California SB 53: Understanding the Transparency in Frontier Artificial Intelligence Act

Key Takeaways

• California Leads on AI Regulation: SB 53, the Transparency in Frontier Artificial Intelligence Act (TFAIA), makes California the first state to enact legislation focused on frontier AI models and developer accountability.
• Scope of the Law: Applies to large AI developers with annual revenues over $500 million, requiring them to prioritize transparency, risk mitigation, and public safety.
• Core Requirements: Developers must publish a Frontier AI Framework, conduct transparency reporting before model deployment, and maintain whistleblower protections with penalties up to $1 million per violation.
• HITRUST Support: HITRUST introduced AI Security and Risk Management Assessments to help organizations meet TFAIA compliance through structured controls and governance frameworks.
• Future Outlook: SB 53 is expected to set a precedent, prompting similar AI legislation across other states as regulation catches up with rapid AI innovation.

Artificial intelligence (AI) has seen rapid growth in recent years following the introduction of ChatGPT. While there are various benefits, concerns around ethics, accountability, and safety have surfaced. This article will discuss the new AI law enacted in California and the potential future of AI legislation.

California SB 53

The law titled, Transparency in Frontier Artificial Intelligence Act (TFAIA), enacted as SB 53, is designed with safety and public trust in mind. California is home to more than 30 of the top AI companies, so this law comes as no surprise based on the AI presence. The law itself regulates frontier AI models, applies to frontier developers with annual revenue greater than $500 million, and aims to increase the transparency, mitigate catastrophic risks, and protect public safety.

A Breakdown of TFAIA

The law is composed of three primary focuses. The first is the Frontier AI Framework. Large developers must publish their framework detailing any risk mitigation strategies, include national and international standards (as well as best practices), include cybersecurity, governance, third-party evaluations, and incident response plans, and update the framework annually or after material changes.

The second component relates to transparency reporting. Prior to deploying or modifying any frontier model, a company must publish the model capabilities, uses, and supported languages, including any risk assessments, mitigation steps, and third-party involvement.

The third component is whistleblower protections and civil penalties. Frontier developers must provide reporting channels to allow for anonymous reporting including legal protections for successful claims. Civil penalties, including failure to publish required documents, making false statements about risk or compliance, and failure to report incidents or comply with the framework, can result in penalties of up to $1 million per violation.

In Response to the Law

To assist in addressing the requirements resulting from this law, HITRUST has introduced its AI Security Assessment and Certification. This can be paired with an e1, i1, or r2 and is composed of 44 AI controls, risk mitigation, incident response, governance and transparency support, and independent assurance through HITRUST. HITRUST also offers an AI Risk Management Assessment as an alternative to the AI Security Assessment and Certification. This option does not provide certification but includes 51 specific AI controls and a self-evaluation; it is a more cost-effective solution. Additional information regarding both services is available on the HITRUST website.

California is the first state to enact legislation addressing frontier AI models, and they will certainly not be the last. As AI adoption continues to increase, other states are likely to follow with similar legislation to ensure safety, accountability, and public trust.

McKonly & Asbury is a certified HITRUST external assessor. For more information on how a HITRUST assessment and certification can help your organization, visit our HITRUST and SOC services pages, and please contact Dave Hammarberg, CPA, CISSP, CFE, MCSE, CISA, CCSFP, CHQP, CCP, CCA with any questions.

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