SB 2-AI, DEEPFAKES, CYBERSECURITY, DATA XFERS  3:56:38 PM CHAIR KAWASAKI announced the consideration of SENATE BILL NO. 2 "An Act relating to disclosure of election-related deepfakes; relating to use of artificial intelligence by state agencies; and relating to transfer of data about individuals between state agencies." 3:57:17 PM SENATOR SHELLEY HUGHES, District M, Alaska State Legislature, Juneau, Alaska, sponsor of SB 2 said state agencies need to use AI responsibly, protect Alaskans' data and personal liberties, and ensure fairness and transparency. She said while AI can help address workforce and budget challenges by streamlining tasks, AI use must balance innovation with safeguards against harm. She shared an experience serving on the National Conference of State Legislators Task Force on AI. She stressed the responsibility of state agencies to apply AI appropriately and transparently without hindering private sector innovation. 4:00:11 PM SENATOR HUGHES moved to slide 2, and defined the different types of A.I.: [Original punctuation provided.]   Defining A.I.    ARTIFICIAL INTELLIGENCE: falls into two primary categories: GENERATIVE: Machine-based system designed to operate with varying levels of autonomy that may exhibit adaptiveness after deployment and that, for explicit or implicit objectives, infers how to generate outputs from input the system receives. RULES-BASED: Computational program or algorithm designed to process information in a logical way that does not produce inferential output beyond its original programming and query parameters. 4:00:33 PM SENATOR HUGHES moved to slide 3, Why Now Why Here, and discussed the following points: [Original punctuation provided.] WHY NOW? A.I. is here. It is evolving at lightning speed. We cannot stop it. We cannot ignore it. "A.I. is a tool and in itself is not inherently evil. Our job is to protect against bad actors and harness A.I. for good the very best we can."-Senator Shelley Hughes WHY HERE? Congress is unlikely to unite on parameters and best practices anytime soon. State legislatures are more nimble and ready to mitigate the harm and bridle the benefits of A.I. 4:01:11 PM SENATOR HUGHES moved to slide 4, Why this Focus, and discussed the following points: [Original punctuation provided.] 1. State Agency Use of A.I.  a) Targeting private sector development and deployment would stifle innovation and be a fool's errand for a state with a small population. b) Setting the parameters for state agency use is necessary i. to safeguard the public ii. to ensure appropriate deployment that will offer efficiencies and solutions for the workplace 2. Political Deepfakes  a) No time to waste. Elections occur every year. b) In general, lack of trust chaos. SENATOR HUGHES said when SB 2 was first drafted, it was the only legislation addressing political deepfakes. Since other legislation now covers that issue, the committee may want to remove the political deepfake section and allow it to be handled separately to ensure proper disclosure and accurate public information. 4:01:53 PM SENATOR HUGHES moved to slide 5, A Good Starting Point, and discussed the following points: [Original punctuation provided.] AGREEING ON AI PRINCIPLES  • Differentiate between tool and actor -Protect against bad actors -Support innovation for beneficial uses • Aim for tech neutrality • Assign human oversight and responsibility • Maintain transparency • Avoid harm/injury • Respect sensitive personal data privacy and security • Embrace data hygiene • Avoid creating/reinforcing unfair bias • Uphold laws and protect individual rights 4:03:19 PM EIELIA PRESTON, Staff, Senator Shelly Hughes, Alaska State Legislature, Juneau, Alaska, co-presented the slideshow for SB 2 and moved to slide 6, What it Does-High Level: [Original punctuation provided.] 1. Adds disclosure statement requirements for political deepfake communications. 2. Adds new sections regarding state agency use of artificial intelligence and individuals' data. 3. Adds section to allow persons who suffers harm to bring civil action to superior court. 4:04:03 PM MS. PRESTON moved to slide 7, What it Does-a bit in the weeds: [Original punctuation provided.] Requires biennial inventory and report of AI systems being used by state agencies published on DOA website. 1.Name and vendor of system 2.General capabilities and uses 3.Most recent impact assessment completed date   Requires biennial impact assessments to determine efficacy and continued use of systems. 4:04:35 PM MS. PRESTON moved to slide 8, What it Does-a bit in the weeds: [Original punctuation provided.] Impact Assessment  1.System efficacy 2.Human oversight 3.Accountability mechanisms 4.Decision appeals process 5.Benefits, liability, and risks to state 6.Effects on liberty, finances, livelihood, and privacy interests of individuals, including effects from geolocation data use. 7.Unlawful discrimination or disparate impact on individual or group 8.Policies and procedures governing process of A.I. system use for consequential decision-making. 4:05:07 PM MS. PRESTON moved to slide 9, What it Does-a bit in the weeds: [Original punctuation provided.] Requires state agencies to  1.Notify individuals who may be legally or significantly affected 2.Obtain individual's consent before soliciting or acquiring sensitive personal data or sharing data with another state agency* 3.Provide appeals process including manual human review 4.Inform and acquire consent if AI used in hiring interview video 5.When outsourced, multi-factor authentication must secure system and stored data MS. PRESTON said these matters require transparency, such as the Department of Public Safety sharing legally required information with the court system. 