“SANDBOX Act” Proposed to Advance AI Innovation

Senator Ted Cruz (R-TX), Chair of the Senate Commerce Committee, introduced a legislative framework aimed at reducing regulatory barriers for artificial intelligence development earlier this week. 

• The framework is built on five policy pillars to guide Congressional action on AI. The approach emphasizes a light-touch regulatory strategy that both encourages U.S. competitiveness against other countries like China and appropriate safeguards against risks such as health, safety, or fraud. 

SANDBOX Act. The centerpiece of this effort is the SANDBOX Act, a bill that would allow companies that develop and deploy AI tools to apply for exemptions or modifications to federal regulations that may hinder innovation.  

• If enacted, The SANDBOX Act would allow companies to apply for two-year regulatory exemptions—if they spell out potential safety and financial risks and how they plan to mitigate them.  

• The Office of Science and Technology Policy (OSTP) would oversee the process, coordinating across agencies and reporting back to Congress to improve transparency and inform future policymaking.  

No state law preemption: Notably, the SANDBOX Act does not preempt state AI regulations, meaning companies would still need to navigate a patchwork of state-level requirements—an outcome that could undercut the bill’s intent to accelerate AI innovation.  

• It is possible that future AI policy frameworks will address preemption given the complexity and compliance burden of overlapping state laws.  

• Earlier this year, Senator Cruz sought to include a federal ban on state AI regulations in the Republican budget reconciliation bill, but the proposal proved unpopular across party lines and was removed during floor debate by a 99–1 vote.  

Congress is looking closely at how to balance innovation with oversight—and employer voices matter. 

• Our goal: Make sure company innovation in AI is supported—not stifled—by regulation. We’ll keep CHROs informed on the SANDBOX Act and other AI legislation. 

Go deeper: Read the framework along with the draft bill text and a bill summary.