Senator Ted Cruz unveiled new legislation on Wednesday aimed at establishing a regulatory “sandbox” designed for artificial intelligence companies to innovate with reduced federal oversight.
Titled the SANDBOX Act, the proposed law would enable businesses to apply for changes or exemptions from any regulations deemed “obstructive” in the development and implementation of products featuring AI technology. In exchange, these companies would be obligated to present strategies to address consumer safety and financial concerns.
If approved, the waivers granted under this act would be valid for two years, with the possibility of extension up to ten years, revisiting previous proposals that aimed to halt all state-level AI regulation for a decade, which ultimately failed in the Senate in July.
The authority to grant these waivers would belong to federal agencies that typically enforce regulations, such as the Federal Trade Commission, which is responsible for upholding current online privacy safeguards for minors. Companies would automatically receive waivers if there is no response from the agency within 90 days. In cases of rejection, they would have the option to appeal to the White House Office of Science and Technology Policy (OSTP), which could overrule the decision. Additionally, Congress would receive annual reports detailing the frequency of waived or modified federal regulations.
The Tech Oversight Project, a technology accountability group, criticized the bill, labeling it a “sweetheart deal for Big Tech CEOs” that could favor companies with financial ties to Donald Trump over smaller startups. Consumer advocacy group Public Citizen raised alarms that the proposal could enable Silicon Valley to adopt a “move fast and break things” ethos regarding legal and regulatory compliance, reflecting concerns about the OSTP’s capability to override federal agency decisions, particularly those weakened by the recently dismantled DOGE.
President Trump’s AI Action Plan, announced in July, supports the establishment of such regulatory sandboxes and proposes sanctions against states that impose AI regulations.
Senator Cruz previously championed an AI law in Texas in June that similarly introduced a regulatory “sandbox,” though it restricts the duration to 36 months.
