November 25, 2024

This week decoded

Last week, Congress was busy with multiple hearings and markups on AI-, cyber-, and data-related threats and opportunities, including consumer protection, China’s cyber capabilities, veterans’ data protection, transportation, modernizing government data practices, and promoting AI at DOE.    

It was also a busy week across federal agencies. Significant taskforces were announced at NIST with the Testing Risks of AI for National Security (TRAINS) Taskforce, at the Commerce and State Departments with the International Network of AI Safety Institutes, and an interagency task force at State on AI-generated digital content. Reports with a focus on AI were released by IRS, SEC, Commerce, State, and the U.S.-China Economic and Security Review Commission. Notably, the Fed identified cyberattacks as a risk to U.S. financial stability.  

Federal policymakers are beginning to openly discuss the issue of continuity of emerging tech actions and priorities across Administrations.  

We’ll be taking a break for the Thanksgiving holiday. See you here on December 9.

Read more below

Congress

Hearings and Meetings

• Last week
  • On November 19, the Senate Commerce, Science and Transportation Consumer Protection, Product Safety, and Data Security Subcommittee held a hearing on protecting consumers from artificial intelligence-enabled fraud and scams.
• • On November 19, the Senate Judiciary Subcommittee on Privacy, Technology, and the Law held a hearing on China’s cybersecurity threat.
• • On November 19, the House Homeland Security Subcommittee on Transportation and Maritime Security held a hearing on “Impacts of Emergency Authority Cybersecurity Regulations on the Transportation Sector.”
  • On November 20, The House Veterans’ Affairs Subcommittee on Technology Modernization held a hearing on “VA Cybersecurity: Protecting Veteran Data from Evolving Threats.”

• This week
  • Congress is in recess until the week of December 2.

Legislation

• The House Oversight and Accountability Committee approved H.R. 10151, the Modernizing Data Practices to Improve Government Act, sponsored by Reps. Summer Lee (D-PA) and Nancy Mace (R-SC), which would extend the Chief Data Officer Council and update the functions of the Council to support agencies in leveraging emerging technologies and artificial intelligence oversight. (Press release)

• The Senate Committee on Energy and Natural Resources approved S.4664 – Department of Energy AI Act, which would establish a program to promote the use of artificial intelligence to support the missions of the Department of Energy. (Text)

• Sen. Catherine Cortez Masto (D-NV) introduced legislation to allow U.S. Customs and Border Protection (CBP) to better integrate artificial intelligence, machine learning, infrared sensing, and nanotechnology at the border. (Text)(Press release)

• Reps. Rick Larsen (R-WA) and Andy Kim (D-NJ) introduced a bill authorizing the United States to participate in and contribute up to $200 million over 10 years to the NATO Innovation Fund. (Text)(Press release)

• Rep. John Curtis (R-UT) introduced the Spam Communications Assessment and Mitigation Platform (SCAM Platform) Act, which would create an AI-powered platform under the Federal Communications Commission (FCC), allowing Americans to upload texts, emails, and letters they suspect might be scam attempts to a portal that would analyze whether they match known scams or exhibit signs of fraudulent activity. (Text)(Press release)

• Reps. Stephanie Bice (R-OK), Blake Moore (R-UT), and Aaron Bean (R-FL) introduced the Decreasing Overlapping Grants Efficiently Act (DOGE Act), which would prohibit federal agencies from awarding federal grants to applicants who have received another federal grant for the same or identical purpose, including a report on the feasibility of using AI to identify duplicative applications. (Text)

Correspondence

• Sen. Jeff Merkley (D-OR) led a letter with 11 bipartisan Senators to the Inspector General of the Department of Homeland Security, calling for an investigation into the Transportation Security Administration’s plans to expand use of facial recognition technology at 430 airports. (Letter)

Biden-Harris Administration

National Institute of Standards and Technology (NIST)

• The U.S. Artificial Intelligence Safety Institute announced the formation of the Testing Risks of AI for National Security (TRAINS) Taskforce, which will “enable coordinated research and testing of advanced AI models across critical national security and public safety domains, such as radiological and nuclear security, chemical and biological security, cybersecurity, critical infrastructure, conventional military capabilities, and more.” (Press release)

