AI Frontier Institute

Artificial intelligence; state agencies; rules

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Arizona House Bill 2592 (57th Legislature, 2nd Regular Session, 2026) adds Section 18-105 to Title 18, Chapter 1, Article 1 of the Arizona Revised Statutes, directing the state's IT director to regulate how state budget units adopt and govern artificial intelligence systems. Under Section 18-105(A), the director must require each budget unit to identify AI implementation opportunities that reduce administrative burdens, eliminate regulations that unnecessarily restrict AI innovation, streamline AI procurement, establish enterprise AI governance, review existing AI-related regulations for regulatory capture or competitive harm, and modify or eliminate rules that create unreasonable barriers to AI innovation. Section 18-105(B) requires that AI implementation focus on reducing costs and improving service delivery, prohibits creating new regulatory requirements solely applicable to private-sector AI development, and limits new administrative bodies. Section 18-105(C) restricts budget units from adopting rules specifically regulating AI systems or computational resources unless the legislature provides an express statutory delegation targeting a specific harm, the rule uses the least restrictive means, its benefits clearly outweigh innovation and competition impacts, and it does not create market-entry barriers or favor incumbent firms. Section 18-105(D) requires the director to submit an annual report by December 1 to the Senate President, House Speaker, and Governor (with a copy to the Secretary of State) covering each budget unit that implemented an AI system, the functions to which AI was applied, quantitative and qualitative efficiency measures (processing time, cost savings, service quality), and any regulatory, procurement, or operational barriers encountered. Section 18-105(E) provides definitions for 'artificial intelligence system,' 'computational resource,' and 'content.'

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