November 11, 2024
This week decoded
Congress returns to Washington, DC this week with a full agenda to close out the 118th Congress. For months, the question of whether AI-related legislation would be considered in the lame duck has been dismissed with “it depends on what happens in the election.” Now that the 119th Congress is coming into view, with a 52-47-1 Republican majority in the Senate and a potential Republican majority in the House, in addition to an incoming Republican White House, that answer is now “it depends on what Democrats prefer to cut deals on in the waning days of their Senate control and what Republicans prefer to own in their upcoming majority.”
One of those key issues is outbound investment; comments by Rep. John Moolenaar (R-MI), Chair of the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party, on its lame duck prospects are included below.
The National Defense Authorization Act (NDAA), as part of the lame duck agenda, has historically been a reliable vehicle for AI policy to pass into law. In the coming weeks, we will watch how those discussions progress.
Looking ahead, stay tuned for a full analysis of how the new Congress and Trump Administration could impact AI and emerging tech policy next year and beyond.
Meanwhile, as the election results were being tabulated this week, the Biden Administration continued to advance emerging tech policies in multiple agencies. TSA published a notice of proposed rulemaking on cyber risk management, the FAA issued a request for information on AI tools for identifying and mitigating safety risks, and multiple agencies announced upcoming meetings to consider AI recommendations in their jurisdictions.
Read more below
Congress
Hearings and Meetings
- Congress is in recess until November 12.
- This week: On November 13, 2024, the House and Senate Republican Caucuses will hold leadership elections.
Legislation
- Congress is in recess until November 12.
Correspondence
- Chair of the House Ways & Means Health Subcommittee Vern Buchanan (R-FL) and Reps. David Schweikert (R-AZ) and Michelle Steel (R-CA) sent a letter to the Centers for Medicare & Medicaid Services (CMS) to encourage the use of AI digital health tools for Medicare beneficiaries. (Letter)(Press release)
- Sen. Marco Rubio (R-FL) sent a letter to PwC Global Chairman Mohamed Khande expressing concern over the company’s ties to the CCP. The letter includes the question, “Do any of PwC’s current or past China-based clients work in the following sectors: military and civil defense, aerospace and aviation, energy and power generation, critical mineral mining and refining, steel and aluminum, new materials, shipbuilding, electric or gas combustion vehicle production, artificial intelligence, quantum computing, microelectronics, telecommunications, biotechnology, or high-speed rail?” (Letter)(Press release)
Biden-Harris Administration
Department of Defense (DOD)
- DOD has reportedly been developing a Responsible Artificial Intelligence Toolkit, a series of guides on how defense officials, the intelligence community, civilian agencies, and foreign allies like NATO can develop responsible AI. (Breaking Defense)
- DOD published a notice announcing the Defense Health Board (DHB) will meet on November 19 to receive an update on the Ethical Implementation of Artificial Intelligence (AI) in the Military Health System tasking and a briefing on essential questions and necessary elements of AI governance. (Notice)
- The Army issued a press release highlighting the Experimental Demonstration Gateway Event 24, in which 75th U.S. Army Reserve Innovation Command Soldiers tested autonomous drones, artificial intelligence-driven aircraft systems, and other next generation aerial combat and reconnaissance tools. (Press release)
Transportation Security Administration (TSA)
- TSA published a notice of proposed rulemaking to impose cyber risk management (CRM) requirements on certain pipeline and rail owner/operators and to require certain over-the-road bus (OTRB) owner/operators to report cybersecurity incidents. The comment period ends on February 5, 2025. (NPRM)
Federal Aviation Administration (FAA)
- The FAA published a request for information (RFI) seeking input on machine learning and artificial intelligence tools to identify safety risks, generate insights, and provide rapid response capabilities. (RFI)
Commerce Department
- The President’s Export Council at Commerce announced a virtual meeting on December 10 to consider recommendations on ways AI can improve competitiveness of U.S. businesses operating in international markets. (Notice)
Federal Trade Commission (FTC)
- The FTC announced a proposed order to settle a complaint against Sitejabber, a consumer review AI platform, prohibiting the platform from making misrepresentations about consumer ratings and reviews. (Press release)(Complaint)(Order)
Trump-Vance Transition
- Politico reported that Gail Slater and Michael Kratsios will lead tech policy in the Trump transition. Kratsios served in the first Trump White House as chief technology officer and helped draft Trump’s 2019 artificial intelligence executive order. Slater served as economic policy advisor to in the office of Senator JD Vance and served as a special assistant to then-President Trump on tech, telecom and cybersecurity issues. (PoliticoPro)
Noteworthy Quotes and Events
ADMINISTRATION
Federal Trade Commission (FTC)
- Regarding the complaint against Sitejabber, Samuel Levine, Director of the FTC’s Bureau of Consumer Protection said, “Platforms don’t have free rein to mislead people about the consumer reviews shown for companies and their products. Along with our rule on fake reviews and testimonials, cases like this one show that we’ll act to stop all forms of deception in the review ecosystem.” (Press release)
Department of Defense (DOD)
- Regarding DOD’s Responsible AI Toolkit, Pentagon Responsible AI (RAI) director Matthew Johnson said, “We were appointed by the Executive Office of the President to create the recommended process for government agencies to meet the AI risk requirements under the Executive Order. We also have integrated into it the ability to show how you meet the requirements under the National Security Memorandum on the issue last week.” He added, “We’ve gotten a lot of feedback from OSTP and NIST, and we’re working on getting that into a version two that’ll be released to the interagency in the next couple of weeks.” (Breaking Defense)
National Geospatial-Intelligence Agency
- National Geospatial-Intelligence Agency’s chief AI officer, Mark Munsell, said, “I think you’ll see a lot more energy around implementing generative AI in the analytic workflow… what I mean by that is a lot of these … big models being developed by the big companies like Anthropic and Google and OpenAI are still not accessible by the folks at NGA. They are still not usable by the folks in NGA. So I would consider myself successful when our analysts and the officers at NGA have access to those — the world’s best models — on a top secret network.” Munsell added, “A new AI strategy will be published by NGA probably after the [2024] calendar year.” (DefenseScoop)
Securities and Exchange Commission (SEC)
- Keith E. Cassidy, Acting Director of the SEC Division of Examinations delivered remarks to the 2024 National Compliance Outreach Seminar in which he said, “In today’s market environment, not only are we conducting examinations in traditional areas, but we’re also examining for compliance with newly effective rules, looking ahead to changes in technology, dealing with some of the same cyber issues that each of you face every day, and considering the implication of recent advances in crypto assets and artificial intelligence.” (Prepared remarks)
Internal Revenue Service (IRS)
- Within its 2024 Agency Financial Report, the IRS discussed digital assets in multiple areas, including:
- Governance: “The IRS began implementing a new artificial intelligence governance process to ensure enterprise level oversight and compliance with federal requirements.”
