Background

While regulation is necessary in some cases to protect health, safety and the environment, the accumulation of thousands of regulations has been shown to stifle economic growth and substantially increase the cost of doing business.

In particular, regulations with words and phrases such as shall, must, may not, prohibited and required can signify legal constraints and red tape obligations for businesses and residents.

Frontier Institute’s 2020 Montana Recovery Agenda noted the 2019 Administrative Rules of Montana (ARM) contained 60,086 of these such restrictions and 4.7 million words. It would take an individual about 263 hours, or nearly seven weeks, to read the entire 2019 ARM.

As of 2020, Montana had the second-most regulatory restrictions per capita among its regional neighbors, trailing only Wyoming and well ahead of Colorado, Idaho and Utah.

In January 2021, Gov. Greg Gianforte issued his first executive order creating the Red Tape Relief Initiative with a mission to lead a “top-to-bottom regulatory review of all state agencies” to identify and repeal “excessive, outdated and unnecessary regulations.”

2024 Statewide Update

Frontier Institute utilized two sources to assess the status of Montana’s regulatory burden in 2023. The first source was State RegData, developed by researchers at the Mercatus Center at George Mason University, which provides a platform for quantifying and analyzing each state’s regulatory text using machine learning. State RegData’s most recent update provided counts of total regulatory restrictions in surrounding states for 2023.

The second source was internal metrics for Montana’s regulatory burden provided directly by Governor Gianforte’s office in response to a Frontier Institute data inquiry. Data provided was current as of December 2023. Frontier Institute utilized these internal metrics to analyze Montana’s regulatory burden in an effort to obtain the most accurate information possible for 2023.

As of December 2023, Montana’s ARM contained a total of 58,707 restrictions compared to 59,821 in 2021, a decrease of 1.86%.

Figure 1 compares this change to regulatory activity in Montana’s neighbor states:

[Figure 1] 

Figure 2 details each state agency’s share of Montana’s total regulatory burden in December 2023. DPHHS, DEQ and DLI impose nearly half of all regulatory restrictions:

[Figure 2]

State Agencies regularly take actions to modify, repeal or add new rules containing restrictions.

Figure 3 allows users to compare the total restrictions imposed for 2021 and 2023 by each Montana agency:

[Figure 3]

2024 Impact of the Red Tape Relief Initiative

From 2021 to 2023 agencies that participated in the Red Tape Relief Initiative saw their collective regulatory burden decrease by 2.8%, while agencies that did not formally engage in the Red Tape Relief Initiative saw their total regulatory burden increase by 2.5%. Figure 4 shows the percentage change in total restrictions imposed from 2021 to December 2023 by each Montana agency.

[Figure 4]

Figure 5 shows the net change in regulatory restrictions imposed between 2021 and 2023 by each Montana agency. Montana’s net regulatory burden was reduced by 1114 restrictions from 2021 to December 2023.

[Figure 5]

The Department of Labor and Industry leads agencies in progress on regulatory relief, accounting for over three quarters of the net decrease in regulatory restrictions from 2021 to 2023. 

The biggest increase in regulatory restrictions since 2021 were imposed by the Department of Revenue. Between 2021 and 2023, the Department of Revenue increased its regulatory burden by 5.3%. This increase is almost entirely due to rules necessary to implement the state's new recreational marijuana program, authorized by the Legislature in 2021.

What The 2024 Snapshot Reveals

Not only did this year’s Red Tape Snapshot reveal a continuing trend of regulatory relief, but it also revealed just how successful an executive-led Red Tape Relief program can be at changing the culture within government agencies. 

The data clearly shows that after Governor Gianforte signed Executive Order 1-2021, directing the 13 agencies under his jurisdiction to begin a comprehensive evaluation to identify and cut red tape – those agencies did just that. Meanwhile, the 6 agencies that did not formally participate in the Red Tape Relief Initiative saw their overall regulatory burden increase during the same period. 

By grouping Montana agencies by whether they did or did not formally participate in the Red Tape Relief Initiative, we can get a better idea of the initiative’s success. Figure 6 shows that taken together, the agencies participating in the Initiative led to a reduction of 1392 restrictions, while agencies that did not formally participate in the Initiative saw an increase of 278 restrictions.

[Figure 6]

Gov. Gianforte’s executive-led initiative appears to have been successful at reducing the pace of regulation accumulation in Montana by spurring staff in state agencies to begin seriously evaluating whether existing regulations are truly adequate or necessary.

Impact Of Regulatory Relief

After the signing of Executive Order No. 1-2021, which established the Red Tape Relief Initiative, the 13 Agencies under the Governor’s jurisdiction began a top-to-bottom evaluation of the state’s Administrative Rules. This initial review of the administrative rules led to a number of impactful reforms, such as one reform which cut apprenticeship red tape and has since allowed for a record number of new apprentices.

Following this initial evaluation, state agencies prepared more than 80 red tape relief reforms the Montana legislature could implement. These Red Tape Relief bills ranged from the repeal of a law that required huckleberry pickers to register their secret huckleberry patches with the government, to a litany of bills which modernized licensing and reduced unnecessary red tape.

Now that state agencies have done much of the work to implement these red tape relief reforms, they have once again turned their attention back to the administrative rules. Only this time their efforts have primarily focused on the more tedious work of modernizing and eliminating duplicative rules, and simplifying the administrative code. The two agencies which secured the most red tape relief reforms over the last two years were the Department of Health and Human Services (DPHHS) and the Department of Labor and Industry (DLI).

DPHHS has looked for ways to reform excessive regulations on one of Montana’s most heavily regulated industries: healthcare. In one rule notice, DPHHS proposed the repeal of 43 regulations in order to update, consolidate, simplify, and make more user friendly the administrative rules governing licensure of emergency medical service (EMS) providers – many of which hadn’t been updated in 20 years. 