4:05:49 PM SENATOR HUGHES commented that the asterisk on the slides explains there is an exemption for the Department of Public Safety. 4:05:55 PM MS. PRESTON moved to slide 10, What it Does-a bit in the weeds: [Original punctuation provided.] Prohibits* state agencies from using.    1.Biometric identification e.g., facial recognition 2.Emotion recognition 3.Cognitive behavioral manipulation of individuals or groups 4.Social scoring 5.AI systems that use data hosted in hostile nations *With provisional exceptions for Department of Safety 4:06:24 PM SENATOR HUGHES recommended an amendment to reference the U.S. Code for defining foreign adversary nations. She said this would avoid updates and provide clarity, since views on hostile nations may differ. 4:06:53 PM MS. PRESTON moved to slide 11 and showed examples of other countries with issues from deepfakes during an election. 4:07:17 PM MS. PRESTON moved to slide 12, and read the following quote: [Original punctuation provided.] "The fact-checkers trying to hold the line against disinformation on social media in Slovakia say their experience shows AI is already advanced enough to disrupt elections, while they lack the tools to fight back." (Morgan Meaker, The Wired, 2023) 4:07:40 PM SENATOR HUGHES noted that while deepfakes disrupted elections abroad in 2024, U.S. research found deepfakes spread misinformation yet did not change outcomes. Still, 52 percent of Americans struggle to distinguish fact from fiction in election news, and studies show 2550 percent of deepfakes aim to mislead. She said growing awareness has helped people spot fakes, but disclosure, enforcement, penalties, and injunctive relief remain important parts of the proposal. 4:09:49 PM CHAIR KAWASAKI opined that 52 percent is a low number of people that struggle to identify misinformation. He referenced slide 13 stating that with AI filters everything would need a content disclosure requirement. He asked for her views on how disclosure laws should apply to deepfakes. 4:10:57 PM SENATOR HUGHES reiterated the definition of a deepfake: It would have to be something that creates something false that would appear to a reasonable person to depict a real individual saying or doing something that did not actually occur and provides a fundamentally different understanding or oppression of an individual's appearance, conduct, or spoken words. SENATOR HUGHES replied that that AI was also used positively in the last election, such as translating candidate speeches into other languages. She wanted to keep SB 2 narrowly focused on deceptive uses, like making someone appear to say or do something that never happened. 4:12:11 PM CHAIR KAWASAKI announced invited testimony on SB 2. 4:13:17 PM SPENCE PURNELL, Resident Senior Fellow, Technology and Innovation, R Street Institute, Tampa, Florida, testified by invitation on SB 2. He agreed that deepfakes are a real problem and supports a narrow definition to avoid overreach, favoring disclosure over bans. He stressed government roles beyond regulation, such as education and awareness. He endorsed SB 2 as a well-written bill that sets responsible boundaries without discouraging beneficial AI use. He noted the importance of careful regulation given the technology's early stage. 4:15:51 PM CHAIR KAWASAKI stated his belief that disclosure is effective, though it must be done carefully. He said if everything requires a disclosure, people may start ignoring them altogether. He asked for an explanation on how other states have set guidelines for the use of artificial intelligence, particularly around disclosure. 4:16:22 PM MR. PURNELL warned that to avoid liability, many will add disclosure statements to political communications, which could lessen the impact. While not a bad outcome, he stressed that the need is for digital literacy and civic education, enabling citizens to critically evaluate information. He noted that AI is just the first of many emerging technologies, and long-term resilience depends on fostering cultural change and critical thinking rather than relying solely on policy or technology. 4:19:06 PM DANIEL CASTRO, Vice President, Information Technology and Innovation Foundation, Washington, D.C., testified by invitation on SB 2 and emphasized that generative AI offers significant benefits while posing risks, particularly with deepfakes in elections. He highlighted the need for narrowly tailored state policies that focus on harmful manipulation rather than legitimate AI use. Key principles include meaningful disclosure, timely enforcement, accountability for bad actors, and preserving beneficial uses like translation and accessibility. He stressed that government use of AI should be transparent and accountable, and that policies should protect election integrity without stifling innovation. 