by James A. Bacon

A House bill aiming to prevent “algorithmic discrimination” would cripple Virginia’s ability to compete in the rapidly evolving Artificial Intelligence sector by creating excessive compliance burdens, legal ambiguities and astronomical costs, warned Caleb Taylor, director of police at the Virginia Institute of Public Policy in an email distributed yesterday.

HB2094, sponsored by Delegate Michelle Maldanado, D-Manassas, is a “well-intentioned but deeply flawed piece of legislation,” Taylor wrote. Small businesses could see compliance costs between $10,000 and $500,000 annually. Large corporations may face costs exceeding $10 million, he claimed.

“Whilst states like Indiana, Tennessee, and Minnesota are actively courting AI investments with business-friendly policies, Virginia must not throttle our own businesses in a vital, growing sector,” said Taylor.

The Lexington-based Virginia Institute for Public Policy is an independent education and research organization committed to the goals of individual opportunity and economic growth.

“Algorithmic discrimination,” according to the bill, is defined as the use of an artificial intelligence system that disfavors an individual or group on the basis of age, color, disability, ethnicity, genetic information, limited proficiency in the English language, national origin, race, religion… pausing for a moment to catch my breath… reproductive health, sex, sexual orientation, veteran status, or … just to make sure we didn’t miss something…. “other classification protected under state or federal law.”

The bill covers so-called “high-risk artificial intelligence systems” impacting critical areas like employment, housing, healthcare, and education, Taylor said. “Discrimination in these areas is already illegal under state and federal laws,” Taylor said. “As written, HB2094 will add completely unnecessary compliance expenses.”

The United States faces fierce competition, particularly from China, which has already unveiled AI models like DeepSeek R1. “We cannot afford to become less productive,” he said.

The potential impact of the bill also could threaten the data center industry, a cornerstone of Virginia’s economy,” Taylor said. Data centers contribute 74,000 jobs, $5.5 billion in labor income, and $9.1 billion in GDP annually to Virginia, according to a 2024 JLARC study.

“Let’s not stifle innovation or push businesses out of the Commonwealth,” Taylor argued. “Instead, we should position Virginia as a leader in ethical, competitive AI development—one that balances progress with responsibility.
If we impose these burdens now, we may lose our standing in the AI revolution before it even begins.”