January 13, 2025
This week decoded
The 119th Congress convened on January 3, 2025, bringing a flurry of activity as conferences, caucuses, and committees organized. The House Financial Services Committee announced the new subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence will be led by Rep. Bryan Steil (R-WI). The Senate begins the confirmation hearings of President-elect Trump’s cabinet nominees this week.
Politico reports the upcoming Biden executive order to accelerate permitting for the construction of AI data centers on federal lands and increase geothermal and nuclear energy production to power AI data centers will also include requirements on federal agencies and procurement around cybersecurity, software and cloud security, and digital identity.
The fate of Biden’s multiple executive orders on emerging technologies are in question in the transition to the incoming Trump Administration; the President-elect had promised while campaigning to cancel Biden’s executive order on AI on day one.
On this question, with DHS release of a playbook to help federal, state, and local government officials adopt generative AI tools, Secretary Alejandro Mayorkas said, “I am quite confident that the incoming administration will similarly seek to leverage technological advances to further the mission of this department, and will do so across its administration.”
DOJ issued a final rule to implement Executive Order 14117 on Preventing Access to Americans’ Bulk Sensitive Personal Data and United States Government-Related Data by Countries of Concern. The CFPB announced conditions for applications for No-Action Letters and Compliance Assistance Sandbox approvals. Multiple federal agencies released health-related AI rulemakings. The White House announced the launch of the U.S. Cyber Trust Mark.
Read more below
Congress
Hearings
- Last week
- There were no relevant hearings last week.
- This week
- On January 14, the Senate Armed Services Committee will consider the nomination of Peter Hegseth to be Defense Secretary.
- On January 15, the Senate Homeland Security and Governmental Affairs Committee will hold a hearing on the nomination of SD Gov. Kristi Noem to be Homeland Security Secretary.
- On January 15, the Senate Energy and Natural Resources Committee will hold a hearing on the nomination of Chris Wright to be Energy Secretary.
- On January 16, the Senate Finance Committee will hold a hearing on the nomination of Scott Bessent to be Treasury Secretary.
Legislation
- Rep. David Schweikert (R-AZ) introduced H.R. 193 to direct the Secretary of Health and Human Services to issue guidance on payment under the Medicare program for certain items involving artificial intelligence. (Text)
- Schweikert also introduced H.R. 238 to amend the Federal Food, Drug, and Cosmetic Act to clarify that artificial intelligence and machine learning technologies can qualify as a practitioner eligible to prescribe drugs if authorized by the State involved and approved, cleared, or authorized by the Food and Drug Administration, and for other purposes. (Text)
Correspondence
- Select Committee on the CCP Chair John Moolenaar (R-MI) and Ranking Member Raja Krishnamoorthi (D-IL) sent a letter to Commerce Secretary Gina Raimondo urging the Bureau of Industry and Security to “push other countries to limit their interactions with the PRC in contexts where it threatens our national security interests “ and “impose clear redlines for countries that may want access to U.S. technology” in its work on rulemaking for an Export Control Framework for AI Diffusion. (Letter)
Biden-Harris Administration
Consumer Financial Protection Bureau (CFPB)
- The CFPB published policy statements in the Federal Register announcing it is accepting applications with detailed conditions for No-Action Letters (NALs) and Compliance Assistance Sandbox Approvals to ensure they “promote innovations that solve unmet needs in markets for consumer financial products and services.” (NAL Notice)(Sandbox Notice)
Department of Homeland Security (DHS)
- DHS released a playbook to help guide federal, state, and local governments’ use of generative AI. (Playbook)
Department of Justice (DOJ)
- DOJ issued a final rule to implement Executive Order 14117 on Preventing Access to Americans’ Bulk Sensitive Personal Data and United States Government-Related Data by Countries of Concern. The rule “identifies countries of concern and covered persons to whom the Final Rule applies, and designates classes of prohibited, restricted, and exempt transactions;” “establishes bulk thresholds for certain sensitive personal data, including human ‘omic data, biometric identifiers, precise geolocation data, personal health data, personal financial data, and certain covered personal identifiers;” and “prescribes processes to obtain licenses authorizing otherwise prohibited or restricted transactions; protocols for the designation of covered persons; and provides advisory opinions, and recordkeeping, reporting, and other due diligence obligations for covered transactions.” (Final rule)(Fact sheet)
Food and Drug Administration (FDA)
- The FDA issued draft guidance on Artificial Intelligence Enabled Device Software Functions: Lifecycle Management and Marketing Submission Recommendations to “provide recommendations regarding the contents of marketing submissions for devices that include artificial intelligence (AI)-enabled device software functions including documentation and information that will support FDA’s evaluation of safety and effectiveness.” The comment period closes on April 7. (Notice)
- The FDA issued draft guidance on Considerations for the Use of Artificial Intelligence To Support Regulatory Decision-Making for Drug and Biological Products to “provide recommendations to industry on the use of artificial intelligence (AI) to produce information or data intended to support regulatory decision-making regarding the safety, effectiveness, or quality for drug and biological products.” The comment period closes April 7. (Notice)
