Congressional Action

On September 10, Senate Commerce, Science, and Transportation Committee Chair Ted Cruz (R-TX) released what he called a “light-touch” regulatory framework for federal AI legislation, outlining five pillars for advancing American AI leadership.  In parallel, Senator Cruz introduced the Strengthening AI Normalization and Diffusion by Oversight and eXperimentation (“SANDBOX”) Act (S. 2750), which would establish a federal AI regulatory sandbox program that would waive or modify federal agency regulations and guidance for AI developers and deployers.  Collectively, the AI framework and the SANDBOX Act mark the first congressional effort to implement the recommendations of the AI Action Plan the Trump Administration released on July 23. Continue Reading Senator Cruz Unveils AI Framework and Regulatory Sandbox Bill

In a surprise move, Senate Parliamentarian Elizabeth MacDonough ruled that a proposed moratorium on state and local AI laws satisfies the Byrd Rule, the requirement that reconciliation bills contain only budgetary provisions and omit “extraneous” policy language.  While MacDonough’s determination allows the Senate Commerce Committee’s version of the moratorium to…

Continue Reading Senate Parliamentarian Clears Revised State AI Enforcement Moratorium for Reconciliation Bill, But Passage Remains in Doubt

On June 3, President Donald Trump sent a package of $9.4 billion in rescissions to Congress for expedited consideration under Section 1017 of the Impoundment Control Act (ICA) of 1974. The House of Representatives reportedly plans to introduce, debate, and pass a bill to implement the President’s proposed rescissions as soon as next week. The Senate would have until mid-July to send the bill to the President for his signature.  While previous presidents have proposed rescissions, Congress has never fully deployed the ICA’s procedures to rescind appropriated funds.  Because the ICA provides a statutory limit on debate for rescissions bills in the Senate, the recissions process could be a powerful tool for a Congress and a President—when both chambers and the White House are under single-party control—to cut discretionary spending.

The Impoundment Control Act and Rescission Procedure

Congress adopted the ICA in 1974 to limit executive branch authority to decline to spend (“impound”) congressionally appropriated funds.  Until the Nixon Administration, presidents generally viewed appropriation levels as “ceilings” on permissible spending.  If a project came in under budget, an executive branch agency could simply return the leftover funds to the Treasury.  Presidents Truman and Nixon both used this impoundment power aggressively.  The ICA codified an assertion that spending of congressionally appropriated funds was not optional, requiring the president to send a “special message” to Congress specifying the amount of the proposed recission and the justification for why the funds should not be spent, before withholding funds. If Congress does not pass legislation to approve the President’s recommendation within 45 legislative days, the executive branch must then spend the funds and the President may not propose to rescind them again. 

The ICA specifically limits debate on rescissions bills on the Senate floor to 10 hours, meaning these measures are not subject to the Senate filibuster and may become law if passed by a simple majority vote in both chambers.  A rescissions bill can be amended, but amendments must be germane. If a rescissions measure passes through both chambers of Congress within 45 days of the president’s transmission of the special message, the president may impound the funds.

Congress has never in the 51-year history of the ICA deployed these procedures in full.  Instead, Congress can, and often does, rescind funding through ordinary legislation (including annual appropriations bills that are subject to the Senate filibuster, and budget reconciliation bills, which are not).  In several instances, the Senate has also approved rescission bills by unanimous consent, bypassing the filibuster but also skipping the ICA procedure.

History and Precedent

According to the Congressional Research Service, four presidents have submitted rescissions packages under Section 1017 of the ICA, but the procedure has never successfully been used on a partisan basis. Presidents Gerald Ford and Jimmy Carter used the rescission authority ten times, but those rescissions were not controversial and passed the Senate by unanimous consent. George H.W. Bush submitted $7.9 billion in rescissions in 1992, which also passed on an overwhelmingly bipartisan basis, with 404 votes in the House and 90 votes in the Senate. In his first term, President Trump proposed $15 billion in rescissions. The measure narrowly passed the House, 210 votes to 206, but failed in the Senate, 48 votes to 50. Consequently, Section 1017 has never successfully been used to rescind funds on a partisan basis. In current case, the President’s proposal would rescind funding from bills signed by his predecessor.Continue Reading Trump Rescissions May Revive Dormant Process to Fast Track Spending Cuts

