A new Red Tape Index from regulatory intelligence firm Labrynth has identified major differences in how efficiently states process construction permits, with Tennessee ranked as the top state for permitting efficiency. The index, released this week, aggregates data from public building departments, zoning boards, and state environmental agencies to provide a snapshot of where regulatory delays most often occur.

“Tennessee ranks first for construction permitting efficiency in the United States,” the report stated, adding that states across the South generally outperformed those in the Northeast and on the West Coast.

The index measures both the speed and effectiveness of permitting and zoning approvals, providing insights for policymakers to reduce red tape. By highlighting regulatory bottlenecks, the goal is to help public officials better understand how delays can drive up costs, stall development, and discourage investment.

“By shining a light on permitting inefficiencies, this index aims to give governments and businesses a clearer roadmap for improvement,” the report noted.

The release comes at a critical moment for the construction sector, where demand for large-scale projects is surging. Federal initiatives under the Trump administration have emphasized streamlining permitting for projects valued at $500 million or more, making state-level efficiency increasingly important.

According to industry observers, long review periods — sometimes stretching from months into years — can derail project timelines. This is particularly true in sectors like data center construction, where permitting friction has become one of the top concerns, alongside power availability and equipment delays. The Associated Builders and Contractors has reported that one in eight contractors is currently working on a data center project, underscoring the scale of the issue.

Top 10 States for Construction Permitting Efficiency

1. Tennessee
2. Florida
3. Texas
4. Indiana
5. Arizona
6. North Carolina
7. Georgia
8. Virginia
9. Michigan
10. New Hampshire

Bottom 10 States

1. Rhode Island
2. Maine
3. Vermont
4. Maryland
5. Massachusetts
6. Connecticut
7. New York
8. New Jersey
9. California
10. Hawaii

The geographic split is notable. Southern and Sunbelt states dominate the top of the rankings, reflecting regional trends of population growth, pro-business policies, and aggressive efforts to attract corporate relocations. In contrast, Northeastern and West Coast states are burdened by more complex regulatory frameworks, environmental review requirements, and local opposition that often prolong the process.

For developers, the difference between building in Tennessee versus California can mean months — or even years — of savings in permitting time. Those delays translate into higher costs for labor, financing, and materials, and can ultimately make or break whether projects move forward.

Industry leaders argue that addressing permitting efficiency is crucial not only for builders but also for local economies. With billions of dollars at stake in housing, energy, infrastructure, and technology developments, states that streamline approvals are better positioned to attract investment and jobs.

“Permitting may sound bureaucratic, but it’s the first gatekeeper for economic growth,” the Labrynth report emphasized. “States that lower unnecessary barriers stand to gain a competitive edge in the coming decade.”

Originally reported by Sebastian Obando in Construction Dive.