Regulatory quality and COVID-19: The use of regulatory management tools in a time of crisis

 How widespread are regulatory management tools and practices?

The COVID-19 crisis has made the need for well designed, evidence-based, and well-enforced regulation particularly acute. Governments across the globe have been forced to develop emergency regulatory responses in a context where the clinical picture of the virus has not been fully understood and with the lack of a robust evidence base on the effectiveness of containment measures.

The OECD has produced a series of publications to advise governments on the effective use of regulation to achieve better social, environmental and economic outcomes, including the 2012 Recommendation of the Council on Regulatory Policy (OECD, 2012[4]), which was developed in the aftermath of the 2008 global financial and economic crises. It focuses particularly on the importance of the three key regulatory management tools of stakeholder engagement, regulatory impact assessment (RIA) and ex post evaluation of regulations, which form critical aspects of the regulatory lifecycle. It also highlights the salience of regulatory oversight mechanisms as essential to bridge the gap between the establishment of formal requirements for using regulatory management tools and their implementation in practice.

• RIA refers to the process of critically examining the consequences of a range of alternative options to address various public policy proposals. RIA is a central aid to decision making, helping to provide objective information about the likely benefits and costs of particular regulatory approaches, as well as critically assessing alternative options. A growing number of OECD countries apply a proportionate approach to decide whether or not RIA is required and to determine the appropriate depth of the analysis.

• Stakeholder engagement refers to informing and eliciting feedback from citizens and other affected parties so that regulatory proposals can be improved and broadly accepted by society. At a time of general mistrust of governments, it is imperative that consultation with stakeholders provides a meaningful avenue for those affected to be able to help shape regulations so as to maximise overall well-being. Countries are increasingly seeking feedback from citizens and businesses about regulatory proposals.

• Ex post evaluation involves an assessment of whether regulations have in fact achieved their objectives, as well as how they can remain fit for purpose. The ‘stock’ of regulation is extensive in all countries, typically having accumulated over many years, while scant attention is often paid to regulatory proposals once they have become laws. There has only been a minor increase in the number of countries that have formal requirements and a comprehensive methodology in place for ex post evaluations.

• Regulatory oversight is also highlighted in the 2012 Recommendation as a critical enabler of effective regulatory frameworks. The recommendation outlines a wide range of oversight functions, which governments should institute, in order to promote high quality evidence-based decision-making and enhance the impact of regulatory policy. These functions include the quality control of regulatory management tools; examining the potential for regulation to be more effective; contributing to the systematic improvement of the application of regulatory policy; co-ordination; training and guidance; and strategies for improving regulatory performance.

Well-designed and delivered regulation is essential for ensuring that our economies and public services continue to function effectively throughout and following the crisis. Regulation impacts upon the availability of medical tests, products and devices for dealing with the pandemic, as well as ensuring that critical supply chains continue to function, such as the delivery of food and critical medical supplies. Regulatory policy can also help design some elements of the pandemic response in the best way possible in terms of safeguarding privacy and individual rights, achieving desired health outcomes with the lowest possible economic and social cost, maintaining and reinforcing public trust and legitimacy of public administration decisions. However, there have been a number of challenges in applying best practice regulatory management tools to the COVID-19 responses, as this paper will examine.

 Governments have been under severe pressure to rapidly develop policy responses to COVID-19

Responding to the unprecedented public health crisis has been a global priority which has required governments to make complex regulatory decisions to drastically shortened timeframes at nearly every stage of the policy making process, impacting every economic sector.

Administrations worldwide have responded to the crisis using a range of regulatory instruments, including primary and secondary legislation, as well as non-legislative changes (e.g. these have included relaxing inspection regimes, waiving licence charges or deadlines) to implement urgent reforms impacting upon a range policy areas e.g. public health, emergency response systems, competition legislation (e.g. to ensure that supply chains continue to provide urgently needed goods). Thousands of these COVID-19 measures have been implemented in administrations worldwide and have been described by the OECD Policy Tracker4 as falling into the following policy categories: containment measures (including quarantine/confinement, travel bans/restrictions, closure of schools/universities, and cancellation of public events), fiscal and monetary initiatives, health system measures, employment and social initiatives. A selection of some of the government’s COVID-19 response measures are set out in Box 1 below.