House Republicans have passed through committee a nationwide, 10-year moratorium on the enforcement of state and local laws and regulations that impose requirements on AI and automated decision systems.  The moratorium, which would not apply to laws that promote AI adoption, highlights the widening gap between a wave of new…

Continue Reading House Republicans Push for 10-Year Moratorium on State AI Laws

On April 28, the House of Representatives voted 409-2 to pass the Tools to Address Known Exploitation by Immobilizing Technological Deepfakes on Websites and Networks Act (“TAKE IT DOWN Act”), which criminalizes the publication of nonconsensual intimate visual depictions (“NCII”) and requires online platforms to establish a notice and takedown…

Continue Reading U.S. Congress Passes Bill Establishing Notice and Takedown Regime for Publication of Nonconsensual Intimate Visual Depictions

On March 24, the Senate Judiciary Subcommittee on the Constitution held a hearing on the “Censorship Industrial Complex,” where senators and witnesses expressed divergent views on risks to First Amendment rights.  Senator Eric Schmitt (R-MO), the Subcommittee Chair, began the hearing by warning that the “vast censorship enterprise that the…

Continue Reading Senate Judiciary Subcommittee Holds Hearing on the “Censorship Industrial Complex”

Recently, three key investigative committees of the House of Representatives—the Oversight and Government Reform Committee, Judiciary Committee, and Energy and Commerce Committee—each adopted their respective committee’s oversight plan for the new Congress, offering a window into the committees’ investigative priorities for the next two years. The newly adopted oversight plans provide insights into the companies and industries most likely to draw congressional scrutiny from these three significant committees.

Under clause 2(d) of Rule X of the House, each authorizing committee is required to adopt and submit an oversight plan to the Committee on Oversight and Government Reform and the Committee on House Administration by March 1 after the start of a new Congress. The Oversight and Government Reform Committee collects the individual oversight plans and later publishes a comprehensive collection by April 15.

With some exceptions, the current oversight plans described below align with the plans adopted by these committees in the last Congress, and the Republican Members of the committees rebuffed the Democratic Members’ efforts to expand the plans to encompass oversight of the new Trump Administration. During a series of contentious markups, the committees rejected various amendments that would have expanded the scope of the oversight plans to include reviews of the Trump Administration directives, federal funding freezes, the activities of the Department of Government Efficiency, and other topics. As a result, the oversight plans tend to focus on private sector investigations, suggesting that investigations of private sector interests may take an outsized role in these committees’ oversight activities in the current Congress.

Below we highlight those elements of the committees’ oversight plans that are mostly likely to have implications for private sector entities. The plans are especially relevant to clients in industries including energy and environment, aerospace and defense, communications, technology, artificial intelligence, higher education, and pharmaceuticals.Continue Reading Preparing Now for Expected Congressional Oversight: Newly Released Oversight Plans Signal Investigations of Private Parties

Last month, DeepSeek, an AI start-up based in China, grabbed headlines with claims that its latest large language AI model, DeepSeek-R1, could perform on par with more expensive and market-leading AI models despite allegedly requiring less than $6 million dollars’ worth of computing power from older and less-powerful chips.  Although some industry observers have raised doubts about the validity of DeepSeek’s claims, its AI model and AI-powered application piqued the curiosity of many, leading the DeepSeek application to become the most downloaded in the United States in late January.  DeepSeek was founded in July 2023 and is owned by High-Flyer, a hedge fund based in Hangzhou, Zhejiang.

The explosive popularity of DeepSeek coupled with its Chinese ownership has unsurprisingly raised data security concerns from U.S. Federal and State officials.  These concerns echo many of the same considerations that led to a FAR rule that prohibits telecommunications equipment and services from Huawei and certain other Chinese manufacturers.  What is remarkable here is the pace at which officials at different levels of government—including the White House, Congress, federal agencies, and state governments, have taken action in response to DeepSeek and its perceived risks to national security.  

