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22LSO-0252
2022
STATE OF WYOMING
22LSO-0252
Numbered
2.0
HOUSE BILL NO. HB0135
General regulatory sandbox program.
Sponsored by: Representative(s) Andrew, Duncan, Heiner, Henderson, Olsen and Sherwood and Senator(s) Boner, Driskill and Rothfuss
A BILL
for
AN ACT relating to economic development; creating the general regulatory sandbox program; authorizing limited waivers of statutes and rules under specified conditions; establishing standards and procedures for sandbox applications, operations and supervision; specifying standards for the suspension and revocation of sandbox authorization; providing definitions; requiring rulemaking; requiring reporting; and providing for effective dates.
Be It Enacted by the Legislature of the State of Wyoming:
Section 1
.
W.S. 9
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12
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1601 through 9
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12
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1612 are created to read:
ARTICLE 16
GENERAL REGULATORY SANDBOX PROGRAM
9
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12
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1601.
Title.
This article is known and may be cited as the "General Regulatory Sandbox Program."
9
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12
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1602.
Definitions.
(a)
As used in this article:
(i)
"Applicable agency" means a department or agency of the state that by law regulates a business activity and persons engaged in the business activity, including the issuance of licenses or other types of authorization, which the council determines has regulatory authority over a sandbox participant;
(ii)
"Applicant" means a person who applies to participate in the general regulatory sandbox program;
(iii)
"Consumer" means a person who purchases or otherwise enters into a transaction or agreement to receive an offering pursuant to a demonstration by a regulatory sandbox participant;
(iv)
"Demonstration" or "demonstrate" means to provide an offering in accordance with this article;
(v)
"Offering" means a product, production method or service;
(vi)
"Product" means a commercially distributed good that is:
(A)
Tangible personal property;
(B)
The result of a production process; and
(C)
Passed through the distribution channel before consumption.
(vii)
"Production" means one (1) or more methods of obtaining goods, including growing, raising, mining, fabricating, harvesting, fishing, farming, trapping, hunting, capturing, gathering, collecting, breeding, extracting, manufacturing, processing or assembling a good;
(viii)
"Regulatory sandbox" means the general regulatory sandbox program created by this article, which allows a person to temporarily demonstrate an offering without the enforcement of a law or regulation;
(ix)
"Sandbox participant" means a person whose application to participate in the regulatory sandbox is approved in accordance with this article;
(x)
"Service" means any commercial activity, duty or labor performed for another person.
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1603.
Duties of the council.
(a)
With respect to this article the council shall:
(i)
Coordinate council policy and management with state and federal agencies and local government entities;
(ii)
Act as a liaison between private businesses and their applicable state regulatory bodies to identify for temporary suspension laws or regulations that may impair the business' ability to adapt to changing market circumstances or to innovate in ways not contemplated or allowed by the law or regulation;
(iii)
Create a framework to analyze the risk level of consumer activities with respect to a demonstration and the appropriate response of laws to protect the health, safety and financial wellbeing of consumers;
(iv)
Formulate a proposal for potential reciprocity agreements between states that have or wish to use similar regulatory sandbox programs as set forth in this article; and
(v)
Promulgate rules to administer this article.
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1604.
Program created; Administration; Application requirements.
(a)
There is created the general regulatory sandbox program to be administered by the council.
(b)
In administering the regulatory sandbox, the council:
(i)
Shall establish a program to enable a person to obtain legal protections and limited access to the Wyoming market to demonstrate an offering without obtaining a license or other authorization that would otherwise be required;
(ii)
To the extent not inconsistent with this article, may enter into agreements with or adopt the best practices of corresponding federal regulatory agencies or other states that are administering programs that waive or
suspend statutory or regulatory requirements as a means of promoting business development;
(iii)
May consult with Wyoming businesses about existing or potential proposals for the regulatory sandbox;
(iv)
Shall consult with each applicable agency;
(v)
Shall not approve any application that would waive any law or regulation in violation of federal law, or that would jeopardize any national accreditation or other national standard for any state agency.
