On February 20, Speaker Mike Johnson (R-LA) and Democratic Leader Hakeem Jeffries (D-NY) announced a new Artificial Intelligence (AI) task force in the House of Representatives, with the goal of developing principles and policies to promote U.S. leadership and security with respect to AI. Rep. Jay Olbernolte (R-CA) will chair the task force, joined by
On December 14, 2023, the U.S. Congress passed the National Defense Authorization Act for FY 2024 (NDAA), authorizing $886 billion in defense spending. Amid its numerous provisions, there is the concept of the “national technology and industrial base,” which now includes the United States, Canada, the United Kingdom, Australia, and New Zealand and could potentially serve as the basis for wider industrial cooperation with European and other global partners. This could provide useful synergies with ongoing efforts in Europe to galvanize defense production and help ensure an enduring competitive edge for the wider West over potential adversaries—within NATO and with global partners.
The Global “National Technology and Industrial Base”
The national technology and industrial base (NTIB) is defined in U.S. law as “the persons and organizations that are engaged in research, development, production, integration, services, or information technology activities” in national security and dual-use areas. First established in 1994, NTIB initially included only Canada in addition to the United States. In 2016, however, United Kingdom and Australia were added, followed by New Zealand in 2022. NTIB entities may receive preference for certain limited procurement actions and may be exempted from certain foreign ownership or control/influence requirements.
The logic behind this initial expansion was to foster industrial defense cooperation among the Five Eyes allies, which already had provisions for intelligence sharing potentially required for sophisticated military projects. And the expected benefits were to leverage economies of scale, promote innovation, and increase interoperability.
Given Russia’s large-scale war of aggression against Ukraine and the longer-term challenge from China, the NTIB could be expanded further to ensure that the wider West is able to produce the military materiel required to deter and confront any security challenges. The United States and its NATO Allies have already faced stockpile constraints in providing weapons supply to Ukraine to continue waging its defense. Now, the 2024 NDAA has added Israel and Taiwan to a program started to expedite delivery and replenishment of munitions to Ukraine, which will put further pressure on existing production. The NTIB could also serve as the fulcrum to leverage European defense initiatives in light of Russia’s war of aggression.
European Defense Initiatives
The European defense landscape has long been characterized by severe under-investment and fragmentation among Member States, with less than one-fifth of investments in defense programs conducted in cooperation. In 2009, the European Union expressed its willingness to facilitate joint procurement with the adoption of procurement rules for munitions, arms, and war material in the Defense Procurement Directive. However, implementation was lacking, and most procurement contracts were still awarded without an EU-wide tender.Continue Reading U.S. Defense Bill’s Implications for European and Global Partners
On December 12, the U.S. House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party (the “Select Committee”) adopted a broad set of policy recommendations intended to reduce the United States’ economic and technological ties with China across a broad swath of the economy.
The Select Committee passed the 53-page report, containing 130 recommendations, on a bipartisan, though not unanimous, voice vote. The report is organized around three pillars:
- “Reset the Terms of Our Economic Relationship with the PRC,” emphasizing the scope of the United States’ strategic dependence on China;
- “Stem the Flow of U.S. Capital and Technology Fueling the PRC’s Military Modernization and Human Rights Abuses,” which calls for increasingly hawkish trade and investment-review policies; and
- “Invest in Technological Leadership and Build Collective Economic Resilience in Concert with Allies,” focused on strengthening the workforce, critical supply chains, and related capabilities.
