Vermont Legislature SmartTranscripts:

[Michael Marcotte (Chair)]: Good afternoon, everyone. This is the Lamoille House Committee on Commerce and Economic Development. It is Fridays, January twenty third twenty twenty six at 01:05 in the afternoon. So we're here to finish our day up and our week with a discussion on president's executive order on AI. So we start with our, let's say, candidate table. Rick, thanks for joining us. And I think we're gonna talk about that. And I think for everybody, I think we wanna have a conversation after about how they're going to work on AI. We need a definition. Should we have a definition, should we not? We need to give the speaker some our thoughts on how these AI bills that are sitting in other committees, how we're going to deal with them. Should they start up there and then come in here for us to take a look at? If we start here and go up there? But I think those are conversations we all need to have. Rick, I'll let you take it away.

[Rick Siegel, Office of Legislative Counsel]: Oh, good afternoon. Rick Siegel with the Office of Lipsoid Council I actually made a presentation. You got through. Wow. Typically, it's

[Michael Marcotte (Chair)]: just words on a page,

[Rick Siegel, Office of Legislative Counsel]: but now I have colors and words on a page That's to share with what you get when you have had me in for a topic. And I don't know some of you may know this, I don't know if you're newer, I used to teach political science. So I enjoy actually being able to discuss things that are not just specifically bills or words on a page. Like concepts and ideas, and this is certainly an idea that I have talked about before and glad to talk about again. So we're gonna discuss executive order fourteen thousand three and sixty five. They go in order, and this is the number that the AI order got. So I may be going kind of back and forth. It's actually a pretty short order considering other executive orders. President Biden's was very long as his AI order was very, very long. President Trump's second one on AI, pretty short, if which they look at it, good or bad. So start with kind of a high level look at what is an executive order. We don't really deal with that a whole lot here, right, in state government, but important to kind of think about what are we actually looking at here. So an executive order is a unilateral order issued by the president, and it instructs agencies, officials within the executive branch how to carry out policy. It is not law. It is not a statute that congress passed. The president can literally put whatever he or she wants in to detect the border because there's no check on that authority. There's a check on the enforcement of it, which I'll talk about in a second, but the president can do whatever he wants and call it and get a number on an executive order. A president can also unilaterally revoke an order from a previous president, and this happens all the time, especially when there's a switch in partisan power. So, I don't know how many president Biden's orders were, revoked when president Trump took over. I don't know how many of president Trump's original orders were revoked by Biden when Biden took over. I assume most of them. You So just do it, and it's done. There's no other approval needed besides the president saying that this is now my authority. However, congress can undermine an executive EO sorry, an EO, which I shortened to, shortened by executive order, by passing a law that directly contradicts it. But the president will have to sign that law passed by congress. So why would the president sign a law that contradicts his authority? President Nixon, you may remember, from your history class, was, using the war power that Congress has, and Congress passed a bill called the War Powers Act. President Nixon vetoed it because it he thought it up up in his authority. Congress overrode his veto. So you can override a president's veto, but it takes two thirds. Probably not gonna happen in this climate. And finally, courts can judicially review an executive order to ensure it's constitutional. That's kind of the big check. Right? Is the president does something, there's no control over it, and at some point, a state or a person can sue saying that you can't do this. This succeeds your presidential authority. So some background on what an executive order is. Okay. So what is in the president's AI executive order? Was issued on December 11. It's titled ensuring a national policy framework for artificial intelligence. I think I mentioned this is the second one. The first one he issued pretty early on, I think in January. And it basically revoked president Biden's AI executive order that was like, woah. Let's hold on. Let's not use it without further research. Let's put some safeguards on it. That AI order pretty much revoked president Biden's previous AI order. That one was not controversial because that dealt with just the federal government and federal agencies under the president's purview. This order deals with states much more than the federal government, and that's why it's controversial. Okay. So a couple of section by section in the order. The first two sections are just kind of how we call bindings purchase policy. Not much substance here, but it's important to kind of see the framework for it. It must forbid state laws that conflict with the policy set forth in this order. The framework should also ensure that children are protected, censorship is prevented, copyrights are respected, and communities are safeguarded. So you see here, these are a few exceptions that they've laid out that even though we're going to restrict AI laws, there's few categories that we think are exempted. If something, if there's an AI law by the state that protects children, maybe that one gets exempted, censorship, and so forth. So you kind of see they are not totally banning states from enforcing AI. There are a few exemptions. But it is the policy of The United States to sustain and enhance US global AI dominance through a minimally burdensome national policy framework for AI. That kind of shows you their thinking process here, right? They are trying to minimize the restrictions on state laws regulating AI, and they would prefer a national governance for AI that is minimally intrusive to the technology. Okay, now to the substance. Section three creates an AI litigation task force whose sole responsibility shall be to challenge state AI laws inconsistent with that policy just talked about, including on grounds that such laws unconstitutionally regulate interstate commerce, are preempted by existing federal regulations, or are otherwise unlawful in the AG's judgment, including as appropriate laws identified pursuant to Section four, get to in a second. So, the task force is coming together. This is the memo from the Attorney General, who is gonna be the chair or a designee of the task force, and the associate AG will serve as vice chair. So this task force is coming together, and I imagine they are beginning their review to look at state laws that, in their minds, go against the policy of this executive order.

[Michael Marcotte (Chair)]: Good so far? Well, I got a lot of questions.

[Herb Olson (Member)]: Okay. Go ahead.

