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Committee hears third hearing on regulatory sandbox bill aimed at startups and AI testing
Summary
Testimony for House Bill 176 described a state regulatory sandbox to let startups test products (including AI in health care) with tailored rules, advisory oversight and required disclosures; members pressed for consumer protections, exit rules, and clarity about differences from a terminated CFPB program.
The House Government Oversight Committee held the third hearing on House Bill 176, a proposal to create a state regulatory sandbox to allow businesses — especially technology startups and firms using AI — to test products under tailored or temporarily suspended regulations while working with regulators.
Greg Lawson, who testified as a proponent, described the bill as a way to "offer opportunities for new businesses, in particular new technologies," and said the sandbox would be housed within the Common Sense Initiative and overseen by an advisory committee composed of regulators and business representatives. Lawson said the program would include consumer disclosures and an iterative process between applicants and regulators to avoid unintentionally stifling innovation.
Lawson said the bill allows an initial participation period of up to five years with the possibility of three one‑year renewals, which he described as a glide path that many participants would not use in full. He added that participants who wish to exit earlier could do so with 30 days' notice.
During questioning, Ranking Member Humphrey asked how the state proposal would differ from a federal sandbox program the ranking member said the Consumer Financial Protection Bureau had terminated. Lawson said he was not fully familiar with CFPB's operation but emphasized that this bill builds in an iterative, collaborative process with regulators. Representative Raider and others pressed Lawson on risks from AI in health care and on how consumers would be protected and restored if harmed. Lawson said existing statutes (for example, deceptive-practices laws) would remain enforceable and that strong front‑end disclosures were central to the proposal.
Committee members also asked whether participants could exit and later re-enter the sandbox. Lawson said participants could exit and, if seeking to return with a materially different service, would likely submit a separate application; he said repeated in-and-out behavior would be discouraged.
No committee vote was taken on House Bill 176 during the hearing; the committee accepted written testimony from David Iglesias and concluded the third hearing.
