President Biden Signs Sweeping Artificial Intelligence Executive Order

On October 30, 2023, President Joe Biden issued an executive order (EO or the Order) on Safe, Secure, and Trustworthy Artificial Intelligence (AI) to advance a coordinated, federal governmentwide approach toward the safe and responsible development of AI. It sets forth a wide range of federal regulatory principles and priorities, directs myriad federal agencies to promulgate standards and technical guidelines, and invokes statutory authority — the Defense Production Act — that has historically been the primary source of presidential authorities to commandeer or regulate private industry to support the national defense. The Order reflects the Biden administration’s desire to make AI more secure and to cement U.S. leadership in global AI policy ahead of other attempts to regulate AI — most notably in the European Union and United Kingdom and to respond to growing competition in AI development from China.

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The Finalization of the UK-U.S. Data Bridge

On September 21, 2023, the UK and the U.S. announced the UK extension to the EU-U.S. Data Privacy Framework (DPF), which will come into effect on October 12. A new UK adequacy regulation provides that the UK Secretary of State for Science, Innovation and Technology has determined that the U.S. provides adequate levels of protection for personal data in certain transfers and brings the UK within the DPF announced in July 2023. The U.S. Attorney General also designated the UK as a “qualifying state” under an Executive Order on September 18 for the purposes of the DPF. This means that on October 12, UK businesses will be able to transfer personal data to U.S. organizations self-certified under the DPF.

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SEC’s Cybersecurity Disclosure Rules Are Here. Is Your Company Ready to Comply?

Companies are facing more attacks on their information systems. And, as their cyber risk skyrockets, the SEC has stepped in with new regulations, telling businesses what to disclose about these incidents — and requiring detailed disclosures on cyber risk management more broadly. With the deadline for compliance fast approaching, businesses are scrambling to mitigate their legal risk and comply with regulations that some say may be an overreach.

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New EU FIDA Proposal: How Does This Affect GDPR?

The European Commission issued the Financial Data Access Act (FIDA) proposal in June this year. FIDA will create a legislative framework that aims to “bring payments and the wider financial sector into the digital age” by facilitating the sharing of and access to customer financial data (whether of businesses or consumers).

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Schumer Framework May Forge U.S. Model on AI Governance

*This article first appeared on Law360 on September 5, 2023.

This summer, Senate Majority Leader Chuck Schumer proposed a distinctive new framework to develop a comprehensive artificial intelligence regulatory policy that is intended to be adamantly bipartisan and committed, as a first principle, to preserving innovation and intellectual property rights.

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Alan Charles Raul

Washington, D.C., New York

araul@sidley.com

Regulatory Update: National Association of Insurance Commissioners Summer 2023 National Meeting

The National Association of Insurance Commissioners (NAIC) held its Summer 2023 National Meeting (Summer Meeting) from August 12–16, 2023. Highlights include continued development of accounting principles and investment limitations related to certain types of bonds and structured securities, continued discussion of considerations related to private equity ownership of insurers, a proposed model bulletin addressing the use of artificial intelligence by the insurance industry, and continued development of a new consumer privacy protections model law.

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EU, U.S., and UK Regulatory Developments on the Use of Artificial Intelligence in the Drug Lifecycle

Globally, the rapid advancement of artificial intelligence (AI) and machine learning (ML) raises fundamental questions about how the technology can be used. Drug approval authorities are now also taking part in this discussion, resulting in emerging and evolving guidelines and principles for drug companies.

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Oregon Enacts Comprehensive Consumer Data Privacy Law

On July 18, 2023, Oregon joined the growing league of states that have passed a comprehensive data privacy framework. Signed into law by Gov. Tina Kotek, the Oregon Consumer Privacy Act (the Act), or SB 619, is the product of a multi-year effort by the state Consumer Privacy Task Force formed by Oregon Attorney General Ellen F. Rosenblum, comprising 150 consumer privacy experts from various industries. The Act will take effect on July 1, 2024, except for some provisions that will not take effect until January 1, 2026.

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UK ICO Scrutinizes Use of Generative AI

Following the EU’s increased focus on generative AI with the inclusion of foundation and generative AI in the latest text of the EU AI Act (see our post here), the UK now also follows suit, with the UK’s Information Commissioner’s Office (“ICO”) communicating on 15 June 2023 its intention to “review key businesses’ use of generative AI.” The ICO warned businesses not to be “blind to AI risks” especially in a “rush to see opportunity” with generative AI. Generative AI is capable of generating content e.g., complex text, images, audio or video, etc. and is viewed as involving more risk than other AI models because of its ability to be used across different sectors (e.g., law enforcement, immigration, employment, insurance and health), and so have a greater impact across society – including in relation to vulnerable groups.

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AI and the Role of the Board of Directors

Artificial intelligence (AI) has the capacity to disrupt entire industries, with implications for corporate strategy and risk, stakeholder relationships, and compliance that require the attention of the board of directors.

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