• The National Artificial Intelligence Advisory Committee (NAIAC) will meet virtually on December 12 to report working group findings, identify actionable recommendations, and receive public briefings (Notice)

Internal Revenue Service (IRS)

• The IRS Advisory Council released its 2024 Annual Report, which incorporated analysis and multiple recommendations regarding AI, including “A modern element of digitalization is the use of artificial intelligence (AI). The IRS has noted its use of AI in modernization efforts, such as to ‘detect tax cheating, identify emerging compliance threats and improve case selection tools to avoid burdening taxpayers with needless ‘no-change’ audits.’ For example, the IRS announced in September 2023 that it would use AI to help in selecting large partnership returns for examination. These announcements have not also explained the nature of the AI tools and protections in place to avoid misuse.” (Report)

• The Tax Inspector General for Tax Administration (TIGTA) released a report entitled “Governance Efforts Should Be Accelerated To Ensure the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence,” recommending that the IRS: “(1) identify accesses to external generative AI domains and platforms from traffic logs and update its rulesets to restrict further accesses and (2) accelerate standing up the new governance structure and processes. IRS management agreed with both recommendations.” (Report)

Federal Reserve

• The Fed identified cyberattacks as a risk to U.S. financial stability in its current Financial Stability Report, “The risk of cyberattacks has grown amid increased geopolitical tensions and rapid advancements in artificial intelligence. In addition to malicious attacks, nonmalicious cyber events, such as software malfunctions at key third-party service providers, have demonstrated the potential to cause significant disruptions. Shocks caused by cyber events, especially cyberattacks, may propagate through the financial system through complex interdependencies among financial institutions, market infrastructure, and service providers. When these channels are sufficiently systemic, cyber shocks can disrupt payments or other operational components of the financial system.” (Report)

Commerce and State Departments

• Commerce and State published a fact sheet on the launch of the International Network of AI Safety Institutes, a “new global effort to advance the science of AI safety and enable cooperation on research, best practices, and evaluation.” (Fact sheet)

State Department

• The State Department announced it is leading an interagency task force to “make it easier for people to determine how and when digital content, such as videos, images, or audio, has been altered, generated, or manipulated using AI tools.” (Press release)

Department of Energy (DOE)

• DOE announced a meeting on December 10 of the Secretary of Energy Advisory Board (SEAB) to consider the SEAB report on artificial intelligence. (Website)

U.S. Trade Representative

• Ambassador Katherine Tai will participate in a panel titled, “Augment and Involve: Empowering Workers in an AI-Driven World” at the NationSwell Summit. (Website)

Department of Health and Human Services (HHS)

• HHS announced a meeting of the National Committee on Vital and Health Statistics on December 3-4 to consider privacy and security in health data access. (Announcement)

Securities and Exchange Commission (SEC)

• The SEC released its enforcement results for Fiscal Year 2024, “583 total enforcement actions in fiscal year 2024 while obtaining orders for $8.2 billion in financial remedies, the highest amount in SEC history.” The report includes a detailed section on enforcement actions in emerging technologies, introduced with, “Fiscal year 2024 saw heightened investor risk from emerging technologies and cybersecurity incidents and from market participants using social media to exploit elevated investor interest in emerging investment products and strategies. The Division kept pace, investigating noncompliance and false or misleading disclosures involving artificial intelligence, social media, cybersecurity, crypto, and more.” (Press release)

U.S.-China Economic and Security Review Commission (USCC)

• The USCC released its annual report to Congress, which includes findings and recommendations on U.S.-China competition in emerging technologies. (Report)

Department of Homeland Security (DHS)

