Update 7/26/2023 – This article has been updated to reflect the least and most regulated states for the year 2022, as determined in the newest version of the State RegData project.
The regulatory landscape varies substantially between U.S. states. In addition to having a great impact on how citizens live and work, the extent of state regulations has far-reaching implications for the vibrancy and efficiency of economies overall. But what are the most regulated states? And which are the least? Until recently, it was hard to get a definitive answer because state administrative codes are incredibly long and complex.
Traditionally, attempts to quantify state regulatory restrictions relied on proxies like page counts of regulatory codes and budgets of regulatory agencies. But in 2019, researchers at the Mercatus Center at George Mason University launched the State RegData project to gain a better understanding of the reach of state-level regulation in the United States by directly measuring regulatory restrictions. Using QuantGov, the team’s open-source machine learning and text analysis platform, researchers analyzed state regulatory codes and ranked states in terms of the size, scope, and complexity of their regulations.
State RegData has four versions encompassing datasets from 2019, 2020, 2021, and 2022. In Versions 1.0 and 2.0, the regulatory codes of Arkansas, Hawaii, New Jersey, and Vermont were not analyzed due to limitations on data availability. In Version 2.0, Alaska and Connecticut were not analyzed. The latest version, State RegData Definitive Edition (Version 4.0), includes datasets from 49 states plus the District of Columbia. Regulations in Arkansas were not quantified because the state does not have a regulatory code.
In this article, we’ll review the most recent findings from the State RegData project and take a look at the #1 least and most regulated states in America.
State RegData Definitive Edition finds average state has 136,262 regulations
According to researchers, it would take about 23,000 hours, or more than 11.5 years, to read every word of every state regulatory code for the states analyzed in State RegData Version 2.0. Overall, the Definitive Edition analysis found the average state had 136,262 regulatory restrictions in its administrative rules in 2022. For comparison, Canadian provinces and territories averaged about 30,910 restrictions in 2022, while Australian states averaged about 28,325 restrictions. The number of regulatory restrictions were determined by counting the number of command words (i.e., “shall,” “must,” “may not,” “required,” and “prohibited” in the regulatory codes.
Data showed that California was the most heavily regulated state in the country in 2022, while Idaho was the least. The top three most restricted industries nationwide were waste management and remediation services, petroleum and coal products manufacturing, and chemical manufacturing. The least restricted industry was educational services, followed by food and beverage stores, and social assistance.
Top Five Least Regulated States by Number of Restrictions (2022)
According to the State RegData Definitive Edition, the least regulated states in America in 2022 were:
- Idaho – 36,612
- South Dakota – 45,202
- North Dakota – 54,883
- Montana – 59,908
- Nevada – 64,864
Idaho least regulated state in America in 2022
In State RegData Version 1.0, Mercatus researchers ranked South Dakota as the least regulated state in America for the year 2019, with Idaho coming in at #4. However, for subsequent datasets released for the years 2020, 2021, and 2022, Idaho took the top spot of least regulated state. The change in ranking came after Governor Brad Little, who was sworn in at the beginning of 2019, took direct aim at cutting red tape. Throughout his first year in office, Little issued two executive orders – the Red Tape Reduction Act and Licensing Freedom Act – which helped the state cut or simplify 75% of regulations. In 2020, he followed up with two executive orders that forced an annual review of regulations and consolidated 11 separate agencies into a new Division of Occupational and Professional Licenses.
After a dramatic 23% drop in Idaho’s total number of regulatory restrictions between 2019 and 2020 (according to the most recent data available for 2019, which was updated from the figure reported in Version 1.0), restrictions climbed slightly in 2021 and then declined again in 2022. According to the State RegData Definitive Edition, there were 36,612 regulatory restrictions in Idaho in 2022. The three most restricted industries were waste management and remediation services, animal production and agriculture, and paper manufacturing.
Data show that most regulatory restrictions are related to the topic of environmental protection and natural resources, followed by industry, commerce and development, and then health services. The Department of Lands and the Department of Water Resources are responsible for the most regulatory restrictions in Idaho at 1,811 and 1,769 respectively.
Top Five Most Regulated States by Number of Restrictions (2022)
According to the State RegData Definitive Edition, the most heavily regulated states in America in 2022 were:
- California – 403,774
- New York – 298,804
- New Jersey – 286,933
- Illinois – 279,147
- Texas – 273,106
California named most regulated state from 2019-2022
State RegData datasets ranked California as America’s most regulated state each year from 2019 to 2022. According to the Mercatus Center, it would take the average person about 1,176 hours—or more than 29 weeks – to read all 21.2 million words in the 2019 version of the California Code of Regulations (CCR). Based on State RegData Version 1.0 data, researchers found that the administrative and support services industry was the most heavily regulated in California in 2019, while securities, commodity contracts, and other financial investments and related activities was least regulated. In terms of occupational regulations, the CCR contained 16,015 restrictions related to professional and vocational regulation at that time.
According to the State RegData Definitive Edition, there were 403,774 regulatory restrictions on the books in California in 2022 – which is roughly 11 times greater than the number of restrictions in Idaho, the least regulated state. The total number of restrictions in 2022 increased by about 2% from the 2019 figure. The top three most heavily restricted industries were listed as insurance carriers and related activities, petroleum and coal products manufacturing, and paper manufacturing. The least regulated industry was social assistance, followed by waste management and remediation services, and educational services.
The most common subject of government action, according to State Regdata “cluster” data, was industry, commerce and development, followed by environmental protection and natural resources, and health services. The Department of Industrial Relations was responsible for writing or enforcing the largest number of regulations in California in 2022 at 48,797.
Quantity of regulations only part of the story
Of course, examining the volume of regulations in a state only tells part of the story. The Mercatus Center’s State RegData project is mainly concerned with the quantity of regulations and doesn’t take into account different types of regulatory instruments or attempt to measure the quality and effectiveness of regulatory restrictions. Nonetheless, having a comprehensive picture of the size, scope, and complexity of state regulations can be very useful for policymakers as they try to identify where cutting unnecessary red tape might be possible.
