SB199 - Enacts provisions relating to artificial intelligence systems. (BDR 52-583)

REQUIRES TWO-THIRDS MAJORITY VOTE (§ 6) EXEMPT (Reprinted with amendments adopted on April 21, 2025) FIRST REPRINT S.B. 199 - *SB199_R1* SENATE BILL NO. 199–SENATOR NEAL FEBRUARY 11, 2025 ____________ Referred to Committee on Commerce and Labor SUMMARY—Enacts provisions relating to artificial intelligence systems. (BDR 52-583) FISCAL NOTE: Effect on Local Government: May have Fiscal Impact. Effect on the State: Yes. ~ EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. AN ACT relating to artificial intelligence systems; providing for the registration and regulation of artificial intelligence companies by the Bureau of Consumer Protection in the Office of the Attorney General; imposing certain requirements and restrictions upon certain persons engaged in certain activities relating to artificial intelligence systems; requiring the Department of Employment, Training and Rehabilitation to develop a survey and report certain information relating to artificial intelligence systems; requiring a county recorder to develop, implement and maintain certain policies, procedures and protocols; revising the list of activities that constitute an unlawful contract, combination or conspiracy in restraint of trade; requiring the Superintendent of Public Instruction to establish the Working Group on the Use of Artificial Intelligence Systems in Education; providing penalties; and providing other matters properly relating thereto. Legislative Counsel’s Digest: This bill enacts various provisions relating to “artificial intelligence systems,” 1 which section 4 of this bill defines to mean any machine-based system that, for any 2 explicit or implicit objective, infers from the inputs such system receives how to 3 generate outputs, including, without limitation, content, decisions, predictions or 4 recommendations, that can influence physical or virtual environments. 5 Sections 6-12 of this bill provide for the registration and regulation of 6 “artificial intelligence companies,” which section 3 of this bill defines to mean, in 7 general, a person who develops an artificial intelligence system that is primarily 8 – 2 – - *SB199_R1* used to generate certain material or is trained using certain data and either sells the 9 system to another person or enters into a contractual arrangement with another 10 person that, by its terms, allows customers of the person to use the artificial 11 intelligence system in exchange for a fee paid by the person to the artificial 12 intelligence company. Section 6 requires an artificial intelligence company to be 13 registered with the Bureau of Consumer Protection in the Office of the Attorney 14 General. Sections 6-8 set forth various requirements for the issuance and renewal 15 of such a registration. 16 Section 11 authorizes the Bureau to impose certain penalties against a person 17 who fails to register as required in section 6. Section 12 authorizes the Bureau to 18 adopt regulations to carry out the provisions of sections 6-11. 19 Section 13 of this bill requires a person who sells computer software that is 20 capable of generating legal documents through the use of an artificial intelligence 21 system, with certain exceptions, to ensure that each such document generated is 22 reviewed by a licensed attorney before the document is provided to a customer in 23 this State. 24 Section 14 of this bill requires the operator of a social media platform that 25 provides users both a method to conduct a search on the platform that will result in 26 information concerning the search being used to train an artificial intelligence 27 system and a method that will not have that result to: (1) require a user to opt in to 28 use the method that will result in the information concerning the search being used 29 to train an artificial intelligence system; and (2) allow a user that does not opt in to 30 continue to use the method that will not have that result so long as the operator 31 offers the method. 32 Section 15 of this bill prohibits a person who is paid money for a service on the 33 condition that the service be provided by a natural person from providing the 34 service through an image of a natural person generated by an artificial intelligence 35 system. 36 Section 16 of this bill requires the Department of Employment, Training and 37 Rehabilitation to develop a survey to be sent to certain employers in order to 38 determine the number and type of jobs that have been lost in this State because of 39 the use of artificial intelligence systems and submit an annual report to the 40 Governor and the Legislature regarding the information collected from the survey. 