The Transparency in Frontier Artificial Intelligence Act has taken effect as the first state-level AI law in the US, regulating safety and transparency in AI model development.
The law, which Governor Newsom signed in September 2025, will now require large AI model developers in California to publish risk assessment and management strategies, as well as provide summaries during 'catastrophic risk' to the authorities.
This will ensure that Californian developers will adhere to safety, transparency, and increasing public trust by strengthening oversight of advanced AI systems.
Governor of California, Gavin Newsom, announced a series of state laws that took effect on January 1st.
In a statement he made earlier last year, Governor Newsom explained how SB 53 will enable the state to meet security and compliance expectations now seen in providers worldwide.
“California has proven that we can establish regulations to protect our communities while also ensuring that the growing AI industry continues to thrive,” he said.
“This legislation strikes that balance. AI is the new frontier in innovation, and California is not only here for it – but stands strong as a national leader by enacting the first-in-the-nation frontier AI safety legislation that builds public trust as this emerging technology rapidly evolves.”
Many of these state laws, which aimed to provide safety and digital rights to Californian residents and companies, also included SB 53, requiring large AI developers to document risk-mitigation strategies and improve transparency between provider and customer.
This announcement followed the release of the AI guardrail safety report, offering Governor Newsom strategic recommendations to ensure the appropriate regulation of security risks, transparency, and policymaking.
Being home to 32 of the top 50 AI companies worldwide, California is in a critical position to provide healthy regulations in the birthplace of AI.
In response, SB 53 was created in line with the report’s recommendations, strengthening California’s position as an AI leader.
What SB 53 Offers
This law now establishes new requirements for frontier AI developers, increasing expectations in governance, transparency, and incident readiness.
Transparency: AI developers must now publish a written framework to explain how they are applying national/international standards and industry practices during AI model development and management. This offers customers clarity about the developer's current approach to risk management and governance.
Innovation: The Government Operations Agency has developed a state-led consortium, CalCompute, to create a public computer cluster framework. By utilizing CalCompute, developers can collaborate to plan and guide the development of shared AI computer resources that support AI development with shared safety and equity policies.
Safety: AI developers are now required to inform local authorities of potential safety risks associated with frontier models, including possible threats to public safety and large-scale harm. This allows both customers and developers to report likely risk incidents to the Office of Emergency Services.
Accountability: AI developers may face civil penalties if they fail to meet these new governance standards, whether via employee or public exposure. The law also provides legal protection to those responsible for risk disclosure, ensuring that developers are continuously held accountable without fear of retaliation.
Responsiveness: The California Department of Technology has agreed to review the law annually to continue the progression of the regulatory framework. Updates to SB 53 will be made to ensure that California remains in line with international standards and technological advancements.
What Will This Act Mean For CX?
1. Trust Through Transparency & Explainability
Speaking with CX Today, Jigyasa Grover, Machine Learning Engineer for Uber, X, and Meta, frames SB 53 as a trust and experience driver, rather than simply a compliance obligation.
SB 53 mandates transparency requirements that fundamentally change how customers interact with AI systems, offering clarity to reduce uncertainty.
From a CX perspective, users can now understand how AI makes decisions, increasing confidence and trust with the technology as frameworks become customer-facing assets.
"SB 53 doesn't just mandate transparency; it encourages investment in explainability frameworks," she said.
"From a CX standpoint, users may naturally ask, 'Why did this AI make that recommendation?' or 'What safeguards exist if it fails?', and being able to answer these questions clearly can be a game-changer for building trust and loyalty."
Regulatory compliance is typically out of sight for users, however this act allows them to access these in simple terms and self-justify risks.
"Companies that can turn technical compliance into intuitive, user-facing signals, like dashboards, safety labels, or opt-in transparency notices, will not only stay ahead of regulators but also strengthen customer confidence."
And by connecting product, ML, legal, and CX teams together, this allows transparency and safety to occur and reduces the chances of mismatched information from the AI.
"SB 53 also underscores the value of cross-functional collaboration between product, CX, legal, and ML engineering."
Grover further frames SB 53 as a leader indicator, raising baseline expectations for AI governance and how it should be communicated to users.
"Even if your AI doesn't yet qualify as 'frontier,' SB 53 sets expectations for auditability, reporting, and operational safety that are likely to influence all AI systems. CX teams should proactively consider how to signal compliance and model reliability, rather than reacting after the fact, to preserve trust as regulations evolve."
2. Governance Moves Into the Customer Journey
In conversation with CX Today, Nik Kale, Principal Engineer, CX Engineering, Cloud Security & AI Platforms at Cisco, highlights how AI compliance has shifted from being a backseat, internal function to now an integral, front row part of the customer experience.
With its popularity having increased in recent months, AI compliance is now becoming a visible part of the customer experience through disclosures, explanations, and escalation paths.
SB 53 and similar regulatory frameworks incentivize companies to resurface their governance practices, even outside of regional law expectations.
"Laws like California's SB 53 reflect something already happening in practice: AI governance is moving out of the back office and into the customer journey."
This allows customers to have access to simplistic understandings of AI behaviors and how to handle change or failures rather than keeping it closed within internal processes.
"As AI systems scale and regulation catches up, customers will encounter compliance directly through clearer disclosures, more explainable behavior, and defined escalation paths when automation hits its limits."
With higher standards in place, organizations will now have to design AI experiences with explanations, disclosures and safe escalation as baseline expectations.
"Transparency requirements don't just mitigate risk; they reset expectations. Customers start expecting AI-driven interactions to be understandable and accountable by default."
3. Privacy & Data Control as Brand Differentiators
In discussion with CX Today, Ron De Jesus, Field Chief Privacy Officer at Transcend, argues that the act does not offer full transparency expectations needed for clarity and confidence in data handling.
Whilst SB 53 addresses catastrophic risks, CX teams face a different challenge: the decrease of trust at an individual level when customers don't understand how their data is being used by AI systems.