Over the past year, regulators have engaged in a wide range of discussions as they attempt to face new and ongoing challenges like labor shortages, AI proliferation, political pushes for deregulation, and more. In this piece, we explore the top 10 themes that emerged in our coverage of regulatory news over the course of 2023, pointing out specific examples and narratives that have developed in areas like licensing reform, interstate compacts, digital government, and alternative pathways to licensure.

Licensing reform

Debates and actions over licensing reform took many shapes this year, but one notable theme that emerged was the ongoing back-and-forth between lawmakers, governors, and the public over deregulation and consolidation. A prime example of this debate can be found in New Hampshire Gov. Chris Sununu’s efforts to implement sweeping reforms, many of which were cut short by legislators.

In February, less than two months before the state’s House budget deadline, the governor proposed over 100 pages of licensing reforms. This included eliminating 692 “unnecessary” statutory provisions, 14 regulatory boards, and 34 license types. Sununu’s proposal also included the creation of an Office of Regulatory Review, Reduction, and Government Efficiency to find and clear other regulatory hurdles.

The proposal was met with resistance from both Republican and Democratic budget writers in the state House. Representatives from both parties moved to maintain 31 of the 34 licenses that would have been eliminated under the governor’s proposal, including licenses for foresters, radiologists, and licensed nursing assistants. Some House Republicans said they rejected many of the governor’s proposals on the grounds that they were put forth too soon before the budget deadline.

A similar discussion took place in Iowa, where, at the direction of Gov. Kim Reynolds, the state’s Boards and Commissions Review Committee put forth a proposal to consolidate or eliminate 119 of the state’s 256 boards and commissions. In a September hearing, stakeholders from several professional communities implored the committee to keep licensing boards intact, arguing that they operate at little cost to the state but greatly benefit public safety.

And earlier in the year, Nevada Gov. Joe Lombardo lifted a six-month freeze that disallowed agencies, commissions, and boards in the state from creating new regulations. He also announced that his plan to eliminate licensing rules for professions that are not licensed in most states would be put on hold, as his office had not yet compiled a proper list of occupations that should no longer require licensing.

Labor shortages

As the world continues to recover from COVID-19, workforce shortages continue to affect many different professions, particularly in the health care field. Governments, in turn, have continued their attempts to mitigate these issues with new legislation and reforms.

A report from CNN in May captured the mounting concern among U.S. lawmakers that health care workforce shortages could exacerbate existing health inequities and undermine the nation’s ability to respond to future health emergencies. According to data from the Health Resources & Services Administration, the U.S. needs more than 17,000 additional primary care practitioners, 12,000 dental health practitioners and 8,200 mental health practitioners to meet the needs of its citizens.

In response to the ongoing shortages, Missouri Gov. Mike Parson signed two pieces of legislation in late August cementing temporary policy changes that took effect at the height of the pandemic. One of the bills codified a lift on license mobility restrictions for Advanced Practice Registered Nurses, while the other established a grant program for medical providers who create new medical residency positions in the state.

Meanwhile, in Michigan, lawmakers attempted to fight labor shortages in the field of nursing by imposing mandatory nurse staffing ratios for all hospitals within the state. The move, however, faced heavy criticism from a coalition of health care, business, and advocacy organizations, which instead voiced support for alternative workforce shortage solutions like joining the Nurse Licensure Compact, expanding license eligibility, and funding workplace violence prevention campaigns.

License mobility

In attempts to address labor shortages in underserved areas, many state governments considered making moves toward universal licensure over the past year. The aforementioned proposals from New Hampshire Gov. Sununu, for example, also included adopting universal recognition of licensed professionals in other states to make it easier to relocate to the state.

These same conversations occurred in many different states, including Florida, where legislators debated Senate Bill 1364, which would offer universal licensure under three different conditions: if the professional has already been licensed by a different licensing body, if the professional has a certain amount of prior work experience, or if the professional is privately certified and has work experience in a state without licensure in that field.

And in May, GOP lawmakers in Wisconsin sponsored a bill that would allow the state government to provide reciprocal credentials to professionals certified in their fields in other states. The bill sought to expand a reciprocal licensing standard which already existed for military families; this newly expanded standard would apply to professionals “credentialed in good standing” outside the state, even if they do not currently live in Wisconsin.

Meanwhile, in Arizona, a study by the Common Sense Institute (CSI) found that the state’s 2019 universal licensing law could increase employment by nearly 16,000 workers, boost state GDP by $1.5 billion, and increase the state’s population of working age adults. The think tank estimated that the law would result in 2,361 universal licenses issued annually, and approximately half of those would be in the healthcare services and construction sectors, where Arizona has experienced severe labor shortages.

Interstate compacts

Much progress was made in the development of interstate compacts in the U.S. this year. Florida, Kansas, and Colorado were among several states to implement the Interstate Teacher Mobility Compact, which became active in July after 10 states adopted model legislation for it. Under the rules of the compact, teachers who have obtained a bachelor’s degree, completed a state-approved program for licensure, and procured a full teaching license can receive an equivalent license in participating states.

