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Virginia bill could raise costs for businesses in pursuit of AI guidelines

Rebecca Barnabi
Artificial intelligence
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The Virginia Institute for Public Policy (VIPP) warns that Virginia’s once-thriving tech industry could be reduced to a shadow of its former self if House Bill HB2094 becomes state law.

Although well-intentioned, the legislation is deeply flawed, according to the VIPP. The High-Risk Artificial Intelligence Developer and Deployer Act aims to prevent “algorithmic discrimination” but if adopted, Virginia’s ability to compete in the rapidly evolving Artificial Intelligence (AI) sector would be crippled by excessive compliance burdens, legal ambiguities and astronomical costs.

“If HB2094 is passed, small businesses could see compliance costs between $10,000 and $500,000 annually. Large corporations may face costs exceeding $10 million. 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,” Caleb Taylor, Director of Policy at the Virginia Institute for Public Policy, said.

The bill covers so-called “high-risk artificial intelligence systems” impacting critical areas like employment, housing, healthcare and education. The United States faces fierce competition, particularly from China, which has already unveiled AI models like DeepSeek R1. Virginia cannot afford to become less productive.

“Discrimination in these areas is already illegal under state and federal laws. As written, HB2094 will add completely unnecessary compliance expenses,” Taylor said.

The impact goes beyond AI development. The data center industry, a cornerstone of Virginia’s economy, could also face devastating consequences. 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. If Virginia continues down the regulatory path, the state risks losing AI innovators and the critical infrastructure that supports them.

The VIPP said Virginia should be positioned as a leader in ethical, competitive AI development—one that balances progress with responsibility. If burdens are imposed now on businesses, Virginia may lose its standing in the AI revolution before it even begins. Virginia must reject HB2094 and pursue a path that fosters growth, protects fairness and secures a bright future in the global AI race.

Rebecca Barnabi

Rebecca Barnabi

Rebecca J. Barnabi is the national editor of Augusta Free Press. A graduate of the University of Mary Washington, she began her journalism career at The Fredericksburg Free-Lance Star. In 2013, she was awarded first place for feature writing in the Maryland, Delaware, District of Columbia Awards Program, and was honored by the Virginia School Boards Association’s 2019 Media Honor Roll Program for her coverage of Waynesboro Schools. Her background in newspapers includes writing about features, local government, education and the arts.