July 13: This week in AI federal policy

DC/ai Decoded: A weekly newsletter on developments in artificial intelligence, quantum, and data federal policy

This week decoded

Driving the week in AI policy, the House holds hearings on AI's role in small business, U.S.-China economic competition, and export controls, while a wave of new legislation focuses on impacts to national security, consumer protection, and workforce development. Bills related to AI in financial services, education, and tax passed out of their respective committees. Looking ahead, House Financial Services Committee Ranking Member Maxine Waters (D-CA) launched a formal Request for Information (RFI) seeking public input on the use of AI in financial services.

On the regulatory side, the FTC opened a comment period on AI systems potentially manipulating consumer behavior and Commerce's decision to ease chip export controls for the UAE drew sharp criticism.

This week, the Federal Reserve convenes a conference on AI and financial inclusion.

Read more below

Congress

Hearings

This week

• On July 14, the House Small Business Committee holds a hearing on “AI on Main Street: How AI is Shaping the Future of Small Business.”

• On July 14, the House Oversight and Government Reform Economic Growth, Energy Policy, and Regulatory Affairs Subcommittee holds a hearing on “Roundtable - Winning the Economic Competition with China: Working Families, the AI Race, and Energy.”

• On July 14, the House Foreign Affairs Committee holds a hearing on “FY2027 BIS (Bureau of Industry and Security) Budget: the AI Arms Race and the ICTS (Information and Communications Technology and Services) Office.”

Upcoming

• On July 21, the House Administration Committee holds a hearing on “Modernizing Public Access to Legislative Data and Information.”

• On July 24, the House Education and Workforce Committee holds a field hearing on “Building an AI-Ready America: How AI Is Creating Opportunities Across America’s Workforce.”

Legislation

• The House Science, Space, and Technology Committee passed the National Science Foundation Artificial Intelligence Education Act (NSF AI Education Act) to build AI workforce pipelines.

• The House Ways and Means Committee passed the AI Tax Integrity Act to encourage the Treasury Department and the Internal Revenue Service to use artificial intelligence tools to detect tax fraud.

• The House Financial Services Committee passed a series of bills, including the Protecting Investors’ Personally Identifiable Information Act to protect investors’ personally identifiable information by limiting the unnecessary collection and disclosure of sensitive personal data to the consolidated audit trail.

• Sens. Tim Scott (R-SC) and Bill Hagerty (R-TN) introduced the ICTS Supply Chain Security Act to codify the Office of Information and Communications Technology and Services within the Bureau of Industry and Security, establish a Senate-confirmed Assistant Secretary to lead the effort, create a clear prohibition on covered transactions involving foreign adversary technology, and include guardrails to protect free speech and open-source software. (Text)

• Reps. Valerie Foushee (D-NC) and Greg Casar (D-TX) introduced the People-First Chatbot Act to prohibit companies from using minors’ chat logs or personal data to train AI chatbots; prohibit the use of chat logs or personal data for training without affirmative consent; require companies to disable harmful AI chatbot design features for minors; limit the use of users’ personal data and chat logs for targeted advertising, profiling, customized ads, and sale; give users the right to access and delete retained chat logs and personal data; require AI chatbot providers to clearly disclose when a user is interacting with an AI chatbot rather than a human; prohibit AI chatbot providers from implying that chatbot outputs are provided by, endorsed by, or equivalent to those provided by licensed healthcare, legal, accounting, or financial professionals; and require monthly safety assessments. (Press release)

• Reps. Michael McCaul (R-TX), Ami Bera (D-CA) and Mike Kelly (R-PA) introduced the Accelerating Innovation (AI) for Kids Act to accelerate the use of artificial intelligence to improve and transform pediatric cancer research, treatment options, and data storage. (Press release)

• Rep. Greg Landsman (D-OH) introduced the Protecting Communities from Data Center Impacts Act to require the Environmental Protection Agency to contract with the National Academies of Sciences, Engineering, and Medicine (NASEM) to study the environmental impacts of data centers and develop best practices to combat environmental impacts. (Text)

• Sens. Pete Ricketts (R-NE) and Tim Kaine (D-VA) and Reps. Bill Huizenga (R-MI), Mark Messmer (R-IN), Joe Courtney (D-CT), Michael McCaul (R-TX), Pat Ryan (D-NY), Blake Moore (R-UT), and Gabe Amo (D-RI) introduced the UNLOCK AUKUS Act to strengthen the AUKUS security partnership by providing the United States, Australia, and the United Kingdom greater flexibility to collaborate on advanced defense technologies while preserving critical national security safeguards. (Text)

• Reps. Josh Gottheimer (D-NJ), Tom Kean (R-NJ) and Sam Liccardo (D-CA) introduced the Spot the Fakes Act requiring that all AI-generated content carry a built-in label embedded in its metadata. (Press release)

• Sen. Elizabeth Warren (D-MA) and Rep. Mary Gay Scanlon (D-PA) announced that they will reintroduce the Health and Location Data Protection Act to ban data brokers from selling Americans’ sensitive personal information. (Press release)