In addition, the crisis has put governments and regulatory oversight bodies under severe resource constraints, with the need to reprioritise resources away from regulatory management teams, and from regulatory oversight bodies, into policy teams working on COVID-19 responses.5 This has also impacted on regulatory oversight bodies in a number of countries, in which secretariat staff which support the work of the oversight bodies have been mobilised to work on COVID-19 related policy work in the government ministries.

Accordingly, many administrations have had to reduce their volumes of non-COVID-19 legislation in the pipeline or reprioritise their legislative programmes, to ensure that resources are dedicated to address the COVID-19 emergency. For example, the central oversight body of Canada, the Treasury Board of Canada Secretariat (TBS), has been prioritising orders and regulations that support the Government’s response. TBS has asked federal regulators to consider delaying the development of regulations that are not related to the COVID-19 crisis.6

 Shortened administrative procedures have been utilised for developing crisis responses.

Most administrations have introduced some form of shortened legislative procedures for putting in place the crisis responses (as highlighted above). These have included utilising fast track or emergency legislation in which legislative measures can be rapidly implemented, which bypass the ordinary procedures for making regulations, in derogation of existing standards and rules, leaving significantly less time for scrutiny of the measures through RIA, stakeholder consultation and parliamentary scrutiny.

Similar pieces of legislation have been passed across the globe, sometimes following a declared state of emergency and other times existing as emergency provisions. In Scotland, for instance, the Coronavirus (Scotland) Act 20207 passed through the full legislative process at Holyrood in a single day. In Ireland, the Health (Preservation and Protection and other Emergency Measures in the Public Interest) Act 20208 was passed by both houses of the Irish Parliament and was signed into law by the President on 20 March 2020. On 22 March 2020, France’s two-chamber parliament adopted an Emergency Law to Address the COVID-19 Epidemic,9 declaring a health emergency in the country to counter the spread of the coronavirus, a move that gave the Government greater powers to fight the spread of the disease and mitigate the socio-economic impacts.

There has been a robust debate internationally over the appropriateness and the necessity of using emergency legislation. On the one hand, emergency legislation can be viewed as reflecting extraordinary circumstances and enables the state to respond effectively to crises while keeping the exercise of emergency powers within the rule of law. On the other hand, emergency legislation, in granting powers to the state that circumvent ‘normal’ legislation, can have adverse effects on the rights of the individual (e.g. confinement measures or the tracking of COVID-19 patients using GPS10) (Molloy, 2020[11]).

It should also be noted that some administrations have not needed to use special fast track or emergency procedures to develop their crisis responses. One notable example includes the Government of the Netherlands, which has been able to utilise a number of administrative flexibilities in its legislative process. These flexibilities have included the ability to conduct the intra/interdepartmental preparation of a draft regulation with high urgency, shortening or omitting the period of internet consultation and the Cabinet asking parliament to speed up the parliamentary scrutiny process (a decision made by parliament).11

In addition, to assist with the co-ordination of the policy making process and speed of decision making, a number of governments have put in place new co-ordination committees of senior ministers and officials. Examples of where this approach has been adopted are set out in Box 2:

 Many governments have taken a flexible approach to applying regulatory management tools to developing emergency measures

The urgent need for administrations to respond to the crisis has posed a challenge to the more discursive nature of policy making with traditional regulatory management tools and practices. It has generally not been possible during the crisis response phase for administrations to prepare detailed ex ante RIA analysis of the potential impacts of policy options, or carry out comprehensive stakeholder engagement to the same timescales and level of detail as before. The crisis response has necessarily led to a shift in purpose for regulatory management tools, to move away from the traditional approach of assessing the estimated costs and benefits of prospective proposals, their scale and how they affect different groups, towards an administrative focus on rapidly implementing the crisis response (and to ease the administrative burden on policy teams focusing on responding to the crisis).