41 Sections 16 and 16.5 of this bill provide for the confidentiality of certain 42 information collected from the survey. 43 Section 17 of this bill requires a county recorder to develop, implement and 44 maintain policies, procedures and protocols to verify the identity of any person 45 filing a document and to protect against fraud committed in the filing of a 46 document through the use of an artificial intelligence system. 47 Section 18 of this bill requires each law enforcement agency to develop, 48 maintain and periodically update a policy concerning the use of artificial 49 intelligence systems by the law enforcement agency. Section 18 requires the policy 50 and any update to the policy to be submitted to the Bureau of Consumer Protection. 51 Section 26 of this bill requires the Superintendent of Public Instruction to 52 establish the Working Group on the Use of Artificial Intelligence Systems in 53 Education to conduct an assessment and develop certain policies and guidance 54 relating to the use of artificial intelligence systems during the 2025-2026 interim. 55 The Nevada Unfair Trade Practice Act sets forth various activities that 56 constitute an unlawful contract, combination or conspiracy in restraint of trade and 57 authorizes the Attorney General to investigate and take certain actions against 58 persons who engage in such activities, which may include, without limitation, 59 criminal prosecution and the imposition of civil penalties. (Chapter 598A of NRS) 60 Section 20 of this bill includes among the activities that constitute an unlawful 61 contract, combination or conspiracy in restraint of trade the establishment by a 62 landlord of a price for rent for a dwelling unit that is based upon a recommendation 63 – 3 – - *SB199_R1* provided by certain artificial intelligence systems that generate recommended 64 prices for rent using certain nonpublic information provided by multiple landlords. 65 Section 21 of this bill authorizes the Commissioner of Financial Institutions to 66 adopt regulations establishing requirements and restrictions on the use of artificial 67 intelligence systems by persons licensed by the Commissioner. Section 24 of this 68 bill prohibits an insurer from using any data collected by the insurer relating to the 69 health of an insured to train an artificial intelligence system developed by the 70 insurer without providing certain notice and obtaining the consent of the customer 71 to whom such data relates. 72 Existing law sets forth various practices that constitute an unfair or deceptive 73 trade practice in the business of insurance. (NRS 686A.010-686A.310) Section 25 74 of this bill requires an insurer to adopt practices designed to ensure that the use of 75 an artificial intelligence system by the insurer does not result in the commission of 76 an unfair or deceptive trade practice. Section 25 also requires an insurer to develop, 77 implement and maintain a plan for the responsible use of artificial intelligence 78 systems by the insurer and sets forth certain requirements for such a plan. 79 Section 22 of this bill applies the definitions set forth under the provisions of 80 existing law governing financial institutions to the provisions of section 21. 81 THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. Title 52 of NRS is hereby amended by adding 1 thereto a new chapter to consist of the provisions set forth as 2 sections 2 to 16, inclusive, of this act. 3 Sec. 2. As used in this chapter, unless the context otherwise 4 requires, the words and terms defined in sections 3, 4 and 5 of this 5 act have the meanings ascribed to them in those sections. 6 Sec. 3. “Artificial intelligence company” means a person 7 who: 8 1. Is registered with the Bureau pursuant to section 6 of this 9 act; 10 2. Develops an artificial intelligence system that: 11 (a) Is primarily used to generate: 12 (1) Legal documents; 13 (2) Images of natural persons through which services are 14 provided; or 15 (3) Recommended rent prices for dwelling units; or 16 (b) Is trained using data collected from searches conducted on 17 a social media platform; and 18 3. Either: 19 (a) Sells the artificial intelligence system to another person; or 20 (b) Enters into a contractual arrangement with another person 21 that, by its terms, expressly allows customers of the person to use 22 the artificial intelligence system in exchange for a fee paid by the 23 person to the artificial intelligence company. 24 – 4 – - *SB199_R1* Sec. 4. “Artificial intelligence system” means any machine- 1 based system that, for any explicit or implicit objective, infers from 2 the inputs such system receives how to generate outputs, 3 including, without limitation, content, decisions, predictions or 4 recommendations, that can influence physical or virtual 5 environments. 