The report urges Congress and the Administration to deploy a variety of tools to compete with China, including by building on the Biden Administration’s recent executive orders on artificial intelligence and outbound investment. With respect to trade, the Select Committee recommends implementing stricter export controls and moving China to a new tariff column, effectively revoking its permanent normal trade relations (PNTR) status. Furthermore, the report calls for broadly expanding authorities for the Committee on Foreign Investment in the United States (CFIUS), as well as for investments in international economic development to counter China’s efforts to influence the economic affairs of trading partners through its Belt and Road initiative. The report recommends several steps to protect U.S. innovators from intellectual-property-related abuses and sanction companies in China that threaten U.S. national security.Continue Reading House Select Committee report urges “new path” for economic engagement with China
Recently, a bipartisan group of U.S. senators introduced new legislation to address transparency and accountability for artificial intelligence (AI) systems, including those deployed for certain “critical impact” use cases. While many other targeted, bipartisan AI bills have been introduced in both chambers of Congress, this bill appears to be one of the first to propose…
The field of artificial intelligence (“AI”) is at a tipping point. Governments and industries are under increasing pressure to forecast and guide the evolution of a technology that promises to transform our economies and societies. In this series, our lawyers and advisors provide an overview of the policy approaches and regulatory frameworks for AI in jurisdictions around the world. Given the rapid pace of technological and policy developments in this area, the articles in this series should be viewed as snapshots in time, reflecting the current policy environment and priorities in each jurisdiction.
The following article examines the state of play in AI policy and regulation in the United States. The previous article in this series covered the European Union.
Future of AI Policy in the U.S.
U.S. policymakers are focused on artificial intelligence (AI) platforms as they explode into the mainstream. AI has emerged as an active policy space across Congress and the Biden Administration, as officials scramble to educate themselves on the technology while crafting legislation, rules, and other measures to balance U.S. innovation leadership with national security priorities.
Over the past year, AI issues have drawn bipartisan interest and support. House and Senate committees have held nearly three dozen hearings on AI this year alone, and more than 30 AI-focused bills have been introduced so far this Congress. Two bipartisan groups of Senators have announced separate frameworks for comprehensive AI legislation. Several AI bills—largely focused on the federal government’s internal use of AI—have also been voted on and passed through committees.
Meanwhile, the Biden Administration has announced plans to issue a comprehensive executive order this fall to address a range of AI risks under existing law. The Administration has also taken steps to promote the responsible development and deployment of AI systems, including securing voluntary commitments regarding AI safety and transparency from 15 technology companies.
Despite strong bipartisan interest in AI regulation, commitment from leaders of major technology companies engaged in AI R&D, and broad support from the general public, passing comprehensive AI legislation remains a challenge. No consensus has emerged around either substance or process, with different groups of Members, particularly in the Senate, developing their own versions of AI legislation through different procedures. In the House, a bipartisan bill would punt the issue of comprehensive regulation to the executive branch, creating a blue-ribbon commission to study the issue and make recommendations.
I. Major Policy & Regulatory Initiatives
Three versions of a comprehensive AI regulatory regime have emerged in Congress – two in the Senate and one in the House. We preview these proposals below.
A. SAFE Innovation: Values-Based Framework and New Legislative Process
In June, Senate Majority Leader Chuck Schumer (D-NY) unveiled a new bipartisan proposal—with Senators Martin Heinrich (D-NM), Todd Young (R-IN), and Mike Rounds (R-SD)—to develop legislation to promote and regulate artificial intelligence. Leader Schumer proposed a plan to boost U.S. global competitiveness in AI development, while ensuring appropriate protections for consumers and workers.Continue Reading Spotlight Series on Global AI Policy — Part II: U.S. Legislative and Regulatory Developments
Unless Congress reaches an agreement to keep the lights on, the U.S. government appears headed for a shutdown at midnight on October 1. As the deadline looms, stakeholders should not let the legislative jockeying overshadow another consequence of a funding lapse: regulatory delay. Under normal circumstances, federal agencies publish thousands of rules per year, covering agriculture, health care, transportation, financial services, and a host of other issues. In a shutdown, however, most agency proceedings to develop and issue these regulations would grind to a halt, and a prolonged funding gap would lead to uncertainty for stakeholders, particularly as the 2024 elections approach. Another consequence is that more regulations could become vulnerable to congressional disapproval under the Congressional Review Act (CRA).
The Administrative Procedure Act (APA) provides that “General notice of proposed rulemaking shall be published in the Federal Register,” and prescribes requirements for the contents of an agency rulemaking notice. To initiate or finalize a rulemaking, agencies must submit rules to the Office of the Federal Register (OFR)—the National Archives and Records Administration agency that publishes the Federal Register, the government’s daily journal of rules, regulations, and other activities.