[Rick Siegel, Office of Legislative Counsel]: Okay. I'll keep going. Some of them may be answered by the time I'm through. Okay, section four, evaluation of state AI laws. There should be an evaluation of existing state AI laws that identify onerous laws that conflict with the policies that work in section two, as well as those should be referred to the task force. That evaluation shall at minimum identify laws that require AI models to alter their truthful outputs or that may compel AI developers or deployers to disclose or report any information in a manner that would violate the First Amendment or any other provision of the constitution. Okay, so we're evaluating the state AI laws. Now we actually have the stick of the carrot, however you want to call it, section five, the restrictions on state funding. There should be a policy notice specifying the conditions under which states may be eligible for remaining funding under the Broadband Equity Access and Deployment Program. So, here you have your first kind of punishment of a state that does not respect the task force's review of a law that they deem to be against the policy of The US AI governance of AI, that you may have some non deployment funds restricted. And I'll get more about that in a second. Section five continued, not just the Bead program, but departments and agencies shall assess their own grant programs, any grant programs, and determine whether agencies may condition such grants on states either not enacting an AI law that conflicts with the policy of this order, including any AI law identified pursuant to Section four or challenged to Section three, or for those states that have enacted such laws on those states enacting into a binding agreement with the relevant agency not to enforce any laws during the performance period in which it receives the discretionary funding. So just kind of summarizing here, it's allowing every federal office agency to review its grant programs to see if there's any connection where it could restrict funding based on these AI laws being enforced. It's not specific to any besides Bead, there's no specific program it mentions. Okay. Section six. The chairman of the FCC shall initiate a proceeding to determine whether to adopt a federal reporting and disclosure standard for AI models that preempts conflicting state laws. More about that

[Michael Marcotte (Chair)]: in a

[Rick Siegel, Office of Legislative Counsel]: second. Section seven, preemption of state laws mandating deceptive conduct in AI models. The chairman of the FTC shall issue a policy on the application of the FTC acts prohibition on unfair and deceptive acts or practices under 15 USC 45. You may recognize that language. We have the same language in our Vermont laws. In fact, we cross reference the FTC's rulings on these practices. So again, more about that in a second. Okay, finally, section eight, the special advisor who, it is David Sacks, I believe is his name, and the assistant to the president for science technology shall jointly prepare a legislative recommendation establishing a uniform federal policy framework for AI that preempts state AI laws that conflict with the policy set forth in this order. Okay, so section eight is just saying that we would like federal legislation because it really, at this time, isn't any specific federal law that applies to AI. There may be some connection through the Unfair and Deceptive Act, maybe some regulation at the FCC, but let's get to this. So I've read several analyses of the order, and I have kind of summarized what I think some of the issues are as far as the constitutionality of the order. As I mentioned, there's no federal law kind of underlining this authority, which doesn't mean the president can't do that, but typically, an executive order enforces federal law. Right? So what federal law is the president enforcing here? The order kind of tries to make up for that by saying that we have these rules from these agencies that regulate AI, but it's dubious. Okay? So the Commerce Clause. We don't talk about a lot of I've not talked about the Commerce Clause recently, but it's you're the Commerce Committee. Generally speaking, states can regulate commerce, right? That's something that's inherently an authority of states. However, if it's interstate commerce, that is a federal responsibility. And not just directly interstate commerce, but there's something called the dormant commerce clause, which says that even if it does not directly affect interstate commerce and the federal government has not regulated something, this is in the field of the federal government. And we don't think the state should be regulating something that the feds should be regulating. But in order for a state to violate the dormant commerce clause, the general rule is that you must purposely discriminate against out of state interests. That's kind of the recent court decisions that have been interpreted in the commerce clause. So, you know, I'm sure there are some AI bills, maybe not in Vermont, but other states that maybe would purposely discriminate. Like, you benefit in state developers or now state developers, for one example, maybe that violates dormant commerce laws. But a law that generally regulates AI is probably not gonna do that. So what I've read is that this will be a difficult argument for the federal government. That the states likely have the authority to regulate AI as long as you're not discriminating against out of state interests purposely. Okay, preemption is a better argument for the federal government, and you have the task force that is gonna be looking at AI laws actually that have been passed and acted, which we don't have any. I should have maybe started with that. Vermont does not really have any active laws. We have bills, not laws, that directly regulate AI. However, some various states do. And it's important to remember an executive order cannot print a state law. Like, it's not law. Right? However, a federal regulation can. So the president, through executive orders, can maybe thread the needle and find a way to say, you know what, this federal regulation, if it's used in this way, would preempt a state law. But again, you gotta thread that needle, and you have to argue how that is done. So, talking about preemption, and again, this is kind of looking ahead to what the the stick of the order, which is funding. Right? That's kind of the president in a lot of ways with immigration too has used that funding as the stick, that you won't get these funds that have been appropriate but not deployed because you are not either in the immigration case, you have sanctuary cities, you have sanctuary policies. In this case, it's AI policies. So the B, the broadband, I can't remember all the letters, broadband, expansion, something. Deployment. Deployment, yeah. Vermont, obviously Equity access. Sure, that sounds right. Vermont, and I spoke to Maria Royal, who is more of the alleged counseled area. Vermont has relied on this funding, so when the executive order specifies Bead, it's, and let me show you. This is the actual detective order here. So section five, subsection a, within ninety days of this order, the Secretary of Commerce shall issue a policy notice specifying the conditions under which states may be eligible for remaining funding under the broadband equity access and employment that was saved through my administration's benefit of the bargaining reforms. The policy notice must provide the states with onerous AI laws are ineligible for non deployment funds. So the non deployment funds are the funds that his administration have labeled as not actually building the broadband lines. Right? So which is a lot. It's significant. President Biden opened those funds up to nondeployment parts of the broadband expansion program. So it's a lot of money, And certainly states may be concerned about enforcing AI laws that go against this executive order. So my summary of this specific thing is that you have the National Telecommunications and Information Administration. Do they have their federal agency there? Do they have the authority to hold back these funds? Maybe. It it depends on how the statute interpreted. Did Congress give them the authority to hold back funds? It's not super clear. I asked, does it matter? Because let's say a state enforces AI laws and they don't get the funding, they sue. How many years are they going to go without getting the funding? So my advice to here is that the state may have an argument. They do have an argument that this is unconstitutional. However, you have to work it through the courts, and there are certain states, Vermont, I would assume would be one of them, that really need the money. So something practical to consider. The other discretionary funding, which is section 5B, is very, very broad and just says that any agency or department in the executive branch shall review their discretionary grant programs and determine if an AI law conflicts with a policy of this order. So, I mean, how many billions of dollars are issued through discretionary grant programs? Hard for me to say exactly how that would look, but again, it depends on how that specific statute gives that agency to enforce the the money. Sometimes the Administrative Procedure Act is in play, which will make it harder for them to hold back funds because you have to follow rulemaking like Vermont does. If there's rulemaking, it's gonna be probably difficult for the federal government to win that argument. But if there is no rulemaking, then maybe it's easier to withhold the funding. It's every grant is gonna be treated differently. Section six is the FCC's reporting and disclosure standard. This one I think is dubious. The FCC regulates telecommunications, not AI, and it never really has claimed to regulate AI. Doesn't mean it can't, but Congress has not given them the authority clearly to regulate AI. But, again, they may claim to do it through this executive order, and it's gonna be up to the states to argue that the FCC does not have that authority. And, again, in my opinion, I think the FCC does not regulate AI. It's not part of their purview.