Federal Government-Wide Responses

  • Bi-Partisan Bill to Ban DeepSeek from Government Devices:  On February 7,Representatives Gottheimer (D-NJ-5) and LaHood (R-IL-16) introduced the No DeepSeek on Government Devices Act (HR 1121).  Reps. Gottheimer and LaHood, who both serve on the House Permanent Select Committee on Intelligence, each issued public statements pointing to grave and deeply held national security concerns regarding DeepSeek.  Rep. Gottheimer has stated that “we have deeply disturbing evidence that [the Chinese Communist Party (“CCP”) is] using DeepSeek to steal the sensitive data of U.S. citizens,” calling DeepSeek “a five-alarm national security fire.”  Representative LaHood stated that “[u]nder no circumstances can we allow a CCP company to obtain sensitive government or personal data.”

While the details of the bill have not yet been unveiled, any future DeepSeek prohibition could be extended by the FAR Council to all federal contractors and may not exempt commercial item contracts under FAR Part 12 or contracts below the simplified acquisition (or even the micro-purchase) threshold, similar to other bans in this sector.  Notably, such a prohibition may leave contractors with questions about the expected scope of implementation, including the particular devices that are covered.Continue Reading U.S. Federal and State Governments Moving Quickly to Restrict Use of DeepSeek

Barely noticed in the firehose stream of presidential activity since the inauguration was a brief Oval Office mention of cutting a deal with Ukraine for access to its critical minerals. Securing steady access to uranium, the rare earth elements, and other critical minerals is a natural priority for an America First agenda, so President Trump’s February 3 statement is unlikely to be his last. Changes to the tax code, permitting reform, regulatory incentives, and partnerships with allies as well as troubled nations are among the actions to watch for.

A Bipartisan Issue

Leaders of both parties agree that action is needed. “Whether it’s critical minerals with China … or uranium from Russia, we can’t be dependent on them,” Secretary of the Interior Doug Bergum asserted in his confirmation hearing. “We’ve got the resources here. We need to develop them.” Virginia Senator Mark Warner (D, VA) recently charged, “China dominates the critical mineral industry and is actively working to ensure that the U.S. does not catch up.” He urged, “The U.S. must, alongside allies, take meaningful steps to protect and expand our production and procurement of these critical minerals.” President Biden’s State Department was even more blunt, asserting that China is intentionally oversupplying lithium to “lower the price until competition disappears.”

Several recent developments have increased U.S. policymakers’ concerns about future supplies of critical minerals. New technologies, including artificial intelligence, promise to dramatically boost demand. China, meanwhile, is using new export control laws to curtail exports to the United States. A resurgent war in the eastern provinces of the Democratic Republic of the Congo (DRC), ostensibly over tribal rivalries, is actually a fight over the country’s rich mineral resources. These include gold and diamonds, but also coltan, an ore from which tantalum is extracted. Tantalum is extremely valuable for its use in the capacitors found in smartphones, laptops, and medical equipment.

The number of minerals in question (51), the usual number of steps in the production chain (4), and the variety of international agreements, public laws, private initiatives, and emerging technologies add up to a dizzyingly complex set of issues. Nevertheless, the bipartisan alignment evident in the above statements signals that impacted industries should watch closely for fast-moving legislative and regulatory developments.

Market Overview

Critical minerals are essential for a long list of industrial and defense-related needs. Attention is often focused on the 17 ‘rare earth elements,’ (REEs) but the U.S. Geological Survey (USGS) has a broader list of 50 mineral commodities that are critical to the nation’s economy and national security. Uranium is excluded by a statutory definition but is often tracked in parallel. Together, these 51 elements are used for a far wider array of products than is often recognized. The 17 REEs alone are also needed for oil refining, guided missiles, radar arrays, MRI machines, computer chips, hydrogen electrolysis, lasers, aluminum manufacturing, cameras, jet engines, satellite manufacturing, and a long list of other advanced applications.Continue Reading What President Trump Might Do on Critical Minerals