6 Sec. 5. “Bureau” means the Bureau of Consumer Protection 7 in the Office of the Attorney General. 8 Sec. 6. 1. A person shall not engage in the business of an 9 artificial intelligence company in this State unless the person is 10 registered with the Bureau pursuant to this section. 11 2. A person who wishes to register with the Bureau as an 12 artificial intelligence company must submit to the Bureau the fee 13 established pursuant to subsection 4 and an application, on a form 14 prescribed by the Bureau, which contains: 15 (a) The name and address of the applicant; 16 (b) Information concerning the nature of the data the person 17 maintains and the locations at which such data is stored; and 18 (c) Such other information as the Bureau may require by 19 regulation. 20 3. Registration as an artificial intelligence company expires 1 21 year after issuance and may be renewed upon submission of the 22 fee established pursuant to subsection 4 and an application for 23 renewal, on a form prescribed by the Bureau, which contains: 24 (a) Information concerning the nature of the data the 25 company maintains and the locations at which such data is stored; 26 and 27 (b) Such other information as the Bureau may require by 28 regulation. 29 4. The Bureau shall establish by regulation fees for the 30 issuance and renewal of a registration as an artificial intelligence 31 company. 32 Sec. 7. 1. In addition to any other requirements set forth in 33 this chapter, a natural person who applies for the issuance or 34 renewal of a registration as an artificial intelligence company 35 shall: 36 (a) Include the social security number of the applicant in the 37 application submitted to the Bureau. 38 (b) Submit to the Bureau the statement prescribed by the 39 Division of Welfare and Supportive Services of the Department of 40 Health and Human Services pursuant to NRS 425.520. The 41 statement must be completed and signed by the applicant. 42 2. The Bureau shall include the statement required pursuant 43 to subsection 1 in: 44 – 5 – - *SB199_R1* (a) The application or any other forms that must be submitted 1 for the issuance or renewal of the registration; or 2 (b) A separate form prescribed by the Bureau. 3 3. A registration may not be issued or renewed by the Bureau 4 if the applicant: 5 (a) Fails to submit the statement required pursuant to 6 subsection 1; or 7 (b) Indicates on the statement submitted pursuant to 8 subsection 1 that the applicant is subject to a court order for the 9 support of a child and is not in compliance with the order or a 10 plan approved by the district attorney or other public agency 11 enforcing the order for the repayment of the amount owed 12 pursuant to the order. 13 4. If an applicant indicates on the statement submitted 14 pursuant to subsection 1 that the applicant is subject to a court 15 order for the support of a child and is not in compliance with the 16 order or a plan approved by the district attorney or other public 17 agency enforcing the order for the repayment of the amount owed 18 pursuant to the order, the Bureau shall advise the applicant to 19 contact the district attorney or other public agency enforcing the 20 order to determine the actions that the applicant may take to 21 satisfy the arrearage. 22 Sec. 8. 1. If the Bureau receives a copy of a court order 23 issued pursuant to NRS 425.540 that provides for the suspension 24 of all professional, occupational and recreational licenses, 25 certificates and permits issued to a person who is the holder of a 26 registration as an artificial intelligence company, the Bureau shall 27 deem the registration issued to that person to be suspended at the 28 end of the 30th day after the date on which the court order was 29 issued unless the Bureau receives a letter issued to the holder of 30 the registration by the district attorney or other public agency 31 pursuant to NRS 425.550 stating that the holder of the registration 32 has complied with the subpoena or warrant or has satisfied the 33 arrearage pursuant to NRS 425.560. 34 2. The Bureau shall reinstate a registration that has been 35 suspended by a district court pursuant to NRS 425.540 if the 36 Bureau receives a letter issued by the district attorney or other 37 public agency pursuant to NRS 425.550 to the person whose 38 registration was suspended stating that the person whose 39 registration was suspended has complied with the subpoena or 40 warrant or has satisfied the arrearage pursuant to NRS 425.560. 41 Sec. 9. (Deleted by amendment.) 42 Sec. 10. (Deleted by amendment.) 43 – 6 – - *SB199_R1* Sec. 11. If a person violates the provisions of section 6 of this 1 act, the Bureau may impose [Text truncated for display. Full text available on LegiScan.]