Missouri Senate approves bill creating program to waive regulations for eligible startups

The Missouri Senate approved a bill Monday that would allow state agencies to waive regulations they believe are hindering certain businesses.

The bill, which has raised fears among environmental advocates that it could undermine health and safety regulations, now heads to the Missouri House, which is already working on its own version. 

Missouri legislators have sought several times to pass similar legislation, known as the “Regulatory Sandbox Act.” Supporters say it would pave the way for the next Uber or other businesses who face regulatory hurdles in their early years. 

“What we don’t want to do is have our regulatory system crush good ideas, good products, good services before they even have a chance to get off the ground,” said Rep. Alex Riley, R-Springfield, who is sponsoring the House version of the bill. 

The legislation passed the Missouri Senate on a 27-5 vote. The House version received a warm reception from members of the House Economic Development Committee, but representatives have not yet voted on it this year.

It would create a process where startups with “innovative” products could apply to have regulations waived. The state department that enforces those regulations would review the application, and if the agency approves, an advisory committee would make a recommendation as to whether the department should let the company into the sandbox program. 

The idea has broad support from business organizations and chambers of commerce who say it could help create jobs and grow Missouri’s economy. 

“Our small business people, our Main Street folks — believe it or not, I know this comes as a shock — don’t read the Missouri register every month to see what new regulations are coming out,” said Brad Jones, state director for the National Federation of Independent Businesses.

But the Missouri chapter of the Sierra Club warns it could lead to destruction.

“Innovative means new. Sometimes new things are good,” Berg said. “Sometimes they are not.” 

Businesses could remain in the sandbox for two years or seek an extension.

Riley said the idea originated in Europe. States around the country have started implementing similar programs, he said, though many of those are only for particular industries, like financial technology, insurance and other professional services. 

But Missouri’s legislation would apply to any business sector except electric and gas utilities that are regulated by the Missouri Public Service Commission. 

Though supporters of the bill argue it would help small businesses who can’t afford to hire attorneys to help them navigate applicable regulations, several of them invoked Uber as an example of a company that could benefit. Uber, a tech unicorn, was worth $62.5 billion around the time it launched in Missouri, according to the New York Times. 

Supporters also cited examples from other states of financial products offered through sandbox programs, including making banking accounts more accessible to low-income consumers. 

Berg said he feared the program could be used for cryptocurrency business, which uses huge amounts of energy, “which uses a lot of energy without actually producing a physical product.”

Beyond that, Berg said it raises fairness questions to give some businesses perks that aren’t available to others. 

Riley said he had worked to make the House bill more appealing to Democrats by including members of the minority party on the advisory committee and giving state agencies the ability to reject applications. 

The Senate version of the legislation was amended to include provisions requiring the state to generate reports on the number of government contracts given to new businesses and recommendations on making services more accessible for new Missouri businesses or businesses owned by women, minorities and veterans. It would also create an Office of Entrepreneurship in the state’s Department of Economic Development to uplift new businesses owned by minorities, women and veterans.