President Biden Signs Sweeping Executive Order on Artificial Intelligence

On October 30, 2023, President Biden issued a sweeping Executive Order regarding the use of artificial intelligence (AI). The order calls for federal agencies to create new standards around privacy, security, safety, and the prevention of discrimination. 

Privacy

The order states that federal agencies will develop techniques to protect peoples’ privacy and study the effectiveness of the current privacy protections. Recognizing the limited ability of the president to unilaterally mandate increased privacy protection in the private sector, the order primarily focuses on ways that the government’s use of AI must protect privacy while calling on Congress to pass comprehensive privacy legislation. Comprehensive data privacy legislation has stalled in Congress repeatedly over the past few years.

Security, Safety, and Transparency

Exercising powers under the Defense Production Act, the order requires that developers of the most powerful AI systems share their safety test results and other critical information with the federal government prior to providing the models to the public. The standards for the red-team testing will be set by the National Institute of Standards and Technology. The Department of Homeland Security and the Department of Energy will apply those standards to certain critical infrastructure sectors as well as chemical, biological, radiological, nuclear, and cybersecurity risks. 

Recognizing the fraud risk posed by deep fake AI technology, the order requires the Department of Commerce to develop guidance for content authentication and watermarking to clearly label AI-generated content. The order indicates that these measures are needed to ensure that people know that information they receive from the government is authentic.

To limit the use of U.S.-based infrastructure by foreign adversaries, the order also mandates that cloud computing companies verify the identity of any foreign person that obtains a cloud computing account. This could be a significant obligation for companies with a worldwide market.

Prevent Discrimination

The order mandates that federal agencies provide clear guidance to landlords, federal contractors, and other recipients of federal benefits programs regarding the use of AI programs to prevent increased discrimination. The guidelines shall ensure that anyone receiving a federal benefit is aware of any use of an algorithm system when making determinations about benefits and that there is sufficient oversight over any automated system. The concern is that AI programs that rely on discriminatory data may perpetuate discriminatory outcomes.

The order also mandates that the secretary of Labor must publish guidance for federal contractors regarding nondiscrimination in hiring involving AI and other technology-based hiring systems.

Impact on Workers, Students, and Healthcare

The order also calls on various federal agencies to create guidelines for the implementation of AI in schools and healthcare facilities, as well as develop principles and best practices to mitigate the harms of AI for workers. It appears that these guidelines will likely be discretionary. 

Conclusion

Overall, the order is sprawling in its breadth. However, given the limited capacity of the president to act without Congress, the order will likely only have a direct impact on companies that create large AI models and the infrastructure that supports those models and companies/organizations that directly interact with the federal government. Nevertheless, the approach taken by the White House with this order, as well as the guidelines that will be developed by the various federal agencies, will give us more insight into how AI will likely be regulated going forward, both in the United States and internationally. The guidelines may also increase confidence for companies looking to adopt AI models as part of their business that the models coming to market in the future have received at least some vetting before being released to the public.

Sherman and Howard’s AI Task Force is working to stay abreast of these new developments and the implications for our clients. This is part of a series of client advisories that will discuss the potential benefits and drawbacks of generative AI in the workplace, relevant statutory and regulatory guidance, litigation risks, and other critical issues. If you have questions about AI policies, please contact your Sherman & Howard attorney, and if you would like to subscribe to our AI advisories, click HERE.