Unicameral session update: Tech Nebraska backs business innovation, challenges AI constraints

Newly proposed laws regulating artificial intelligence, data privacy and business innovation could either expand Nebraska’s tech sector or halt its growth, according to leaders at Tech Nebraska.

Tech Nebraska, the state’s first tech trade association, is tracking 22 of the more than 700 bills introduced this session. Among them is the Artificial Intelligence Consumer Protection Act (LB642), which Tech Nebraska argues could restrain innovation. Other key measures include immunity from liability for cybersecurity breaches and new incentives for manufacturing and startup growth.

Nebraska’s legislative body operates as a unicameral system, meaning it has a single chamber instead of the typical dual-chambered structure of a House and Senate, with the people of Nebraska acting as the second chamber. 

In the Nebraska Legislature, every bill introduced is assigned to a specific committee based on its subject matter. During the committee hearing process, any individual or organization may provide testimony in person or through written submissions. After the hearing, the committee decides whether to advance the bill to the full legislature for floor debate or keep it in committee for further consideration.

The Artificial Intelligence Consumer Protection Act

LB642, called the Artificial Intelligence Consumer Protection Act and introduced by Sen. Eliot Bostar, aims to set guardrails around how AI systems are used in Nebraska, especially in high-stakes scenarios such as employment, lending decisions and housing. The bill hinges on a key concept: “high-risk artificial intelligence systems.” These AI tools can operate without human review and impact a person’s life, such as determining whether they receive a loan or get hired. The legislation aims to prevent discriminatory practices and create transparency and accountability for organizations using these systems.

Under the proposal, developers must exercise “reasonable care” when creating high-risk AI systems, meaning they must disclose to their clients — referred to as “deployers” — any known risks of discrimination and provide information about how the system is trained, tested and intended to be used. Deployers, in turn, are required to conduct “impact assessments” to evaluate the possibility of bias or discrimination before rolling out the AI tools, and to address any problems that come to light. They also need to inform consumers when a crucial decision about them, such as an approval or denial of a job application is being made, at least in part, by an AI system.

To help enforce these provisions, LB642 gives the Nebraska Attorney General exclusive authority to investigate violations. The bill lays out a notice-and-cure provision, giving developers or deployers time to correct issues before the state seeks penalties in court. At the same time, it includes exemptions for specific regulated industries, such as banking and health care, when they are subject to stricter or equivalent federal standards. It also recognizes circumstances that might override the law, such as addressing urgent safety risks or meeting federal security requirements.

LB642 is a bill based on a multi-state working group and is highly modeled after the Colorado AI Impact Bill. The similar Colorado bill was signed into law on May 17, 2024. 

Since the Colorado bill passed, it led to the creation of the Colorado AI Impact Task Force, which recently put out a report outlining the potential areas where the Act can be “clarified, refined and otherwise improved,” according to The National Law Review. 

LB642 had a hearing on Feb. 6 in the Judiciary Committee.

Tech Nebraska openly opposes this bill, which the Nebraska Chamber, the Greater Omaha Chamber and the Lincoln Chamber of Commerce back.

While Tech Nebraska acknowledges that LB642 includes some changed language compared to the Colorado AI bill, the organization states that it will likely require additional amendments and changes if passed. Tech Nebraska’s testimony opposing LB642 opened with a statement saying every company is a technology company in today’s world. Laurel Oetken, who represented Tech Nebraska during the testimony and serves as the organization’s executive director, called on the committee to carefully consider the areas of concern within LB642.

“As introduced, the bill’s broad definitions and requirements could stifle innovation within Nebraska’s growing technology sector. For Nebraska to remain competitive, grow our tech ecosystem, and retain young talent, we need to create an environment that encourages innovation,” said Oetken

Tech Nebraska expressed concern that the bill could create a growing competitive disadvantage compared to other states or regions with a more favorable regulatory environment, prompting an exit of valuable technology workers and innovators from Nebraska. 

Nebraska is constantly fighting “brain drain” and has plans and goals to reduce the number of educated people leaving the state. Omaha currently ranks last in Technical.ly’s Map of Innovation Ecosystems, and according to the story on SPN, leaders said Nebraska needs to grow innovation in order to become more competitive. The proposed bill could hinder growth that Nebraska’s leaders had hoped for, according to Tech Nebraska.

Oetken says now more than ever, Nebraska needs to be viewed as a business, innovation and technology-friendly state that incentivizes and encourages growth and innovation. She asked the committee to continue working with Sen. Bostar and tech industry leaders to collaborate on a balanced approach with additional research and input.

The Business Innovation and Startup Act

LB100, the Business Innovation and Startup Act, was introduced by Sen. Ashlei Spivey. The measure would make it easier for new businesses, especially those in existence for less than five years, to secure state contracts, funding and technical support. The bill aims to strengthen innovation across demographics and geographic regions that have historically struggled to access traditional business resources. 

SPN wrote more about the introduction of the bill here.

Tech Nebraska said the organization provided neutral testimony on LB100, mainly due to concerns about the attached fiscal note.

Several Nebraska entrepreneurs testified in support of the bill, including Lashonna Dorsey of the Aksarben Foundation, Tom Chapman, CEO of Peeq Pro, and Andy Stoll, founding executive director of the Ecosystem Building Leadership Network.