Department of Health and Human Services (HHS)
- HHS released its Strategic Plan for the Use of Artificial Intelligence to Enhance and Protect the Health and Well-Being of Americans, providing an operational roadmap for leveraging emerging technologies and outlining four key goals to 1) Catalyze health AI innovation and adoption; 2) Promote trustworthy AI development and ethical and responsible use to avoid potential harm; 3) Democratize AI technologies and resources to promote equitable access for all; and 4) Cultivate AI-empowered workforces and organizational cultures to allow staff to make the best use of AI. (Press release)(Plan)
- HHS published a notice of proposed rulemaking to modify the HIPAA Security Rule by requiring increased cybersecurity of electronic protected health information. The comment period ends March 7. (Notice)
White House
- The White House announced the launch of the U.S. Cyber Trust Mark, a cybersecurity labeling initiative to encourage companies to implement security standards on smart wireless interconnected devices. (Press release)
- The Council on Economic Advisors transmitted to Congress its annual Economic Report of the President, in which it discusses economic impacts of AI policy in national security-related outbound investment and the K-12 education system, as well as digital services taxation. (Report)
Internal Revenue Service (IRS)
- The National Taxpayer Advocate released the annual report to Congress describing tax service challenges and recommendations on IRS improvements, including increased transparency and stakeholder engagement on the use of AI by the IRS in tax administration. (Report)
Departments of Energy (DOE) and Commerce
- DOE and the National Institute of Standards and Technology (NIST) announced a memorandum of understanding (MOU) to collaborate on safety research of advanced artificial intelligence models and systems. (MOU)(Press release)
National Aeronautics and Space Administration (NASA)
- NASA published a 2024 AI Use Case Inventory highlighting the active use of AI across the agency. (AI Inventory)
National Institute of Standards and Technology (NIST)
- NIST will host a virtual discussion on January 15th on the Privacy Workforce Evolves and Matures. (Event page)
Trump – Vance Transition
- Nomination hearings begin this week in the Senate for several of President-elect Trump’s cabinet secretary nominees.
Noteworthy Quotes and Events
ADMINISTRATION
Federal Reserve
- Fed Governor Michelle Bowman delivered remarks at the California Bankers Association 2025 Bank President Seminar, saying, “Regulators should operate in a transparent way and carefully and meticulously follow administrative procedures when making revisions to the regulatory framework. We should take a similar approach to shifts in supervisory focus. Doing so promotes trust and accountability to the public and should be integral to the important work we do promoting the safe and sound operation of the banking system and financial stability. Transparency also promotes innovation in the financial system by enabling banks to understand how to engage in new activities. This is especially important as digital assets and artificial intelligence are becoming increasingly more prevalent in the financial system.” (Prepared remarks)
White House
- Office of Science and Technology Policy Director Arati Prabhakar expressed concerns regarding federal funding for research and development in AI-related privacy, discrimination, and misinformation, saying, “Some of those great advances are at risk and that’s because — very unfortunately — last year, congressional Republicans held the country hostage, threatening to default on our debt obligations, and the upshot of that was budget caps that, among many problems, have stalled progress on federal R&D funding and even cut some of these critical federal R&D programs.” She also said, “there’s no protection for any of us from the prying eye of corporations, of your government or another government. In this dark future, every move, every click is being surveilled. In this dark future, misinformation and disinformation and deepfakes are so rampant that reality is distorted, and fraud is so rampant that trust is destroyed.” (FedScoop)
- National Security Advisor Jake Sullivan delivered remarks on A New Frontier for the U.S.-India Partnership, saying, “…as we work to build clean energy technologies, to enable growth in artificial intelligence, and to help U.S. and Indian energy companies unlock their innovation potential, the Biden administration determined it was time to take the next major step in cementing this partnership. So today I can announce that the United States is now finalizing the necessary steps to remove longstanding regulations that have prevented civil nuclear cooperation between India’s leading nuclear entities and U.S. companies.” (Remarks)
Department of Defense
- Deputy Secretary of Defense Kathleen Hicks delivered remarks at the School of Advanced International Studies on Outpacing the PRC: Lessons Learned for Strategic Competition, saying, “We’re also outpacing China’s military in the rapid, responsible use of data and AI, making our decision advantage even better than it already is. Our approach reflects our ethics and democratic principles — we don’t use data and AI to censor, repress, or disempower people. Instead, building upon our predecessors, we draw upon our many U.S. advantages: better chips, better tech, better talent, and better values that guide how we use data and AI.” (Transcript)
Commodity Futures Trading Commission (CFTC)
