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Inside Delaware’s proposed agentic AI sandbox

A controlled test program is intended to let approved organizations trial specific AI-agent business activities under defined conditions—not operate without rules.

Proposed · Chapter 80 · Draft only

Purpose: bounded market testing

The June 2, 2026 draft would create an Artificial Intelligence Regulatory Sandbox Program. Its stated purpose is to let an eligible applicant obtain limited access to the Delaware market to test innovations that use an AI agent through an AIC. The sandbox would be overseen by a committee chaired by the Secretary of State and including, among others, the Attorney General, Chief Justice, AI Commission chair, appointed lawyers and AI practitioners.

Four different clocks—and none is running today. If enacted, the draft says implementation would occur no later than six months after enactment, or earlier after a notice by the Sandbox Administrator. The overall sandbox would then last 30 months from implementation; each participant’s test would have to finish within 24 months after its registration number is issued; and the Act itself would expire 36 months after enactment unless the General Assembly extends it. The draft still contains bracketed implementation-date placeholders, so these are proposed mechanics, not live dates.

Who could apply?

The draft describes an eligible applicant as an entity organized under Delaware law that is qualified to become the sole member of an AIC and meets any additional requirements set by the Sandbox Administrator or Committee. The approved applicant would then form the AIC used for the test. The draft’s definition of “entity” excludes an individual, so the applicant is not simply any person with an AI product.

What an application would need to show

  1. Identity and accountability: contact information and a named point of contact between the applicant and the state.
  2. Track record: disclosures relating to relevant criminal convictions, civil judgments, investigations, sanctions, enforcement actions and regulatory proceedings involving the applicant and key personnel.
  3. Innovation case: a description of the agentic innovation and how it would benefit the public.
  4. Risk profile: risks to the public, counterparties and third parties, and the safeguards proposed to manage them.
  5. Data security: how counterparty and third-party data under the applicant’s control would be protected.
  6. Test plan: expected market-entry and market-exit periods, plus any necessary licenses or authorizations.
  7. Wind-down plan: how the applicant would cease unauthorized agent activity and fulfill or transfer outstanding obligations if the test ended early or was revoked.
  8. Specific exemptions: every Delaware Code provision, regulation or licensing requirement for which an exemption is requested.
  9. Capital: proof that the applicant and proposed AIC would be adequately capitalized.
  10. Audit and termination capability: records available for inspection, adverse-event notifications, periodic reports and the technical ability to terminate the agent.

What could be exempted—and what would remain

The Committee would specify the exact Delaware provisions, regulations or licensing requirements from which a participant is exempt. The draft says exemptions may not exceed those requested by the applicant. This is a targeted process, not an automatic suspension of every rule that makes a business inconvenient to operate.

The draft expressly preserves several important constraints: participants are not immune from civil damages for acts or omissions under the chapter; they remain subject to state criminal and consumer-protection laws; and they remain subject to liability arising under the proposed AIC Act. Federal laws are not erased by a state sandbox. The proposed exemption mechanism is limited to the specific Delaware provisions, regulations or licensing requirements requested by the applicant and approved by the Committee.

Counterparty disclosure

Before interacting with a counterparty, the sandbox-authorized AIC would need to disclose the participant’s name and contact information, its registration number, that the innovation is authorized under the chapter, the applicable liability-shield protections, that Delaware does not endorse or recommend the innovation, and that the test is temporary. The draft also provides a route for counterparties to contact the Sandbox Administrator or Attorney General with complaints.

Who counts as a counterparty? The draft defines a counterparty as an “entity” that enters into a transaction with a sandbox-authorized AIC. Its definition of entity excludes individuals. Read together with the rule that testing may occur only with a counterparty, the text appears designed for business-to-business or entity-to-entity tests—not direct testing on individual consumers. A counterparty that enters a covered transaction after receiving the disclosure would also be deemed to consent to Delaware personal jurisdiction and the Court of Chancery as the exclusive forum for the dispute. That forum provision deserves prominent disclosure and careful legal review.

Testing boundaries and oversight

  • Each innovation requires a separate application.
  • The Administrator reviews completeness and consults affected agencies; the draft sets an initial 10-business-day administrative review period.
  • The Committee generally has 30 calendar days to approve or deny an application, with limited extension mechanisms in the draft.
  • The Committee may require periodic reports and inspect records; participants must promptly report adverse events and security breaches.
  • Participation may be suspended or revoked, with an emergency plan to halt unauthorized agent activity.

Transparency, records and appeal rights

The draft contains a material accountability trade-off. Sections 8004(b)–(c) would take sandbox rules and administrator or committee decisions outside the procedural requirements and judicial review provided by Delaware’s Administrative Procedures Act. Section 8006(h) states that the Committee’s decision to grant or deny an application is not subject to APA judicial review and is “not otherwise appealable.” A separate provision applies similar language to Committee suspension or revocation decisions.

Section 8011 would make records submitted to or obtained by the Administrator or Committee in administering the program—including participant reports—not public records under Delaware’s FOIA. Committee members and their designees would also have confidentiality duties. The draft does permit certain disclosures to regulators, grand juries, the State Auditor or Inspector General, and contemplates interim reports and a final report to be published within six months after the last sandbox period ends. Those reports may provide public-level information, but they are not the same as public access to each application, exemption request, incident file or decision record.

Why this matters: a sandbox can require strict private monitoring while still limiting public scrutiny of individual decisions. The balance between trade-secret protection, privacy, independent review, appeal rights and public accountability should be debated before enactment—not after a test begins.

Wind-down matters as much as launch

A test can fail, be suspended or reach the end of its approved term. The draft requires a wind-down plan that addresses commercial relationships, counterparty obligations and continuity after the sandbox ends. It also contemplates notice before the test period ends and continued fulfillment—or arrangement for another person to fulfill—ongoing duties.

Design question: Can the entity pause or stop the agent in minutes, preserve records, notify affected counterparties, and continue performing contracts even if the model vendor, cloud provider or human member disappears?

Primary source: June 2, 2026 draft text, especially §§ 8002–8013 and 81-101–405. Legal analysis: Delaware Journal of Corporate Law, October 15, 2026. Section numbers and mechanics may change before any bill is introduced.