Environment Canada's Response to: "Environment Canada's World Class Regulator Project: An Assessment" by Cary Coglianese

Introduction

Based on a commitment to operate as a World Class Regulator (WCR), Environment Canada (EC) has embarked on an initiative to strengthen how it selects, develops and implements regulatory instruments ("the WCR project"). Department-wide consultations identified five criteria that a WCR consistently applies in its work. EC subsequently conducted an internal evaluation of regulatory activities using these criteria. An action plan and continual improvement strategy were then developed based on the results of the evaluation.

Professor Cary Coglianese, an internationally-recognized expert in regulatory policy from the University of Pennsylvania, recently conducted a review of the WCR project. The aim was to provide EC with the perspective of an external expert in the field and to confirm the direction of the project in addition to obtaining suggestions that could inform ongoing regulatory reform efforts.

Following is a summary of Professor Coglianese's findings and Environment Canada's response to his primary recommendations.

Summary of Findings

Professor Coglianese assessed the WCR project along three dimensions: the WCR criteria and framework, process / methodology and action plan. Overall, his findings were quite positive. For instance, he agreed that EC's WCR criteria appropriately define a World Class Regulator. He also concluded that the project was conducted in a highly methodical, transparent, and collaborative manner and that the action plan aligns with and is likely to improve EC's operations.

Professor Coglianese also provided four main recommendations to strengthen the project:

  • Include distributional fairness as a WCR criterion;
  • Distinguish between cost-effectiveness and efficiency;
  • Focus more on problems than process, on outcomes than inputs; and
  • Develop more fine-grained metrics of regulatory performance.

EC's Response

Environment Canada is grateful to Professor Coglianese for his review and appreciates the fact that it essentially provides a third-party validation of the WCR project. The findings and conclusions demonstrate that the WCR project's objectives, criteria, process and resulting actions are consistent with leading regulatory practices.

In particular, EC concurs with the finding that the WCR project has been designed and delivered to reinforce an organizational culture committed to achieving regulatory excellence and making continuous improvement. According to Professor Coglianese, the project "exemplifies exactly the kind of systematic and widespread effort at self-assessment that one expects to find in an organization with a strong culture of continuous improvement". He also supported the project's emphasis on staff engagement as essential for providing information and sharing perspectives on EC's performance and providing a basis for communicating the importance of continuous improvement.

EC appreciates Professor Coglianese's recommendations, and will consider them as part of the Department's commitment to ongoing improvement and regulatory reform. EC's response to the recommendations is outlined below.

Include distributional fairness as a WCR criterion

Distributional fairness (i.e., the equitable distribution of the costs and benefits associated with an initiative) is an underlying principle of our constitution and is an important consideration in policy development, including Canadian federal regulatory processes. However, at present, it is a criterion that is difficult to define, measure, and operationalize. More needs to be done to determine how this concept can be applied in practice. EC will continue to refine its understanding of distributional impacts as part of its regulatory processes.

Distinguish between cost-effectiveness and efficiency

EC uses the term "efficiency" in the context of the WCR project to refer to cost-effectiveness (i.e., design the regulation to minimize the cost to achieve a given level of behavioural change or reduction in the problem). Moving forward, it will be important to distinguish this concept from other definitions of efficiency, which relate, for example, to an optimal distribution of resources or costs.

Focus more on problems than process, on outcomes than inputs

Ultimately, the test of a good regulation depends in large part on whether it achieves its intended goal. This requires a focus on outcomes. EC's WCR project focuses on process as well as outcomes, however. This is because a world class regulatory process is important as it engages stakeholders and engenders public support and trust. We also need to account for process indicators because focusing on outcomes alone may not produce enough useful information to guide decisions about regulatory design.

Measuring outcomes and determining the extent to which regulatory actions cause improvements in those outcomes is a common challenge faced by environmental regulators around the world. There is often a long timeframe between action and improvements in environmental conditions. Also, it can often be difficult to associate improvements with one regulation due to factors such as the long range movement of pollutants emitted from other jurisdictions.

EC is committed to strengthen its focus on environmental outcomes. EC's regulatory initiatives are included in annual departmental environmental sustainability reporting. This supports the Federal Sustainable Development Strategy (FSDS), which enables Canadians to see, in one place, the Government's environmental sustainability priorities and our progress in achieving them. We track environmental outcomes and measure the results of the FSDS through the Canadian Environmental Sustainability Indicators program (although without direct attribution). The WCR short-term action plan also commits to reporting in the Canadian Environmental Protection Act Annual Report on the environmental outcomes over time of select regulatory instruments.

Develop more fine-grained metrics of regulatory performance

Environment Canada agrees that it is important to use fine-grained metrics of regulatory performance (e.g., examining the quality or rigor of cost-benefit analysis in addition to confirming the use of cost-benefit analysis). However, a conscious decision was made to trade-off some rigour in the interest of being able to engage the department and develop momentum behind the WCR project as quickly as possible.

As such, the internal assessment we conducted relied on a mix of broad and detailed metrics, and used fine-grained metrics where information was readily accessible. For example, under the transparency criterion, in addition to confirming the fact that consultations were completed, regulatory programs outlined in significant detail which stakeholders were consulted, how they were consulted, and at what points in the process they were consulted. This information was then assessed to identify best practices and opportunities for improvement.

Other

Environment Canada generally agrees with the other recommendations in the report. In particular, EC concurs with the need to further strengthen performance measurement and ex post reviews of regulation. While the internal assessment as part of the WCR project found that these are strengths of some of the regulations reviewed, further improvements could be made.

For example, the WCR short-term action plan will strengthen performance measurement activities by enhancing Departmental training and examining the feasibility of including economic indicators in performance measurement and evaluation plans (PMEPs). In addition, the Government of Canada's Economic Action Plan 2012 proposes reducing red tape through a "One-for-One" rule, which would require federal departments and agencies to repeal an existing regulation for each new one introduced. Implementing the rule will require regulators to examine the performance of existing regulations as they strive to balance new regulations with repeals of those that are no longer needed.