Biden administration rushes to regulate AI before Trump takes office

The Biden administration prepared Monday to regulate artificial intelligence before President-elect Donald Trump takes office next week, forcing his team to make quick decisions about restricting the emerging technology.

The interim final rule on artificial intelligence diffusion includes new controls for advanced AI chips. It proposes model weights to shield top technology from foreign adversaries while sharing it with U.S. allies.

Mr. Trump can undercut the regulation, but President Biden’s team aims to force the next administration to work from Mr. Biden’s blueprint, which has the semiconductor industry on edge.

Commerce Secretary Gina Raimondo told reporters Sunday that she was focused on the most advanced AI developers and intended for “ordinary commercial business in AI to continue uninterrupted.”

She said the Biden administration scheduled 120 days for regulators to solicit feedback from the public, leaving Mr. Trump’s team four months to decide the fate of the new regulations.

“We hope that the next administration takes full advantage of those 120 days to listen to experts, industry, industry players, partner countries, [and] consider their input,” Ms. Raimondo said. “And I fully expect the next administration may make changes as a result of that input, so we’ve provided for 120 days, which is a very long comment period, and we’ve provided for one year, 365 days, for compliance for the standards at AI data centers.”

The Office of the Federal Register says comment periods for proposed rules often range from one to two months but can take six or more months for complex regulations.

Mr. Trump has pledged to reverse Mr. Biden’s AI executive order, and the Republican Party’s 2024 platform included plans to undermine Mr. Biden’s AI regulatory policy.

The Biden administration said its AI rule will promote responsible use and equitable access to AI.

White House National Security Adviser Jake Sullivan said the Biden administration took a “balanced and practical approach.”

“The rule makes it hard for our strategic competitors to use smuggling and remote access to abate our export controls,” Mr. Sullivan told reporters. “It creates incentives for our friends and partners around the world to use trusted vendors for advanced AI, both U.S. vendors and local vendors who meet strong security requirements.”

The semiconductor sector fears the Biden administration’s rush to regulate rather than allow for a smoother transition could affect business.

The Semiconductor Industry Association said last week that it was “deeply concerned” about the potential AI regulation’s scope and complexity. The association said the rule “risks causing unintended and lasting damage to America’s economy” and the semiconductor industry.

Oracle Executive Vice President Ken Glueck wrote on his company’s website that he feared the Biden administration’s AI rule would “go down as one of the most destructive to ever hit the U.S. technology industry.”

“To retroactively and surreptitiously issue a final rule of this magnitude without industry consultation and only days before the change in administration is highly consequential,” Mr. Glueck wrote. “For the first time, we are applying draconian new regulations to largely unregulated public, commercial cloud.”

Ms. Raimondo said federal regulators carved out exceptions for businesses and friendly nations.

“Supply chain activities are explicitly excluded, so chips can move where they need to be packaged or tested,” she said. “We’ve also been crystal clear that this does not apply to gaming chips. Even gaming chips which can approach the capability of AI chips are carved out from the rule.”

A senior administration official said transfers of powerful AI models would be restricted for countries on arms-embargoed lists, such as Cuba, Iran and Russia. Meanwhile, Taiwan, South Korea, Japan and others would have no such restrictions.

Biden administration officials said such export controls are needed to secure the spread of AI capabilities and to counter their use in adversaries’ weapons systems.

Oracle is not a fan of heavy-handed AI rules. Mr. Glueck wrote that the technology sector does not want federal regulators’ protection.

“Apart from the previously articulated and agreed upon national security concerns, we don’t need a ride, we need government to get out of the way,” Mr. Glueck wrote.