Correspondence

• Sen. Jon Ossoff (D-GA) sent a letter to Director of the White House Office of Science and Technology Policy (OSTP) Michael Kratsios seeking information after researchers and CEOs of several AI companies signed an open letter urging the Federal government to implement mandatory screening of orders for artificially generated nucleic acids due to concerns that artificial intelligence could be misused by bad actors to produce chemical and biological weapons. (Letter)

• Sen. Elizabeth Warren (D-MA) sent letters to the Department of Defense, Google, SpaceX, NVIDIA, Reflection, Microsoft, Amazon Web Services, and Oracle requesting information regarding the DoD’s use of AI in military operations and urged these companies to release the full text of their contracts. (Press release)

• Reps. Mike Lawler (R-NY) and Josh Gottheimer (D-NJ) sent a letter to the Cybersecurity and Infrastructure Security Agency (CISA), the Department of Justice (DOJ), the Federal Election Commission (FEC), and the Department of Homeland Security (DHS) requesting the agencies collaborate to ensure AI-driven technologies do not undermine voters’ access to accurate, neutral, and reliable election information. (Letter)

• Sen. Jim Banks (R-IN) sent a letter to Commerce Secretary Howard Lutnick urging the U.S. Patent and Trademark Office (USPTO) to protect American innovation from Chinese companies that are using AI to scrape U.S. patent applications and accelerate the theft of American intellectual property. (Letter)

• House Judiciary Committee Ranking Member Jamie Raskin (D-MD) and Rep. Hank Johnson sent a letter to the Honorable Robert J. Conrad Jr., Director of the Administrative Office of the U.S. Courts, urging the Judicial Conference to prohibit federal judges, clerks, and judicial staff from participating in online prediction markets. (Letter)

• Sens. Ron Wyden (D-OR) and Jeff Merkley (D-OR) wrote to OR Gov. Tina Kotek’s data center advisory committee to express concerns about the state panel’s work to balance data centers’ economic benefits with their financial impacts on utility consumers and the environment. (Letter)

Publications and Events

• Sen. Edward Markey (D-MA) released an “AI Accountability Agenda: Taking Power Back from Big Tech,” discussing risks posed by AI and recommending specific policy proposals to protect communities from the immediate harms of AI. (Agenda)

• House Financial Services Committee Ranking Member Maxine Waters (D-CA) launched a formal Request for Information (RFI) inviting consumer advocates, industry experts, regulators, and the public to submit feedback on the use of AI in the financial marketplace. (Press release)

• Sen. John Cornyn (R-TX) published an op-ed in Dallas Morning News entitled “CHIPS Act will help America win the AI race with China.” (Op-ed)

• The Congressional Research Service (CRS) published a report on “Controlling Advanced Artificial Intelligence: Executive Order 14409 Explained” (Report)

• The Congressional Research Service (CRS) published a report “Agentic Artificial Intelligence and Cyberattacks” (Report)

Trump Administration

Federal Reserve

• On July 14, the Federal Reserve holds the Next-Gen Financial Inclusion Conference, including remarks from Federal Reserve Board Governor Michael Barr on “Artificial Intelligence,” a panel discussion on “Artificial Intelligence and Financial Inclusion,” a discussion with Federal Governor Lisa Cook on “Consumers, Artificial Intelligence, and Financial Inclusion: Balancing Opportunities and Challenges” and remarks by Federal Reserve Board Vice Chair for Supervision Michelle Bowman on “Responsible Innovation and Financial Inclusion.”

Department of Labor

• The Bureau of Labor Statistics (BLS) published a Request for Information for comments concerning the proposed “American Time Use Survey (ATUS) Artificial Intelligence (AI) Questions, particularly regarding whether the proposed collection of information is necessary for the proper performance of the functions of the agency. The comment period ends September 8. (Notice)

Federal Trade Commission (FTC)

• The FTC published a request for comment on a proposed policy statement addressing concerns that AI companies may be manipulating the behavior of their AI systems contrary to reasonable consumer expectations for objectivity and accuracy. The comment period ends July 31. (Press release)

Commerce Department

• The Bureau of Industry and Security (BIS) issued a final rule amending the Export Administration Regulations (EAR) to provide enhanced favorable treatment for the United Arab Emirates (UAE), easing export controls on the United Arab Emirates to allow purchases of advanced technology including defense equipment. (Rule)

Government Accountability Office (GAO)

• The GAO published a report on “VA Disability Benefits: Opportunities and Challenges to Modernizing Technology and Adopting AI” (Report)

Noteworthy Quotes

CONGRESS

• On overly burdensome regulations, House Energy and Commerce Committee Chair Brett Guthrie (R-KY) said, “Government just can’t react quick enough to innovate.” He added, “China doesn’t behave like we want them to all the time. We have to make sure we win this battle.” (Punchbowl)

• On data centers, Guthrie said, “If you’re going to build a data center, you’re going to build an automotive assembly plant, the local people need a say where it’s going to go and how it’s going to be used.” (Punchbowl)

• Rep. Zach Nunn (R-IA) said that “agentic systems are the next front” and “It’s incumbent upon us to lead from the front and develop these technologies in a safe and responsible way.” (Punchbowl)

