Across the United States, millions of regulations and restrictions are holding back innovation, entrepreneurship, and prosperity. Americans for Prosperity believes peeling back these regulations is an essential step toward reigniting the American Dream. Thankfully, states can pursue various options to reduce regulatory burdens and provide much-needed accountability and transparency to the regulatory process.
The policies are split into three tiers based on their track record and potential impact on regulatory reform.
Tier 3: Emerging Opportunities
This report provides model legislation, success stories, and additional resources to equip reform-minded policymakers. While many tools require executive or legislative action to be effective, sustained use and refinement based on data and experience are critical to long-term success.
Kevin Schmidt, Director of Investigations (KSchmidt@afphq.org)
Andrew Gilstrap, Policy Analyst (AGilstrap@afphq.org)
Thomas Kimbrell, Policy Analyst (TKimbrell@afphq.org)
One of the most impactful ways to prevent the imposition of substantial regulatory burdens is by enacting a reform proposal commonly known as the REINS Act. This reform not only slows the growth of new regulatory burdens but also ensures that democratically elected representatives have a voice in the rulemaking process. REINS involves two main elements:
Several states, including Florida, Indiana, Kansas, Oklahoma, and Wisconsin, have implemented all or part of this legislative reform.
Florida’s law, enacted in 2010, coincided with a period of substantial economic expansion. According to the Foundation for Government Accountability:
[I]n Florida, the commissioner of agriculture is an elected state official not under the policy direction of the governor. In 2021, then-commissioner Nikki Fried attempted to initiate a statewide ban on Styrofoam. The Styrofoam ban worked its way through Florida’s rulemaking process and would have cost more than $1 million over five years, triggering Florida’s legislative approval requirement. The legislature opted not to approve the rule, and the .
Without REINS, this million-dollar rule change would have been implemented unopposed. It would have cost taxpayers, and they would have had no say whatsoever. REINS ensures there are no costly regulations without representation.
Wisconsin’s REINS Act has defeated high-cost regulations, brought transparency to the rulemaking process, and tempered agency overreach. Agencies proposing rules with a compliance cost exceeding $10 million over two years must obtain legislative approval before implementation.
For example, in 2022, Wisconsin’s Department of Natural Resources proposed new PFAS drinking water standards that would have imposed significant costs on municipalities and utilities. The proposal triggered the REINS threshold, prompting legislative review and broader public scrutiny. As a result, the rule was revised to reduce its economic impact.
In a similar case, an unnecessary utility infrastructure regulation, proposed in 2021 by the Public Service Commission, would have cost ratepayers tens of millions. REINS forced a cost estimate and allowed lawmakers to stop the rule before it imposed undue financial burdens. The Act also altered agency behavior: When the Department of Agriculture considered a licensing overhaul that neared the cost limit, the agency revised the plan proactively to avoid triggering legislative intervention.
The REINS Act puts the brakes on runaway regulation by requiring legislative approval for major rules. It’s a proven, constitutional way to protect taxpayers, restore democratic accountability, and ensure the regulatory state serves — not bypasses — the people.
In many states, courts and judges improperly defer to regulatory agencies. This systemic bias against citizens undermines equality before the law and abdicates the judiciary’s duty to interpret the law.
In 2024, the U.S. Supreme Court’s decision in Loper Bright Enterprises v. Raimondo ended Chevron deference, a legal doctrine that tipped the scales in favor of federal agencies. States should also end systemic bias in state courts in favor of state agencies.
In interpreting a state statute, regulation, or other sub-regulatory document, a state court or an officer hearing an administrative action may not defer to a state agency’s interpretation of it, and must instead interpret its meaning and effect de novo. In actions brought by or against state agencies, after applying all customary tools of interpretation, the court or hearing officer must exercise any remaining doubt in favor of a reasonable interpretation which limits agency power and maximizes individual liberty.
This model ensures that citizens — not agencies — get the benefit of the doubt when the law is unclear.
While some regulations may be valuable and necessary, times change, resulting in outdated or redundant regulations. Instituting sunset provisions ensures regulations are reviewed regularly and obliges agencies to update or remove regulations that are no longer necessary or effective. Sunset provisions generally stipulate that all new regulations expire five to 10 years after their implementation and often outline a process by which older existing regulations should be reviewed at regular intervals as well.