Prior to the COVID-19 crisis, around one-third of OECD members had already established some sort of exception to the requirement to carry out a RIA when developing new primary and secondary legislation, including when a regulation was being introduced in response to an emergency situation (OECD, 2018[6]). Furthermore, in response to the pandemic, many administrations have introduced a further range of flexibilities around their RIA procedures. These flexibilities have included outright exemptions from the requirement to produce RIA for regulatory proposals responding directly to COVID-19 related legislation, whilst generally still requiring RIA for non COVID-19 regulations. Among the countries that have adopted this approach are Australia,12 New Zealand13 and the Czech Republic14 and Italy.15 In the case of New Zealand, a time-limited RIA exemption for COVID measures had to be specifically agreed by the Cabinet in May 2020, as no such emergency exemption had previously existed.16 The Cabinet subsequently agreed in July 2020 to replace this temporary exemption, with a more detailed set of RIA exemption arrangements that could apply in a range of emergency scenarios.

In addition, many countries (including those that provided RIA exemptions) have tried to ensure that policy documents should still endeavour to discuss impacts, at least qualitatively, and provide evidence-based rationale, even if this looks different to traditional RIA. These administrations have required policy teams to produce more simplified, descriptive forms of RIA analysis (some examples of these have included New Zealand,17 Italy,18 the United Kingdom, Netherlands, the EU Commission,19 Canada20).

For regulatory oversight bodies, the speed of emergency legislation has meant that the usual scrutiny procedures (e.g. whereby the quality of new regulatory proposals is checked) have often not been followed or shortened in length, or that existing emergency rules have been invoked. Certain oversight bodies (e.g. the Nationaler Normenkontrollrat in Germany21) have put in place requirements that policy teams producing simplified RIA must follow-up with quantified evidence once it becomes available and that have pointed to the existence of less burdensome evaluation techniques (e.g. break-even analysis) which could be utilised in the meantime. However, where non-COVID-19 regulations are still being produced, the usual scrutiny approach is generally being followed. Secretariats of regulatory oversight bodies, sometimes operating with fewer staff, have generally been able to continue working in some form as usual.

Examples of how different administrations have adapted their regulatory management requirements, including regulatory oversight, to cope with emergency COVID-19 measures are set out in Box 3:

 A number of tools have been implemented to ensure that measures exempted from RIA do not indefinitely avoid all scrutiny of impacts

Exemption from the requirement to carry out ex ante RIA should not mean that these “emergency” regulations adopted in haste receive “carte blanche” treatment and can forgo any scrutiny of their impacts. Once the immediate pressure from the crisis is over, there are a number of tools which administrations can utilise, to ensure that the impacts of these emergency measures undergo some form of evaluation (the 2012 OECD Recommendation pointed to the importance of ex post evaluation as a crucial tool for “closing the policy cycle”). Regulations adopted through fast-track procedures can be subjected to careful ex post, or post-implementation reviews in order to examine their effectiveness. Policy officials should take every opportunity to gather information on the virus, its impacts on different populations, and the effectiveness of different mechanisms for responding to the crisis (Dudley, 2020[3]).

Most administrations have reported that their COVID-19 legislation is intended to be temporary in nature, and therefore contain expiry dates in the legislation. For example, in the Republic of Ireland, the powers under the Health (Preservation and Protection and other Emergency Measures in the Public Interest) Act 2020 will cease to have effect after the 9th day of November 2020, unless a resolution is passed by both houses of the parliament to approve the continuation of the measures (Molloy, 2020[11]).

Prior to the crisis, just under half of OECD member countries had some form of sunset requirements in place, whereby the legislation either automatically expires or a decision has to be made to allow it to continue after a set period of time (OECD, 2018[18]). Recent examples of countries that have used sunset clauses22 within their emergency COVID-19 regulations, include the Netherlands,23 Canada24 and Scotland. In Scotland, the Coronavirus (Scotland) Act includes a sunset clause, according to which most of it will automatically expire six months after it comes into force (the Scottish Parliament will be able to vote to extend this for another six months if necessary, and then for another six months after that, but this is the absolute limit) (Molloy, 2020[11]).