• Senate Banking, Housing and Urban Affairs Committee Ranking Member Elizabeth Warren (D-MA) released a statement on the Department of Commerce easing export controls on AI chip sales to the UAE, saying, “We already know that the UAE royal behind G42 and MGX secretly bought a 49% stake in the Trump crypto company, World Liberty Financial. It was also just revealed that President Trump made a whopping $263 million windfall related to this deal, part of the $1.4 billion he raked in from his crypto ventures last year alone. Now, Trump’s Commerce Department is giving G42 license-free access to advanced AI chips and promising favorable treatment for MGX, despite reported concerns about the diversion of sensitive technology to China and other national security risks. Secretary Howard Lutnick and Under Secretary Jeffrey Kessler need to testify in front of the Committee to explain this corrupt deal and how it could put our national security at risk. And Congress should not pass any crypto legislation that does not stop the President and his family from continuing to profit off of crypto.” (Press release)

• Warren also posted “Selling advanced AI chips to China will turbocharge its military capabilities and its bid for technological dominance. The Trump Administration is letting it happen, despite warnings from Republicans and Democrats. Congress needs to pass bipartisan export control legislation now.”

• Rep. Tom Kean (R-NJ) posted “As artificial intelligence becomes more sophisticated, identifying what’s real and what’s artificially generated has become a real challenge. That is why, last week, I introduced the Spot the Fakes Act with Congressman Gottheimer and Congressman Liccardo. This legislation would require that AI-generated content carry a built-in label in its metadata so that AI-generated content can be clearly and accurately labeled.”

• Rep. Mike Lawler (R-NY) posted “Artificial intelligence is transforming how we communicate, but it also creates new challenges to the integrity of our elections. That’s why I joined repjoshg in urging the Department of Justice, Department of Homeland Security, the Federal Election Commission, and the CISA to strengthen coordination with leading AI companies to address election threats, improve transparency, and identity bias.”

• Rep. Jay Obernolte (R-CA) posted “The Science, Space, and Technology Committee also advanced my CREATE AI Act, another key piece of my Great American AI Act. This bipartisan bill will establish the National Artificial Intelligence Research Resource to give American researchers, students, educators, and small businesses access to the compute, data, models, and tools they need to develop advanced AI. America’s AI future cannot be limited to only the largest companies. To stay competitive, we need our universities, entrepreneurs, and next generation of innovators leading the way.”

• Sen. Tim Sheehy (R-MT) posted ”America MUST win the AI race against Communist China. Data centers are a part of that. But data centers should NOT jack up prices on families. We must unleash American energy: drill, nuclear, natural gas. Cheap power + tech dominance = Winning”

• Sen. Chris Coons (D-DE) posted “Trump seems to have no plan to establish AI dominance and ensure that the technology of the future is built in America, on the American stack, with American values in mind. The administration owes everyone answers about whether they have a strategy to ensure that American companies lead the AI race, not their Chinese or Emirati counterparts.”

• Sen. Ed Markey (D-MA) posted “The harms of AI aren’t hypothetical. They’re happening right now. That is why I’m releasing my AI Accountability Agenda—a comprehensive legislative plan to take power back from Big Tech and put commonsense protections in place for workers, kids, and communities across the country.”

• Sen. Mark Kelly (D-AZ) posted “As AI becomes part of everyday life, we need to understand how these tools affect older Americans. AI has the potential to make a difference for seniors, families, and caregivers, but research hasn’t kept up. We need real data on the benefits and risks so we can make smarter policies. My Aging with AI Act will do just that.”

• Rep. Valerie Foushee (D-NC) posted “RepCasar and I introduced the People-First Chatbot Act alongside 30+ groups including ConsumerFed, SecureAINow, CommonSense, FairplayForKids, FamStudies, NCL_Tweets and Parents4SOS. AI chatbots are putting the lives and data of Americans at risk. We must take action.”

• Foushee also posted “This bill would protect Americans from AI chatbot harms by requiring monthly safety assessments for risks like suicide, banning the use of children’s data for training and harmful features for minors, and empowering FTC and state AGs to enforce the law.”

• Rep. Nancy Mace (R-SC) posted “South Carolina just ranked among the top 10 states for AI data center deals. This is exactly why we’re renewing our call for a one-year moratorium on new data center construction. South Carolina is not Big Tech’s personal power grid. As our state becomes a prime target for AI data center development, the stakes are only getting higher. We need time to understand the impact on our electric grid, water supply, and make sure South Carolina families aren’t left footing the bill. The rules are simple: data centers pay their own way, or they don’t come here. Period.”

What I’m Reading This Week

• Inside the Alternative Playbook to AI Regulation, Maria Curi and Ashley Gold, Axios.

• How Do We Tax AI?, Martha Gimbel, Tax Notes.

• Taxing AI in the Wake of the Emergence of Agentic AI, Reuven S. Avi-Yonah and Herbert Snitz, Tax Notes.

About Zero One Strategies

Zero One Strategies is a specialized 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, digital assets, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.

Contact us at Stacey@ZeroOneStrategies.com

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