Virginia Legislature Passes Comprehensive Artificial Intelligence Act

AT A GLANCE

On February 20, 2025, the Virginia legislature passed the High-Risk Artificial Intelligence Developer and Deployer Act (Virginia AI Act), a comprehensive artificial intelligence bill focused on preventing algorithmic discrimination. We examine the core tenets of the Virginia AI Act in this Legal Update.

On February 20, 2025, the Virginia legislature passed the High-Risk Artificial Intelligence Developer and Deployer Act (Virginia AI Act), a comprehensive artificial intelligence (AI) bill focused on preventing algorithmic discrimination. If signed into law by Governor Glenn Youngkin, Virginia will become the second state, after Colorado, to have a comprehensive state-level AI law. Below are the key points regarding the Virginia AI Act.

• Who does the act apply to?
  • The Virginia AI Act applies to deployers and developers of AI systems that do business in Virginia. A deployer is a person that deploys or uses a high-risk AI system that makes a consequential decision, while a developer is a person that develops or intentionally and substantially modifies a high-risk AI system, which is offered, sold, leased, given, or otherwise made available to deployers or Virginia residents.
  • Unlike Colorado’s Anti-Discrimination in AI Law (Colorado AI Act), the Virginia AI Act is intended to protect Virginia residents acting only in an individual or household context (referred to as consumers), instead of individuals operating in a commercial or employment context. As such, in this respect, the Virginia AI Act is narrower in scope than the Colorado AI Act.
  • Notably, in assessing whether an entity is a developer, companies should be mindful that if they make any deliberate change to an AI system that results in a new material risk of algorithmic discrimination or integrates with a general-purpose AI model (e.g., foundation models), they could be subject to the law.
• What does the act regulate?
  • The Virginia AI Act regulates high-risk AI systems. An AI system is defined as “any machine learning-based system that, for any explicit or implicit objective, infers from the inputs such system receives how to generate outputs, including content, decisions, predictions, and recommendations, that can influence physical or virtual environments.”
  • For an AI system to be considered high-risk, it must specifically be intended to autonomously make, or be a substantial factor in making, a consequential decision. A consequential decision means that the AI system makes a “decision that has a material legal, or similarly significant, effect on the provision or denial to any consumer of (i) parole, probation, a pardon, or any other release from incarceration or court supervision; (ii) education enrollment or an education opportunity; (iii) access to employment; (iv) a financial or lending service; (v) access to health care services; (vi) housing; (vii) insurance; (viii) marital status; or (ix) a legal service.”
  • The Virginia AI Act adds two new categories of high-risk decisions that are not present in the Colorado AI Act, which are (i) and (viii) above. However, unlike the Colorado AI Act, the Virginia AI Act does not include within its scope AI systems that make decisions regarding essential government services.
  • The Virginia AI Act’s standard for an AI system being a “substantial factor” in making a consequential decision is narrower than the Colorado AI Act. The Virginia AI Act requires the output to be a “principal basis” for decisions, while the Colorado AI Act just needs the output to “assist” in making a consequential decision to trigger the high-risk obligations. Based on this standard, if companies apply significant human oversight and consider other factors besides the AI’s output, they may be able to avoid triggering the Virginia AI Act.
• When does the law go into effect?
  • If signed into law, the Virginia AI Act goes into effect July 1, 2026, which is five months after the Colorado AI Act’s effective date. This gives companies about 16 months to comply.
• What do developers and deployers need to do to comply with the Virginia AI Act?
  • Like the Colorado AI Act, the obligations under the Virginia AI Act are demarcated based on party roles. The chart below provides an overview of developer and deployer obligations under the Virginia AI Act.

• Are there any exemptions and exclusions?
  • Yes. There is a long list of exemptions under the Virginia AI Act. Notably, under certain circumstances, the obligations under the Virginia AI Act do not apply to: (a) the federal government or any federal agency; (b) certain financial institutions (e.g., banks, credit unions, mortgage lenders, savings institutions), or their affiliates, subsidiaries or service providers; (c) insurers; and (d) healthcare entities. Each of these exemptions has certain caveats and nuances, which exempt entities should document under the Virginia AI Act.
  • There are also certain exclusions from the definition of a high-risk AI system, such as if the system is intended: (a) to perform a narrow procedural task; (b) to improve the result of a previously completed human activity, (c) to detect any decision-making patterns or any deviations from pre-existing decision-making patterns; or (d) to perform a preparatory task to an assessment relevant to a consequential decision.
  • A long list of technologies are also specifically excluded from the definition of a high-risk AI system, such as calculators, autonomous vehicle technology, cybersecurity technologies, data storage, spreadsheets, and others.
• How is the act enforced and what are its penalties?
  • The Virginia Attorney General has exclusive authority to enforce the Virginia AI Act. The Virginia Attorney General is empowered to issue a civil investigative demand and bring an action to enforce the act. Persons who violate the Virginia AI Act could be subject to a civil penalty of up to $1,000, plus reasonable attorney fees, expenses, and costs. This penalty can be increased up to $10,000 if there is a willful violation.
  • The Virginia AI Act states that each violation of the act “shall constitute a separate violation,” which may suggest that these penalties could multiply. Persons who are alleged to violate the law may cure such violations within 45 days of receiving a notice of violation from the Virginia Attorney General.