• DHS’s chief AI officer sent a letter in response to correspondence from Just Future Law regarding the use of AI at the U.S. Citizenship and Immigration Services, Immigration and Customs Enforcement, and Customs and Border Protection. The letter includes, “As we shared when other Department leaders and I met with civil society organizations in July 2024, we expect that DHS will use the authority granted to Chief Artificial Intelligence Officers in M-24-10 to issue limited waivers for certain safety- and/or rights-impacting AI use cases. These waivers will be limited in scope and will include a written determination, based upon a system-specific and context-specific risk assessment in coordination with our oversight offices. Waivers will be disclosed publicly to the fullest extent possible. I will only issue waivers where discontinuing the use of an AI system would create an unacceptable impediment to critical agency operations or where that system will soon fully comply with the applicable requirements.” The letter also states DHS will “publish in December 2024 an updated AI Use Case Inventory on dhs.gov/ai that includes additional details on our AI use cases, rights- and safety-impacting determinations, and how we are meeting the OMB-required risk management practices.” (Letter)

Trump-Vance Transition

• President-elect Donald Trump reportedly chose Howard Lutnick, CEO of Cantor Fitzgerald, as his nominee for Commerce Secretary.

Noteworthy Quotes and Events

ADMINISTRATION

Department of Commerce

• Commerce Secretary Gina Raimondo said regarding continuity in AI policymaking, “I can’t predict what the next president will do. Here’s what I will say. In less than a year, under President Biden’s leadership, we have made a remarkable amount of progress — in a bipartisan way — to start to define what are the standards to keep us safe… We’re doing this in partnership with the private sector… So this isn’t really about us doing something to industry, to slow them down.” (PoliticoPro)

• Regarding the new Network of AI Safety Institutes, Raimondo said, “In this regard, our interests are aligned even with some of our fiercest competitors like China. China is sending some of their scientists to this event. It is in no one’s interest anywhere on the planet for AI to develop in a way that is unsafe and that is harmful, and so that’s why this is such a seminal event.” (PoliticoPro)

Federal Reserve

• Fed Governor Michelle Bowman delivered a speech entitled “Artificial Intelligence in the Financial System” at the 27th Annual Symposium on Building the Financial System of the 21st Century: An Agenda for Japan and the United States in which she discussed the need for a balanced definition of AI, innovation and the effect on competition, and the sufficiency of existing regulatory tools to promote AI’s benefits and mitigate risks. She laid out general principles, including, “First, we must understand AI before we consider whether and how to change our regulatory approach… Second, we must have an openness to the adoption of AI.” She concluded with, “as we engage in ongoing monitoring—and expand our understanding of AI technology and how it fits within the bank regulatory framework—I think it is important to preserve the ability of banks to innovate and allow the banking system to realize the benefits of this new technology.” (Prepared remarks) 

CONGRESS

• In the House Oversight and Accountability Committee markup, Chair James Comer (R-KY) said about H.R. 10151, the Modernizing Data Practices to Improve Government Act, “Data is the backbone of modern technologies like artificial intelligence, which are being used to improve federal government processes save taxpayer dollars, and increase oversight and accountability of federal agencies. Federal agencies should be encouraged to use these emerging technologies when appropriate, and with the necessary safeguards to benefit everyday Americans. However, these tools are only as good as the data that informs them, which is why the federal government needs a coordinated effort towards data management and governance… Data management challenges are not new, but the effects of their failures are more pronounced in the age of AI and emerging technology. So we must ensure the federal government’s use of AI will benefit the American people in a way that fosters public trust and upholds American values. It is necessary to ensure that the data leadership of federal agencies have a clear role in helping the infant to in helping inform the adoptions and responsible use of emerging technologies like AI. The modernizing data practices to improve government act provides this assurance again, I think Representative summer Lee and Nancy mace for the work on this important issue.”

• In remarks on her bill at the House Oversight and Accountability Committee markup, Rep. Summer Lee (D-PA) added, “When our federal agencies fail to use data, and make evidence back decisions, we risk making uninformed choices, and that’s why the chief data officer Council has been such a critical resource for federal agencies. Since its creation in 2018, the CTOs Council has helped to federal agencies treat data as a strategic asset and improve how they govern and use it. But as we move forward into the age of artificial intelligence and other emerging technologies, the stakes and challenges are higher than ever.”

• In the Senate Commerce Subcommittee on Product Safety and Data Security hearing on Artificial Intelligence-Enabled Crime, Chair John Hickenlooper (D-CO) said in his opening remarks, “States across the country began to enact legislation states being the laboratories of democracy to try and address the creation and distribution of deceptive media… And as we can see, this is right now a patchwork of protections which is, is defying the need for predictability, which pretty much any industry needs to prosper. A consistent federal approach would be tremendously beneficial to fill in these gaps.”

