November 18, 2024

This week decoded

The week was dominated by speculation about what the incoming Trump Administration and Republican-controlled 119^th Congress will mean for AI and emerging tech policy.

The importance of energy to the U.S. AI industry was at the forefront of President-elect Trump’s nomination of North Dakota Gov. Doug Burgum (R) as Secretary of the Interior Department and head of a new National Energy Council.

Sen. John Thune (R-SD) was selected by Senate Republicans to serve as the next Senate Majority Leader; Thune has a history of championing bipartisan AI legislation. Leadership on Congressional committees critical to emerging tech policy is beginning to take shape, with Sen. Ted Cruz (R-TX) likely to lead the Senate Commerce Committee and Rep. Brian Babin (R-TX) running unopposed to chair the House Science, Space and Technology Committee. Other key committees, such as House Energy & Commerce, are facing contested races for the top chair. 

With Congress’s return to DC, Congressional activity is ramping up on policies related to emerging tech, including the introduction of new legislation, committee hearings on AI copyright issues, cybersecurity, data protection, and AI-enabled fraud.   

As for the work Congress must accomplish in the lame duck, including the NDAA, multiple AI-related provisions are reportedly still under consideration. Punchbowl reported Senate Commerce and House Science Committee leadership are putting together an AI legislative package of bills that both committees have advanced, including the Future of AI Innovation Act to codify the AI Safety Institute, the CREATE AI Act to provide open source computing resources and datasets to developers, the NSF AI Education Act to establish AI scholarships and workforce training, and Small Business Artificial Intelligence Training and Toolkit Act to help small businesses integrate AI. Meanwhile, Politico reported that House Armed Services Ranking Member Adam Smith (D-WA) said NDAA negotiators have yet to discuss leadership-driven items, which include AI.  

The Biden-Harris Administration continued acting on AI risk, including recommendations on AI in critical infrastructure from DHS, a CFPB report on the adequacy of state and federal protections on consumer financial data, and a FinCEN alert to financial institutions on the increase in deep fakes to avoid identity verification and authentication. 

Read more below

Congress

Hearings and Meetings

• Last week
  • Senate Judiciary Committee Intellectual Property Subcommittee held a hearing on November 13 with Shira Perlmutter, Register of Copyrights and Director of the U.S. Copyright Office, in which artificial intelligence was a prominent issue of focus.

• This week
  • On November 19, the Senate Commerce, Science and Transportation Consumer Protection, Product Safety, and Data Security Subcommittee will hold 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 will hold a hearing on China’s cybersecurity threat.
  • On November 19, the House Homeland Security Subcommittee on Transportation and Maritime Security will hold a hearing on “Impacts of Emergency Authority Cybersecurity Regulations on the Transportation Sector.”
  • On November 20, The House Veterans’ Affairs Subcommittee on Technology Modernization will hold a hearing on “VA Cybersecurity: Protecting Veteran Data from Evolving Threats.”

Legislation

• To stem the importation of fentanyl, the Senate Homeland Security Fiscal Year 2025 Appropriations Bill includes funding to the Customs and Border Patrol agency for “artificial intelligence/machine learning (AI/ML) investments to improve detection of anomalies in vehicles and cargo.” (Summary)

• Reps. Ted Lieu (D-CA) and Kevin Kiley (R-CA) introduced H.R. 10125, The AI Fraud Deterrence Act, which would increase criminal penalties for certain financial crimes involving artificial intelligence. (Text)(Press release)

• Sen. Peter Welch (D-VT) introduced the Humanitarian Tech Corps Act, which would create a new scholarship program through the National Science Foundation (NSF) for students who plan to work for federal humanitarian organizations. (Press release)

Correspondence

• Reps. Brett Guthrie (R-KY) and Jay Obernolte (R-CA) led a letter with 14 Republican members to Energy Secretary Jennifer Granholm “in support of the energy sector’s role in advancing U.S. leadership in AI” and highlighting the “dangers posed by an authoritarian regime leading the world in next generation AI” and urging the Biden-Harris administration to “address the risks facing our electric grid that can undermine future development.” (Press release)(Letter)

Biden-Harris Administration

Department of Homeland Security (DHS)

• DHS released a (DHS) released a report of recommendations for the “safe and secure development and deployment of Artificial Intelligence (AI) in critical infrastructure,” for “entities at each layer of the AI supply chain: cloud and compute providers, AI developers, and critical infrastructure owners and operators – as well as the civil society and public sector entities that protect and advocate for consumers.”  (Report)(Press release)

White House

• The Office of Personnel Management (OPM) issued a fact sheet entitled, “OPM Highlights its Key Actions under Biden Administration’s AI Executive Order” (Fact sheet)