The Counseling Compact, which offers multijurisdictional licensing for professional counselors in participating states, also experienced significant growth over the course of 2023. Over 11 states joined the compact, including Arkansas, Indiana, Iowa, Kansas, Vermont, Washington, and Wyoming. Representatives from the American Counseling Association expressed their enthusiasm for the compact’s rapid expansion across so many different geographic areas within the U.S.

The Nurse Licensure Compact (NLC), one of the largest compacts in the U.S., continued to gain traction as legislatures in states like Michigan put forth model legislation to enact the agreement. Meanwhile, Pennsylvania, which passed legislation two years ago, began partially implementing the compact in September, allowing nurses with multistate licenses from other compact states to practice there. The compact now comprises over 40 states and territories.

The Council of State Governments (CSG), which has sponsored the development of interstate compacts, is continuing its work to promote these agreements in fields like cosmetology, massage therapy, psychology, social work, and physical therapy. Be sure to stay updated with our exhaustive breakdown of interstate licensing agreements, last updated in July 2023.

Note: With the fast-paced expansion of compacts this year, there have been more recent additions to many, and we will be providing a fresh update to the list in 2024.

Military/veteran licensing

The history of interstate compacts (and their substantial funding from the Department of Defense) shows that many of these agreements began as efforts to increase license mobility for military members and veterans. Such efforts continued to take place in different forms throughout 2023 as well.

Take, for example, Pennsylvania, where legislators advanced House Bill 404, which intends to ensure that a servicemember’s military education and training are taken into consideration when fulfilling requirements for professional credentials related to EMS providers. It adds the Department of Health and the Department of Agriculture to the list of state agencies required to consider such experience.

In North Carolina, the State Board of Education (SBE) adopted a provision of the Veterans Auto and Education Improvement Act of 2022 which will allow military members and their spouses to obtain temporary professional licensure upon moving to the state. The legislation also includes provisions affecting professions like nursing, cosmetology, and real estate.

And in Texas, Gov. Greg Abbott directed state agencies to expand out-of-state occupational licensing reciprocity for military servicemembers and their spouses. The governor also directed agencies to implement any changes needed to comply with the recently amended Servicemembers Civil Relief Act, which requires the nationwide recognition of most types of occupational licenses of servicemembers and their spouses when a servicemember relocates due to military orders.

Criminal records

Over the course of the year, lawmakers in several states debated legislation that would make licensing easier for applicants with criminal convictions. A committee in the South Carolina Senate, for example, approved Senate Bill 165, which says “professional boards and commissions may not solely deny a license application based on an applicant’s prior criminal conviction unless the conviction is for a crime that directly relates to the duties and responsibilities” of that profession.

In South Dakota, lawmakers considered legislation that would streamline the licensing process for applicants in the field of addiction counseling who have prior criminal convictions. Advocates for this reform pointed out that many who work in the recovery field are in recovery themselves, and some of them entered recovery by way of criminal convictions. The new law would allow them to have their applications considered by the South Dakota Board of Addiction and Prevention Professionals, which could then grant the license if they determine the person does not pose a risk to public safety.

As part of a larger set of proposals intended to cut back on red tape in the state of Georgia, Lt. Gov. Burt Jones helped put forth Senate Bill 157, which aims to help applicants with criminal convictions seeking licensure as cosmetologists, barbers, engineers, librarians, and contractors. According to the Georgia Justice Project, these applicants are frequently disqualified from licensure because of their unrelated criminal backgrounds.

Foreign credential recognition

Some governments responded to ongoing workforce shortages by easing licensure restrictions for internationally educated and internationally licensed professionals. Professional Engineers Ontario (PEO), for example, removed a requirement for foreign-trained engineers to have prior Canadian work experience in order to receive a license in the province. This move came as part of a larger nationwide adoption of new rules forcing regulators to remove these requirements in many different professions.

Canada’s newly amended Fair Access to Regulated Professions and Compulsory Trades Act, first announced in 2021, applies to 36 professions and trades, including teaching, architecture, social work, and auto body repair. It intends to expedite the licensing process for international professionals. Regulatory bodies affected by the legislation had until Dec. 2 to remove Canadian work experience requirements from their application processes.

Meanwhile, The College of Registered Nurses of Alberta (CRNA) overhauled its licensure process in April to streamline credentialing for internationally educated nurses in the province. In response, regulators saw an exponential increase in applicants; the CRNA issued more permits in just one month than it did in the four years prior.

In Nova Scotia, the provincial College of Physicians and Surgeons dropped a requirement for doctors from the U.K., Australia, and New Zealand to have their training evaluated by the Royal College of Physicians and Surgeons of Canada in order to work in the province. Foreign-trained doctors who move to Nova Scotia will now be given a defined license and the future opportunity for full licensure, pending six months of supervised work.