• Sen. Ed Markey (D-MA) delivered floor remarks about his Artificial Intelligence Civil Rights Act, “Today, I am proud to announce that 54 new organizations have endorsed my bill, including some of the biggest labor unions in the country, critical housing organizations, and indispensable civil rights groups. In total, 80 civil society organizations and AI experts have endorsed my AI Civil Rights Act. This support sends a clear message: As Congress considers AI legislation in the coming weeks and years, we must ensure the AI age does not come at the expense of already-marginalized communities. We cannot allow AI to stand for Accelerating Injustice in our country. We have a choice. Do we promote innovation without addressing AI bias and discrimination? Do we protect profits instead of people? Do we allow biased black-box algorithms to control our lives? Make no mistake: we can have an AI revolution, while also protecting the civil rights and liberties of everyday Americans. We can support innovation without supercharging bias and discrimination. And we can promote competition, while safeguarding people’s rights. That is why we must pass my Artificial Intelligence Civil Rights Act.” (Press release)

• In the House Appropriations Committee Labor, Health and Human Services, Education and Related Agencies Subcommittee hearing on Social Security Administration Oversight, Rep. Lois Frankel (D-FL) asked Social Security Administration Commissioner Martin O’Malley about the department’s use of AI, asking, “I want to talk about the processing, are you considering or using artificial intelligence to help process disability claims?” O’Malley’s response, “There’s a lot, it seems like we can’t ever have a conversation without talking about AI Artificial Intelligence. So I’m not a tech expert, but I play one on TV, I can tell you that what we have is more akin to, there’s two things that we have. Or two sides of the same tool we created before COVID, a tool called Imagine, because of electronic health records, the volume of the health records that those initial Disability Determination examiner’s have to go through and they’re required by statute to read every page can be now what they call Section F is up to 1,000 pages, 1,500 pages. So we do have a tool that now curates that almost like a search engine, and then tells the disability examiner, the pages that match the medical listing are these 23 pages.”

• In the House Financial Services hearing on prudential regulator oversight, Rep. Zach Nunn (R-IA) mentioned AI legislation, “First and foremost, we are looking for a financial leadership out of Washington that puts citizens first promoting a competitive and diverse financial system through tailoring and flexibility, fostering innovation through dynamic systems based on thoughtful digital assets, as well as artificial intelligence legislation, evidence based regulate Tory reforms based on a cost benefit analysis, something that I think that this team has failed to do time and time again.”

• Sen. Maria Cantwell (D-WA) said about potential inclusion in the NDAA of her Future of AI Innovation Act, “To me, the bottom-line is that there was a lot of support for that concept, because everyone in the sector understood that to grow the sector, this is part of that.” (PoliticoPro)

• Sen. Mike Rounds (R-SD) supported housing the AI Safety Institute within NIST, “On the development of stuff within NIST, there needs to be a place where we can get the expertise for all areas of government, so that all areas of government aren’t buying their own expertise. They can share their expertise. And we think NIST is a good place to put that facility.” (PoliticoPro)

• Rep. Richie Torres (D-NY) said about Congress’s approach to AI regulation, “I’m in favor of federal preemption on something like AI. We have to learn about the technology first before rushing to regulate. And I think Europe is infamous for over-regulating, and therefore it has no vibrant tech sector.” (PoliticoPro)

• Rep. Dan Goldman (D-NY) said of federal preemption in AI regulation, “We should be a place where people want to come because of the thoughtful and sophisticated platforms that our state could give, so I do worry a little bit about complete preemption.” (PoliticoPro)

• A spokesperson for the Senate Commerce Committee said, “As Sen. Cruz takes over as Chairman of the Commerce Committee he plans to seek input from his colleagues on both sides of the aisle to strengthen America’s data privacy rights without losing economic growth.” (PoliticoPro)

• Sen. John Cornyn (R-TX) retweeted a Financial Times article, adding, “What could go wrong? Chinese tech groups build AI teams in Silicon Valley.”