In the hearing on Jan. 27, Sen. Spivey said in her opening statement that she knows there are concerns about the fiscal note. She says that national averages, not just Nebraska data, created an inaccurate financial landscape and projection. The note mentions that 75% of Venture Capital investments lose money, but fails to mention that only 1-2% of venture-backed companies generate the majority of returns across the industry. 

After the Business and Labor Committee held the hearing, Oetken says the bill is still in committee. Spivey is a new senator in this session, so she can still bring the bill back, or it can stay in committee, and they can revisit and revise it to become part of the discussion for next year.

Provide Immunity from Liability for Cybersecurity Events

LB241, introduced by Sen. Bob Hallstrom, titled “Provide immunity from liability for cybersecurity events,” seeks to protect private entities from class-action lawsuits unless the breach was caused by willful, wanton or gross negligence. Under the proposed language, routine hacks or accidental data leaks would not open an organization to class-action liability.

The measure was referred to the Banking, Commerce and Insurance Committee, and had its public hearing on Feb. 3. Following testimony and debate, the committee placed the bill on the General File. An amendment, AM246, was introduced to add definitions clarifying that a cybersecurity event includes a “breach of the security of the system” as defined under state law. It would have also required private entities to notify affected individuals and receive a written certification from the Attorney General stating that any investigation had been completed. However, that amendment was ultimately not adopted. 

The bill’s next steps will include floor debate and potential amendments before any final vote in the legislature.

Tech Nebraska did not take a firm stance on whether or not it supports or opposes the bill, but Oetken says this is a “good for business kind of bill.” She also said, “If a company willingly knows that they’re doing malicious things, they are exempt… it definitely does provide some protection to the business community.”

Manufacturing Modernization Pilot Investment Act

LB536, introduced by Sen. Tony Sorrentino and called the Manufacturing Modernization Pilot Investment Act, aims to award one-time grants to manufacturing businesses making significant technology upgrades. Specifically, these grants, which can be as large as $250,000, would help cover investments in specialized hardware, software or other equipment intended to boost productivity, efficiency and overall competitiveness. The Department of Economic Development would administer the program, and recipients would be required to match grant funds dollar-for-dollar with their own private financing.

The bill has been referred to the Banking, Commerce and Insurance Committee with a hearing scheduled for Feb. 25. 

Oetken says from a Tech Nebraska standpoint, the manufacturing industry is incredibly important to Nebraska’s economy and future opportunities. 

“[The bill] would provide an opportunity for manufacturers in the state to have an invested interest in technology, and to think about the up-skilling opportunity for existing workforce,” Oetken said. “I think it also is a really great attraction tool for talent that’s coming out of the K-12 system, wanting to go directly into the workforce, or for folks that are more interested in an apprenticeship or kind of internship program.”

Biometric Autonomy Liberty Law

LB204, the Biometric Autonomy Liberty Law, would establish significant rules around collecting, storing and using biometric data. Introduced by state Sen. Kathleen Kauth. The bill says that while biometrics are increasingly used for identity verification and security, i.e., via fingerprints or retina scans, these technologies also create risks if sensitive data is compromised or misused. According to legislative findings, data breaches could leave individuals more vulnerable to identity theft and discourage them from engaging in biometric-based transactions.

The bill covers a range of restrictions and rights. Under LB204, an individual’s biometric data is a person’s property. Companies and public entities would be barred from collecting or possessing such data without the written consent of the person, or their legal guardian, who owns the biometrics. The legislation further requires that any entity holding biometric data store and protect it as carefully as other “confidential and sensitive” data. There are some provisions that prohibit organizations from requiring invasive devices, such as implantable chips, to collect biometrics and require them to destroy biometric data once it’s no longer needed. Exceptions exist for law enforcement purposes, emergencies or situations involving security threats.

The bill has been referred to the Banking, Commerce and Insurance Committee where a hearing is scheduled for March 17. 

Oetken said she doesn’t know if this bill will be Kauth’s priority. Tech Nebraska will weigh in on the bill in some capacity, but is waiting to see where the language of the bill goes. The organization also says there is an overlap with the existing data privacy bill passed in session last year. 

A chance to use your voice

Oetken explained that Nebraska’s budget and deficit situation could impact decisions and recommendations made to any current bill that has been introduced.

“Any bill that has been introduced with any type of fiscal line item is going to be discussed to a certain extent,” said Oetken. 

Tech Nebraska’s parent organization, the Nebraska State Chamber, will likely be more engaged in discussions about the state’s tax policies and more significant budget issues. 

Tech Nebraska said the community can participate in the legislative process in different ways. For those interested in staying up-to-date, the organization will continue providing updates on their policy positions and conversations through their newsletter. You can also join as a member to have a say in Tech Nebraska’s goals. 

However, Tech Nebraska encourages direct involvement, noting that any individual can show up and testify on a bill. Oetken offered to help guide first-time testifiers through the process, including walking them through the state Capitol if needed. The organization said that they are happy to be a resource and help educate the community. 

“You have a voice; you can use it in whatever capacity you want, and we are happy to help and be an advocate for you on the tech, innovation or entrepreneurship-related bills,” said Oetken.