Virginia can serve as a model for other states looking to reform and modernize their regulatory regimes.
Government regulation is getting a lot of attention these days. During the recent presidential election, both sides laid out competing visions for the role of government. And each of the 50 states has also grappled with regulatory issues.
In his first term, President Donald J. Trump made regulatory reform a top priority, issuing executive orders that required federal agencies to scrap old regulations before proposing new ones. A handful of states have undertaken similar efforts, directing state agencies to cut regulatory requirements.
These reforms have enjoyed varying degrees of success. President Joseph R. Biden rescinded President Trump’s regulatory executive orders on his first day in office. The states that have undertaken regulatory reduction initiatives have occasionally struggled with foundational questions such as “what counts as a regulatory requirement?” and “can agencies get credit for burden reductions that do not cut words?”
As these reforms play out, one state stands above the rest. In his first year in office, Virginia Governor Glenn Youngkin created an Office of Regulatory Management (ORM) to lead regulatory modernization in the Commonwealth of Virginia. He tasked ORM with enhancing transparency and efficiency in both regulation and permitting. And he set the ambitious goals of reducing regulatory requirements by 25 percent and achieving a substantial shortening of permit processing times.
Now, two years later, Governor Youngkin’s administration has achieved such extraordinary success that other states and reform-minded federal officials are sitting up and taking notice. A few developments over that period have been particularly noteworthy.
First, ORM estimates that regulatory reductions will save Virginia citizens over $1.2 billion per year. Virginia has taken an innovative approach to regulatory reduction. During past reform efforts in other states, state agencies received credit only for cutting words from their regulations. Virginia agencies can achieve credit towards the 25 percent reduction goal using that approach, but they can also get credit by reducing—but not eliminating—burdens. For instance, when the Virginia Board for Barbers and Cosmetologists reduced cosmetologist training hours from 1500 to 1000, it received a 33 percent credit, multiplied by the associated requirements.
Using this approach to reducing regulator burdens, Virginia agencies have achieved some mind-blowing savings.
The Virginia Department of Housing and Community Development has cut over $24,000 from the cost of constructing a new house by eliminating needlessly expensive requirements from its 2021 building code. Multiplied by the projected annual number of new housing units, this will save $723 million per year. At a time when housing costs are spiraling and many coastal cities are moving in the opposite direction by piling on ever more restrictions, this will ensure that Virginia remains a top destination to live, work, and raise a family.
The Department of Professional and Occupational Regulation (DPOR) has streamlined the professional licensing process in various ways, increasing professionals’ earnings potential by $274 million per year. The Department of Environmental Quality (DEQ) saved Virginia businesses $124 million per year by simplifying the stormwater permitting process and providing new compliance pathways. The Marine Resources Commission saved businesses $47 million per year by allowing them to apply for a more streamlined type of permit—called a “general permit”—when working in subaqueous beds.
All told, reductions taken to date have will save Virginia citizens over $1.2 billion per year.
Virginia agencies are also slashing permit processing times and promoting transparency. One of the more frustrating aspects of running a business is the permitting process—getting a permit can take ages, and the entire process is often obscure and confusing. In 2022, the DEQ sought to change that dynamic by creating a new online dashboard that allows any citizen to track any DEQ permit. The site provides a series of Gantt charts showing each step in the process, how long it is supposed to take, and how long it is actually taking.
Using this site, DEQ has managed to cut its permitting process times by 70 percent in the last three years by publicly tracking every participant’s progress against a published schedule, managing resources to meet the schedule, and reallocating work among offices when its scheduling system shows certain offices or people are overloaded. DEQ estimates that these improvements save Virginians at least $40 million per year.
Building on this DEQ pilot program, ORM and the Virginia IT Agency have now expanded this dashboard statewide, creating the new Virginia Permit Transparency dashboard. The dashboard houses the vast majority of permits across state government and is being expanded to include all relevant permits and licenses. Like DEQ, participating agencies are now turning their attention to improving processing times.
The Virginia Permit Transparency dashboard is a game changer for Virginia businesses, citizens, and agencies. No other state or federal agency has anything nearly as comprehensive.
Furthermore, Virginia ORM literally wrote the book(s) on state regulatory cost-benefit analysis. As mentioned above, state regulatory reformers have struggled with questions related to counting regulatory requirements and conducting cost-benefit analysis. Recognizing this problem, Virginia ORM kicked off its reforms by publishing two key resources to guide agencies’ efforts—the Regulatory Economic Analysis Manual and the Regulatory Reduction Guide.
These guides have ensured that agencies follow a consistent approach to reviewing their regulations and identifying burdens to eliminate. And they prove that someone does not need a Ph.D. in economics to conduct regulatory cost-benefit analysis. Both guides are written in plain, straightforward language and provide a step-by-step approach to assessing regulations.
Using these resources, Virginia agencies now conduct a complete cost-benefit analysis on every regulation and revised guidance document they issue. The analyses are short, usually averaging around 8-10 pages—as opposed to the vast tomes that prevail at the federal level—and are easy for a layperson to digest.
Now that Virginia has done the heavy lifting, other states could easily pick up these two guides, tailor them to reflect local requirements, and build their own versions of ORM. Indeed, the American Legislative Exchange Council has introduced a model bill that state legislatures could introduce to create an ORM.
Virginia’s reforms have massively reduced the upfront cost associated with regulatory reform. Technological innovation will undoubtedly reduce those costs even further. Here, too, Virginia is at the forefront.
State regulatory codes, which are incredibly dense and wordy, are prime candidates for processing by artificial intelligence. AI could scan one state’s regulations, compare them to equivalent regulations in other states, and identify opportunities for streamlining saving thousands of hours of human effort. ORM and DPOR are exploring a possible pilot program using AI to scan DPOR regulations and identify possible reductions.
Regulatory modernization will save Virginia citizens at least $2.4 billion over the course this year and next. ORM estimates that, so far, agencies have cut or streamlined 17.4% of the requirements in the Virginia Code and 27.6% of the words in guidance documents.
These are not just abstract numbers. They represent about $380 in the bank account of each Virginia household every year.
And though we love leading the pack, our hope is that other states—and, maybe someday, the federal government—will follow suit. Everyone benefits when great ideas spread and generate still more great ideas, and Virginia is proud to share the good word of regulatory modernization.
