Kansas may soon have “regulatory sandboxes” that allow companies to bypass state rules if they work with a government agency.
That’s if lawmakers take action on Tuesday’s recommendations from the Special Committee on Foreign Trade and Regulatory Sandboxes.
The sandbox model is about a decade old and was created by the UK Financial Conduct Authority as a “safe space in which companies can test innovative products, services, business models and delivery mechanisms.”
It has since expanded to 17 states. A bill in Kansas was considered during the 2024 legislative session, but it died without coming to a vote.
States have taken different approaches to the sandbox model, with some singling out specific industries and others allowing any company to opt into the sandbox. Arizona, the first state to create a regulatory sandbox, focused on financial technology but later expanded it to a general regulatory sandbox.
Companies are typically given a limited time frame to circumvent the specific regulations they identify in their application. Most programs still require health and safety regulations to remain in effect, and the oversight agency varies from state to state. The 2024 Kansas bill asked the attorney general to oversee the program, but others have given power to the governor or state trade agencies.
The committee has decided to create a sandbox program open to all types of companies, which will allow the regulatory agency to bring in industry experts to advise decision makers on regulations affecting companies. While the latest proposal called for oversight of the program by the attorney general, they asked not to be involved.
“We would prefer not to be in charge of it just because we have quite a complicated regulatory relationship,” said Robert Hutchison, deputy attorney general in the Civil Litigation Division.
Hutchison said there could be potential conflicts with the attorney general, because he represents licensing agencies and advises them on regulations. If they oversee a sandbox, they could potentially represent a licensing agency on one side, and a company trying to avoid regulations on the other.
However, the agency will issue an opinion on the constitutionality of a sandbox, but so far no state program has been shut down due to a lawsuit.
Pro-business organizations favor sandboxes, with last year’s bill receiving support from the National Federation of Independent Business, the Kansas Chamber of Commerce, American for Prosperity and the Kansas Policy Institute.