- Risk: “The technology risks are related to the IRS information technology infrastructure’s resiliency, accessibility, reliability, security, and evolving risks such as Artificial Intelligence and the modernization of Information Technology at the IRS.”
- Bias: “…as the IRS plans to increase compliance efforts, it must protect the rights of taxpayers and promote tax fairness. For example, as the IRS changes how it selects returns and identifies issues for examination, including integrating artificial intelligence into case selection, it must consider the potential for disparate treatment of taxpayers.”
- Compliance: “The IRS is using improved technology and artificial intelligence to better detect cheating, identify emerging compliance threats, and improve case selection tools to avoid burdening taxpayers with needless audits.”
- Audit: “Expanded enforcement efforts in FY 2024 included the pursuit of balance sheet discrepancies for partnerships with at least $10 million in assets and the use of artificial intelligence to assist with the selection of 76 of the largest partnerships for audit. The IRS expanded compliance efforts on the U.S. subsidiaries of foreign companies that distribute goods in the U.S. and use transfer pricing rules year after year to report losses that are engineered through the improper use of these rules to avoid reporting an appropriate amount of U.S. profits. Monitoring the progress of these efforts utilizing artificial intelligence and subject matter expertise in areas such as cross-border issues will be the focus for FY 2025.”
- Modernization: “The IRS is working to streamline data processes and increase data efficiency, including publishing an initial artificial intelligence powered Enterprise Data Catalog. The Catalog provides a comprehensive view of data assets and should enable data sets to be standardized so they can be used for efficient discovery, understanding, and lineage tracking.”
- TIGTA priorities: “We will determine if cloud-computing security controls prevent the loss of sensitive data and assess the IRS’s efforts to provide effective governance, management, and oversight of forthcoming artificial intelligence.” (Report)
Consumer Financial Protection Bureau (CFPB)
- The CFPB published in the Federal Register a circular, “Background Dossiers and Algorithmic Scores for Hiring, Promotion, and Other Employment Decisions,” clarifying an employer can not make employment decisions using background dossiers, algorithmic scores, and other third-party consumer reports about workers without adhering to the Fair Credit Reporting Act (FCRA). (Circular)
CONGRESS
- In an interview, Politico asked Chair of the House Select Committee on the CCP, John Moolenaar (R-MI), whether outbound investment legislation would be considered in the lame duck or wait for consideration in a Republican-controlled Congress and White House in 2025. Moolenaar responded, “I’ll leave the decision on that up to our leadership, but I would just say that this is an urgent priority. The bottom line is that we need to cut off the flow of money to the CCP and protect our country and provide long-term clarity to American investors. That is a bipartisan priority. In a statement the other day, I commended the administration for their move to restrict investments to countries that pose a national security threat to the United States, like China does. But our investigations into the financial industry have shown that we need to take further action to ensure American money no longer fuels the Chinese Communist Party’s military build-out, its technological ambitions or its ongoing genocide.” He added, “I think also the Senate may have some dynamics where [Senate Majority Leader Chuck Schumer] may have priorities that he would like to see in the NDAA related to AI. There may be an opportunity to have a win-win scenario in the coming weeks. So, we’re going to make every effort.” (PoliticoPro)
- Moolenaar also issued a statement about a Jamestown Foundation report on how the Chinese Communist Party repurposed Meta’s Llama open-source AI tool into ChatBIT, a platform supporting the People’s Liberation Army (PLA), “This report reveals a stark truth: the Chinese Communist Party is co-opting American AI to fuel its military agenda. By weaponizing our open-access technology, the CCP is using U.S. innovation to tip the global balance of power, undermining our security and the principles of open collaboration. The Jamestown Foundation has exposed this urgent threat, demanding a critical reassessment of how we protect our technological edge from exploitation.” (Press release)
- House Admin Committee GOP tweeted, “Chairman Rep Bryan Steil is holding the U.S. Copyright Office accountable for delays in critical AI reports, pushing to ensure creators, innovators, and lawmakers get the guidance they need without further delay.”
- Rep. Deborah Ross (D-NC) tweeted, “Great visiting NCStateCED on NationalSTEAMDay and to hear more on how they are paving the way in harnessing AI to shape the future of learning. It’s clear – the next generation of educators & students are on the cutting edge of critical innovation.”
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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