(c)
An applicant for the regulatory sandbox may contact the council for a consultation regarding the regulatory sandbox before submission of an application.
(d)
An applicant for the regulatory sandbox shall provide to the council an application in a form prescribed by the council that:
(i)
Confirms that the applicant is subject to the jurisdiction of the state;
(ii)
Confirms that the applicant has a physical presence in the state, and that the demonstration will be developed and performed in the state and that all required records, documents and data will be maintained in the state;
(iii)
Contains relevant personal and contact information for the applicant, including legal names, addresses, telephone numbers, email addresses, website addresses and other information required by the council;
(iv)
Discloses criminal convictions of the applicant or other participating personnel, if any;
(v)
Contains a description of the offering to be demonstrated, including statements regarding:
(A)
How the o
ff
ering is subject to licensing, legal prohibition, authorization requirements or other operational requirements;
(B)
Each law or regulation that the applicant seeks to have waived or suspended while participating in the regulatory sandbox program;
(C)
How the offering would benefit consumers;
(D)
How the offering is different from other offerings available in the state;
(E)
What risks might exist for consumers who use or purchase the offering as part of a demonstration if the offering is not subject to regulatory and legal assurances;
(F)
How participating in the regulatory sandbox would enable a successful demonstration of the offering;
(G)
A description of the proposed demonstration plan, including estimated time periods for beginning and ending the demonstration;
(H)
Recognition that the applicant will be subject to all laws and regulations pertaining to the applicant's offering after conclusion of the demonstration; and
(J)
How the applicant will end the demonstration and protect consumers' interests or rights if the demonstration fails.
(vi)
Lists which government agency, if any, regulates the applicant's business; and
(vii)
Provides any other information as required by the council.
(e)
The council shall collect a reasonable application fee from an applicant as set by rule of the council.
(f)
An applicant shall file a separate application for each offering that the applicant wishes to demonstrate.
(g)
After an application is filed, the council may request additional information from the applicant that the council determines is necessary to evaluate the application and for the application to be considered complete.
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1605.
Application reviews and reports; consultation.
(a)
Not later than five (5) business days after the day on which a complete application pursuant to W.S. 9
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12
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1604 is received by the council, the council shall:
(i)
Review the application and refer the application to a relevant applicable agency that regulates the applicant's offering; and
(ii)
Provide to the applicant:
(A)
An acknowledgment of receipt of the application; and
(B)
The identity and contact information of each applicable agency to which the application has been referred for review.
(b)
Not later than twenty
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five (25) business days after the day on which an applicable agency receives a complete application for review, the applicable agency shall deliver a written report to the council of its findings. The report shall:
(i)
Describe any identifiable and likely harm to the health, safety or financial wellbeing of Wyoming consumers that the law or regulation subject to waiver protects against; and
(ii)
Make a recommendation to the council that the applicant either be admitted or denied entrance into the regulatory sandbox.
(c)
The applicable agency may provide notice to the council of an extension of five (5) business days to deliver the report required by subsection (b) of this section, which shall be automatically granted. Only one (1) extension shall be permitted per application.
(d)
If the applicable agency recommends an applicant under this section be denied entrance into the regulatory sandbox, the applicable agency shall provide to the council a written description of the reasons for the denial recommendation and why a temporary suspension of specified laws or regulations would harm consumers. The description shall include:
(i)
The type of potential harm consumers could face as a result of temporary suspension of laws and regulations and its severity;
(ii)
The probability of the potential harm occurring; and
(iii)
The permanence of the potential harm.
(e)
If the agency believes that a consumer's health, safety and financial wellbeing can be protected through less restrictive means than a waiver of the existing law or regulation, then the applicable agency shall articulate how that can be achieved.
(f)
The council shall consider an applicable agency's failure to deliver the report required under subsection (b) of this section within the required time as a lack of objection to the temporary suspension of the applicable law or regulation under this article.
(g)
The council shall consult with each applicable agency before recommending to the state loan and investment board that an applicant be admitted into the regulatory sandbox.