Nearly every month throughout 2023, DLI consistently proposed repealing unnecessary and duplicative rules, in addition to reforms which simplified and modernized the administrative rules they oversaw. Some of the most substantial reforms came from changes to occupational licensing requirements, an area of regulation which research demonstrates is particularly burdensome and poses a major barrier to individuals seeking work in Montana. 

In addition to implementing a series of reforms passed by the 2023 legislature to expand the scope of practice of several medical professions and streamline licensing across state lines, DLI also took the opportunity to streamline and simplify other existing regulations. Rule changes regarding licensing for Physicians Assistants for example, which was prompted by the passage of HB 313, went beyond specific changes in the law and took the opportunity to also remove numerous other unnecessary or duplicative rules identified by the licensing board, such as chart review requirements. DLI noted the changes allowing for “flexibility in review as dictated by the PA’s experience, practice level, and the discretion of the collaborating providers.”

Another 2023 DLI rule change lessened Continuing Education requirements for nurses, allowing them to “choose educational offerings that support their professional development without specific board-prescribed requirements.”

Montanans Can Expect More Red Tape Relief

With clear change in culture at agencies and a renewed call for slashing red tape, the Frontier Institute anticipates the 2025 Red Tape Snapshot will continue to show reductions to Montana’s regulatory burden. Two factors will contribute to significant changes: additional red tape relief actions by the administration and further implementation of Red Tape Relief reforms from the 2023 legislative session.

The process for state agencies to propose, hold public hearings and eventually fully repeal regulations in ARM can take months, so we may continue to see deregulatory actions initiated in 2023 continue into 2024. Additionally, other red tape relief actions will likely occur as the Gianforte administration works with lawmakers to make statutory changes to further cut red tape during the 2025 Legislative session.

Recommendations

Montana leaders should continue to focus on reducing the overall regulatory burden, targeting at least a 30% reduction in the total number of regulatory restrictions. Meeting this target reduction level would help place Montana in line with the regulatory burden of neighboring states like Idaho, making Montana’s economy regionally competitive.

Once meeting the target reduction, Montana lawmakers should take steps to prevent the accumulation of harmful regulations in the future. This will require adding more accountability to Montana’s regulatory process.

There are a variety of measures that can be adopted to establish stronger accountability over the regulatory process and protect the separation of powers. These measures generally fall under three pillars of regulatory reform: Legislative Oversight, Executive Accountability, and Judicial Integrity.

Legislative Oversight

Regulatory Budgeting

Lawmakers could consider implementing a regulatory budget, which would require every new regulation imposed to be offset with repealing a regulation. This would create an incentive for regulators to evaluate tradeoffs when proposing new regulations and consider which regulations are truly necessary to protect health, safety and the environment.

Regulatory budgets can take many forms depending on the metric used. The Trump Administration successfully implemented a regulatory budget which capped the total economic costs of each federal agency’s regulations. Under the regulatory budget, regulators were tasked with evaluating the economic costs of each newly proposed regulatory action. Agencies had to ensure that new regulatory actions were accompanied by deregulatory actions to keep the total regulatory cost increase at zero or below. President Trump’s regulatory budget led to a substantial reduction in the growth of the U.S. regulatory burden, saving the public $50.9 billion in regulatory costs from 2017-2019.

Alternatively, Gov. Brad Little of Idaho implemented a simpler regulatory budget focused on the total number of rules. Little’s 2020 Zero-Based Regulation Executive Order mandated at least one existing rule be repealed or significantly simplified for every new or amended rule so “the net regulatory burden is decreased or neutral.” Thanks to the success of this regulatory budget, Idaho is now the least regulated state in the country.

Whether the metric used is regulatory costs, restrictions, words or something else, Montana lawmakers would be wise to implement an on-going regulatory budget to prevent the future accumulation of regulations.

Sunset Review of Rules

With every new legislative season, new laws are passed necessitating the executive branch to issue new rules to implement these laws. The result is an ever-accumulating growth in administrative rules, many of which might not reflect the intent or the will of the current legislature. To solve these issues the legislature can require a periodic ‘sunset review’ of regulations to determine if they should be repealed, reformed or retained.

Targeted Legislative Review of Major Rules

The Montana Legislature could require that major rule changes (a definition defined by the legislature) require a vote before said rules went into effect. Targeted legislative review of major rules would ensure the legislature retains its core lawmaking power while agencies are left to fill in smaller regulatory gaps.

Executive Accountability

A fundamental feature of our political system is the distinct division of government power between the legislative, executive and judicial branches. This separation of power ensures each branch performs its unique function and prevents other branches from exercising the core functions of the others. 

The executive branch is supposed to be solely responsible for implementing and enforcing the law, however, this isn’t always the case today. Today, many regulations are proposed, adopted and then implemented by agencies without ever receiving the express approval of the chief of the executive branch, the Governor. This has effectively created a 4th branch free from the constraints provided by the separation of power, and in turn, has resulted in the accumulation of thousands of excessive and overburdensome regulations. To solve this knowledge problem and lack of accountability, the legislature could require that all new rules be signed by the governor.

Judicial Integrity

Another factor that has led to the accumulation of regulations is judicial bias. For example, rather than evaluating regulatory ambiguity with a deference to liberty, courts have instead opted to defer to the executive agency interpretations of a statute. This wrongful judicial bias has led to the accumulation of ever greater government power in the executive branch. To address judicial bias and restore the separation of powers, the legislature could require that judges evaluate laws without bias towards agency interpretation, and instead require courts to give deference to individual rights.