What is a 'regulatory sandbox'? Why a new bill means more playtime for Utah businesses

Rep. Cory Maloy, R-Lehi, discusses HB60, which drops the permit requirement for Utahns to carry a concealed firearm, in the House chamber at the Capitol in Salt Lake City on Tuesday, Jan. 26, 2021.

(Kristin Murphy, Deseret News, File)

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SALT LAKE CITY — A new bill under consideration on Utah's Capitol Hill would expand a regulatory relief program, which is currently available only to certain types of businesses, to any industry in the state.

HB217, sponsored by Rep. Cory Maloy, R-Lehi, would expand the availability of "regulatory sandboxes" and create a new "regulatory relief office" within the Governor's Office of Economic Development.

But what is regulatory sandbox?

"A regulatory sandbox is a new and unique way for businesses to innovate," Maloy told KSL.com. "The main purpose is to encourage innovation, especially among small businesses and entrepreneurs."

Essentially, a regulatory sandbox allows startups and established companies to work on new projects and ideas without following all of a state's regulatory proscriptions, as long as they have government preapproval. Benjamin Hart, deputy director of the GOED, said the sandboxes allow "innovative ideas" from businesses at the "vanguard" to thrive.

"A lot of times, innovation is hindered by regulations, bureaucratic burdens — whatever it may be, it hinders their ability to really get off the ground," Hart said. Regulatory sandboxes allow businesses to ask for a reprieve from regulation or bureaucracy that's "holding them back."

The state has already established sandbox programs in the financial technology, insurance and legal services industries. But no one has yet applied for any waivers through those programs, Hart said. HB217 would make relief "industry-agnostic," he said, available to all.

"I think this is an effort to do this on a bigger level and make sure everyone knows about it," Hart added.

But is scrapping regulation even safe? After all, wasn't it created for a reason?

"Utah is looking to expand its regulatory sandboxes to further position the state as a place that welcomes...

Posted by Speaker Brad Wilson on Monday, February 1, 2021

"Regulations related to public safety, safety to the consumer, and so on, are not waived," Maloy clarified. "They can't do anything that would be unsafe to the consumer, or fraudulent. ... There's a lot of checks and balances in here to make sure this doesn't harm the public."

HB217 would create the Utah Office of Regulatory Relief within the Governor's Office of Economic Development. Interested applicants would tell the office about their innovation or idea and about which regulations, in particular, they need an exemption from. Maloy said their application would then go before an advisory board and before relevant state agencies. If all parties agree and deem the project safe, businesses will get the green light to move forward.

The waiver would apply for one year, with the possibility of a 12-month extension, Maloy said.

Maloy hopes the sandbox program will provide Utah data about which regulations are necessary and which ones can be scrapped. "We want to be proactive, in terms of looking at mistakes, regulations, what's on the books, and determining whether those things are really needed or not," Hart agreed.

Hart said the program will also help Utah bolster its business-friendly bona fides and attract companies from elsewhere. "We're working with a lot of businesses," he said, "and when the time's right, we want to be able to go and recruit them in the right way, make sure they're great businesses for the state and fit our industry."

Even a Forbes contributor took notice of Utah's sandbox plan this week, calling it a "smart move" that will "further break down barriers to entrepreneurship, increase competition, and encourage innovation."

"I think this is a landmark bill," Maloy said. "It's going to open up a lot of doors to small businesses and entrepreneurs."

HB217 is on the calendar for a vote in the Utah House. If voted through, it will move to the Senate for approval and then, if passed, will be on its way to the governor's office for a signature.

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Graham Dudley reports on politics, breaking news and more for KSL.com. A native Texan, Graham's work has previously appeared in the Brownwood (Texas) Bulletin and The Oklahoma Daily.


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