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 all 50 states have also grappled with regulatory issues.
In his first term, President Donald J. Trump made regulatory reform a top priority, including by issuing an executive order that required federal agencies to scrap old regulations before proposing new ones. He has promised even more aggressive regulatory reform in the next four years.
A handful of states have undertaken similar efforts, directing state agencies to cut regulatory requirements. State reform efforts have enjoyed varying degrees of success. States 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.
On the regulatory reduction front, ORM estimates that changes to date are saving Virginia citizens over $1.2 billion per year. Virginia has taken an innovative approach to regulatory reduction. Virginia agencies can achieve credit towards the 25 percent reduction goal by cutting words, 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 regulatory 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.
Virginia is now looking at ways to use technology to accelerate this process. 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, thereby 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.
Virginia is also improving citizens’ lives by modernizing the permitting process. One of the more frustrating aspects of running a business is getting the necessary permits, which can take ages and be highly 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.
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.
Now that Virginia has achieved these successes, it is looking to spread the word to other states. Prior to beginning its reform efforts, Virginia ORM literally wrote the book(s) on state regulatory cost-benefit analysis. ORM’s Regulatory Economic Analysis Manual and the Regulatory Reduction Guide are straightforward resources that any state could easily repurpose to track its regulatory code.
These guides have ensured that Virginia 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.
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 17.6% of the requirements in the Virginia Code and 34.9% 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—as well as 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.