In addition, OECD data indicates that eight member countries currently have PIR requirements in place: Australia, Hungary, Ireland, Italy, Japan, Korea, New Zealand and Slovenia (OECD, 2018[18]). Recent examples of countries that have added such PIR requirements to their crisis legislation, include the United Kingdom and Australia, to ensure that the measures undergo mandatory ex-post review after a set period of time, including assessing the effectiveness of the legislation and publishing the results.

 Governments and regulators have introduced a range of regulatory easements to support the pandemic response

A number of governments and regulators have been adjusting regulatory practices to reduce the burden on regulated entities and to remove legacy regulatory measures where they are preventing potentially life-saving services, testing or Personal Protective Equipment being made available25.

In order to boost testing capacity for the pandemic response, a number of administrations have been removing regulatory barriers that limit the participation of public or private laboratories (for-profit or non-profit alike) in providing testing services. For example, Korea, learning from previous crises (MERS in particular), has enlarged its testing network to encompass all laboratories with appropriate capacity as well as removing barriers that may limit the opening of “off-premises” locations (e.g. testing has involved innovative methods such as drive-through and walk-through testing facilities). (OECD, 2020[2])

Across the board, regulators have been demonstrating administrative flexibility, extending or suspending deadlines for various processes. New Zealand’s Commerce Commission has extended deadlines on a range of regulatory reporting processes. Brazil’s Agency of Land Transportation (Agência Nacional de Transportes Terrestres) has given additional time for regulated companies in the rail, passenger transportation and road freight sectors to comply with contract obligations. The Australian Competition and Consumer Commission (ACCC) will continue to consider proposed mergers but recognises timelines for some reviews/applications may need to be extended if there are challenges in conducting and completing the necessary inquiries with merger parties and market participants due to COVID-19.

Regulatory exemptions have been introduced in several sectors. In the transport sector, the Canadian Transportation Agency (CTA) provided temporary adjustments to the airline’s requirement to pay compensation to customers for flight disruptions within their control and to allow them to nimbly adjust operations as the situation evolved and focus on imperatives like repatriating citizens stranded abroad.

With respect to enforcement, many regulators have suspended, deferred or minimised the use of inspections or adjusted usual practices due to the difficulty in both carrying out these activities in light of movement restrictions and social distancing requirements, as well as to reduce the burden on operators. In some countries, inspectors have needed to be officially recognised as essential workers in order to be authorised to continue working. Lithuania’s National Energy Regulatory Council has cancelled all scheduled and unscheduled inspections. Australian regulator ACCC will conduct those compulsory examinations that it deems necessary by phone or video conference, and will take into account the burden when making decisions about the scope and timing of statutory notices for the production of information and documents. (OECD, 2020[23]) In the USA, the Food and Drug Administration has issued Enforcement Policy Guidance, “allowing” (or announcing that no enforcement measure would likely be taken) masks to be put on the market without prior approval under a number of circumstances and conditions. (OECD, 2020[2])

 Governments have conducted targeted stakeholder engagement where possible

Comprehensive stakeholder engagement with all potentially affected parties on urgent measures has become much more challenging during the crisis, due to restricted timelines to prepare legislation. Many administrations have taken a flexible approach, including shorter consultation periods and focusing consultation activities upon smaller selected groups of stakeholders including social partners, local governments or major NGOs.

For example, in Norway a number of temporary COVID-19 related new regulations have been fast-tracked through the parliament with very minimal public consultation (generally of two to three days), but with significant input in the drafting from the main labour and industrial organisations.26 In Canada, the TBS has exempted COVID-19 related regulations from pre-publication and has considered more limited public consultations due to the urgency and time-limited nature of many of these instruments.27 Other administrations, including the EU Commission, have adopted a phased approach to consultations, focussing on the most urgent ones and allowing more time for initiatives that can be delivered at a later stage.28

Choosing the appropriate consultation tools (e.g. ICT consultation tools) has been particularly important in light of the reduced timelines in developing COVID-19 responses and the impossibility of conducting face-to-face meetings with stakeholders. Certain administrations have adapted their face-to-face consultation processes, such as citizens juries, to take place online and to a more constrained timeline e.g. examples of where this has taken place include the US State of Oregon29 and West Midlands in the UK.30 Several governments have consolidated their COVID-19 related regulations in online platforms, enabling easy access to the public and allowing other regulators to learn from these (see Box 4).

