8. How the Rule Works: Governor in Council and Non-Governor in Council Regulatory Changes

8.1 Application of the Rule to Governor in Council Regulatory Changes

Figure 1 provides an overview of the processes and requirements that departments must meet when developing regulatory proposals for the GIC. As shown in the figure, there are two elements of the "One-for-One" Rule. Element A will restrict the growth of new administrative burden costs on business by offsetting regulatory changes that impose new administrative burden on business by an equal amount. Element B will control the number of regulations by removing an existing regulation every time a new one imposing new administrative burden costs on business is enacted. The application of the rule to non-GIC regulatory changes is discussed in section 8.2.

Figure 1. Overview of How the "One-for-One" Rule Works: GIC Regulatory Changes
Overview of How the "One-for-One" Rule Works: GIC Regulatory Changes. The information conveyed by the graphic is explained in the surrounding text.

As shown in Figure 1, the rule applies to all regulatory changes that impose new administrative burden costs on business. When a department intends to seek GIC approval for a new regulation or to amend an existing one, it must engage the Regulatory Affairs Sector of the Treasury Board of Canada Secretariat at the earliest stages of regulatory development so that triage can be undertaken to determine its level of impact. At this stage, the Regulatory Affairs Sector will provide an early indication as to whether the rule applies. The triage assessment and other aspects of the regulatory process are discussed in section 10 of this document.

Under Element A of the rule, if a new regulation or an amendment to an existing regulation imposes new administrative burden costs on business, departments are required to monetize and offset those costs with equal administrative burden reductions within 24 months of GIC approval (i.e., registration of the IN). In particular, departments are required to monetize INs and OUTs using the Regulatory Cost Calculator and to consult on their estimates with affected stakeholders. In some cases, the monetization of administrative burden could occur after stakeholder consultations, for example, in situations where stakeholders identify regulations that could be modified to reduce administrative burden costs on business. Under Element B of the rule, if the regulatory change is a new regulation, the sponsoring minister will have to ensure that a regulation is removed within 24 months.

Following stakeholder consultation on the estimates of new administrative burden costs, departments will prepare their regulatory submissions for Treasury Board (Part B) consideration to pre-publish the proposed regulatory change in the Canada Gazette, Part I. At this stage, the Treasury Board (Part B) will make a determination as to the application of the rule and apply carve-outs for regulatory changes that: (i) implement a non-discretionary obligation; (ii) relate to tax or tax administration; or (iii) address emergencies or crisis situations, or other unique, exceptional circumstances as determined by the Treasury Board (Part B). (Refer to section 9 for further details.)

If the regulatory change is exempt from pre-publication, a decision regarding the application of the rule will be made by the Treasury Board (Part B) when the sponsoring minister recommends final approval by the GIC of the regulation.

Once the regulatory change that imposes new administrative burden costs on business is approved by the GIC and registered, ministers are required to provide an equal reduction in administrative burden costs within 24 months (this is not required for OUTs).

8.2 Application of the Rule to Non-Governor in Council Regulatory Changes

As per the Cabinet Directive on Regulatory Management, the "One-for-One" Rule applies to both GIC and non-GIC regulatory changes that impose new administrative burden costs on business.

To ensure accountability and a consistent approach to implementing the rule across government, both the Regulatory Affairs Sector of the Treasury Board of Canada Secretariat and the Treasury Board (Part B) have specific roles with regard to the application of the rule to non-GIC regulatory changes. In terms of the regulatory process, departments are required to discuss the potential application of the rule to all non-GIC regulations that may impose new administrative burden costs on business with the Regulatory Affairs Sector prior to approval by a minister or other regulatory authority.

The Regulatory Affairs Sector, on behalf of the Treasury Board (Part B), will monitor and track all regulatory proposals published in the Canada Gazette, Part II and will work with departments to ensure that the rule is properly applied to non-GIC regulatory changes. To obtain credit for a non-GIC OUT, departments must have the analysis verified and the OUT confirmed by the Regulatory Affairs Sector.