[Herb Olson (Member)]: The

[Rick Siegel, Office of Legislative Counsel]: FTC, I mentioned earlier, has the unfair and deceptive act's ability to not prosecute, but litigate businesses that commit those acts. Just like in Vermont, we have Title IX, the unfair, the Vermont Consumer Protection Act. So it is a state's enforcement of AI laws preempted by the FTC's authority to prohibit unfair and deceptive acts? My view is probably not. But can you argue that there would be a state AI law that would require an unfair and deceptive practice. Would a state require an AI system to produce false content? Like, I can't think of anything, but I suppose if it did, then that law could be deceptive. But I think the whole point of AI laws are to prevent deception. So but this order is very, very difficult because it has so many different parts. It can be attacked in different ways. And it's I think the biggest problem for the White House is there's not a federal law that is foundationally being used here to enforce the order. Typically, there's something that the president can point to and say, have the Immigration Nationality Act that gives the federal government regulation over federal civil arrests, those kind of things. But in this case, you just don't have because it's so new. Congress has not regulated AI. You may remember back during HR one, there was a talk about the moratorium on AI in our last last session towards the end, I think, May. That would have been a better argument because that would have been an act of congress that gave federal government the authority through law to preempt state AI laws, but that didn't pass. It didn't make it into the HR one. So that's kind of my analysis. Happy to answer questions and how Vermont can best respond.

[Jonathan Cooper (Member)]: Yep.

[Monique Priestley (Clerk)]: I'm just thinking it might be good to hear the overview from the other guys, too, and then Duke after. I

[Michael Marcotte (Chair)]: think it's good if people have questions on what Rick's Yeah.

[Herb Olson (Member)]: So thanks a lot. I agree. A lot of your analysis without the probably not kinda stuff on the which I understand why you have it. The preemption part of the executive order, I find, particularly strange. The notion that you could preempt something without a basis in some sort of law, it's just very foreign to them, all my legal training. The idea, frankly, they could do it by regulation without an underlying law that allowed you to promulgate that regulation. It's also kind of formed. And the specific statute that they did try to put a handle on this thing, the FTC's authority over unfairly picked up. That's directed at businesses who are committing unfairly like our our. Doesn't have anything to

[Dr. Travis Hall, Director for State Engagement, Center for Democracy & Technology]: do with state

[Herb Olson (Member)]: law. I'm very skeptical. Each order, especially about preemption, acknowledging that, you know, money's money. Grant money could be held. That's an unevolved wax. Question

[Jonathan Cooper (Member)]: about something that came up in section six, and just really, I wanted to understand. The quote that you pulled was Disclosure standard for AI models that preempts conflicting state laws. Can you just clarify for me, is the conflict between the laws passed within different states, or just simply any state having a law that is in conflict with a federal

[Rick Siegel, Office of Legislative Counsel]: Yeah, Well, so any state law that conflicts with the policy of this executive order. Okay, All right.

[Jonathan Cooper (Member)]: Thank you.

[Monique Priestley (Clerk)]: Other questions? Just a question about anything to do with data center stuff. Do you feel like any of this affects data center citing and

[Herb Olson (Member)]: all of that.

[Rick Siegel, Office of Legislative Counsel]: I think Maria worked on that, Bill. What I know about data centers is they mostly supply AI energy or AI server space. Is that Yeah. So, if I am a state looking at what the executive order attempts to exempt, which I talked about, children protection, censorship, copyrights, communities are safeguarded. It depends on if data centers are thought of as AI regulation, which I've been working on that bill, so I'm not sure how it was structured. To me, doesn't sound like it's yeah, delayed AI.

[Jonathan Cooper (Member)]: Can you what's something on your mind, Monique, that you might help?

[Monique Priestley (Clerk)]: No. It was just a question that I've been getting, because I just wonder yeah. Yeah.

[Rick Siegel, Office of Legislative Counsel]: It's a good question. I I

[Michael Boutin (Member)]: I would bill

[Monique Priestley (Clerk)]: circulating a building. So yeah. Yeah.