Governments have reported the need to take into account the capacity constraints faced by stakeholder organisations in preparing their responses to consultations; e.g. these organisations may need to canvas their members and collate data in preparing responses to consultations. Similarly, governments have reported the need to prevent ‘consultation fatigue’ among stakeholders by asking for similar information or views too often (an issue that could be exacerbated by the tighter legislative deadlines needed to respond to the pandemic). A number of administrations have reported that stakeholders are more likely to have capacity to report what the issues are, but not necessarily to come up with policy solutions - it can therefore be more constructive to approach stakeholders with a pre-defined series of options to respond to.31 For example, many of Canada’s largest stakeholder organisations have advised that they and their members did not have the capacity to provide meaningful comments during the crisis response period and have requested that the development of most regulations be put on hold until they can participate – the TBS has requested that regulators take this into consideration.32

Understanding citizens’ experiences, their concerns, their reasons for non-compliance, etc. can help governments to better adapt their measures and ensure that citizens are following the necessary public health measures to a greater extent33. However, a rapid effective response, also needs to be based on and informed by evidence and scientific expertise.34 A number of governments have established (or had already existing) advisory groups consisting of experts from all relevant areas (e.g. public health, economics) to provide advice to central government committees. These groups have included the Scientific Advisory Group for Emergencies (SAGE) in the UK;35 the Czech National Economic Council of the Government (NERV), the COVID-19 Technical Advisory Group in New Zealand,36 the COVID-19 Scientific Council in France37 and the Robert Koch Institute in Germany.38 As we move out of the crisis response phase, a key question for examination would likely be: how effectively have such groups been able to feed their expert advice into the policymaking process?39

 Governments have utilised a variety of approaches to communicate the rationale behind their crisis responses measures

Governments and regulators have taken different approaches to communicating with a variety of stakeholders, to ensure they clearly understand the purpose and necessity of the sometimes drastic regulatory measures put in place. Providing transparent, timely and effective information will be a critical means of ensuring that the administrations retain sufficient credibility and trust in eyes of the public. Research has suggested that distortion of information, particularly if seen as deliberate, is a sure way to squander it.40 This may be more difficult in countries with pre-existing levels of low trust in the effectiveness of the state, and also where citizens perceive that there were errors in the early handling of the crisis. Lower levels of trust will accordingly make it more challenging to obtain voluntary compliance from citizens, whether these relate to lockdown measures or surveillance/tracking apps.41 In addition, the pandemic has been coupled with an “infodemic” with rising levels of misinformation (and disinformation) circulating around the virus, requiring governments to act swiftly.42

The importance of “clear and timely communication and transparency with citizens” has also been highlighted by the European Commission. The Commission has published the “European Roadmap towards lifting COVID-19 containment measures” which includes, among others, the importance of raising awareness about what to do and what not do; conducted targeted health campaigns; stressing the importance of physical distancing and hygiene rules; and co-ordination among bordering regions and neighbouring countries, so as not to give conflicting messages to the citizens.43 The OECD policy paper “Building resilience to the COVID-19 pandemic: the role of centres of government” states that governments will also need to make their messages more compelling and adapted to specific or vulnerable groups. An additional challenge is catching citizens’ attention in a crowded media ecosystem in which stakeholders are dealing with information overload (OECD, 2020[24]).

Governments will need to recognise the behavioural drivers of human actions, and factor them into their communications and policy responses. The effects of social context and behavioural biases on “rational” decision making may be amplified in ways that make effective policy responses more difficult to manage. Some examples have already emerged – people may not take heed of government policies to socially distance or quarantine despite clear evidence of the need to do so, or “hoarding behaviour” may spread by the mere image of others doing exactly the same. Mixed, confusing, or excessively “confident” messaging by public authorities (which are later reversed or overtaken by events) may worsen the risk of growing distrust.44