- CFTC Chair Rostin Behnam delivered remarks at the Brookings Institution regarding his tenure leading the commission, including launching their “first annual strategic data and AI action plan aimed at: strengthening data governance and quality; developing and deploying sophisticated enterprise analytics and AI capabilities; modernizing and streamlining tools and technologies; and promoting a data-informed workforce” and issuing an advisory in December “on the use of AI by CFTC registered entities and registrants.” (Prepared remarks)
CONGRESS
House Financial Services Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence
- Rep. Bryan Steil (R-WI) said, “Innovation in the financial services sector provides an exciting opportunity for consumers and entrepreneurs, as technologies like financial apps, digital assets, and machine learning revolutionize our economy. I am honored to serve as the Chairman of the Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence. I look forward to building on the important work this subcommittee completed under Chairman Hill as we continue to provide the rules of the road to move our economy into the future.” (Press release)
- House Financial Services Chair French Hill (R-AR) said, “Rep. Steil has been a leader in his time in Congress, both on our Committee and as House Administration Committee Chairman. As a member of the Digital Assets Subcommittee last Congress, Steil helped push forward our agenda and was instrumental in the historic House passage of FIT21 and fighting to roll back SAB 121. I am delighted he will take over my role as Digital Assets Subcommittee Chairman for the 119th Congress and be a leader in counting our work to create a regulatory framework for digital assets that will protect consumers and investors while keeping the United States a leader in innovation in the digital assets ecosystem.” (Press release)
DOJ Lawsuit Against RealPage
- Sen. Amy Klobuchar (D-MN) issued a press statement on the Justice Department lawsuit against RealPage, saying, “RealPage has used its algorithms to help landlords fix rental prices and limit competition, driving up the cost of housing for families already struggling to make ends meet. I called on the Justice Department to investigate RealPage, and I am glad to see they are taking an aggressive approach by expanding their lawsuit to include corporate landlords using this modern-day price-fixing tool. I will continue the fight to pass my bill that will strengthen antitrust law to prevent algorithmic collusion. We must lower housing costs by ensuring renters get the full benefits of competition.” (Press release)
- Rep. Chuy Garcia (D-IL) retweeted a Washington Post story on RealPage and said, Landlords are using AI software such as RealPage to raise rents for families across our country. That’s why w/ @RepBeccaB I am leading a bill that would ban these algorithmic-price-fixing softwares and prevent future housing market monopolies.”
- Garcia also tweeted, “It’s no secret that corporate landlords are using AI to hike up prices, forcing families to choose between paying rent and putting food on the table. This exploitation has to end. That’s why I’ve co-led a bill to stop these predatory practices and protect renters.”
Data Centers and Climate
- Sen. Ed Markey (D-MA) tweeted, “I want to talk to you about AI and our climate. Increased AI use could lead to: – doubling data center electricity demand by 2026 – increased carbon emissions – water supply shortages – electronic waste We are already facing a climate crisis. We can’t let AI make it worse.”
- Sen. Sheldon Whitehouse (D-RI) retweeted a NY Times article on emissions and power demand, saying, “The unbelievably rich AI and crypto companies should pay to bring clean power to their data centers, not make it everyone else’s problem.”
- Rep. Brett Guthrie (R-KY) said, “The computing power required for domestic AI data centers to outpace Chinese development will continue to demand significant amounts of energy in the years ahead.” Regarding nuclear energy, he said, “These reactors can be safely built in rural areas across the country, creating jobs in communities that have often been left out of the development of new technologies, and they can provide an adequate source of energy located close in proximity to the source of demand, such as AI data centers.” (Punchbowl)
Miscellaneous
- On CNN State of the Union, Sen. Andy Kim (D-NJ) said, “I’ve worked in national security before a lot of bipartisan concerns about American global competitiveness about the United States and China, what that means going forward, you know, I help pass the bipartisan CHIPS and Science Act, I’d love to see a 2.0 version, something where we can invest, maybe in artificial intelligence, other places where we can figure out how to be able to propel America going forward, and make sure that the innovation of the future is one that we are able to generate.” (Transcript)
- Sen. Amy Klobuchar (D-MN) tweeted, “AI is developing fast and soon it will be part of every aspect of our lives. We need guardrails in place that allow for innovation while protecting the American people.”
- Sen. Mark Kelly (D-AZ) tweeted, “ASU’s Research Park will soon house a cutting-edge facility to scale-test microchip prototypes—one of only two outside China. This puts Arizona at the center of America’s effort to lead in the next generation of chips that’ll power everything from AI to quantum computing.”
- Rep. Joe Morelle (D-NY) tweeted, “40% of students were aware of a deepfake of someone associated with their school last year. Our laws must meet the evolving threats of AI. My legislation would establish criminal and civil penalties for producing deepfakes and create a strong deterrent.”
- Rep. Maria Elvira Salazar (R-FL) tweeted at Elon Musk, “U.S. universities produce ~700k STEM graduates per year. We need to fill 3.5 million STEM jobs by next year. To compete with Communist China, we desperately need to fill this gap. Should we update our immigration system to help us win in the AI & Cyber race?”
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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