[Michael Boutin (Member)]: As we talk about which bills we're thinking about, would it be beneficial to have you take a look at the bills and just see whether or not you think we will have problems with litigation on them?

[Michael Marcotte (Chair)]: And then

[Michael Boutin (Member)]: say, these are the bills that might be worth your time without

[Rick Siegel, Office of Legislative Counsel]: litigating? Probably not something I would be comfortable with. Well, but you know, I think you guys are the policy deciders and which policy you want to pursue. I think it should be up to you and happy to talk about this on a bill that you want to discuss. I'll say, you know, as it pertains to the executive order, just to be aware of. And I'll say that for every AI bill, notwithstanding the AI executive order.

[Edye Graning (Vice Chair)]: That is part of something that we ask the Legg Council to do when they take us on a walk through, to let us know when there's language that could be questionable or could be Yeah, we could be putting ourselves in problematic situations.

[Kirk White (Ranking Member)]: Thanks, Edye. Rick, is there precedent for this sort of thing? I know that the federal government preempted states on broadband, but I'm wondering if the process was at all the same.

[Rick Siegel, Office of Legislative Counsel]: So I'm familiar with the transportation funding that was restricted earlier last year for states that were enacting quote unquote sanctuary policies. So when that was done, there were states, I don't if Vermont was one that joined the lawsuit, but there were several states that litigated it, and they won at the district court level, the states did. Because the Fed did not follow proper rulemaking procedures and it was money appropriated already through Congress, and that money was not subject to restriction after it had been appropriated. That's the example I can think of off the top of my head. I'm happy to come back with other examples, but this one's pretty unique, I think.

[Edye Graning (Vice Chair)]: No questions for Rick? So Travis, you're next on our agenda. Can you introduce yourself?

[Dr. Travis Hall, Director for State Engagement, Center for Democracy & Technology]: Sure thing. Thank you so much for the time and for the opportunity to address you all. Thank you, Rick, for making the job easy by going through most of the overview. Really quick, wanted to I had my hand up because I wanted to respond directly to representative Priestley's.

[Edye Graning (Vice Chair)]: Before you do, could you just introduce yourself

[Dr. Travis Hall, Director for State Engagement, Center for Democracy & Technology]: for Of the course. I'm so sorry about that. I'm jumping right in. So I'm doctor Travis Hall. I'm the director for state engagement at the Center for Democracy and Technology. The Center for Democracy and Technology is a thirty year old nonprofit, nonpartisan organization dedicated to user rights in the digital space. So human rights, civil rights, and civil liberties. I've been with CDT for almost a year at this point. And prior to that, I was actually at the Department of Commerce at NTIA, at the National Telecommunication and Information Administration, working there for ten years, where ultimately I led their policy shop. So happy to weigh in both on some of the insider scoop on executive orders, as well as even though I wasn't in the office that oversaw Bead, I have had conversations with numerous current and former colleagues who are at NTIA about the executive order and where things stand. So first off, just in direct response to representative Priestley's question about data centers, I would note that the executive order in its legislative proposal does exempt out compute and data center infrastructure other than generally applicable permitting reforms. However, this is goes to a a little bit of a broader point that I think you all are already honing in on, which is that the administration cannot preempt state laws by executive order. All they can do is kind of like threat. And the there was multiple attempts to put forward the moratorium into legislation, HR one and the NDAA. And this executive order came out initially as a leak in order to pressure folks to pass it into the NDAA. And there are some interesting differences between the leak and this final exec executive order. So for example, in the policy section, it still calls out copyright. If But you look at the exemptions in the legislation, it's not there because copyright is actually already fed like federal copyright protections already preempt. There are other forms of intellectual property such as name image likeness that are not preempted already by federal law. I would completely agree with Rick about the about some of the analysis. For example, the FCC does not have the authority authority over artificial intelligence. It's really solely over telecommunications. And with some recent supreme court precedent that specifically removing some of the what the kind of a long standing doctrine that had the courts deferring to agencies as to what was in their authority and what there wasn't, like in terms of setting definitions and things, that has actually narrowed even further. And also, the interesting thing is the Trump administration put out the AI action plan last year, and many of the things that are in this executive order were actually already things that were happening. So the review of federal discretionary grants was actually started under the executive order, and there have been a couple of requests for comments that came out with that. Also, the FCC review similarly was started with the action plan. And I think that one of the reasons that we're seeing these assignments come out again is because they're not really making a lot of progress on them. The FCC in particular is having a hard time. I think they're probably having a hard time coming up with an answer that satisfies the administration in terms of what their authorities could be to preempt. I would point out that the FTC, in terms of what the executive order tells it to do, is only policy guidance. In terms of actual preemptive regulations, you actually, in terms of the precedent that we've seen, it has to be very specific and very specific about how their regulations are in conflict with a particular law. So the FTC is also a little bit of bluster here. The ones that I think Rick correctly noted as being the actual teeth of this executive order is on the funding side. I would note that the process to do the review from everything that I have heard from inside from my contacts is that that has not started. I would note that the people who are set who are tasked with the review, the the, you know, the secretary of commerce along with the and cryptos are David Sachs, OSTP's director, Michael Katsios, that this isn't going to be an arbitrary and political process. Right? It is very, very difficult, and I've heard this from my former colleagues, that there it is not clear what the line is to be drawn. The only law that was called out specifically was Colorado's s b twenty four two zero five. In the leaked draft, it included California's SB 53, which was the foundation model bill, along with the RAISE Act in New York, but those references were removed. And for what it's worth, Colorado is undergoing a legislative process reviewing their bill and probably reforming it. And it really isn't clear from what they have here in terms of what they're looking for, in terms of alterations of truthful disclosures, what that actually is going to mean in terms of any of the laws that are either being proposed or are on the books. I will note that there is actually a third executive order on artificial intelligence that the Trump administration put out, which is against which is about procurement of woke AI, where it does does have a similar prohibition on the administration purchasing or procuring artificial intelligence that alters truthful outputs. But I would note that the difficulty of actually creating a standard of what is or is not a truthful output in this framework, particularly when you're talking about generative AI, that makes stuff up. That's kind of part of what it does. So I have some mild sympathy for my former colleagues who are career staff, are set with trying to figure out what a line is and how to draw that line around some of the different bills. But right now, the only line that they actually have is around Colorado's 24,205. So it really isn't clear what they're looking at in terms of what is quote unquote onerous. And for what it's worth, SB 53 and the RAISE Act both fell out, at least in terms of the initial phrasing. In terms of the task force on litigation, again, there's a little bit of like, oh, it shouldn't be onerous, but really it's focused in on things that are censorious or compelling or against the First Amendment. And I will just simply say straight out that if a bill that is passed by state legislator violates the First Amendment, there will be many people who are suing, and the DOJ moving in here is probably not gonna be the determinative factor. And I completely agree with Rick's analysis that in terms of standing and commerce clause, that the federal government really doesn't have a leg to stand on. So really, if there is any focus, it would probably likely be on the Bead funding. But the Bead funding, it isn't clear what the lines are or are going to be. It is likely going to be set primarily by the administration, and it will probably be political in its determinations. I I do think that this executive order does not actually preempt anything. It really is just a threat. And I would treat it similar to what is being going on with sanctuary cities and probably lots of other types of policies as well from the administration where they're using funding as a threat for their preferred policy outcomes. However, in this one in particular, they don't themselves really know where and how to draw those lines. It is possible that we will be getting guidance at some point in time. But Ariel Roth, who is NTIA's administrator, promised in the beginning of the year that they were gonna be releasing guidance on non deployment funds regardless. My bet is that it's gonna that that guidance is gonna be nothing more than, like, addition like, adding in the language here, and they will continue to defer up to the political process as to what laws are or are not problematic. And so for my part, I would absolutely urge you all to continue the path. And because I don't know if you would be able to, there isn't anything, as long as you're not violating the First Amendment, which I hope you're not doing anyway, I really don't see clear guiding lines here of what they consider to be onerous or not onerous outside of political considerations of who is making and drafting the bills.