Treasury Department

• The Financial Crimes Enforcement Network (FinCEN) issued an alert to financial institutions on identifying fraud schemes using generative AI deepfakes. FinCEN indicated an increase in suspicious activity reports (SARs) by financial institutions describing the suspected use of deepfakes in fraudulent identity documents to circumvent identity verification and authentication. (Alert)

Consumer Financial Protection Bureau (CFPB)

• The CFPB released a report on federal and state-level privacy protections for consumers’ financial data, finding federal-level protections on financial data are limited. (Report)(Press release)

Trump-Vance Transition

• In his announcement naming North Dakota Gov. Doug Burgum (R) as Secretary of the Interior Department and head of a new National Energy Council, President-elect Donald Trump said, “With U.S. Energy Dominance, we will drive down Inflation, win the A.I. arms race with China (and others), and expand American Diplomatic Power to end Wars all across the World” and that expanding access to affordable energy would “win the battle for A.I. superiority, which is key to National Security and our Nation’s Prosperity.” (PoliticoPro)

Noteworthy Quotes and Events

ADMINISTRATION

White House

• In remarks to the press before President Joe Biden’s meeting with President Xi Jinping of the People’s Republic of China, Biden said, “On AI, we have brought together our nations’ experts together to discuss risks and safety.” (Remarks)

• The White House released a readout of President Joe Biden’s meeting with President Xi Jinping of the People’s Republic of China, which included a summary of their discussions on AI, “Building on a candid and constructive dialogue on AI and co-sponsorship of each other’s resolutions on AI at the United Nations General Assembly, the two leaders affirmed the need to address the risks of AI systems, improve AI safety and international cooperation, and promote AI for the good of all. The two leaders affirmed the need to maintain human control over the decision to use nuclear weapons.  The two leaders also stressed the need to consider carefully the potential risks and develop AI technology in the military field in a prudent and responsible manner.” (Readout)

• In a press briefing, National Security Advisor Jake Sullivan said about President Joe Biden’s upcoming meeting at the G20 Summit with President Xi Jinping of the People’s Republic of China (PRC), “The president’s approach on the PRC has prioritized investments in sources of American strength at home, including growing the middle class and ensuring that America maintains its industrial capacity and its innovation edge in fields such as semiconductors and artificial intelligence.” He later added, “And then, of course, he will look to try to consolidate progress on areas where we can work together, for example, on counternarcotics and fentanyl coordination, and on trying to manage the safety risks associated with artificial intelligence.” (Briefing)

• The White House released a joint statement with Japan and the Republic of Korea that included agreements on AI and quantum computing, “We concur on the need for trilateral collaboration on technology security, standards, and trusted ecosystems, and we commit to develop a trilateral framework to further advance our next generation critical and emerging technology cooperation. We hail the successful launch of the Trilateral Technology Leaders Training Program, which has served to train and connect policymakers focusing on semiconductors, artificial intelligence (AI), quantum technology, digital economy, biotechnology, cybersecurity, energy, and space. In addition, Japan, the ROK, and the United States are working to accelerate the development of a trusted AI ecosystem across our three countries. We are strengthening commercial collaboration around AI chips in addition to enhancing protections for critical technology and strengthening engagement on AI safety. We are working to build resilient supply chains for active pharmaceutical ingredients through the “Bio-5” coalition. As founding members of the Quantum Development Group, we look forward to further strengthening cooperation on supply chains and trusted investment in our quantum ecosystems. We are proud of the launch of a new quantum workforce program by IBM, in partnership with Japanese, Korean, and U.S. universities, which aims to train 40,000 students over the next decade. We also welcome trilateral cooperation among our national research institutes, and we stress the significance of the successful launch of the Disruptive Technology Protection Network, which is essential for combatting illicit technology transfer.” (Statement)

Department of Homeland Security (DHS)

• DHS Secretary Alejandro Mayorkas said about the department’s AI work, “I am committed to a smooth transition to ensure that the incoming secretary and their team understands the challenges that we face on the homeland and to ensure that the team understands, appreciates and is in a position to advance the capabilities that we have developed and strengthened to address those challenges successfully.” About the “Roles and Responsibilities Framework for Artificial Intelligence in Critical Infrastructure,” he said, “It is the first such product created through extensive collaboration with such a broad, diverse set of stakeholders involved in the development or deployment of AI. In our nation’s critical infrastructure, it is, quite frankly, exceedingly rare to have leading AI developers engaged directly with civil society on issues that are at the forefront of today’s AI debates.” (FedScoop)

