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Corporate Policy2026-10-29

Anthropic and OpenAI Propose Rival Shutdown Frameworks for California

What happened

In response to California Executive Order N-9-26 on Independent AI Oversight and an AI Kill Switch, Anthropic and OpenAI submitted separate frameworks to California Governor Gavin Newsom. This was reported by CSO Online. Anthropic's proposal would empower the state attorney general to seek court orders suspending the operation of models found to pose serious risk. OpenAI's alternative would require AI developers to maintain enforceable, multi-layered shutdown controls that extend contractually through inference providers to downstream enterprise deployers. Both labs also expressed support for mandatory independent safety assessments and expanded incident reporting obligations. The submissions follow Anthropic's S-1 disclosure of shutdown resistance risks and a broader pattern of state-level intervention as federal AI legislation stalls.

Why it matters

  • ·California's executive order is already in force. The competing proposals signal that whatever framework Newsom adopts will likely impose new contractual and audit obligations on every enterprise deploying Anthropic or OpenAI models in the state.
  • ·OpenAI's supply-chain model, if adopted, would require enterprises to hold and document enforceable shutdown rights in vendor contracts. This is a control most procurement programs have not yet built. Failure to do so could expose deployers to direct regulatory liability.
  • ·Both proposals expand incident reporting requirements, meaning enterprises using these platforms may face mandatory disclosure obligations for AI-related harms or near-misses, paralleling the direction of FTC Enforcement on AI (Section 5 of the FTC Act) and recent FTC warnings about agentic deployments.

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Governance controls affected

CHM-003Model Rollback and Emergency ShutdownAGT-012Agent Kill Switch and Emergency StopPRC-002AI Contractual RequirementsIRC-003AI Harm Notification ProceduresPRC-006Vendor Safety Commitment Verification

What to do now

  • ☐Review existing contracts with Anthropic and OpenAI to determine whether they include any shutdown, suspension, or emergency stop rights, and flag gaps for renegotiation before California finalizes its framework.
  • ☐Ask your legal team whether your organization qualifies as a 'downstream deployer' or 'inference provider' under OpenAI's proposed model, and what contractual obligations that status would create.
  • ☐Map your incident reporting workflow against both proposals: identify which AI-related events would trigger notification under each model and confirm your current procedures cover those scenarios.
  • ☐Confirm that your vendor due diligence process includes review of each lab's published safety commitments and any changes to those commitments, and assign someone to track California regulatory developments through adoption.
  • ☐Brief your board or audit committee on the competing shutdown frameworks, explaining that whichever model California adopts may set a template other states follow and could affect vendor contract terms across your AI portfolio.

What to watch next

California's adoption of a shutdown framework will likely set a national template, given that both OpenAI and Anthropic have proposed models that extend obligations to deployers and inference providers. Compliance teams should monitor Governor Newsom's response and any implementing regulations under California Executive Order N-9-26 on Independent AI Oversight and an AI Kill Switch for specific timelines and scope. The FTC's open probe into rogue AI agent risks at Anthropic and OpenAI adds federal enforcement pressure that could accelerate contractual and disclosure obligations regardless of what California decides. Independent safety assessment requirements in both proposals may also align with California Transparency Frontier Artificial Intelligence Act (SB 53). That act already imposes transparency obligations on frontier developers and the new proposals could extend its scope.

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