[Michael Boutin (Member)]: Michael? You talked about the freedom of speech, like the First Amendment issues. As we're talking about AI, it's all code. So if we're regulating, I guess you could say the same thing about S-sixty nine. Never mind.

[Dr. Travis Hall, Director for State Engagement, Center for Democracy & Technology]: Yeah. So specifically, what they call out is disclosure. Compel AI developers and employers to disclose or report information in a manner that would violate the First Amendment or any other provision of the constitution. There have been like, there have been legitimate concerns raised about some transparency requirements that in terms of what they would force a company to speak. I am actually not a lawyer, but my understanding is it's speech about speech, and that does require a stricter level of scrutiny. That there are ways to write transparency requirements that are on firmer First Amendment grounds and some that are on less firm First Amendment grounds, but it's really a nitpicky argument. Right? It's a really in the weeds kind of like, oh, this is how you kind of like can compel transparency about a company's speech or activities. But this but again, in as much as that is a major concern, the Department of Justice is probably not going to be the one who really brings the case or brings it in good faith.

[Michael Marcotte (Chair)]: Thank you, Travis. Rob?

[Rob Elleveld, Co-founder and CEO, Transparency Coalition]: Thanks. Thanks, Travis. You're gonna hear, some similar things maybe with a little bit different of a background from me. But, to start with, my name is Rob Elleveld. I'm a co founder and CEO of a nonprofit Transparency Coalition. Under Transparency Coalition, we have both a five zero one c three and a five zero one c four. I cofounded this, two and a half years ago, with a partner here in Seattle, cofounder here in Seattle. Both of us have twenty five plus years of for profit tech experience. I was a submarine officer in the navy just out of school, and then I went back to school. But I've been a CEO of tech companies for twenty five years, four of them, mostly small businesses, kind of 20 to 40 person businesses. One, one a little bit larger up to about 250 people with kind of a global footprint that was acquired by Mastercard. And our mission is really to, two fold mission to help educate, lawmakers and government officials, but especially state lawmakers on, artificial intelligence and and and how to put comments and guardrails into place. And second, with our, transparency coalition action fund, our five zero one c four to, actually, do direct advocacy in certain states. This year this this year that just started the twenty twenty six legislative session, we will be supporting at least one bill and one bill author right now in 22 states. We are nonpartisan in our approach. About 80% of our work is around protecting kids, 70%, let's say. But we we we do not, we we work with one or two lobbyists, but we really don't, hire lobbyists in states. We really just try and back up, provide technical backup and and and, bill review and, model bills if needed for, bill authors, and we just try and, support their strategy. And we work with Republican and Democratic bill authors and Republican and Democratic states. So that's a little background. In terms of, the executives my executive summary, and I don't want to try and repeat everything Rick said because he did a really great summary. And and Travis also has more kinda inside baseball knowledge of enforcement. So I'm gonna give you more our perspective working with a lot of lawmakers in a lot of states and having been involved in this and knowing the tech lobby because this this executive order was effectively written by the tech lobby through David Sachs. Make make no mistake about that. There was there was two or three attempts to get things passed by congress that that failed bipartisan bipartisan effort to shoot those efforts down, and so this executive order came out of effectively frustration from that. Okay? But the the first the first my first takeaway is this executive order is not about kind of legality or in this is this is about sowing confusion in the twenty twenty six state legislative sessions, exactly what you all are dealing with right now. Full stop. That is the the the strategy we believe is, is is is the purpose of this executive order. I don't think it's gonna be around in 2027. I don't think it's gonna hold up in court. All of the things that drab Travis gave you background on, I would just my my executive summary is I don't I don't think it's gonna be around in 2027. Its its purpose is primarily to sow confusion in the 2026 legislative sessions because the distrust of tech across all states, bipartisan, red and blue states, especially around protecting kids, but also protecting citizens has grown so much that, the number of AI bills across many, many states this year is probably three to five x what it was last year. It's sort of a growing wave. Okay? So, the second thing is there are already carve outs. I think we've covered them, but just to be clear, it looks like first of all, I think Rick said it, but this is a short, like, two and a half, three page executive order if I remember right. I read it a month ago, but it's it's very plain English. So, I know all you have very many things to read. If you haven't read it, just just for your own, you know, knowledge on what Rick or Travis or myself is saying, just just spend ten minutes with a cup of coffee and you can read it. But there there are carve outs for protecting kids. There are carve outs for data centers per Monique Priestley's question. And there are there's a carve out for government government rules for government procurement in a given state of AI systems. So that's anything that sort of is along those lines or that in terms of state bills or that you can