• Sen. Alex Padilla (D-CA) tweeted, “NEWS: $100 million from the CHIPS Act is headed to Silicon Valley for cutting-edge semiconductor manufacturing! With this award to Applied Materials, we’re: Innovating AI & high performance computing, Out-building our global competitors, Developing the next-gen workforce”

• Rep. Summer Lee (D-PA) tweeted, “Our Modernizing Data Practices to Improve Government Act passed unanimously through the Oversight Committee! This bipartisan bill ensures federal agencies adopt AI responsibly & transparently. Now it’s time for the full House to act. Let’s get it done!”

• Rep. Sara Jacobs (D-CA) ) tweeted, “Unregulated data brokers are one of the biggest threats to our privacy. They regularly collect, track, or sell our personal information like our service member’s location data – without any consequences. That’s why I’m working to protect our data and our 4th Amendment rights.”

• Rep. Greg Stanton (R-AZ) tweeted, “NEW: ASU will receive $100 million under our CHIPS and Science Act to develop advanced semiconductor packaging capabilities—the foundation for technologies of the future, like AI. As usual, Sun Devils are leading the way.”

• Rep. Beth Van Duyne (R-TX) tweeted, “Fascinating discussion on artificial intelligence this week with former CEO of Google, ericschmidt at the Library of Congress. America has an opportunity to lead on AI and I appreciated hearing Eric’s insights on where the technology is heading.”

• Sen. Ed Markey (D-MA) tweeted, “I’m live on the Senate floor calling for the passage of my AI Civil Rights Act. While AI poses great promise, we cannot allow the AI Age to replicate and supercharge the bias and discrimination already prevalent in society today.”

• Senate Majority Leader Chuck Schumer (D-NY) retweeted a Times Union article, adding, “The chips made by GlobalFoundries are critical to the auto industry, national defense, AI, our smartphones. If we want to keep prices low and prevent shortages, one of the best things we can do is build chips in America. This will help make that happen.”

• Rep. Monica De La Cruz (R-TX) tweeted, “My DC legislative team met with UT San Antonio policy experts to discuss Texas’ priorities for the 119th Congress. We look forward to working together as Texas continues to grow within the AI, Data Security, and Defense industries.”

• Rep. Lou Correa (D-CA) tweeted, “Orange County is full of brilliant young innovators, including the students in Magnolia Science Academy’s CTE program. Our students are already learning how to leverage robotics and AI. The future is full of new challenges and exciting opportunities-these students are ready!”

Highlights of the Week in AI Policy

• On November 21, I had the honor of joining SEC Commissioner Mark Uyeda; Rich Widmann, Head of Strategy, Web3 at Google; Ignacio Sandoval, Partner at Orrick; and moderator Ashley Ebersole, General Counsel of ZeroEx, Inc. at the DC Bar Association Fintech Regulation & Enforcement subcommittee panel discussion on Regulation of AI in Financial Services.     

• I attended the FinRegLab AI Symposium on November 21, where multiple federal policymakers discussed their approaches to AI regulation, including:
  • Sen. Mike Rounds (R-SD) discussed Senate action on AI legislation, his bill to establish regulatory sandboxes, the benefit of federal preemption in interstate commerce, and the importance of U.S. leadership on AI.
  • Acting Comptroller of the Currency Michael Hsu talked about the risks of prudential regulators moving too slow or too fast on AI, the risks of AI-generated fraud, scams, and hacks, the need for regulators to co-learn with innovators, building trust through fairness, and using their convening authority to have open discussions with stakeholders.
  • CFPB Director Rohit Chopra discussed using lessons from credit scoring to encourage competition in AI.

• Coming up, on December 2, I’ll be at the Center on Regulation and Markets at Brookings and Duke University event “Leveraging artificial intelligence to tackle climate change” exploring the intersection of climate change and AI. On December 4, I’ll be at the Punchbowl News: Tech Policy reception.

What I’m Reading This Week

• Tech Policy Press, “Navigating Trump’s AI Strategy: A Roadmap for International AI Safety Institutes.”

About Zero One Strategies

Zero One Strategies is a boutique government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.

The practice focuses on key areas such as artificial intelligence, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.

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