(h)
The consultation with an applicable agency may include seeking information about whether:
(i)
The applicable agency has previously issued a license or other authorization to the applicant;
(ii)
The applicable agency has previously investigated, sanctioned or pursued legal action against the applicant;
(iii)
Whether certain laws or regulations should not be suspended even if the applicant is accepted into the regulatory sandbox.
(j)
In reviewing an application, the council and applicable agency shall consider whether a competitor to the applicant is or has been a sandbox participant and, if so, weigh that as a factor in favor of allowing the applicant to also become a sandbox participant.
(k)
In reviewing whether an application will be approved, and in consultation with the applicant, the council shall consider whether:
(i)
An applicant's plan adequately protects consumers from potential harm; and
(ii)
The benefits to consumers of not suspending the law or regulation outweigh the offering's potential benefits to consumers.
(m)
The council may deny any application if the council determines that the preponderance of the evidence demonstrates that suspending enforcement of a law or regulation would cause a significant risk of harm to consumers or residents of the state.
(n)
If the council approves an application it shall submit it to the state loan and investment board for final approval. The state loan and investment board shall consider all of the factors specified in this article, and any other factors it finds relevant, in the same manner as
the council in determining whether to approve or deny an application.
(o)
If the state loan and investment board denies an application, not later than ten (10) days following the denial the state loan and investment board shall provide to the applicant a written description of the reasons for the denial as a sandbox participant.
(p)
An applicant becomes a sandbox participant if the state loan and investment board approves the applicant's application for the regulatory sandbox.
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1606.
Availability of regulatory sandbox.
(a)
The regulatory sandbox authorized in this article shall not apply to any financial product or service as defined in W.S. 40
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29
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102(a)(iv) or any innovative medical digital assessment product or service under title 40, Chapter 28 of the Wyoming statutes.
(b)
A government agency that issues any cease and desist letter, citation or other punitive action regarding commercial activity shall provide the person involved in the commercial activity with information for contacting the council to request a suspension through the regulatory sandbox program.
The agency shall also notify the council of the cease and desist letter, citation or other punitive action.
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1607.
Scope of the regulatory sandbox.
(a)
If the state loan and investment board approves an application under W.S. 9
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1604 and 9
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1605:
(i)
The council shall provide to the sandbox participant the description in the report prepared in accordance with W.S. 9
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1605(b)(i);
(ii)
The state loan and investment board shall articulate specific laws and regulations to which the sandbox participant will not be subject during the demonstration; and
(iii)
The sandbox participant has twelve (12) months after the day on which the application is approved to demonstrate the offering described in the sandbox participant's application.
(b)
An offering that is demonstrated within the regulatory sandbox is subject to the following:
(i)
Target consumers shall be residents of the state;
(ii)
Within the past ten (10) years, a participant shall not have been convicted, entered a plea of nolo contendere or entered a plea of guilty or nolo contendere held in abeyance, for any crime involving significant theft, fraud or dishonesty, or that bears a significant relationship to the applicant or participant's ability to safely and competently participate in the regulatory sandbox; and
(iii)
No law shall be suspended that would prevent a consumer from seeking restitution in the event the consumer has been harmed.
(c)
This article shall not restrict a sandbox participant who holds a license or other authorization in another jurisdiction from acting in accordance with that license or other authorization.
(d)
During a sandbox participant's term under paragraph (a)(iii) of this section, a sandbox participant is deemed to possess an appropriate license or other authorization under the laws of the state for the purposes of any provision of federal law requiring state licensure or authorization by the state.
(e)
Except as otherwise provided in subsections (h) and (j) of this section, a sandbox participant is not subject to enforcement of state laws or regulations identified in paragraph (a)(ii) of this section.
(f)
A prosecutor shall not file or pursue charges pertaining to a violation of a law or regulation identified in paragraph (a)(ii) of this section against an applicant that occurred during the demonstration period.
