prioritizing rapid innovation, minimal government interference, and a strong free-market approach to AI regulation, in lieu of fostering the eight key principles described above.
On July 10, 2025, Trump followed up with “America’s AI Action Plan,” a policy roadmap encouraging infrastructure development and reduced regulatory burdens. This roadmap quickly set the stage for three key executive orders issued on July 23, 2025:
- Preventing “Woke” AI in Government – Discourages federal use of AI systems perceived as promoting DEI (diversity, equity, and inclusion) values.
- Exporting the American AI Stack – Aims to position the U.S. as a global AI leader through international alliances and private-sector innovation.
- Accelerating Data Center Permitting – Aims to streamline approval for new AI infrastructure, favoring speed and industry incentives over environmental and other considerations.
What This Means Going Forward
This tug-of-war between administrations (i.e., between regulation and deregulation) has left a large policy void at the federal level. With no stable national framework in place, state legislatures are increasingly stepping in to chart their own paths through implementation of rules around AI usage, privacy, ethics, and accountability.
For businesses, developers, and consumers, this means navigating a growing patchwork of state-level laws while keeping an eye on evolving federal priorities. AI governance in the U.S. is very much in flux and requires constant vigilance to ensure compliance with the latest rules.
Current and Pending Illinois AI Regulations
Given the federal government’s shift toward abstention from hardline AI regulation, state legislatures have taken up the task of enacting their own regulations to address what they see as the most pressing issues concerning the rollout of AI into everyday American life. Illinois is no exception. Indeed, in 2020—in the early stages of consumer access to AI and before the expansion of generative AI technology—Illinois passed the Artificial Intelligence Video Interview Act, which requires employers who utilize video interviews in considering applications for employment to notify the applicant that AI will be used, explain how the AI works, obtain the applicant’s informed consent, delete the video file upon the applicant’s request (or within 30 days) and refrain from distributing the video without the applicant’s approval.
Taking another step into AI regulation, Illinois amended the Illinois Human Rights Act in 2024 to prohibit Illinois employers—beginning January 1, 2026—from using AI that discriminates against employment applicants on the basis of race, sex, and other protected characteristics. Finally, just days ago on August 4, 2025, Governor Pritzker signed the Wellness and Oversight for Psychological Resources Act. This Act prohibits providing AI-only therapy or psychotherapy services to the public unless those services are administered by a licensed professional. It further limits a licensed professional’s use of AI to communicate with patients, make independent therapeutic decisions, or generate therapeutic recommendations or treatment plans without direct oversight and intervention by the licensed professional.
Apparently, Illinois is not done regulating the use of AI and has proposed numerous additional AI bills. Indeed, pending in the Illinois legislature are various AI bills which—if passed—would regulate AI as it applies to insurance, consumer protection, consumer financial services, and other important business sectors:
Insurance
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Illinois HB0035 (and SB1425) – Regulating AI in Health Insurance Decisions
-- Summary: Creates the Artificial Intelligence Systems Use in Health Insurance Act. Under this Act, the Illinois Department of Insurance would have regulatory oversight over licensed insurers who use AI to issue adverse outcomes to Illinois insurance consumers (i.e., insureds). Stipulates that an insurer cannot issue an adverse outcome to an insured relying solely on AI, and requires human review and oversight on any instances where an insurer is to issue an adverse outcome to an insurer based on AI.
-- Status: As of June 2, 2025, this bill was pending with the Illinois House of Representatives and was referred to Assignments.
Education
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Illinois SB1677 – Prohibition of AI-Only Teacher Evaluations
-- Summary: Amends the Evaluation of Certified Employees Article of the School Code to prohibit an evaluator from using artificial intelligence tools to perform teacher evaluation tasks.
-- Status: As of April 11, 2025, this bill was pending with the Illinois Senate and has been referred to assignments.
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Illinois HB1859 – Prohibition on AI Professors in Community College Programming
-- Summary: Prohibits a community college from using an artificial intelligence program in lieu of a professor in community college courses.
-- Status: Enrolled. Sent to Governor Pritzker on June 24, 2025.
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Illinois HB2503 (and SB1556) – Implementation of AI Into Educational Systems
-- Summary: Amends the Illinois School Code to require the Illinois State Board of Education to establish the State Instructional Technology Advisory Board, which shall collaborate with the Illinois State Board of Education to evaluate potential methods to incorporate artificial intelligence teaching mechanisms into the Illinois education system.
-- Status: As of April 11, 2025, this bill was pending in the Illinois House of Representatives and had been referred to the Rules Committee.
