On Wednesday, Sen. Ted Cruz introduced legislation to create a regulation “sandbox” that would allow artificial intelligence companies to experiment with minimal federal oversight.
The SANDBOX Act, if passed by Congress, would allow companies to apply for modifications to or waivers from any “obstructive regulations” to the testing and deployment of products or services that use or contain “in whole or in part” at least one AI system. In return, companies would be required to disclose plans to mitigate consumer safety and financial risks.
The waivers would last for two years at a time, up to 10 years, harkening back to the failed moratorium that sought to pause all state-level AI regulation for a decade. That bill was defeated in the Senate in July.
The power to grant those exceptions would rest with the federal agency whose regulations would otherwise be in effect, such as the Federal Trade Commission, which enforces current online privacy protections for children. Waivers would be automatically granted if the agency does not respond within 90 days. If rejected, the company would be able to appeal to the White House Office of Science and Technology Policy (OSTP), which would oversee the sandbox program and have the authority to override the denial. Every year, Congress would receive a report on the number of times federal rules were waived or modified.
Technology accountability group The Tech Oversight Project calls the bill a “sweetheart deal for Big Tech CEOs” that potentially gives companies that donate to Donald Trump a different set of rules than smaller startups. Consumer advocacy organization Public Citizen warns that the bill would allow Silicon Valley to apply the “move fast and break things” attitude to laws and regulations. Both groups raise concerns about the bill giving the OSTP the power to overrule federal agencies, many of which have already been hobbled by the now-dismantled DOGE.
President Trump’s AI Action Plan, announced in July, endorsed the creation of regulatory sandboxes for AI companies. Trump’s plan also includes a back door to the moratorium by rescinding funding to states that do regulate AI.
Cruz’s own state of Texas passed an AI law in June that creates a similar regulation “sandbox” but limits it to 36 months.
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