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SB1964

Regular Session

Relating to the regulation and use of artificial intelligence systems and the management of data by governmental entities.

Critical
Medium Cost
Effective:2025-09-01
Enforcing Agencies

Comptroller of Public Accounts • Department of Information Resources (DIR) • Individual State Agencies (Contract Managers) • Office of the Attorney General (OAG)

SB1964
Critical
Relating to the regulation and use of artificial intelligence systems and the management of data by governmental entities.
Critical Compliance Urgency
Requires immediate attention
Cost Impact
Medium
Effective
2025-09-01
Enforcing Agencies
Comptroller of Public AccountsDIRIndividual State AgenciesOAG
Primary Author: Sen. Tan Parker
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: September 1, 2025
  • Compliance Deadline: September 1, 2025. (Note: Pre-existing systems must be compliant by this date; there is no grandfather clause for legacy systems currently in use).
  • Agency Rulemaking: The Department of Information Resources (DIR) is mandated to adopt rules, an AI Code of Ethics, and standard forms "as soon as practicable" after the effective date.
  • *Regulatory Gray Zone:* Between Sept 1, 2025, and the final publication of DIR rules, the statute is effective but the specific forms may not exist. You must align with NIST AI RMF 1.0 immediately to demonstrate good faith compliance during this gap.

Immediate Action Plan

  • 1. Inventory Audit: Immediately classify all public-sector products as "Heightened Scrutiny" or "Exempt" based on the statutory definition.
  • 2. NIST Gap Analysis: Conduct a gap analysis of your current AI governance against NIST AI RMF 1.0; this is the standard against which you will be judged.
  • 3. Update UI: Schedule development sprints to add required public notices to your software interface before Q3 2025.
  • 4. Draft "Cure" Protocols: Create a rapid-response plan for the 31-day cure period to prevent contract termination if a violation is alleged.

Operational Changes Required

Contracts

  • Mandatory Termination Clauses: Review all Master Services Agreements (MSAs). The law overrides standard "Termination for Convenience" clauses; agencies are now *required* to void contracts if a violation is not cured within 31 days.
  • Indemnification: Expect agencies to demand indemnification against "Unlawful Harm" (discrimination/bias) claims resulting from your AI's output.
  • Scope Expansion: These requirements apply to contracts with local governments (cities/counties), not just state agencies.

Hiring/Training

  • NIST Fluency: Engineering and Product teams must be trained on the NIST AI Risk Management Framework (AI RMF 1.0).
  • Client Training: You must provide training materials to your government clients so they understand the limitations and ethical use of your system.
  • Data Management Officers: For smaller agency clients (<150 employees), identify their designated "Data Management Officer." This is now your primary compliance point of contact.

Reporting & Record-Keeping

  • System Impact Assessments: You must generate a confidential assessment detailing risks, data governance, and limitations *before* deployment or renewal.
  • Public Disclosure: Your software's User Interface (UI) must be updated to display a notification when a user is interacting with an AI system.
  • Violation Reporting: Establish an internal protocol to immediately report known violations to the DIR and Attorney General. Silence is a liability.

Fees & Costs

  • Insurance Premiums: Consult your broker. Standard Technology E&O policies may not cover costs associated with mandatory contract voiding or administrative defense against the Attorney General.
  • Operational Overhead: While there are no new filing fees, the LBB Fiscal Note allocates funding for 10 new FTEs at DIR to enforce this. Expect active auditing, not passive filing.

Strategic Ambiguities & Considerations

  • "Controlling Factor": The law regulates AI that is a "controlling factor" in government decisions. It is unclear if a "recommendation" that is accepted 99% of the time counts as "controlling."
  • "Material Change": Re-assessment is required upon "material change." DIR rulemaking must define if routine SaaS patches or model retraining trigger this requirement.
  • Local Enforcement: While the law applies to local governments, it is unclear if cities/counties have the technical capacity to review Impact Assessments, potentially leading to inconsistent enforcement compared to state agencies.

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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

02

Legislative Timeline

This bill's path through the Texas Legislature

Filed
Mar 5, 2025
Passed Senate
Apr 28, 2025
Passed House
May 28, 2025
Signed
Jun 20, 2025
TopicsArtificial IntelligenceCity GovernmentCity Government--generalCounty GovernmentCounty Government--generalEthicsGovernorPurchasingPurchasing--stateState Agencies, Boards & CommissionsState Agencies, Boards & Commissions--admin. ProcedureState Agencies, Boards & Commissions--newly ProposedState FinancesState Finances--management & ControlPublic NoticeStaff Development & TrainingAttorney GeneralInformation Resources, Department ofPublic Sector Artificial Intelligence Systems Advisory Board
03

Senate Authors

Sen. Tan ParkerRepublican · Primary Author

House Sponsor

Rep. Giovanni CapriglioneRepublican · Primary Sponsor

Bill Text(with markup)

Showing first 50k characters.

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

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Quick Reference

Frequently Asked Questions

Common questions about SB1964

Q

What does Texas SB1964 do?

SB1964 fundamentally alters Texas public sector procurement by mandating strict adherence to the NIST AI Risk Management Framework for any vendor providing "Heightened Scrutiny" AI systems to state agencies, cities, or counties. Failure to comply triggers mandatory contract termination and potential statewide debarment, effectively barring your business from the Texas public sector market. Implementation Timeline Effective Date: September 1, 2025 Compliance Deadline: September 1, 2025.

Q

Who authored SB1964?

SB1964 was authored by Texas Senator Tan Parker during the Regular Session.

Q

When was SB1964 signed into law?

SB1964 was signed into law by Governor Greg Abbott on June 20, 2025.

Q

Which agencies enforce SB1964?

SB1964 is enforced by Comptroller of Public Accounts, Department of Information Resources (DIR), Individual State Agencies (Contract Managers) and Office of the Attorney General (OAG).

Q

How urgent is compliance with SB1964?

The compliance urgency for SB1964 is rated as "critical". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

Q

What is the cost impact of SB1964?

The cost impact of SB1964 is estimated as "medium". This may vary based on industry and implementation requirements.

Q

What topics does SB1964 address?

SB1964 addresses topics including artificial intelligence, city government, city government--general, county government and county government--general.

Legislative data provided by LegiScanLast updated: November 25, 2025

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