(g)
A state agency shall not file or pursue any punitive action or enforcement action, including a fine or license suspension or revocation, pertaining to a violation of a law or regulation identified in paragraph (a)(ii) of this section against an applicant that occurred during the demonstration period.
(h)
If the council determines that certain state laws or rules that regulate an offering apply to a sandbox participant, the council shall notify the sandbox participant of the specific laws or rules that apply to the sandbox participant.
(j)
Notwithstanding any other provision of this section, a sandbox participant shall not have immunity related to any criminal offense committed during the sandbox participant's demonstration.
(k)
By written notice, the council may end a sandbox participant's participation in the regulatory sandbox at any time and for any reason, including if the council determines a sandbox participant is not operating in good faith to bring an offering to market.
(m)
The council and the state loan and investment board are not liable for any business losses or the recouping of application expenses or other expenses related to the sandbox, including for:
(i)
Denying an applicant's application to participate in the regulatory sandbox for any reason; or
(ii)
Ending a sandbox participant's participation in the regulatory sandbox at any time and for any reason.
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1608.
Consumer protection for regulatory sandbox.
(a)
Before demonstrating to a consumer an offering that is protected by a regulatory sandbox, a sandbox participant shall disclose the following to the consumer:
(i)
The name and contact information of the sandbox participant;
(ii)
That the offering is authorized pursuant to the regulatory sandbox and, if applicable, that the sandbox participant does not have a license or other authorization to provide an offering under state laws that regulate offerings outside the regulatory sandbox;
(iii)
That the offering is undergoing testing and may not function as intended and may expose the customer to certain risks as identified by the applicable agency's review;
(iv)
That the provider of the offering is not immune from potential civil liability caused by the offering;
(v)
That the provider of the offering is not immune from criminal prosecution for violations of Wyoming law or regulations not suspended pursuant to the demonstration;
(vi)
That the state does not endorse or recommend the offering;
(vii)
That the offering is a temporary demonstration that may be discontinued at the end of the demonstration period;
(viii)
The expected end date of the demonstration period; and
(ix)
That a consumer may contact the council to file a complaint regarding the offering being demonstrated. The disclosure shall provide the council's telephone number and website address where a complaint may be filed.
(b)
The disclosures required by subsection (a) of this section shall be provided to a consumer in a clear and
conspicuous form and a consumer shall acknowledge receipt of the disclosure before a transaction may be completed.
(c)
The council may, in its grant of an application, require that a sandbox participant make additional disclosures to a consumer.
(d)
The council shall make reasonable efforts to notify a sandbox participant's competitors when a law is suspended under this article so that another company subject to the law may also submit an application to the council to participate in the regulatory sandbox.
(e)
If the council determines that a sandbox participant has engaged in, is engaging in or is about to engage in any practice or transaction that is in violation of this article or that constitutes a violation of a law for which suspension has not been granted, the council may remove a sandbox participant from the regulatory sandbox.
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1609.
Requirements for exiting regulatory sandbox.
(a)
Not less than thirty (30) days before the end of the twelve (12) month regulatory sandbox demonstration period, a sandbox participant shall notify the council that the sandbox participant will exit the regulatory sandbox and discontinue the sandbox participant's demonstration after the day on which the twelve (12) month demonstration period ends or seek an extension in accordance with W.S. 9
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1610.
(b)
Subject to subsection (c) of this section, if the council does not receive notification as required by subsection (a) of this section, the regulatory sandbox demonstration period shall end at the conclusion of the twelve (12) month demonstration period.
(c)
If a demonstration includes an offering that requires ongoing duties, such as servicing the offering, the sandbox participant may continue to do so but will be subject to enforcement of the laws or regulations that were suspended as part of the regulatory sandbox.
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1610.
Extensions.
(a)
Not less than thirty (30) days before the end of the twelve (12) month regulatory sandbox demonstration period, a sandbox participant may request an extension of the regulatory sandbox demonstration period.
(b)
The council shall grant or deny a request for an extension before the end of the twelve (12) month regulatory sandbox demonstration period.
