U.S. News

New study names America’s most regulated states


Freedom is supposed to be an all-American value, but it turns out that it varies from state to state, at least according to a new study measuring the impact of federal regulations nationwide.

Researchers at George Mason University's Mercatus Center — a libertarian think tank founded by the Koch brothers — say they analyzed the entire U.S. Code of Federal Regulations, more than 1 million provisions and counting. By measuring each regulation's impact on various industries, then determining those industries' relative importance in each state's economy, the researchers calculated what they call a Federal Regulation and State Enterprise or "FRASE" index for each state, as well as the District of Columbia.

"Although federal regulation applies in the same way in all states, each state's economy includes a unique mix of industries," write authors Patrick McLaughlin and Oliver Sherouse. "As a result, federal policies that target specific sectors of the economy will affect states in different ways."

Of course, the study gives no consideration to the potential benefits of any regulations. The study paints every rule — and their effect — with a single brush. Still, the authors say it is important to quantify the impact because regulations "created and enforced by bureaucrats" have become the government's primary policy vehicle.

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So which is America's most regulated state? The study gives the dubious distinction to Louisiana, where it found the impact from federal regulations is 74 percent greater than the nation as a whole.

Even more pronounced, the study says, is the cumulative effect of regulations on the state. The study says Louisiana's FRASE Index grew 54 percent from 1997 to 2013.

"The main driver of Louisiana's ranking is the chemical products manufacturing industry," the study says, noting that the industry is three times more important to Louisiana's economy than it is to the nation as a whole, and is 10 times more regulated than the median industry.

Also a factor: oil and natural gas. Louisiana's fourth-largest industry is subject to nearly 15,000 federal regulations, the study says.

Indeed, oil states are prominent among the top 10, including second-place Alaska, sixth-place Texas, and ninth-ranked North Dakota.

Coal producing states feature prominently as well, including third-place Wyoming, No. 8 West Virginia, and 10th-placed Montana. Kentucky, also a coal state, finished fifth — primarily due to its reliance on the heavily regulated auto and auto parts industries.

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The study shows the impact from federal regulations is not limited to states dependent on oil, coal and manufacturing.

It notes that the Dodd-Frank financial reform law has resulted in more new federal regulations than any law since 2009. The study says the law is responsible for a nearly 10 percent jump in the impact on New York — the heart of the financial services industry — since the law's passage in 2010. But New York still finishes among the less-regulated states, in 35th place overall.

America's least-regulated state according to the study is New Hampshire. With an economy dominated by industries such as real estate and retail, the Live Free or Die State enjoys 32 percent less impact from federal regulation than the nation as a whole. But even in New Hampshire, the study notes, regulation is up 39 percent since 1997.

Here is the study's complete list of America's most — and least — regulated states, and their FRASE index scores. A score of 1 would mean an impact from federal regulations that is equal to the national rate.

Rank State FRASE Index (Rounded)
#8West Virginia1.26
#9North Dakota1.22
#14North Carolina1.15
#18South Dakota1.09
#27New Mexico0.98
#28South Carolina0.97
#35New York0.89
#38New Jersey0.88
#49Rhode Island0.72
#50District of Columbia0.71
#51New Hampshire0.68