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U.S. AI, IoT, CAV, and Privacy Legislative Update – Third Quarter 2022

This quarterly update summarizes key legislative and regulatory developments in the third quarter of 2022 related to Artificial Intelligence (“AI”), the Internet of Things (“IoT”), connected and autonomous vehicles (“CAVs”), and data privacy and cybersecurity. 

This quarter, Congress has continued to focus on the American Data Privacy Protection Act (“ADPPA”) (H.R. 8152), which would regulate the collection and use of personal information and includes specific requirements for AI systems.  Disagreements over the legislation’s preemption of state laws and creation of a private right of action continue to stall the its progress.  Separately, the Federal Trade Commission (“FTC”) announced an Advanced Notice of Proposed Rulemaking to solicit input on questions related to privacy and automated decision-making systems.  The notice cites to the FTC’s prior guidance related to IoT devices. 

Artificial Intelligence

Regulators and the White House have expressed increased interest in setting forth requirements and best practice expectations around the operation of AI systems.  For example, the FTC announced an Advanced Notice of Proposed Rulemaking in August that asks for comments on a number of topics related to automated decision-making systems.  In particular, the FTC is requesting comments on the prevalence of error in automated decision-making systems, discrimination based on protected categories facilitated by algorithmic decision-making systems (and whether the FTC should consider recognizing additional categories of protected classes), and how the FTC should address algorithmic discrimination that occurs through the use of proxies. 

In early October, the White House also released its Blueprint for an AI Bill of Rights.  Discussed in further detail here, the Blueprint outlines recommended best practices for entities using AI, which include measures to provide a safe and effective system, protections against algorithmic discrimination, attention to data privacy, notice and explanation, and the provision of human alternatives and consideration.

Congress continues to weigh into the discussion about regulation of AI systems.  The latest version of the ADPPA would require a covered entity or service provider who “knowingly develops” a covered algorithm that processes covered data “in furtherance of a consequential decision” must evaluate the design, structure, and inputs of the covered algorithm.  In addition, entities of a certain size, which the bill calls “large data holders,” must conduct an impact assessment that describes the design process and methodologies of the covered algorithm, an assessment of the necessity and proportionality of the algorithm in relation to its stated purpose, and the steps the entity will take to mitigate the risk of harm.

Internet of Things

This quarter, federal lawmakers introduced and advanced several bills related to the Internet of Things (“IoT”), including two bills imposing requirements on manufacturers of devices with cameras or microphones.  One of these bills is the Earning Approval of Voice External Sound Databasing Retained on People (“EAVESDROP”) Act (H.R. 8543), introduced by Representative Steve Scalise (R-LA) in July.  The bill would require manufacturers of connected devices with microphones to provide notices to consumers regarding the devices’ collection of certain consumer information. Manufacturers would also have to provide an easy way for consumers to deactivate the ability of the device to collect information.  The EAVESDROP Act exempts devices solely marketed as microphones and provides a safe-harbor for manufacturers that comply with a set of self-regulatory guidelines to be developed by the FTC.  In contrast, the Informing Consumers about Smart Devices Act (H.R. 4081) would require manufacturers of connected devices equipped with a camera or microphone to disclose to consumers that a camera or microphone is part of the device, and would not apply to mobile phones, laptops, or other devices that consumers would reasonably expect to include a camera or microphone.  The Informing Consumers about Smart Devices Act is sponsored by Reps. John R. Curtis (R-UT) and Seth Moulton (D-MA) and was approved by the House of Representatives on September 29, 2022.

Additionally, on September 28, 2022, the Senate approved the Small Business Broadband and Emerging Information Technology Enhancement Act of 2022 (S. 3906).  As we noted in our Second Quarterly Legislative and Regulatory Update, this bipartisan bill, sponsored by Senators Jeanne Shaheen (D-NH) and John Kennedy (R-LA), aims to bolster IoT competencies at the Small Business Administration (“SBA”), including through the designation of a coordinator for emerging information technology (which includes IoT technology).

Federal regulatory efforts related to IoT this quarter largely centered on cybersecurity and consumer protections.  For instance, the National Institute of Standards and Technology (“NIST”) published the final version of its Profile of the IoT Core Baseline for Consumer IoT Products (NIST IR 8425), building on work undertaken pursuant to E.O. 14028.  The publication, which follows a public draft released in June 2022, describes NIST’s cybersecurity expectations for IoT products for home and personal use.  As we noted in our previous quarterly update, the NIST guidance is not legally binding, but it signals a best practice that may later be incorporated by lawmakers in legislation. 