When government funding lapses, however, publication of critical rulemaking documents slows. Under the Antideficiency Act, both an agency seeking to publish documents and OFR are prohibited from spending or obligating funds during a shutdown. Government agencies are also prohibited from accepting voluntary services for government work—except in cases of “emergencies involving the safety of human life or the protection of property.”
These restrictions significantly curtail the ability of agencies to initiate new rulemakings that don’t qualify for the exception, or to advance rulemakings that began before a shutdown. Federal employees are not allowed to draft or submit rules for publication, accept or review public comments, or revise or publish final rules while their agency is unfunded.
Likewise, because the APA and other statutes require certain executive actions to be published in the Federal Register—OFR must also be funded and operational to publish most agency documents, even if the agency publishing the document has not experienced a funding lapse.
To account for this issue, OFR has set forth guidelines in advance of prior shutdowns that detail when agencies—funded or not—may submit documents for publication in the Federal Register, and when OFR will publish those documents.
First, for unfunded agencies—which, as of today, would include all federal agencies whose budgets are subject to annual appropriations—OFR will only publish documents that are necessary to safeguard human life, protect property, or “provide other emergency services consistent with the performance of functions and services exempted under the Antideficiency Act.” Agency materials related to “ongoing, regular functions of government” that pose no “imminent threat” to human safety or property protection are not permissible activities for unfunded agencies, and therefore inappropriate for OFR publication.
This restriction would have significant implications for agency regulatory efforts across the government, with impact on a wide range of regulated sectors. In one notable example, the rulemaking to implement the President’s recent outbound investment executive order (which we and our colleagues have discussed here) would likely stall for the duration of the shutdown. Nothing in the order or the Treasury Department’s advance notice of proposed rulemaking (ANPRM) suggests that the order—despite being issued under the International Emergency Economic Powers Act (IEEPA)—involves imminent threats to human safety or property. Thus, while public comments on the ANPRM are due on September 28, before the end of the fiscal year, a subsequent lapse in the Treasury Department’s funding would prohibit agency staff from reviewing public comments, scheduling and taking meetings with stakeholders, and revising and finalizing the proposed rule.Continue Reading Looming Shutdown Elevates Congressional Review Act Threat for New Regulations
We’ve seen this movie before. Conservatives, eager to bend the curve on federal outlays, are preparing to use the only leverage they have (their votes) while Senate Majority Leader Charles Schumer is talking about “House Republican extremists” causing a government shutdown. In most people’s eyes, Republicans have “lost” every shutdown fight since 1995. So why are conservatives back at it again?
Beyond their preference for a smaller government, conservatives are not alone in seeing runaway spending as a dire threat and will admit that their own party shares the blame. Our political system is structurally ill-equipped to turn off spending once it begins. A new estimate that the deficit will double to $2 trillion this year and Fitch Ratings’ recent downgrade of government credit are the most recent reminders that the problem is real. Efforts to rein in the deficit date back at least to the Gramm-Rudman-Hollings agreement in 1985 and include proposed Constitutional amendments, the Budget Enforcement Act of 1990 (PAYGO), the Line Item Veto Act of 1996, the Balanced Budget Act of 1997, a “sustainable growth rate” for Medicare reimbursements, George W. Bush’s plan to make Social Security sustainable, the 2010 Simpson-Bowles Commission, the 2011 ‘Supercommittee,’ sequestration, the discretionary spending caps in the Budget Control Act of 2011, revenue-producing tax increases, and growth-generating tax cuts.
