Missouri lawmakers consider regulatory sandbox bill

The Missouri Capitol is shown in Jefferson City on May 13, 2022. (Photo by Tessa Weinberg/Missouri Independent)
The Missouri Capitol is shown in Jefferson City on May 13, 2022. (Photo by Tessa Weinberg/Missouri Independent)

State lawmakers and business groups alike have rebooted the discussion on a regulatory sandbox program for Missouri.

The proposal would create a Regulatory Relief Office with the Department of Economic Development tasked with identifying state laws and regulations that could be waived for certain businesses for a two-year period. Businesses could apply with the office for a series of exemptions they would like to benefit from, which would be approved or denied by the office.

The office would be advised and could be countered by an advisory committee made up of executive and legislative appointees, lawmakers and the heads of the Commerce and Insurance and Economic Development departments.

Waived rules would create an open "sandbox" for businesses to operate in without typical regulatory burdens to see how they might fare.

Businesses eligible for the sandbox program would be those that use new or emerging technology or ideas for their products, production or services and have a physical presence in the state.

Rep. Alex Riley, a Republican representing part of Springfield, sponsored the proposal again this legislative session as House Bill 268. He told the House Economic Development Committee during the bill's first hearing Wednesday that it presented an opportunity to expand Missouri's opportunities in the tech and innovation industries while supporting smaller firms that might not have the capital to afford help from an attorney like Riley.

"We have an extremely high regulatory burden in Missouri," Riley said. "At its heart, that affects your small businesses, your mom-and-pop shops, but most of the big guys have the resources to pay people like me to do that and to make sure that they're hopping through all the regulatory hoops the little guy doesn't. And that's why we need to do innovative creative things to try and provide some regulatory relief to them, while still ensuring that protections are in place for the public."

The bill brought out a who's-who of Missouri business groups to weigh in. Phillip Arnzen, director of legislative affairs for the Missouri Chamber of Commerce and Industry, was among the witnesses voicing their support for the proposal.

"The Chamber of Commerce supports innovation, and also supports entrepreneurs, and Missouri's actually becoming an emerging tech and innovation hub. We're actually top 10, in numerous categories in tech, including women in tech, energy tech, as well as manufacturing tech. And so we think this helps promote that. And then also will help spur innovation and entrepreneurs and other industries as well."

Other supporters included James Harris with Cicero Action, Shannon Cooper on behalf of several Kansas City business entities and Sarah Schlemeier on behalf of Next Missouri. National Federation of Independent Businesses (NFIB) State Director Brad Jones also voiced his group's support for the bill, noting something similar had been done in the past.

Jones pointed to the defunct Missouri Small Business Regulatory Fairness Board tasked with weighing in on new business regulations to ensure they did not harm businesses while also resolving issues between state agencies and businesses. The board hasn't met for several years and all of its positions are vacant or expired, according to the Department of Economic Development website.

Jones said the proposed office would alleviate some of the regulatory burdens businesses previously looked to the board for help with.

The sole witness in opposition was Michael Berg, political director for the Sierra Club Missouri Chapter. While he said innovation and business development could prove beneficial and applauded Riley's willingness to work with stakeholders to improve the bill, he said his group could not support the legislation as it currently reads. Berg said the vagueness of the definition of an "innovative business" and the quick 45-day timeline from application to approval were general concerns, along with the possibility of an uneven playing field and the impact of business evading environmental regulations.

"The bill needs to protect the health safety or financial well-being of consumers and the public, which is very good. We'd like to add the environment to that, to make sure that none of the regulations that don't need to be adhered to for the length of time would lead to environmental problems," he said. "It's been brought up several times. As one example of innovative products is cryptocurrency, which uses a lot of energy, and I think that should be taken into account. What would be the effect as far as pollution and energy use if those regulations are waved?"

The committee did not vote on Riley's bill or add amendments Wednesday.

A parallel effort in the Senate passed out of committee this week after lawmakers attached an amendment requiring the commission of administration to file annual reports on contracts for businesses operating for fewer than three years.

The sandbox trend began in the United Kingdom several years ago and has since spread to 12 U.S. states.

Last session saw the same proposal make it through the House and Senate, though it languished in the final days of the legislative year before it could progress to a final vote in the House to approve the upper chamber's changes.

HB 268: Establishes the Regulatory Sandbox Act


Sponsor: Rep. Alex Riley


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