Client Alert
Billee Elliott McAuliffe, Jacquelyn S. Eakle, Clare H. Nowogrocki
share this page:
On September 23, 2025, the California Office of Administrative Law approved regulations proposed by the California Privacy Protection Agency (“CPPA”) to revise the California Consumer Privacy Act (“CCPA”). These regulations will impose substantial new compliance obligations on businesses subject to the CCPA that use automated decision-making technology (“ADMT”). As defined, ADMT includes most artificial intelligence and machine learning technologies. Businesses that use ADMT to make significant decisions must comply with these regulations beginning January 1, 2027.
Under the regulations, ADMT is broadly defined as any technology that processes personal information and uses computation to replace or substantially replace human decision-making. “Replace or substantially replace human decision-making” means a business uses the technology’s output to make a decision without human involvement. This broad definition likely includes most types of artificial intelligence and machine learning technology.
Once the new regulations take effect, businesses that use ADMT will need to take additional steps both before using and when deploying ADMT technology.
The regulations implement a risk assessment requirement. If a business uses ADMT for a significant decision concerning a consumer or intends to use personal information of consumers to train ADMT, then the business must first conduct a risk assessment to determine whether the risks to consumers’ privacy from the processing of personal information outweigh the benefits to the consumer, the business, other stakeholders, and the public from that same processing. A “significant decision” is defined as a decision that results in the provision or denial of financial or lending services, housing, educational enrollment or opportunities, employment or independent contracting opportunities or compensation, or healthcare services. Further, under the regulations, “train” means the process through which a technology discovers underlying patterns, learns a series of actions, or is taught to generate a desired output. Businesses that conduct risk assessments in 2026 and 2027 will be required to submit the risk assessments to the CPPA no later than April 1, 2028. For risk assessments conducted after 2027, a business will be required to submit a summary of such assessment no later than April 1 of the following year. In addition, the CPPA or the California Attorney General may require a business to submit its risk assessment reports at any time.
If a business uses ADMT to make a significant decision concerning a consumer, that business will be required to comply with three requirements.
The business must provide consumers with a plain language explanation of the specific purposes for which the business plans to use ADMT prior to the business actually using the ADMT for that purpose. The pre-use notice must be presented prominently and conspicuously to the consumer at or before the point the business collects a consumer’s personal information that the business plans to process using ADMT. If a business has already collected a consumer’s personal information for a different purpose and subsequently plans to process it using ADMT for the purpose of making a significant decision, the business must also provide a pre-use notice for this additional purpose. The pre-use notice must provide information about how ADMT works to make a significant decision about consumers and how the significant decision would be made if a consumer opts out; how ADMT processes personal information to make a significant decision about consumers; and the type of output generated by ADMT and how that output is used to make a significant decision. Generic terms such as, “to make a significant decision,” will not be sufficient.
Unless an exception applies, the business will be required to include a link in its pre-use notice through which consumers can opt out of the business’s use of ADMT. The business may instead rely on the “human appeal exception” to this requirement if it provides the consumer with a method to appeal an ADMT decision to a human reviewer who has the authority to overturn the decision. If the business is relying on any other exception under the regulations, the business must identify the specific exception it is relying on in its pre-use notice.
The business must provide consumers with information about its ADMT use when responding to a consumer’s request to access ADMT. The business must provide plain language explanations of the specific purpose for which the business used ADMT, information about the logic of the ADMT, and the outcome of the decision-making process for the consumer. The business must also disclose to the consumers of how to exercise their rights under the CCPA with regard to the ADMT and clearly state that the business is prohibited from retaliating against consumers for exercising their CCPA rights with regard to the ADMT. A business’s methods for consumers to submit requests to access ADMT must be easy to find and easy to use.
A copy of the proposed regulations approved by the California Office of Administrative Law is available here. The regulations, which are not expected to deviate from the proposed regulations, as well as supporting materials, will be posted on the CPPA website as soon as they are processed. If you would like to learn more about how the CCPA regulations may impact your business, please contact a member of our Data Protection & AI practice group.