One of the Senate’s Republican leaders on artificial intelligence released the broad strokes of a plan on AI regulation Wednesday, along with a draft bill that would establish a regulatory “sandbox” with the hope of driving AI innovation.
Commerce Chairman Ted Cruz, R-Texas, put forward what he called a regulatory “light-touch” framework along with the draft bill text and a bill summary. The bill would allow companies to request waivers from certain federal regulations, which the government could grant for two years at a time.
The release came as the director of the White House Office of Science and Technology Policy, Michael Kratsios, appeared before a Commerce Committee panel where Republicans indicated their support for President Donald Trump’s strategy, dubbed the AI Action Plan.
Republicans on the Science, Manufacturing, and Competitiveness Subcommittee largely supported the administration’s work and what Cruz called the “five pillars” of his own plan, one of which would “prevent burdensome state AI regulations.”
Democrats questioned the administration’s commitment to protecting water and energy resources, as well as Trump’s executive order on political bias in AI.
Speaking about his suggested framework, Cruz quoted Trump as wanting to end a “patchwork” of state regulations on AI. Cruz earlier this year attempted to preempt such state laws through a proposal to ban state AI regulations that was initially part of the Republican budget reconciliation bill enacted this summer. But the provision was unpopular on both sides of the aisle and senators voted to remove it during floor consideration, 99-1.
In response to Cruz’s questioning on preemption, Kratsios said it is “something to look at closely.”
He called the varying state laws “anti-innovation,” that they make it “extraordinarily difficult for America’s innovators to promulgate their technologies across the United States” and give “more power” to bigger technology companies that have the resources to comply. Kratsios added, “We do not believe in allowing this patchwork to go forward.”
Cruz did not speak to what would be included in a federal standard to override state laws. Much of the hearing on the Republican side was devoted to promoting the principles of Trump’s plan and executive orders on AI.
‘Light-touch’ regulation
According to Cruz’s regulatory framework, the first pillar of the plan, “Unleash American Innovation and Long-Term Growth,” would include the sandbox effort, as well as streamlining infrastructure permitting and opening federal datasets for AI model training.
On the issue of federal data, Sen. Gary Peters, D-Mich., questioned Kratsios on the administration’s commitment to data security, in part based on the recent resignation of the Social Security Administration’s chief data officer due to data practices at the administration.
“Data protection is critically important,” Kratsios responded.
“Well you have to demonstrate it. It’s nice words, and rhetoric is always very nice, but if you don’t demonstrate that you’re actually making it a priority, I don’t think any of us can believe that it is a priority,” Peters said. “I have serious concerns that this administration does not have data standards in place that can successfully integrate AI, an incredibly powerful tool, into the workplace.”
On infrastructure permitting, Republican AI supporters point to energy permitting changes as critical to ensuring AI data centers can be built quickly to compete with adversaries like China. Democrats have expressed concern about environmental impacts of the energy used by the centers.
At the subcommittee hearing, Sen. Tammy Baldwin, D-Wis., pointed to the importance of the Great Lakes to her state, and questioned how the Trump administration plans to protect groundwater resources if, as suggested in its plan, regulators amend and expedite Clean Water Act pollution regulations.
“Our North Star will always be to ensuring clear and clean water for the United States. And I think with any regulatory changes, as we’ll go through notice and comment, and we very much look forward to what the public has to say about how we can ensure that whatever new regulations we promulgate at those agencies do meet those high standards,” Kratsios said.
The plan’s second pillar, “Protect Free Speech in the Age of AI,” lists its priorities as stopping government censorship, overhauling the AI goals of the National Institute of Standards and Technology and combating foreign censorship of Americans.
Sen. Amy Klobuchar, D-Minn., spoke to the complexity of balancing free speech with protecting individuals who might be targeted by AI deepfakes. Earlier this year a viral deepfake of Klobuchar spread online and was treated differently by different platforms.
“To me, it’s some regime where, within the realm of the Constitution where some of it is labeling, just ‘digitally altered’ because it’s parody and you’re not allowed to take it down,” Klobuchar said.
Klobuchar encouraged support for a bill she co-sponsored, known as the NO FAKES Act, which would work to hold platforms and individuals accountable for creating non-consensual deepfakes, with some First Amendment carveouts.
The third pillar says it will “Prevent a Patchwork of Burdensome AI Regulation,” under which Cruz plans to clarify federal standards, likely preempting state laws, and “counter excessive foreign regulation of Americans.”
Sen. Marsha Blackburn, R-Tenn., had worked with Cruz this summer on the potential ban on state AI regulation, but was eventually part of its downfall as she came out against the final version. She is also a co-sponsor of the deepfakes bill.
At Wednesday’s hearing, she pushed back on the negative reaction to state AI laws, which she said have helped protect copyright that could be infringed during the AI training process.
“States have played such an important role in stepping forward, because Congress has proven incapable of passing legislation that is going to protect content. So I think that making certain those patents, trademarks and copyrights are not infringed, is vital to our creative community,” Blackburn said.
According to Cruz’s plan, the fourth regulatory pillar, “Stop Nefarious Uses of AI Against Americans,” would work to stop impersonation scams and expand federal policy against AI-generated sexual depictions of children. The fifth pillar of the framework would “Defend Human Value and Dignity,” planning to prioritize bioethical considerations and oppose AI-driven eugenics.
Sandbox bill
Cruz said his bill, titled the “Strengthening Artificial Intelligence Normalization and Diffusion By Oversight and eXperimentation Act,” would help fine-tune federal AI policy, using a method recommended in the administration’s AI plan.
“A regulatory sandbox is not a free pass,” Cruz said. “People creating or using AI still have to follow the same laws as everyone else.”
The unnumbered draft would require companies applying to the program to explain how waiving regulations would benefit customers, enhance the business’ operational efficiency, create jobs or further AI innovation. It would also require developers to list foreseeable risks and explain how they’re outweighed by benefits.
When approving applications to waive agency regulations, it would require the agencies to identify how consumers would be protected and how a company would mitigate risks.
It would also require companies to notify the sandbox program of any incidents that cause harm, including to health and safety or the economy. The bill would maintain consumer rights of action for damages, not allowing them to be waived under the program.
Under the bill, the director of the Office of Science and Technology Policy would annually ask Congress to amend or repeal regulations that the program has shown are not necessary to protect safety.
J.B. Branch, accountability advocate for consumer advocacy group Public Citizen, said in a statement that the bill could allow for the deployment of products that threaten privacy, safety and democracy.
“Public safety should never be made optional, but that’s exactly what the SANDBOX Act does. Companies that build untested, unsafe AI tools could get hall passes from the very rules designed to protect the public. It guts basic consumer protections, lets companies skirt accountability, and treats Americans as test subjects,” Branch said.
Industry group NetChoice, which represents major players in the AI space including Google and Meta, applauded Cruz’s plan and the sandbox bill.
“Senator Cruz is showing true leadership in AI policy in recognizing both the promise of artificial intelligence and the risks posed by heavy-handed government regulation,” said Amy Bos, NetChoice’s director of state and federal affairs, in a statement. “The SANDBOX Act is a forward-looking framework that embraces America’s entrepreneurial spirit, cuts red tape and ensures that bureaucracy does not define the future of American-made AI.”
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