position along those lines, and I'll talk about that in a minute, I think are very, very low risk in terms of getting on radar screen of the DOJ or this FTC ninety day committee ninety day report. It's it's one thing that I I'm I'm might be wrong, but I don't I think it it wasn't necessarily mentioned, but one of the things in the executive order is the FTC is is is tasked with coming out with a ninety day review of what AI systems are problematic. So what again, this is I I have what what we believe will happen is this won't be in ninety days. It will be it will be late by a couple months. Because if it's late and there's no clear delineation, it it's the the whole goal is to freeze the market, if you will, for the for the twenty twenty six legislative session because if it's delayed a little bit and it bleeds into May or June, 45 states, it's too late. Right? So, so so, again, the the the FTC's ninety day review of what are concerning, you know, state regulations or laws or bills probably gonna be delayed, but the the goal there is really to freeze the market. Again, I'm I'm talking from the tech lobby strategy because we countered the tech lobby. We're we're on the other side of the table from them on every state and every bill we back. Okay? This is much more from the the the state's perspective than sort of me being wired into DC, But this is also I live in Seattle. Went to school in California and graduated business school at Stanford. I know what the tech lobby's mindset is. And then the the the other thing is is, as Travis said, this is going to be very subjectively enforced because of what you all have heard from both Rick and Travis. It's gonna be politically enforced. And the real targets are states that are on the White House's sort of radar screen, which effectively are Colorado, Texas sorry, Colorado, California, and New York. The likelihood that Vermont, for instance, is gonna bump up onto that radar screen based on something you all pass this session is exceedingly low. But, you know, that that's that's for you. That I don't have the context you all do on kind of what what the appetite is in your legislature or that sort of thing. What we what what I will say is is that we don't see any real pullback in the state legislatures across. We did a lot of work in the fall with we had four model bills. We've we've we've we've have close partnerships with sixteen, seventeen, eighteen bill authors in in various states. Again, we're working in 22 states. We we haven't seen any pullback based on the executive order and what they are pushing out into their legislative sessions. That doesn't mean there might not be more governor vetoes. K? Because it's too early to tell on that. If the governors are very concerned about funding risks and so forth, that that could be a place where you see the executive order, really, really sort of have its, ability to to create a a a confusion and doubt. But, we are not seeing it in the state, legislatures legislatures across the board in both Republican and Democratic led legislatures. So that that's that's kind of my piece there. The other thing about enforcement, Travis already talked about this, but this is nondeployment bead funding is the real is the real stick right now. I don't know. It's it's important for Vermont to know what that looks like. Just as an example here in the state of Washington, I think there's, like, between 1.1 and $1,200,000,000 of bead funding, but only 50,000,000 of it is nondeployment basically for, like, education purposes and so forth. So it's not a $1,200,000 risk. It's a $50,000,000 risk. Now, again, that's still a big number in a state budget, but it's it's it's it's not nearly as big as what sort of the executive summary in a newspaper article might be about BEAVE funding. Okay? So so those are some thoughts there. The the only other thing I'll just say is that remember that government focused basically, if you all pass any laws around what Vermont state government can buy or not buy in terms of AI, that is gonna be zero risk because Texas last year passed the Texas responsible AI governance act, and it had a lot in there about government procurement. And so I believe that the reason that's carved one of the three things carved out is because you'd be going they'd be going right against one of the biggest red states, Texas, on a on a on a law that's already signed in if they went after government procurement, things. And so the other thing we're seeing, especially in Republican led legislatures, is there is a huge effort right now to protect kids. There is no trust, zero trust of tech on kids. You've seen many of the the suicides being these these these chatbots grooming kids for suicide. There will be probably 20 plus, maybe 30 bills filed, and I think more than half of them will pass on, on on AI chatbot, bills, and they will be at least half in Republican states. There's a lot of work right now on misappropriation of name, image, and likeness because girls, teenage girls are are their lives are being ruined across the country by fake nudes being posted. And so there are areas here where when you if you're working on a bill, positioning it in protecting kids is the use case. Now there's a lot of things beyond in name, image, likeness, misappropriation beyond protecting teenage girls, but, like, that's the starting point. Product liability law is firmly in the state's purview. And and so these are areas where protecting kids from product liability. I mean, we we all trust car seats or or baby formula because of product liability laws. And so why would we not why would we have a different standard for AI targeted at kids because it's being targeted at kids. So anyway, those are what we're seeing out there broadly. I can answer questions, but and I didn't want to repeat everything that Rick and Travis have already said, but I think that's it for right now.