Although sponsoring ministers are responsible for complying with and applying the rule to non-GIC regulatory changes, the Treasury Board (Part B), through its oversight function, will hold ministers to account and ensure that the rule is applied properly to non-GIC regulatory changes that increase administrative burden costs on business. For example, the Regulatory Affairs Sector will brief the Treasury Board (Part B) on non-GIC regulatory changes prior to publication of the Annual Scorecard Report. This will ensure that the Treasury Board (Part B) is aware of any issues related to the application of the rule to non-GIC regulations and can engage the relevant minister to take corrective action, if necessary.

8.3 Application of the Rule to Amendments to Schedules

The rule applies to all regulatory changes that impose new administrative burden costs on business. Therefore, if a regulatory amendment to a schedule of an act of Parliament or a schedule of a regulation imposes new administrative burden costs on business, it will be captured by the rule. See footnote 5

The rule does not apply to schedule amendments that do not impose new administrative burden costs on business.

The rule also does not apply to amendments to schedules that allow a business to enter the regulated sector (i.e., where the regulatory change allows a business to opt into the existing regulatory regime).

8.4 Application of the Rule to Regulatory Changes That Involve Incorporation by Reference

The rule applies to regulatory changes that incorporate by reference a document (e.g., standard, technical document, legislation of another jurisdiction, etc.) when doing so results in new administrative burden costs on business.

In some cases, regulations may incorporate a document (e.g., a technical standard) that is expected to be updated periodically without requiring a regulatory change to bring the updated document into effect (i.e., an ambulatory incorporation by reference). If changes to these incorporated documents impose new administrative burden costs on business, departments, in consultation with the Regulatory Affairs Sector of the Treasury Board of Canada Secretariat, are expected to apply the rule.

8.5 Application of the Rule to Shared Federal-Provincial Responsibilities

Canada's regulatory policy has long promoted collaboration and coordination with provinces and territories to ensure the effective and efficient administration of responsibilities and to minimize regulatory burden, when possible.

With regard to shared federal-provincial activities, federal departments are required to meet the requirements of the rule. For example, if the federal government substitutes a provincial process for a federal process, the potential decrease in administrative burden on business could be monetized and captured as an OUT. In cases where the federal government creates a regulation to backstop an existing provincial or territorial process, and the regulation applies only to provinces or territories that do not have a similar process in place, the federal minister responsible for the regulation will be required to monetize the incremental increase in administrative burden costs on business if there is no equivalent process in the specific province or territory.

If the federal government negotiates a new agreement or amends an existing agreement with a province or territory, departments must inform the province or territory of the rule and discuss its application to all regulatory changes that the federal government may make on behalf of the province or territory as part of the new or amended agreement. If the new agreement involves the federal minister making regulatory changes that impose new administrative burden costs on business at the request of the province or territory, the federal minister sponsoring the regulatory change will be assigned an IN.

8.6 Application of the Rule to Collaboration and Cooperation With the International Community or Other Jurisdictions

All regulatory changes that impose new administrative burden costs on business will be captured by the rule where the federal government has discretion on the regulation's design and administration. Therefore, departments are expected to manage and control the administrative burden that their regulations place on business.

In view of international agreements and obligations, departments should ensure that all measures are taken to design the international agreement to minimize administrative burden on business. If the federal government has no discretion on instrument choice or the design and administration of the regulation, it may be a non-discretionary obligation, and a carve-out from the Treasury Board (Part B) could be sought. Departments should not, however, expect regulatory changes they bring forward to be carved-out as a non-discretionary obligation if they have control over the design and administration of the regulation.

8.7 Application of the Rule to Regulatory Changes That Involve More Than One Minister

In general, the minister who is accountable for or who sponsors the regulatory proposal will be assigned 100 per cent of the administrative burden costs associated with the IN or the OUT. See footnote 6 In situations where the regulatory change involves more than one minister, the following approach will be used to assign INs and OUTs. As a rule, the splitting of administrative burden between two or more ministers will not be allowed.

To ensure that INs and OUTs are assigned to the most appropriate minister, the department of the accountable or sponsoring minister will need to complete the template in Appendix D and include it when the regulatory submission is signed by the minister and delivered to the Privy Council Office (Orders in Council Division) for examination under the Statutory Instruments Act.

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