NIST also published a report summarizing key takeaways from of its June 2022 IoT Cybersecurity workshop (NIST IR 8431), and a report with guidance for first responders on minimizing security vulnerabilities when using mobile and wearable devices (NIST IR 8235).  Other agency activities impacting IoT technology include the FTC’s publication of a business guidance blog post focused on the marketplace for sensitive consumer location and health information collected by connected devices, and highlighting FTC enforcement against misuse of consumer data and deceptive claims about data anonymization.  These developments signal a continued focus by federal regulators on IoT cybersecurity and the protection of consumer data collected by connected devices.

Connected and Autonomous Vehicles

On August 8, 2022, Reps. Debbie Dingell (D-MI) and Bob Latta (R-OH) launched the bipartisan Congressional Autonomous Vehicle Caucus.  The first of its kind, the purpose of this caucus is to educate Congressional Members and staff on autonomous vehicle technology that can improve the safety and accessibility of roadways.  Rep. Dingell stated that the caucus will help the United States stay at the “forefront of innovation, manufacturing, and safety” while “engaging all stakeholders, making bold investments, and working across the aisle to get the necessary policies right to support the safe deployment of autonomous vehicles.”  Industry should watch for developments here, as policy proposals and opportunities for engagement could be on the horizon.

Federal regulators remain active in this space, signaling an interest in funding and advancing the deployment of CAV technologies.  A recent stated priority for the Strengthening Mobility and Revolutionizing Transportation (“SMART”) Grants Program is to improve the integration of systems and promote connectivity of infrastructure, connected vehicles, pedestrians, and bicyclists, and the Department of Transportation (“DOT”) authorized and appropriated $100M for projects in this space for FY2022.  Additionally, the Federal Transit Administration (“FTA”) and DOT issued a Notice of Funding Opportunity to apply for funding for projects exploring the use of Advanced Driver Assistance Systems (“ADAS”) for transit buses to demonstrate transit bus automation technologies in real-world settings.  Finally, DOT issued a Request for Information seeking comments on the possibility of adapting existing and emerging automation technologies to accelerate the development of real-time roadway intersection safety and warning systems for drivers and vulnerable road users.

This quarter, the National Highway Traffic and Safety Administration (“NHTSA”) also released a final version of the Cybersecurity Best Practices for the Safety of Modern Vehicles guidance, an update to its 2016 edition.  While the edits were largely cosmetic, a few key changes potentially relevant to CAVs and in-vehicle software are below:

  • The final version clarifies that both suppliers and manufacturers should maintain a database of software components so that when vulnerabilities are identified in software, affected systems can be easily identified.
  • The final version adds a new best practice stating that manufacturers should employ measures to limit firmware version rollback attacks (i.e., when an attacker uses the software update mechanisms to place older, more vulnerable software on a targeted device).
  • The final version adds a new best practice stating that industry should collaborate to address “future risks” as they emerge.

Privacy and Cybersecurity

As described in further detail in our second quarterly update for 2022 and here, the ADPPA continues to be the prevailing data privacy framework in Congress.  The bill sets forth broad requirements around data collection and disclosures, though the likelihood of passage this Congress continues to decrease as lawmakers remain stalled over issues around preemption and a private right of action.  California’s principal privacy regulator – the California Privacy Protection Agency – convened a special meeting on July 28, 2022 to discuss the ADPPA and to express the Agency’s strong disagreement with the ADPPA’s preemption provision.

The FTC is also exploring privacy regulation, including through its Advanced Notice of Proposed Rulemaking, released in August.  Specifically, the notice broadly asks whether the agency “should implement new trade regulation rules or other regulatory alternatives concerning the ways in which companies (1) collect, aggregate, protect, use, analyze, and retain consumer data, as well as (2) transfer, share, sell, or otherwise monetize that data in ways that are unfair or deceptive.”  Notably, the FTC recently extended the deadline to receive comments on the notice to November 21, 2022.  Additionally, the FTC released its agenda for a workshop on children’s advertising that will be held on October 19, 2022, which will focus on whether children can distinguish ads from entertainment in digital media. We will continue to update you on meaningful developments in these quarterly updates and acrossour blogs.

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