Texas’ sunset law serves as a model for efficiently managing the scope of government. Established in 1977, the Sunset Advisory Commission oversees a 12-year review cycle for state agencies, requiring them to justify their existence and operations. Through public hearings and performance evaluations, the process ensures agencies remain focused, efficient, and necessary.
Since its inception, this program has abolished 42 agencies, restructured over 50 agencies, and saved taxpayers over $1 billion, returning $16 for every dollar spent. Beyond fiscal savings, the sunset process fosters transparency, accountability, and a culture of efficiency within state government.
Research indicates that states with sunset laws achieve lower government spending and improved public services due to regular oversight. Texas’ success demonstrates the value of applying sunset laws broadly, leveraging predictable review cycles, objective criteria, and public participation. This approach helps government remain effective, responsive, and free of unnecessary regulatory bloat.
Regulatory budgeting is a valuable method by which states can reduce the rate of regulatory accumulation. The concepts are relatively simple but have a remarkable ability to alter the way regulators make decisions. One option is for the governor or legislature to set an annual cap on the total amount of new compliance costs associated with regulations, both at a government-wide and agency-specific level. These caps serve as guardrails for agencies as they consider which regulations to implement. Similarly, a state could require the repeal of a certain number of existing regulations before a new rule goes into effect.
States should consider implementing red tape reduction initiatives to promote economic growth, streamline government, and foster prosperity to improve the lives of residents and small businesses. Regulatory codes in many states have grown steadily over decades, often without a comprehensive review or clear justification for individual rules. Red tape reduction programs, such as those implemented in Alabama, Indiana, and Virginia, aim to eliminate outdated, duplicative, or overly burdensome regulations — often with a targeted reduction goal (e.g., 25%). These efforts can restore accountability, boost competitiveness, and ensure regulations serve the public rather than entrench bureaucracy or special interests.
While often implemented via executive orders, codifying frameworks for red tape reduction would create continuous mechanisms for regulatory oversight and promote long-term regulatory discipline and transparency across administrations.
Rather than take punitive action against an innovative business, regulators should take a more hands-off, permissionless approach to new ideas or business models with which they are less familiar. A regulatory sandbox is one approach that allows entrepreneurs or businesses with a novel idea to introduce their product or service to the market without the industry’s regulatory barriers. This concept stems from the United Kingdom, which implemented its Project Innovate within the financial services sector. By the time it was fully implemented, the financial technology regulatory sandbox hosted nearly 700 participants. This was followed by nearly 57 similar programs across the world.
In the United States, several states implemented their own regulatory sandboxes: Arizona followed a similar model for its financial technology sandbox, Kentucky implemented a sandbox for the insurance industry, and Utah implemented a legal services sandbox that ultimately served 2,000 Utahns with innovative models of legal services. These sandboxes can be either industry-targeted or universal. Industries that have been included in targeted regulatory sandboxes include fintech, legal services, agriculture, technology, and energy.
State and federal agencies frequently issue guidance documents, including memoranda, bulletins, and letters that interpret and clarify statutes and regulations. These documents can also set official agency policy on important matters. Colloquially dubbed “regulatory dark matter,” guidance documents vastly outnumber official regulations published in the Federal Register. Unlike regulations, guidance documents are not usually subject to the procedural requirements of the Administrative Procedure Act. A guidance document, for example, is not typically subject to a public notice-and-comment period as with formal rulemaking.
On August 4, 2025, Alaska Governor Mike Dunleavy issued Administrative Order No. 360 which requires state agencies to “post all guidance documents on the Alaska Online Public Notice System.” Former Virginia Governor Terry McAuliffe issued an executive order in 2014 requiring agencies to post all guidance on the Virginia Regulatory Town Hall website. Although the order expired in 2018, Virginia agencies continue to post guidance online.
Though guidance documents are ostensibly not legally binding, in practice, they often carry the force of law and contribute to the overregulation that defines the federal administrative state. Many of these guidance documents are sent to states to express the federal government’s views on the state’s obligations and programs they co-administer. Essentially, arcane federal guidance documents often impact state laws and policies.