Licensure pathways

Regulatory authorities in many jurisdictions and professions considered new potential pathways to licensure throughout the year. This notably occurred in the legal profession in the U.S., which typically involves a lengthy and intensive training and credentialing process. This year, law authorities in California, Oregon, and Washington state advanced pathways to licensure which would exempt law school graduates from having to take the conventional bar exam.

In October, the Washington Supreme Court heard a proposal for an alternative licensing program that would give law school graduates multiple options to obtain credentials without taking the bar exam – one that involves undergoing an apprenticeship program under the supervision of an experienced lawyer for six months and another that involves completing 12 credits of skills coursework and 500 hours of hands-on legal work. Both pathways would require submission of a work portfolio to become licensed.

More recently, the California State Bar gave its endorsement to the Portfolio Bar Exam, which is a similar work experience program that would exempt law school graduates from having to take the conventional bar exam. Under the new pathway, graduates would undergo 700 to 1,000 hours of supervised legal practice alongside experienced attorneys before submitting a portfolio of the legal work they completed for evaluation.

Meanwhile, alternative pathways for teacher licensure, which some states have implemented to varying degrees for over 20 years, have continued to gain traction as the field faces widespread challenges in recruitment and retention. In June, for example, the Virginia Board of Education implemented new rules allowing prospective teachers to obtain provisional licensing to work in classrooms as they work toward their full license through an online program called iTeach.

Modernization and digital government

In April, Gartner announced its top 10 government technology trends for 2023. These trends included adaptive security, cloud-based legacy modernization, artificial intelligence, and composable government applications. To accelerate transformation and prepare for the next generation of digital government, Gartner said state CIOs should consider the impact of these trends and invest in them accordingly so they can improve their capabilities and achieve leadership priorities.

Similarly, a report from the National Association of State Chief Information Officers (NASCIO) found that state CIOs see IT modernization as a key factor in promoting regulatory resilience. With state governments facing threats like cyberattacks, fraud, natural disasters, climate change, legacy systems, and technical debt, developments in AI and automation could help public sector organizations protect their infrastructure and shore up resilience.

When NASCIO held its annual conference on the future of digital government in early October, stakeholders explored further the promise and potential challenges of AI implementation. Vermont AI director Josiah Raiche, for example, highlighted the importance of prioritizing ethics before policies when it comes to generative AI, saying governments should develop a “code of ethics” before exploring acceptable use cases in digital services.

Cryptocurrency

Concerns over how to regulate cryptocurrencies have dominated discussions at both the federal and state levels over the course of 2023. In October, the U.K. government announced that it would bring forward formal legislation to regulate crypto activities in 2024, saying it intends to bring several crypto asset activities under the same regulations that govern banks and other financial services firms. Its proposals include stricter rules for exchanges, crypto custodians, and lending companies.

Australia also took action on cryptocurrency, putting forth a proposal for a new licensing system that would require crypto exchanges holding over AUD$1,500 for a single client or more than AUD$5 million in total assets to obtain an Australian Financial Services License. The license will be linked to various financial functions, including token trading, staking, tokenization, and token-based fundraising, potentially covering non-custodial exchanges.

And in the U.S., California established its first-ever licensing rules for crypto companies. Under the new rules, crypto businesses will need to apply for licensure with the Department of Financial Protection and Innovation (DFPI), which will be empowered to conduct examinations, conduct enforcement actions, and levy penalties. Kiosk operators will be prohibited from accepting or dispensing more than $1,000 per day or forming new customers via kiosks.

Honorable mentions and future trends

The past year also saw substantial developments in areas like cannabis regulation, where Colorado relaxed industry rules by allowing online retail of cannabis products – a move proponents say is a necessary step forward in the development of the industry at large. As states continue to legalize the drug for recreational and medical use, moves like this are sure to follow elsewhere.

Cybersecurity was also top of mind for government officials, as evidenced by a request from the Biden administration that called upon state and local governments to point out “opportunities for and obstacles to harmonizing cybersecurity regulations.” The administration also released its National Cybersecurity Strategy, which called for “harmonizing and streamlining new and existing regulations.”

According to NASCIO, navigating a patchwork of regulations from different agencies at different levels can hamstring cybersecurity capabilities for organizations in both the private and public sectors. Judging by the Office of the National Cyber Director’s request and stated priorities from organizations like NASCIO, efforts toward harmonization are likely to carry on in the coming years.

What else can be said about the future? For one thing, governments still must reckon with how to regulate cryptocurrency. Interstate compacts are gaining traction every month. And, of course, as we have covered extensively in Ascend Magazine, the proliferation of AI technology continues to loom large over the world of regulation. Discussions abound over how AI should be regulated and how it may be used to improve the work of regulation.

It is true that the future is uncertain, but by keeping an eye on the news and trying to understand the past and present, regulators can be that much more prepared to face it.