[Michael Marcotte (Chair)]: Questions for Rob? Great. Thank you. You've all helped lay the Show us the lay of the land. Certainly appreciate it. Think for us, we're trying to figure out how the House operates with all the AI bills. I think we need to figure out, is there a common definition to AI? If there isn't, how do need to give our other committees of jurisdiction on different aspects of AI bills the knowledge that they need to move those bills forward? So I guess that's that's the question that we have right now.

[Rob Elleveld, Co-founder and CEO, Transparency Coalition]: We we could provide some common definitions we see in a lot of bills across a lot of states. It's obviously one of the things that we try and standardize across a lot of states is is standard definitions of things like artificial intelligence. So they're not conflicting in a

[Rick Siegel, Office of Legislative Counsel]: bunch of

[Rob Elleveld, Co-founder and CEO, Transparency Coalition]: states. And so if if there's any need there, let us know.

[Michael Marcotte (Chair)]: That would be great if you could send us that. We'd appreciate that, Ralph. Michael? I think a definition would definitely but I I mean, just

[Michael Boutin (Member)]: watching as Rob did this with his fingers, and immediately the thumbs went up, which is AI.

[Michael Marcotte (Chair)]: And

[Michael Boutin (Member)]: I'm very sensitive to the AI manipulation of our children. It's a huge problem and I wouldn't care about any executive order or any litigation that we would face. We should be protecting our children. And I would love to meet the people that would go against that because well, I wouldn't actually want to meet them. So I do think the concern with regulating AI is we're hitting a transformable point in society completely. I mean, this is the equivalent to we're going from horses to cars, we're introducing computers, internet. We've got to be really careful because we don't want to impede that progress because every single one of us here has benefited from all those transformative changes. Some of the transformative changes we have not benefited from. But there's just

[Rick Siegel, Office of Legislative Counsel]: a comment I had to put out there.

[Jonathan Cooper (Member)]: Jonathan? Something that's sort of on my mind is that the non deployment element of Bead, it seems important for us to just know what that is. I think of Vermont's $230,000,000 or so for Bead, about 118,000,000 I think is deployment stuff. I don't know if the balance is entirely there for non deployment, if there were plans for non deployment there. I don't know if this is something that we need to know or if we know that other people who need to know this are taking it under advisement. The deployment component of it, I guess, is safe, which feels good, because I think 90,000,000 of that was going to NEK Broadband. Under 9,000,000 just to NEK. So it just was good to know where the non deployment what those activities could be. Does Vermont have a plan for them already? And is that something that, I guess, the DCBB would know? And is that something that they like to talk to us about? Is that do we wanna have that knowledge? Or maybe we already all do. I just was thinking about it a little bit as we talked about deployment being safe, but nondeployment being a larger piece of the pie in Vermont than I had originally thought it was.

[Michael Marcotte (Chair)]: Travis?

[Dr. Travis Hall, Director for State Engagement, Center for Democracy & Technology]: So unfortunately, I don't have an immediate response or answer to that specific question. I would say, just in response to a couple of the things that came up, first, in terms of the question around definitions, I think having common definitions is important. I think it's important also to recognize that AI isn't a single thing, and sometimes you do want to talk about different things. So for example, like automated decision systems includes things that are not necessarily like generative AI, kind of like old school algorithms, but are just automation of decisions. And that is something that we've seen in different places, it's important to keep in. Chatbots are not necessarily the same as, like, all AI. So I would just simply urge that that the the process of definitions and centralizing definitions in your committee would be great, and just simply not having a single catch all definition because I think you will probably want some nuance in terms of some of the different regulations and things that you'd be putting in place. In terms of the question on hearing the comment about not wanting to protect children and that it doesn't matter about litigation, for what it's worth, I feel the same way about protecting consumers, protecting workers, protecting just kind of the range of folks from the harms that come with these things. And while we certainly are seeing the adoption of these tools is great and exciting, With transportation, we also developed seat belts and airbags and all these other things as we moved along. And so we are already actively seeing real undocumented harms across a range of communities. And I really appreciate all of your work grappling with these things and feel like it's really frustrating that the federal government, instead of doing its own grappling, is trying to put in roadblocks to you. And to that effect on the BEAT funding, would just reiterate something I said a little bit earlier, which is similar to Rob, I'm going to defer to you all on your political calculus. But I would just simply say that I don't think that this is like they've already made you jump through new hoops on beat. Right? And I don't know if this is going to be the last one. And I think it's very unfortunate that these funds that have been appropriated to Congress, to your communities, not only for actual fiber in the ground, but explicitly in the law for additional programs like digital literacy, like trainings, like other things like that are being threatened by something that is a completely different kind of political project. And while I absolutely appreciate Rick saying that you guys that the funding could get tied up in litigation, and that means that you wouldn't have it immediately, and that is really problematic. I would just simply say that that threat probably exists from this administration across a range of issues and that artificial intelligence, particularly things that like where they don't know what that line is themselves, that this is probably not gonna be the only that brings it down. There's probably just a little bit of a Christmas tree, where it's a little bit akin to Darth Vader saying, pray I don't alter the deal further here. So just simply to say that I hope that you all continue in the hard work that you're doing grappling with the harms that these technologies are creating.

[Michael Marcotte (Chair)]: Thanks, Travis.