• Customs and Border Protection (CBP) issued a press release announcing their actions to prepare for quantum computers that can read coded and encrypted data without using a key. CBP Chief Information Officer Sonny Bhagowalia said, “CBP is one of the first federal agencies to explore post-quantum cryptography to harden security within its systems. “It is necessary to strengthen our agency’s data through post-quantum cryptography encryptions now, in order to be prepared for the security threats of the future.” OIT Deputy Assistant Commissioner Dr. Ed Mays added, “Once previously protected data is made clear and readable through quantum decryption, it can be exposed, potentially leading to espionage, financial fraud, and other malicious activities with potential implications for national security and prosperity. In light of this imminent challenge, it is imperative to stay ahead of forthcoming challenges that may need to be mitigated during the transition to quantum-resistant cryptography.” (Press release)

Internal Revenue Service (IRS)

• Randy Soper, IRS chief of AI for technology, said at the American Institute of CPAs Fall Tax Division Meeting that the IRS is piloting generative AI models built by third-party vendors, stating, “you start with something that somebody else has built with all the capability that it has, but also all the risks that are packaged in that box” while determining “what’s needed architecturally to support those technologies and what’s needed from a risk management standpoint in order to deliver those digitally safely” to understand the “potential return on investment within a workflow and understand the risk manifestation within a workflow.” (TaxNotes)

• The Taxpayer Advocate Service (TAS) will deploy in 2025 a new case management system that uses artificial intelligence to help case advocates access information faster. (TaxNotes)

National Institute of Standards and Technology (NIST)

• NIST issued a press release entitled “AI Can ‘Hear’ When a Lithium Battery Is About to Catch Fire”that details successful experiments done by NIST researching in collaboration with a laboratory at Xi’an University of Science and Technology. (Press release)

CONGRESS

• In floor remarks, Senate Majority Leader Chuck Schumer (D-NY) laid out the Senate’s lame duck priorities, including AI, “We also need to pass the National Defense Authorization Act, the NDAA, to provide for our troops, and hold the line against America’s adversaries. I hope our Republican colleagues work with us to advance key policies to outcompete the Chinese Communist party and secure America’s leadership on some of the most cutting-edge technologies of our time, from AI to innovations in biotech and quantum computing and more. We’ve gotten the NDAA done for over the last six decades without fail, and we must do it again this year.” (Remarks)

• When asked by Politico about AI in the lame duck, Leader Schumer said, “We’re going to try to get as much done as we can [on AI]. It would be a very good thing to do that. We have a lot of support out there in the committees.” He added, “Look, we’re talking to [House] Speaker [Mike] Johnson, we’re talking to our — we had bipartisan support for lots of pieces of legislation.” (PoliticoPro)

• Sen. Jack Reed (D-RI) said during the Senate Democratic Caucus Weekly News Conference, “The NDAA is laser focused on investing in the people, platforms, infrastructure and technologies that will define the future. Specifically, it addresses the challenges and opportunities presented by disruptive technologies like hypersonics, artificial intelligence, drones and quantum computing.” (PoliticoPro)

• At a Center for Strategic and International Studies (CSIS) event on “Ensuring U.S. Leadership in AI,” Sen. John Hickenlooper (D-CO) said about AI policymaking, “I’m not sure I can think of anything that is larger and has a greater sense of urgency than some of the issues we’re going to talk about today. I think the Senate – and I’m sure Representative Graves will echo that in the House – we look at this as one of the most important things we face. This is a competition on a global level. To put that in big capital letters, we have to win. It’s not something we can afford to fight to a draw. We have to stay ahead and control, really own, the future of AI as it grows. And it’s going to grow exponentially. At the same time, we recognize that there are risks involved as you have the opportunities with small business, with health care, with workforce training. I mean, there is no limit to some of the incredible benefits that are going to come very quickly, probably more rapidly than even many experts believe. But that acceleration of success is going to also create problems. A lot of them are the amount of electricity. And we’re not – it’s not clear how we’re going to limit that. You know, how much will efficiency be able to say that, well, instead of two times the electricity we need today, it’s four times. I mean, you know, our utility industry has for years gotten little bits of efficiencies for the little bit of growth and been in kind of a steady state for quite a while. We have kind of a patchwork quilt of a grid. That’s all going to change.” (Transcript)

• At the CSIS event, Rep. Garret Graves (R-LA) added, “Number one, you’ve got data. Number two, you have computing power. Number three, you have energy. Those are your resource constraints, similar to your freshwater, your sediment and your financial resources. And I think in this case there’s no question the U.S. needs to be a leader in AI, and we all agree on that. The problem is that you have a regulatory structure that’s not compatible with your objective. And one of your biggest bottlenecks is the inability, under this current regulatory regime, to be able to deliver the energy resources that you need. So I’ll say it again – no question, we’re in total lockstep agreement the U.S. needs to be a leader. But components of our regulatory structure are inconsistent or incompatible with our objective here.” (Transcript)

