Audit of the Regulatory Development Process: chapter 2

Introduction and background

This audit was included in the AEB's 2013 Integrated Risk-based Audit and Evaluation Plan, as approved by the Deputy Minister, upon recommendation of the External Audit Advisory Committee (EAAC).

Policy framework

A regulation sets out principles, rules or conditions that govern the behaviour of the public and organizations. Regulations are a form of law that have binding legal effect and usually set out rules that apply generally, rather than to specific persons or situations. Regulations are made by persons to whom, or bodies to which, Parliament has delegated authority. These include for example: Cabinet (through the Governor in Council), a Minister, or an administrative agency. Authority to make regulations must be expressly delegated through enabling legislation.

Given the impact that regulations can have on Canadians and the economy, the regulatory life cycle process is highly structured and complex. Departments are expected to meet a number of requirements to ensure that an effective, efficient and accountable regulatory system is in place. In order to assist departments in the implementation of a robust regulatory system, several key policies, directives, guidelines and tools have been developed by the Treasury Board (TB), the Treasury Board Secretariat (TBS), the Privy Council Office (PCO) and the Department of Justice (DoJ).

In the 2012 Cabinet Directive on Regulatory Management (CDRM), the Government of Canada made a commitment to protect and advance the public interest by working with Canadians and other governments to ensure that regulatory activities result in the greatest overall benefit to current and future generations. The CDRM replaced the 2007 Cabinet Directive on Streamlining Regulation and the 1999 Government of Canada Regulatory Policy, andset out a number of requirements designed to achieve government objectives while minimizing the regulatory burden on industry and the Canadian public. The Directive applies to all stages of the regulatory life cycle: planning, development, implementation, evaluation, and review of regulations as well as regulatory management^Footnote1.

Section 1 of the CDRMstates that when regulating, the government will:

• protect and advance the public interest;
• advance the efficiency and effectiveness of regulations;
• make decisions based on evidence;
• promote a fair and competitive market economy;
• monitor and control the administrative burden;
• create accessible, understandable and responsive regulations; and
• require timeliness, policy coherence and minimal duplication.

Departments were also responsible for the implementation of the "Red Tape Reduction Action Plan"^Footnote2 which includes the One-for-One rule that requires that an existing regulation be repealed when a new regulation that imposes new administrative burden on business is introduced. It also requires that the cost of any new administrative burden imposed on business, by a new or amended regulation, be offset by an equal savings amount from other existing regulations within the portfolio.

Regulations at Environment and Climate Change Canada

Environment and Climate Change Canada (ECCC) is one of the Federal Government's most active regulators and in the 2012-13 to 2014-15 period was second only to Finance Canada in the number of regulations published. The number of ECCC regulations and regulatory equivalents^Footnote3 has increased by over 50% in a ten year period between 2004 and 2014.^Footnote4 The Department administers several statutes that authorize regulation making. These include the Canadian Environmental Protection Act 1999 (CEPA), the Migratory Birds Convention Act 1994 (MBCA), the Species at Risk Act (SARA), the Environmental Enforcement Act, the Canada Wildlife Act, and section 36(3) of the Fisheries Act.

The Department uses a range of tools to promote environmental stewardship, including regulations and other enforceable instruments as well as various voluntary partnerships with individuals, organizations, and other levels of government. Examples of other tools that may be used by ECCC include: Pollution Prevention Planning Notices (P2 Plans), Codes of Practice (CoPs), Environmental Performance Agreements, and Significant New Activity (SNAc) Notices^Footnote5.

For some Acts, the type of instrument to address a particular environmental issue is prescribed and in these cases the Department does not have flexibility in the choice of instrument. However, even in these cases there still exists flexibility as to the scope and content of the prescribed instrument.

The Department is currently working on a number of initiatives including regulations of vehicles and engines, chemical substances, wildlife and migratory birds, wastewater as well as amendments to existing regulations and the development of non-regulatory instruments. Under Parts V and VI of CEPA, the Minister of ECCC and the Minister of Health are jointly responsible for the risk management instruments, including regulations. Under SARA, the Minister of ECCC is the responsible minister; however, she must seek the advice of the Minister of Fisheries and Oceans on aquatic species, and where a species is found in a national park, she must consult with her staff in Parks Canada Agency. Therefore, when developing regulations, ECCC coordinates and consults with other government departments, as well as with other jurisdictions.

ECCC maintains a good reputation among departments for its regulatory development processes and tools. In 2006, ECCC introduced the Instrument Choice Framework^Footnote6 (ICF) to guide the choice of instrument for the implementation of environmental risk management tools under CEPA. TBS has referred to ECCC processes and tools as useful models in its "Assessing, Selecting, and Implementing Instruments for Government Action"^Footnote7 guidance document. TBS has rated ECCC in full compliance, with one minor corrective action required in the area of the Forward Regulatory Plan required, in the 2013-2014 "Assessment of Departmental Progress on the Implementation of the Red Tape Reduction Action Plan Regulatory Reforms"^Footnote8.

The Legislative and Regulatory Affairs Directorate (LRAD) within the Environmental Protection Branch coordinates the overall departmental regulatory priority-setting through the Director General (DG) levelRegulatory Planning and Priorities Committee. LRAD also maintains a Regulatory Quality Management System (QMS)^Footnote9 which details the steps to be completed and approvals to be obtained during the development and publication of regulations. The Directorate is responsible for coordinating the approval of regulations and amendments for their publication in the Canada Gazette, Part I (CG1) - for public consultation and Canada Gazette, Part II (CG2) - for promulgation. The Directorate also provides guidance and training on the regulatory development and approval process.

Individual program directorates are responsible for the content of regulations and for their implementation, monitoring, performance measurement and review. The organizational groups involved are listed in Annex 2.

In 2010, ECCC launched the World Class Regulator (WCR) initiative. It was intended to serve as an opportunity for the Department to improve upon its role as an important federal regulator by following the initiative's five criteria: making evidence-based decisions, effectiveness, efficiency, transparency, and adaptability. The 2010-2011 Departmental Performance Report outlined the need for the Department to stay "focused on reinforcing Environment Canada's reputation as a world-class regulator"^Footnote10. A WCR Working Group was created to facilitate this effort.