[Monique Priestley (Clerk)]: Monique? No. Was just I mean, I think Travis actually covered it. I I with the definitions, Travis and Rob, if, like, you end up providing something, my yeah. My my big concern on trying to just give committees something is, like, even just in the bills we have in our committee, we're having definition of a chatbot that that bill doesn't define artificial intelligence partially to try to avoid all of the CEO and and other things, and large language models, and automated decision making systems, and Gen AI systems. And so all of those are actually were crafted somewhat to specifically try to avoid this stuff. But they're all technically, probably in other states. A lot of other states are using the definition of artificial intelligence as a catchall for all those. So I think we have to actually have a menu of things that we're keeping an eye on across committees across the building to try to make sure we catch each of those and then how they interplay with each other.

[Herb Olson (Member)]: But and I'm happy to do that, obviously.

[Michael Marcotte (Chair)]: Rob?

[Rob Elleveld, Co-founder and CEO, Transparency Coalition]: Yeah, I would, what we see out there is that, there's in every state house, you know, this is a fast moving technology. The tech lobby takes advantage of the fact that you all have day jobs. Every legislature, except for maybe California, everyone's working two jobs. You all are doing this on your on your basically spare time. And and and so, because your committee has already just just with this session literally spending a lot more time than almost any other committee will spend. My recommendation would be to we will get you a list of definitions. By the way, I'm working on that right now in in in real time. But, standardizing, basically letting the other committees worry about harms or things that they're trying to protect against on AI, but but sort of funneling it through you also. They don't need to become AI experts or definition experts. I think we'll we'll end up with the with the Vermont legislative process working much better in this area. That's that's what we see is there tends to be a smaller group or a single committee that that is more up to speed because it's just too fast moving and too complex of a topic, then you layer the EO on top of it for a bunch of different disparate committees in any given state to sort of have enough baseline knowledge to be very effective.

[Michael Marcotte (Chair)]: That makes sense.

[Edye Graning (Vice Chair)]: It's more of a statement than a question. I just really appreciate the reframing here and the understanding that there will be EOs in lots of different things that are designed to slow us down from doing the work that we need to do to protect And as long as we keep in mind what we're trying to do and that we're working together to protect Vermonters, we're finding most of these executive orders are being found not to be upheld, right? So not to have teeth. And so we just have to keep doing our work and plugging away and using folks in the field who are able to help us get that broader perspective too, so that we're not getting stuck, spinning our wheels, wasting our seventeen weeks on something where we could actually make a difference. And this is my We're already so far behind on regulating these technologies that every time we can do something, we're just not falling farther behind. And so I just hope that we don't keep getting stuck. People get hurt when we don't do our jobs.

[Michael Marcotte (Chair)]: Okay. Any more questions? I think we have an idea of the path that we need to go down. We'll we'll wait for you, Rob, to send us that information, and we'll work with Rick and Monique, and we'll put something together that we can get to our committees so that they have some common definitions that they can use whenever they're whatever work they're doing, and we can review it after to make sure that everything looks good.

[Rob Elleveld, Co-founder and CEO, Transparency Coalition]: Yeah. I will commit to get you all a a set of definitions by early next week, if not over the weekend. And, part of our mission is education. So if there's committees that want a briefing on just, like, how AI works or what the concerns are, you can certainly do those via Zoom like we're doing now. Or we could do a set of briefings, thirty minute briefings that any legislator in Vermont can attend if they want, just on how AI works or something like that if it's helpful. And, and if it's it's also helpful to be out there for a day or two, probably got we we try and get on the ground in each state we're operating in at least once during the session. So we can come out and have some briefings in person one day that's that's that you all deem as important, before some votes coming or some committee votes or floor votes or whatever. So we just want to be supportive of the process. We know the tech lobby will be on the other side because they are in every state and every bill. And so, we try and, provide our technical expertise and what we're seeing across a lot of states, but, per the earlier comment, you all should keep on doing what your job is in protecting Vermonters because, this will this will pass and, I think there is very low risk of you all being targeted or called out in what you might pass this session. And we're big believers that product liability is well trodden path, one hundred and twenty years of legal precedent that protect our citizens and kids, it absolutely should apply to online products and AI products. We're also big believers in protecting girls from image misappropriation.

[Michael Marcotte (Chair)]: Great. Thank you for your thank you for helping us. We appreciate it. Do you have do you have Rick's email address?

[Rob Elleveld, Co-founder and CEO, Transparency Coalition]: No. That would be great.

[Monique Priestley (Clerk)]: Oh, yeah. Can

[Herb Olson (Member)]: do that. Sure.

[Michael Marcotte (Chair)]: So yeah. Monique will get it to you. Okay. You have Anna Grace's email address?

[Rob Elleveld, Co-founder and CEO, Transparency Coalition]: I do have Anna Grace's. Yes.

[Michael Marcotte (Chair)]: So you can send that to her. She can get it out to us. But you can send that direct to Rick, and then we can start putting something together.

[Rob Elleveld, Co-founder and CEO, Transparency Coalition]: Sounds good.

[Dr. Travis Hall, Director for State Engagement, Center for Democracy & Technology]: And for what it's worth, CDT really like, on behalf of CDT, I really appreciate the time to be able to come and address you on this. And like Rob, would totally echo that we are here as a resource, would be happy to come up and testify or support your session in any way that we can. As these issues are tricky and interesting and sometimes can be complicated, but at its core, what you're what you all are doing, I really appreciate in terms of protecting your your constituents while also, you know, ensuring that these that we can all benefit from these technologies. So thank you.

[Michael Marcotte (Chair)]: Thank you. We appreciate both of you, your willingness to work with us. Thank you. So, committee, I think if there's no more questions, that will end our week, our day and our week. We'll get back here Tuesday morning at 09:00. We're gonna start looking at h two zero five. We have a new draft. We're look that over and then we'll get it out to you and get it posted. And just keep an eye out. Anna Grace will post the the agenda for next week later this afternoon, so we can take a look at it over the weekend. With that, any questions? Any? If we can