• About the future of the House Bipartisan AI Task Force, Rep. Jay Obernolte (R-CA) said, “Future Congresses are going to have to follow up and codify the recommendations of the task force. So I’m very hopeful that the task force continues in some shape or form in the future because it’s certainly needed.” (Punchbowl)

• Sen. Peter Welch (D-VT) issued a press release highlighting his questions in a Senate Judiciary Committee of Shira Perlmutter, Director of the U.S. Copyright Office, about the need for increased transparency around the use of AI hearing. He asked, “It’s really tough for many artists if their material is used to train AI. My view is that they should be notified of that. My view is that they should be compensated for that. But there’s no way in which they can actually get the information, and I’m considering legislation which would make it more possible for them to do that….In terms of your experience and your position, are you getting expressions of concern from the creative community about the use of their work to train AI and their inability to have any way of determining whether, in fact, that’s the case?” Director Perlmutter responded: “Yes, absolutely. Certainly, concerns about use of their work to train AI, and that’s where we will be talking about the fair use analysis in our upcoming report. But, also the transparency issue, because the copyright owners are expressing concern that unless they know if their work was used to train, they can’t do anything about it, whether it’s to license or to bring a lawsuit. And this is an area, of course, that touches other interests besides copyright as well, there’s a lot of reasons why transparency is important in AI training.” (Press release)

• On IRS AI pilot programs, David S. Johnson, nominated to lead the Treasury Inspector General for Tax Administration, was asked about AI in his Senate confirmation hearing before the Senate Finance Committee. Sen. Catherine Cortez Masto (D-NV) asked how the IRS should utilize AI as a tool. Johnson responded, “I think that’s more of a policy decision for the IRS to make a determination about. TIGTA’s role would be more assessing its effectiveness, safety, and ultimately, productivity.” (TaxNotes)

• Sen. Amy Klobuchar (D-MN) issued a statement, “I would like to congratulate fellow midwestern Senator John Thune on being elected as the next Senate Republican leader by his colleagues. Senator Thune and I have a long history of working together – from fixing supply chains and easing shipping backlogs to agriculture issues to our effort to put commonsense guardrails in place for AI.” (Statement) 

• Rep. Seth Magaziner (D-RI) tweeted, “Kudos to SecMayorkas and the Department of Homeland Security for making DHS one of the first federal agencies to make recommendations for how to use AI to improve operations. Smart use of AI can help protect Americans from terror attacks, natural disasters, and other threats.”

• Rep. Brett Guthrie (R-KY) tweeted, “Yesterday I was proud to send a letter to SecGranholm alongside JayObernolte and colleagues urging U.S. leadership in the development of Artificial Intelligence and the critical role American energy needs to play to usher in the benefits AI innovation. We cannot allow an authoritarian state like China to write the rules on the next generation economy.”

• Retweeting a CSIS tweet highlighting his remarks at their event, Sen. John Hickenlooper (D-CO) tweeted, “The horse is already out of the barn when it comes to AI. Congress needs to meet the moment.”

• Sen. Mark Warner (D-VA) tweeted, “You might not think of data breaches as a serious risk to your safety, but anyone can be a victim and they can have terrible implications for your life. In the Senate, I’m leading the charge to keep your data safe from bad actors.”

• On Face the Nation, Rep. Ro Khanna (D-CA) said of the U.S. general election and emerging technologies, “Well, first of all, get 70% of Silicon Valley still supported Vice President Harrison Democrats, but you’re right, that we had slippage and probably down 20 30% support Donald Trump, they have different reasons for doing it. Some of them were free speech, some of them want deregulation, some of what tax cuts, some of what AI got to be regulated, some of them were concerned about crypto. But I think what the Democrats need to remind folks off and I’ve reminded Elon of this is that Tesla got funding for President Obama, SpaceX got started because Ash Carter, under President Obama helped Ilan, get that facility. The Democrats are the party that has invested in the science and technology to help build Silicon Valley. And we can be the party that helps AI robotics, build new factories, build new industry in different parts of the country. When we argue policy, we have a better vision for how to get Americans and prosperity in a modern economy. And if we focus on that, I believe we will win back the majority and win back in 2028. (Transcript)

• House Admin Committee GOP tweeted, “The U.S. Copyright Office’s testimony in the Senate touched on important updates including AI reports, fair use, and the Copyright Royalty Board. These are all priority issues for us and we look forward to reviewing them in the upcoming 119th Congress. – Chairman RepBryanSteil and Ranking Member RepJoeMorelle”

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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