(c)
The council may grant an extension under this section for not more than twelve (12) months after the end of the initial regulatory sandbox demonstration period.
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1611.
Record keeping and reporting requirements.
(a)
A sandbox participant shall retain records, documents and data produced in the ordinary course of business regarding an offering demonstrated in the regulatory sandbox.
(b)
If a sandbox participant ceases to provide an offering before the end of a demonstration period, the sandbox participant shall notify the applicable agency and report on actions taken by the sandbox participant to ensure consumers have not been harmed as a result.
(c)
A sandbox participant shall provide the council with a written report every three (3) months during the demonstration period that provides an update on the status of the demonstration.
(d)
A sandbox participant shall immediately notify the applicable agency and the council of any incidents that result in harm to the health, safety or financial wellbeing of a Wyoming consumer that the relevant law protects against as set forth in the report required under W.S. 9
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1605(b)(i).
(e)
If the sandbox participant fails to notify the applicable agency and the council of any incidents as required under subsection (d) of this section, or the applicable agency has evidence that significant and
irreparable harm has occurred to a consumer, the participant shall be removed from the regulatory sandbox immediately.
(f)
Not less than thirty (30) days after a sandbox participant exits the regulatory sandbox, the participant shall submit a report of termination of the participant's demonstration to the council and the applicable agency. The report shall include any incident of an offering of the participant's that harmed any consumer.
(g)
Not less than thirty (30) days after the submission of the report under subsection (f) of this section, the applicable agency shall provide the council with a report on the demonstration and describe any regulatory or legislative reform the applicable agency believes should be made as a result of the demonstration.
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1612.
Annual report.
(a)
Not later than October 1, 2023, and every October 1 thereafter, the council shall provide a written report to
the joint minerals, business and economic development interim committee concerning the activities of the council under this article, including:
(i)
Information regarding each sandbox participant;
(ii)
Recommendations regarding the effectiveness of the regulatory sandbox;
(iii)
Any proactive assessment of existing laws that the council believes are excessive or unwarranted in light of their risk level pursuant to the framework analysis in W.S. 9
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12
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1603(a)(iv) and the report received pursuant to W.S. 9
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1611(f);
(iv)
A status update of the participants currently in the regulatory sandbox and which industries the participants represent;
(v)
Anticipated or actual cost savings that companies experienced through participation in the regulatory sandbox; and
(vi)
Other benefits to consumers and the Wyoming economy.
Section 2.
W.S. 9
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12
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102(a)(intro) and (viii), 9
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12
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105(a) by creating a new paragraph (x) and 16
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4
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203(d) by creating a new paragraph (xxi) are amended to read:
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102.
Definitions.
(a)
As used in this act, the following terms have the following meanings, except where the context clearly indicates otherwise
or where the term is otherwise defined in this act
:
(viii)
"This act" means W.S. 9
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12
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101 through
9
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12
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1509
9
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12
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1612
.
9
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12
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105.
Economic development services.
(a)
It shall be the duty of the council to encourage, stimulate and support the development and expansion of the economy of the state. The council is charged with the following duties and responsibilities:
(x)
To administer the general regulatory sandbox program established in article 16 of this chapter.
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4
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203.
Right of inspection; grounds for denial; access of news media; order permitting or restricting disclosure; exceptions.
(d)
The custodian shall deny the right of inspection of the following records, unless otherwise provided by law:
(xxi)
Any part of an application pursuant to the general regulatory sandbox program that, if disclosed, would result in actual economic harm to the applicant.
Nothing in this paragraph shall restrict access to a record evidencing a final contract or approval decision.
Section 3.
The Wyoming business council and the state loan and investment board shall promulgate any rules necessary to implement this act.
Section 4.
(a)
Except as provided in subsection (b) of this section, this act is effective July 1, 2022.
(b)
Sections 3 and 4 of this act are effective immediately upon completion of all acts necessary for a bill to become law as provided by Article 4, Section 8 of the Wyoming Constitution.
(END)
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HB0135