Critically, when a guidance document imposes a fine, fee, standard, requirement, or enforcement trigger not found in a duly promulgated rule, it is not guidance — it is a regulation. Such documents must be subjected to the full rulemaking process. Agencies should not be allowed to circumvent legal procedures by dressing mandates in the clothing of “guidance.”
In 2019, the Trump administration issued Executive Order 13891, “Promoting the Rule of Law Through Improved Agency Guidance Documents.” The order defined a “guidance document” to include:
[A]ny agency statement of general applicability, intended to have future effect on the behavior of regulated parties, that sets forth a policy on a statutory, regulatory, or technical issue, or an interpretation of a statute or regulation.
EO 13891 required agencies to:
However, in early 2021, President Biden rescinded EO 13891, eliminating the requirement for agencies to maintain accessible, centralized guidance databases. While some agencies continue to publish guidance documents voluntarily, and President Trump reversed President Biden’s rescission, many agencies have removed or archived their collections entirely. Guidance portals still online include:
Other federal agencies, like the Department of Commerce, deleted their collections of guidance documents.
And some agencies never made the required web portals.
States should act to protect residents, businesses, and local governments from hidden mandates by requiring full transparency for both federal and state guidance documents.
Minimum standards should include:
By adopting these requirements, states can improve transparency and restore public accountability to the regulatory process.
When individuals or businesses challenge unlawful or unjust state agency actions, they often face a significant imbalance of power and resources. Agencies can draw on public funds and institutional expertise, while citizens must bear the cost of legal representation, even when they ultimately prevail. This imbalance discourages legitimate challenges, emboldens bureaucratic overreach, and undermines the rule of law.
To restore balance and promote agency accountability, states should require agencies to pay attorney’s fees when a citizen successfully challenges agency action, especially in cases where the agency acted outside its legal authority or in bad faith. This reform would empower citizens to defend their rights and deter frivolous or punitive enforcement by agencies. Agencies should be held to the same standards as any litigant: If they act improperly, they should pay the price.
A state attorney’s fee statute should include the following key provisions based in part on Indiana’s code: IC 4-21.5-3-27.5 Attorney’s fees.
By adopting these provisions, states can enhance regulatory fairness, ensure lawful administration, and reduce the risk of agency abuse of power. This reform is a powerful tool for protecting individual rights and restoring trust in government.
In New Hampshire, the Joint Legislative Committee on Administrative Rules plays a central role in ensuring state agencies only promulgate rules explicitly authorized by statute. Agencies are not permitted to issue binding rules based on broad or vague statutory purposes; they must have specific rulemaking authority granted by the legislature. JLCAR reviews all proposed and final administrative rules to ensure they comply with legislative intent and statutory authority. If JLCAR objects to a rule, it can delay implementation and even shift the legal burden to the agency if it is challenged in court. This oversight framework effectively prevents agencies from expanding their regulatory scope without legislative consent, thereby maintaining the legislature’s proper control over policy decisions.
Montana law explicitly prohibits state agencies from adopting environmental regulations that are more stringent than federal standards unless they meet a strict set of conditions. Under Montana Code Annotated § 75-5-203 (and similar statutes across environmental code sections), a state agency must demonstrate through a formal process that a stricter rule is necessary. This includes holding a public hearing, providing a detailed written justification, and presenting a cost-benefit analysis based on peer-reviewed science and economic data. The agency must show that the more stringent requirement is both technologically feasible and economically reasonable. This provision is especially important for EPA-delegated programs, as it ensures Montana’s environmental rules do not exceed the federal baseline without clear legislative or scientific justification.
In Arkansas, the Legislative Council’s Administrative Rules Subcommittee, in coordination with standing committees, provides strong oversight of agency rulemaking. All proposed and emergency rules must be submitted for legislative review before taking effect. Committees assess whether agencies have proper statutory authority to issue a new regulation and can recommend disapproval, which blocks implementation unless the rule is revised or later approved. Legislators can also request public hearings, legal reviews, and economic impact statements.
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