None of it worked and the government is $32 trillion in debt. Congress rarely makes tough decisions without an action-forcing mechanism and conservatives want to be that mechanism. The House’s two conservative caucuses, the Freedom Caucus and the larger Republican Study Committee have identified similar priorities. Most broadly, they do not want the Covid-era surge in spending to serve as the baseline for future spending. The FY 2023 omnibus, which was called a “monstrosity” by Speaker Kevin McCarthy, passed the House with almost no GOP support in the very last days of the Democrats’ majority. Conservatives want to return to pre-Covid levels or lower. With $115 billion in rescissions, House appropriators have offered budgetary authority at pre-pandemic (FY 2022) levels, but conservatives say this is a gimmick that won’t reduce actual outlays. On this point, the Heritage Foundation says, ‘This represents an unprecedented expansion of rescissions as a budgetary tool to add spending within appropriations caps.’ Many conservatives also see the President’s emergency supplemental request as an end-run around the debt-limit agreement and have a longstanding position that supplementals should be offset.Continue Reading What Conservatives Want From the Spending Spat
On September 6, 2023, U.S. Senator Bill Cassidy, ranking member of the Senate Health, Education, Labor and Pensions (HELP) Committee, published a white paper addressing artificial intelligence (AI) and its potential benefits and risks in the workplace, as well as in the health care context, which we discuss here.
The whitepaper notes that employers…
Following our recent overview of key topics to watch in the National Defense Authorization Act (“NDAA”) for Fiscal Year (“FY”) 2024, available here, we continue our coverage with a “deep dive” into NDAA provisions related to the People’s Republic of China (“China” or “PRC”) in each of the House and Senate bills. DoD’s focus on strengthening U.S. deterrence and competitive positioning vis-à-vis China features prominently in the 2022 National Defense Strategy (“NDS”) and in recent national security discourse. This focus is shared by the Select Committee on Strategic Competition Between the United States and the Chinese Communist Party (“Select Committee”), led by Chairman Mike Gallagher (R-WI) and Ranking Member Raja Krishnamoorthi (D-IL).
It is no surprise, then, that House and Senate versions of the NDAA include hundreds of provisions—leveraging all elements of national power—intended to address what the NDS brands as China’s “pacing” challenge, including many grounded in Select Committee policy recommendations. Because the NDAA is viewed as “must-pass” legislation, it has served in past years as a vehicle through which other bills not directly related to DoD are enacted in law. In one respect, this year is no different—the Senate version of the NDAA incorporates both the Department of State and Intelligence 2024 Authorization bills, each of which includes provisions related to China.
To get a flavor of the approach to China in this year’s NDAA, look no further than the “Ending China’s Developing Nation Status Act” in Section 1399L of the Senate bill, which would require U.S. opposition to granting China “developing nation” status in treaties under negotiation and by international organizations of which the U.S. and China are members, such as the World Trade Organization. Classification as a “developing nation” affords China access to preferential loans and other economic benefits intended to increase trading opportunities, notwithstanding its current status as an upper-middle income country (as determined by the World Bank), and the world’s second largest economy, trailing only the U.S. Not to be outdone, Section 155 of the House bill contains a provision mandating expedited deployment of advanced radars to track high-altitude balloons and other potential threats to the U.S., in direct response to the incident earlier this year in which a Chinese balloon flew across the U.S. before being shot down by the Air Force.
Given these provisions, and many more (some we discuss below), this year’s NDAA strikes us as different. It incorporates many more China-related provisions and many of these would impose greater obligations on government contractors to limit their interactions with the PRC and entities affiliated with the PRC Government. Whether the laundry list of China-related provisions in the current NDAA survive, and in what form, will be determined by the conference process currently underway. But these provisions have the potential to impose significant near-term burdens on contractors—requiring them to assess their obligations and make adjustments to ensure compliance. Indeed, these provisions may be far more disruptive than requirements imposed by prior year NDAA China provisions that contractors have navigated by reassessing supply chains and increasing due diligence. All government contractors and suppliers to government contractors with any connection to China would be well advised to monitor how the NDAA conference approaches resolution of this legislation over the coming months.Continue Reading Not to Be Outpaced: NDAA Presents Measures Addressing China
Last week, a bipartisan, bicameral group of legislators introduced the Retroactive Foreign Agents Registration Act (“RFARA”) in the U.S. Congress. Led by Chairman Mike Gallagher (R-Wis.) and Ranking Member Raja Krishnamoorthi (D-Ill.) of the U.S. House Select Committee on the Chinese Communist Party, the bill would amend the Foreign Agents Registration Act (“FARA”) to clarify…