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Illinois HB2655 – Monitoring AI in Higher Education
-- Summary: Amends the Illinois Board of Higher Education Act to require the Board to prepare and submit to the legislature a report on the state of artificial intelligence education and development in public and private institutions of higher education. The bill specifies the various categories of information to be reported, but generally requires disclosure regarding the programs and courses offering education in the AI space.
-- Status: As of March 21, 2025, this bill was pending in the Illinois House of Representatives and had been referred to the Rules Committee.
Consumer Protection
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Illinois HB3021 – Undisclosed Consumer Chatbot Interface as Violation of Consumer Fraud Act
-- Summary: Amends the Illinois Consumer Fraud and Deceptive Practice Act to make it a violation for a person to engage in a commercial transaction with a consumer where (1) the consumer is communicating or otherwise interacting with a chatbot, artificial intelligence agent, avatar, or other computer technology that engages in a textual or aural conversation; (2) the communication may mislead or deceive a reasonable consumer to believe that the consumer is communicating with a human representative; and (3) the consumer is not notified in a clear and conspicuous manner that the consumer is communicating with an artificial intelligence system and not a human representative.
-- Status: As of April 11, 2025, this bill was pending in the Illinois House of Representatives and had been referred to the Rules Committee.
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Illinois SB1792 – Disclosure Requirement Under Consumer Fraud Act
-- Summary: Amends the Illinois Consumer Fraud and Deceptive Practices Act to require that the operator of any consumer-facing AI program include a disclosure stating that the outcomes or results of the AI program may be inaccurate or inappropriate.
-- Status: As of April 11, 2025, this bill was pending with the Illinois Senate and has been referred to assignments.
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Illinois HB3529 – Proposed Enactment of Illinois High-Impact AI Governance Principles and Disclosure Act
-- Summary: Requires the Department of Innovation and Technology to adopt rules regulating businesses that use AI systems to ensure compliance with the following 5 principles: (1) safety, (2) transparency, (3) accountability, (4) fairness, and (5) contestability.
-- Status: As of March 21, 2025, this bill was pending in the Illinois House of Representatives and had been referred to the Rules Committee.
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Illinois HB3838 – Prohibition on AI Dynamic Pricing in Event Ticket Sales
-- Summary: Requires a ticket seller to display the full price of the ticket to the potential consumer at the outset of the transaction, prohibits a ticket seller from increasing the price of an event ticket during the transaction, and prohibits the use of AI and other dynamic pricing programs (wherein the price of the ticket is determined in real time based on demand, consumer data, or other factors including, but not limited to, artificial intelligence-enabled pricing adjustments).
-- Status: As of March 21, 2025, this bill was pending in the Illinois House of Representatives and had been referred to the Rules Committee.
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Illinois SB0150 – AI in Election Campaigns
-- Summary: Amends the Illinois Election Code to require conspicuous disclosure when a political advertisement uses AI.
-- Status: As of April 11, 2025, this bill was pending with the Illinois Senate and has been referred to assignments.
Employment
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Illinois HB1594 – Prohibition of Employment Discrimination Through AI
-- Summary: Amends the Illinois Human Rights Act to provide that it is a violation for an employer to use AI in employment-related issues if such use will discriminate against an employee or employees based on their affiliation with a protected class. Additionally, the amendment makes it a violation for an employer to fail to notify an employee that they use AI to make certain employment-related decisions (with the Illinois Department of Human Rights to prescribe rules as to what constitutes sufficient notice in this context).
-- Status: Enrolled. Sent to Governor Pritzker on June 24, 2025.
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Illinois SB2255 – Enactment of the Surveillance-Based Price and Wage Discrimination Act
-- Summary: Prohibits the use of consumer data obtained by certain surveillance methods from being used to inform an AI program or other algorithmic program on setting consumer goods prices or setting wages to be paid to employees.
-- Status: As of April 11, 2025, this bill was pending with the Illinois Senate and has been referred to assignments.
Evidently, the Illinois legislature has its AI regulation sights primarily set on consumer access to essential services, such as education, employment, finance, and consumer protection. The common themes across these proposed regulations include mandatory consumer disclosures when AI is used, meaningful human review of work performed by AI, ensuring that information fed into AI programs remains private, preventing discrimination by AI, and preventing certain information from being fed into AI programs to begin with. While none of these bills are guaranteed to go into effect until signed by Illinois Governor J.B. Pritzker (and complying with additional bill passage rules), the wealth of pending AI regulations demonstrates the caution that Illinois is applying to the rapid rollout of AI programs into government and private enterprise. Illinois businesses, educational institutions, and other affected individuals should monitor these trends and proceed cautiously with their AI implementation plans in order to comply with the latest regulations.
Saul Ewing LLP will continue to monitor these and other relevant developments affecting regulation of the AI industry.
