Audit of the Regulatory Development Process: chapter 4

Findings and recommendations

3.1 Regulatory process

Choice of instrument

We examined whether ECCC follows a rigorous process to choose the most appropriate instrument (i.e., a regulation, a non-regulatory instrument, or a combination) to address an identified environmental issue.

In some of the items examined, there is no consideration of the choice of instrument as it is pre-determined based on legislation, international commitment, or on alignment with a U.S. regulatory regime, for example, in the vehicle and fuel sectors. When choice of instrument is applicable, the Department can select one or more options from a range of tools, including regulatory and non-regulatory instruments.

Under CEPA, the choice of instrument process is outlined in the Instrument Choice Framework (ICF). To ensure a systematic process is followed, the ICF guides program managers through a series of considerations including:

• whether the instruments meet the desired environmental objective;
• the cost/benefit ratio including any disproportionate negative impacts on groups, sectors, or regions;
• compatibility with existing regulations or other tools already in place;
• the expected degree of stakeholder support or opposition; and
• potential conflicts with Canada's international environmental, trade and/or investment obligations.

For instruments introduced under CEPA, the audit found that the ICF process was followed. This demonstrated that the Department applied a rigorous approach and optimized decision-making to ensure that the most appropriate instrument was chosen for producing the desired environmental outcome.

Under other Acts, there is no established process to guide the choice of instrument. However, in all of the items examined the audit found evidence that careful consideration was given to ensure that the selection of instrument was evidence-based. Program directorates made decisions based on cost/benefit calculations, comparative analysis of estimated impact of different options on industry, and information gathered through collaboration with other departments and jurisdictions.

Regulation development process

We examined whether there was an effective process in place for the development and implementation of regulations in ECCC and whether it was followed.

Once the choice of instrument phase is completed and the regulation is chosen as the risk management instrument, the regulatory development and publication process is guided by the Department's Regulatory QMS. The QMS details the required tasks and approvals for the development and publication of regulations in ECCC, in accordance with the CDRM.

The Regulatory QMS provides a framework that can be adapted to meet the requirements of the different statutes. LRAD regularly updates the Regulatory QMS to advance the efficiency and effectiveness of the Department's regulatory processes, while meeting legislative requirements.

The Regulatory QMS is composed of 6 documents: The Flowchart, the Roles and Responsibilities document, the Process Guide, the Record of Decision, the Team Approach, and the Timeline Tool. Together, these documents provide standardized and effective decision-making processes.

The implementation of regulations is initiated upon its publication in CG2. For each regulation, the implementation is supported by such documents as compliance strategy, compliance promotion plan, communication plan, and in the case of high impact regulation, a performance measurement and evaluation plan. One of the initial goals of implementation is to disseminate information to relevant stakeholders and regulatees.

Overall, the audit found that by consistently applying the steps outlined in the Regulatory QMS, the Department followed a robust and rigorous process for the development and publication of regulations, and implementation.

Regulation monitoring

We examined whether regulations were subject to regular monitoring to ensure their effectiveness and compliance.

The evidence from the sample examined^Footnote14 revealed that monitoring on regulatory effectiveness was done by program managers, through such channels as annual reports, information gathering from stakeholders (including provinces and territories where applicable), public consultations, and performance measurement reporting.

In addition to ongoing assessments of effectiveness, the department undertook various activities to ensure compliance and to detect non-compliance. Most of this work is done and documented by the Enforcement Branch.

Many of the results are available publically, either through the Government of Canada websites or in publications by international institutions such as the United Nations Environment Programme, in the case of international environmental commitments.

Based on the limited sample examined, the audit did not identify any deficiencies in the regulatory monitoring process.

3.2 Regulatory planning and reporting

We examined ECCC's regulatory development function to determine whether effective management processes were in place to meet the Department's regulatory objectives. Management processes and tools should be implemented to plan, coordinate, monitor and report on regulatory activities, and help to actively address any risks related to regulatory development.

Regulatory planning and reporting is especially important given that the 2014-2017 Corporate Risk Profile noted, as part of ECCC's 5 key corporate risks, that "the Department may be perceived as not generating timely regulations or legislation to respond to emerging priorities for environmental action". Senior management also observed that there is a continually shifting set of regulatory development priorities.

As an added factor, the development of regulations is a complex process, requiring multiple stakeholder consultations, coordination with various contributors, and analyses of related socio-economic factors. As such it may take a number of years to develop regulations and the process can be subject to frequent delays. In this context, the Commissioner of the Environment and Sustainable Development and others^Footnote15 have previously stressed the importance of integrated and transparent planning and reporting.

We found that the Department has a number of useful planning and reporting elements in place:

• Forward Regulatory Plan - a TBS-required list of planned and potential regulatory initiatives that ECCC expects to bring forward over the next two years, or for which public consultations will start in the following two years.
• Regulatory Drafting Priorities List - a list maintained by LRAD, containing information on the status of all regulations planned, currently in development, and recently published. It includes information on needed DoJ drafting efforts, timing, assigned drafters, and CG1 and/or CG2 target dates.
• Record of Decision (RoD) - provides information on various aspects of the individual regulation's strategy and key development activities - from policy decision to final approval (publication in CG2). The RoD should be regularly updated and kept current as the regulation progresses. Management has indicated that the RoD information is one of the tools or sources of information used to inform the Regulatory Drafting Priorities List. Alternatively, the Timeline Tool also provides key planned dates on an individual regulation's critical path.
• DG Regulatory Planning and Priorities Committee - quarterly meetings of DGs of program directorates which produce regulations (or key documents such as the RIAS), DoJ representatives, the DG of LRAD and select LRAD and other staff as needed. The Committee discusses and decides, based on various considerations, which regulations will take priority for drafting purposes. Also, the Committee's decisions serve to update the Regulatory Drafting Priorities List.
• Regulatory Quality Management System (QMS) Flowchart - lists the steps needed to be followed for regulatory development, from the policy decision to regulate to the regulation's publication in CG2. The QMS is regularly updated by LRAD and provides a clear and comprehensive map for regulatory development and facilitates the regulatory process. ECCC has been recognized by other federal departments and TBS for the high quality of its Regulatory QMS and companion documents (including the RoD and Timeline Tool).
• Regulatory Achievements List - a list of published regulations per calendar year, maintained by LRAD.

