Virginia's AI Bill Veto: What Does This Mean for Virginia Businesses?

In a decision that has sparked widespread discussion, Virginia Governor Glenn Youngkin recently vetoed HB 2094, a bill aimed at regulating artificial intelligence (AI) and addressing concerns about algorithmic discrimination. For business leaders in Virginia—and across the country—this decision raises important questions about the future of AI regulation and its implications for businesses operating in an increasingly tech-driven world.

So, what exactly was HB 2094, why did it spark such debate, and what does this veto mean for businesses in Virginia?

What HB 2094 Aimed to Do

HB 2094, also known as the Artificial Intelligence Use and Accountability Act, was designed to regulate how businesses use AI systems in ways that might lead to unintentional discriminatory outcomes – particularly in matters involving hiring, credit scoring, or other high-stakes decisions. Specifically, it would have:

• Prohibited algorithmic discrimination in key areas such as employment, housing, finance, and healthcare.
• Required annual impact assessments by businesses using AI in high-risk domains, including descriptions of how the systems work, the types of data used, and measures taken to prevent discriminatory outcomes.
• Mandated public disclosures about the use of AI.
• Granted individuals affected by AI-driven decisions certain rights, including the ability to request explanations or challenge outcomes.
• Empowered the Virginia Attorney General to enforce the law, including the ability to seek civil penalties and injunctions for violations.

If passed, HB 2094 would have made Virginia only the second state (after Colorado) to enact comprehensive AI governance legislation. It signaled a growing trend toward state-level regulation of emerging technologies—a trend that could shape the national landscape.

Why Supporters Backed the Bill

Supporters, including civil rights advocates and some technology ethicists, argued that HB 2094 was:

• A necessary guardrail against opaque and potentially harmful AI applications that can perpetuate systemic bias.
• A consumer protection measure to help individuals understand when and how automated decisions are being made about their lives.
• A way to promote transparency and accountability in the use of high-risk AI tools.

Proponents pointed to examples of AI tools used in hiring, lending, or health care decisions that have exhibited racially or socioeconomically biased outcomes and argued that by promoting transparency and accountability, the bill would build public trust in AI systems.

Why It Was Vetoed

Governor Youngkin’s veto was grounded in concerns about the bill’s potential chilling effect on innovation and business development. Opponents of HB 2094 contended that:

• The bill’s definitions—particularly of “algorithmic discrimination” and “automated decision systems”—were too broad or vague.
• It placed heavy compliance burdens on businesses, particularly startups and small-to-mid-sized companies that may lack the resources to conduct annual audits.
• The legislation duplicated ongoing federal regulatory efforts, and it was premature for states to act alone in an area with national implications.
• The bill could stifle technological innovation and drive talent and investment away from Virginia.

Critics also noted that the bill did not clearly define what constitutes a “high-risk” system nor did it provide practical guidance for compliance.

What This Means for Virginia Businesses

While the veto means HB 2094 won’t become law—at least not this year—it’s almost certainly not the end of AI regulation in Virginia. Here's what businesses should take away:

1. This is not the end of the matter. Legislators are already signaling intent to rework and reintroduce AI regulation in the future. Businesses should expect a revised version of HB 2094 or similar legislation to reappear.
2. Monitor State and Federal Developments. While Virginia takes a pause, other states, such as California and New York, are moving forward with AI regulation. Meanwhile, federal agencies continue to develop guidelines and enforcement mechanisms. Staying informed will help you adapt quickly to changing requirements.
3. Invest in Responsible AI Practices. Regardless of regulatory mandates, adopting ethical AI practices is good for business. Conducting voluntary bias audits, documenting decision-making processes, and engaging stakeholders can enhance your reputation and could reduce future legal exposure and reputational harm.

Looking Ahead

Virginia is unlikely to remain on the AI sidelines for long. Lawmakers have already stated their interest in refining HB 2094 to address the governor’s concerns.

For business leaders in Virginia, the key takeaway is this: whether it’s this year or next, regulation is coming, whether at the state, federal, or international level. Companies that proactively embrace responsible AI practices today will be better positioned for what’s next.

Jeff Wilson is a Pender & Coward attorney focusing his practice on employment law matters, including counseling and business litigation.