4:22:56 PM CHAIR KAWASAKI shared an example of Alaska's overly broad cell phone law that unintentionally restricted common screen devices and had to correct the next year. He asked if other states have similarly overregulated technology and later had to roll back or amend the laws. 4:24:02 PM MR. CASTRO answered yes and said some states passed AI laws with poor definitions that overreached, creating ineffective labeling requirements. He said over-labeling can dilute trust signals, and such rules only bind legitimate actors, not foreign bad actors spreading misinformation. He cautioned against imbalance and urged for technology-neutral policies focused on deceptive media in elections rather than AI specifically. 4:26:21 PM NATE PERSILY, Professor, Stanford Law School, Stanford, California, testified by invitation on SB 2 and stated that AI amplifies the abilities of all actorselection officials, candidates, or foreign adversariesto pursue goals. While Americans are especially pessimistic about AI's effect on democracy, evidence from recent elections shows little actual use of deepfakes to sway voters. He said the greater danger is eroding trust in authentic media, as people become better at spotting falsehoods and worse at recognizing truth. This distrust could harm democracy more than the deepfakes themselves. He stated that some states have banned deepfakes, while many others, including bills like SB 2, are under consideration and focus on disclosure. Disclosure is viewed as a modest yet important first step, giving voters tools to understand what content is AI-generated without overregulating rapidly evolving technology. 4:31:23 PM CHAIR KAWASAKI asked how the public can be educated to better discern truth from misinformation, especially when many people no longer trust what they see in the news or online and can easily be misled. 4:33:05 PM MR. PERSILY responded that social media has replaced authoritative news sources, creating an environment where misinformation spreads easily. While empowering users with tools to identify synthetic content is a step forward, lasting solutions require building widespread critical thinking skills. He said however, repeatedly warning people not to trust online content risks is leading people to distrust everything, even information that is accurate. 4:35:37 PM CHAIR KAWASAKI asked from a legal perspective, whether penalties for misinformation or AI misuse can serve as an effective deterrent. 4:36:03 PM MR. PERSILY replied that a blanket ban on AI in communications would be unconstitutional as overly broad under the First Amendment. However, disclosure requirements are a recognized constitutional safe harbor. Courts, including in the Citizens United case, have upheld strong disclosure rules. SB 2 follows that model, treating failure to disclose AI use, especially when intended to manipulate images, similarly to other regulatory contexts where nondisclosure can trigger enforcement. 4:37:55 PM CHAIR KAWASAKI requested an explanation on whether libel laws have been used to address cases where AI makes it appear that someone said something they did not. 4:38:21 PM MR. PERSILY replied that libel laws have seen limited application in AI contexts, primarily with non-consensual intimate imagery, which poses significant risks, especially for young people. For public figures, libel requires proving actual malice, making it harder to pursue cases involving AI deepfakes of officials. He said while libel shows some promise, disclosure requirements are often a more practical regulatory tool for election-related AI content. 4:40:16 PM CHAIR KAWASAKI opened public testimony on SB 2. 4:40:30 PM MIKE COONS, representing self, Wasilla, Alaska, testified in support of SB 2 and shared personal challenges adapting to technology and noted that AI is far more advanced today. SB 2 provides initial protection for responsible government use of AI. He said while AI can accelerate information processing and improve accuracy, the final product must rely on human judgment and innovation. He named his concerns that include overreliance on AI, the potential for deepfakes to mislead the public, and the risk that students may lose critical skills to discern truth from misinformation. He opined that human oversight and responsibility are essential to ensure AI supports rather than undermines decision-making and public trust. 4:43:12 PM SENATOR HUGHES stated that SB 2 is technology-neutral, covering AI and other forms of manipulation like Photoshop for deepfakes, with disclosure required for any altered content. She said state agencies using AI, especially in consequential decisions affecting individuals, should follow clear parameters, obtain consent, and ensure transparency. The fiscal note imposing high costs is seen as unnecessary, as responsible AI use should streamline work rather than require additional staff. She emphasized that AI use must remain transparent, fair, and practical, with common-sense guidelines rather than excessive regulation. Properly implemented, AI offers long-term benefits and potential savings for state operations. 4:46:57 PM CHAIR KAWASAKI stated that the fiscal note includes staffing and resources totaling $5.6 million for operations and $2.5 million for contractual services. He said the Finance Committee would need to review SB 2 and then it would continue to Judiciary as the second committee of referral. He said he would work with the bill sponsor on accelerating SB 2. 4:47:52 PM SENATOR GRAY-JACKSON stressed the urgency of addressing AI, noting it moves too quickly for a task force approach, and expressed willingness to help reduce the fiscal note to move the bill forward. 4:48:27 PM CHAIR KAWASAKI kept public testimony open for SB 2. 4:49:05 PM CHAIR KAWASAKI held SB 2 in committee.