The above elements present many useful aspects of planning and reporting in support of the management and coordination of the regulation development process. However, the audit also identified some areas which could more effectively mitigate the risk previously identified and facilitate the management and coordination of the overall regulatory function.

• Individual Regulations' Plans and Reports - There are no documents that provide integrated information for monitoring the progress of development of an individual regulation against its planned completion. While the RoD is regularly updated, it is not intended as a planning document and does not reflect both planned and actual completion of key steps and activities. While the Timeline Tool provides key planned dates, it is not easily aligned or compared to the RoD for the purpose of monitoring progress. Senior management indicated that better integration of the different documents (so that changes in one document are reflected in others) would be desirable and lead to increased efficiency in planning and reporting.
• Consolidated Plan - There is no complete consolidated plan of all regulations under development. The existing Forward Regulatory Plan or Regulatory Drafting Priorities List do not include all key information and target dates for the complete regulatory development process, or the allocation of required staff and/or resources. Together they provide some details on planned activities but mainly as they relate to consultations, drafting and publication of regulations, and not on other stages of the process. Also, the audit could not easily determine if the Regulatory Drafting Priorities List effectively reflected the most current status of individual regulations as documented in the RoD.
• Progress Report - There is no formal reporting of progress of regulatory development against an overall regulation plan. While the progress of development of individual regulations can be monitored in part through the individual RoDs, there is no documented monitoring or regular reporting against the overall Forward Regulatory Plan or the Priorities List. As a result, there are no current documents that serve to report on the progress made by branches against the overall regulatory development plan or priorities.

While existing systems and processes provide a sound basis to support the development of individual regulations, they are less effective at providing a consolidated view of the progress of the entire set of regulatory initiatives against planned performance and results. It is possible that, given the complexity of the regulatory process, the number of contributors involved and the evolving priorities, more structured planning and reporting would help facilitate coordination between different managers, early identification of emerging delays or bottlenecks, and re-align efforts and priorities as needed to help mitigate the risk of not generating timely regulations.

3.3 World class regulator initiative

We examined whether the World Class Regulator criteria (making evidence-based decisions, effectiveness, efficiency, transparency, adaptability)^Footnote16 were considered and integrated throughout ECCC's regulatory development process.

The audit conducted a comparative analysis of the CDRM, the Regulatory QMS, and the WCR criteria and sub-criteria to determine if there are points of convergence and overlap that would warrant following the CDRM principles and the Regulatory QMS steps in place of the WCR criteria. The analysis revealed that the WCR is fully consistent with the CDRM and reflected in the Regulatory QMS. The CDRM is especially comprehensive since it outlines each step of the regulatory life cycle, as well as regulatory management, and lists specific actions required at each stage. Based on these findings, the audit found no evident indication of the specific value-added that the WCR initiative brings to the Department, beyond the existing policy and process framework.

While the WCR initiative sought to inspire regulatory excellence^Footnote17, the audit found that the initiative does not have performance measures to assess ECCC's progress towards becoming a "world-class regulator", or a process in place to determine whether the WCR criteria are adhered to. It is also unclear whether the initiative constitutes an ongoing aspirational effort or whether the achievement of the world-class regulator status by the Department is its end goal.

There is also a lack of common understanding within the Department of the WCR, including among senior management, regarding the overall goals and requirements of the initiative. Given the high-level launch of the WCR initiative, senior management had expressed an interest in knowing whether the project has fully concluded, what its outcomes have been, and the value of continuing to use the term world-class regulator beyond a "branding exercise"^Footnote18.

In the 20 items examined as part of the audit, only two demonstrated specific evidence of integrating the WCR criteria. For the rest of the items, responses offered by program managers on why the WCR criteria were not explicitly considered and integrated fell into one or more of these three groups:

• Not applicable, as a regulation was the result of a Ministerial Order, international agreement, or a minor amendment to an existing regulation;
• Regulatory process was initiated prior to the launch of the WCR initiative; or,
• The use of the CDRM and Regulatory QMS to develop a regulation was deemed sufficient.

Given that the WCR is reflected in the Regulatory QMS, in its current state it is not clear what value-added it provides to the Department as a stand-alone initiative; how well it has performed since its introduction and whether any modifications or improvements might be needed; what is expected from the initiative by senior management; and if and when ECCC can be declared a world-class regulator. This lack of precision in the WCR initiative inhibits the effectiveness and efficiency of its implementation in the Department.

3.4 Recommendations

Recommendation 1:

The Assistant Deputy Minister - Environmental Protection Branch, in consultation with other involved branches, should review the current regulation development process in order to determine whether its effectiveness could be enhanced through a more consolidated approach to regulatory planning and reporting of progress.

Recommendation 2:

The Assistant Deputy Minister - Environmental Protection Branch should re-evaluate the role and value-added of the World Class Regulator initiative. This action should inform the decision on the future form and/or continued relevance of the initiative.

Management response:

Management agrees with the recommendations and management action plans have been developed to address the findings.