Will the EU Nature Restoration Law get vital Environment Council approval?

The Belgian Presidency has 13 days to convince seven Member States (plus itself) that they can live with agreed Parliament-Council compromise text on a Commission proposal for a Regulation of the European Parliament and of the Council on nature restoration. Failure to do so will likely mean the proposed law will fall. For supporters of the law, this will be seen as a major setback given the state of biodiversity within the EU. For detractors and those opposed, it will be seen as a push-back against “draconian” interference in the use of land, seas and marine environments for a range of economic activities.

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Blog - Letta report highlights need for further refinements and improvements in Commission Impact Assessment process

While much of the media and political attention has been on the big picture issues identified in his Internal Market report including addressing regulatory burdens and coherence, there is much to glean from Enrico Letta´s report around the issue of regulatory proposal design and specifically the use of Impact Assessment (IA) within the Single Market. The key weaknesses identified are around stakeholder consultation – process, incorporation of contradictory views, as well as the complexity and sheer scope of the Better Regulation Tool Box.

The Letta report notes that: “The evaluation of the Better Regulation toolbox reveals its perceived complexity and occasional ambiguity, raising concerns over its approach to IAs. While the introduction of IAs marks significant progress, the demands for a more comprehensive analysis and the integration of diverse tests reflect a complex landscape of stakeholder priorities. This complexity poses challenges, including time constraints and resource limitations, which the EU faces in policy preparation. Several stakeholders also question the user-friendliness of the Better Regulation Toolbox – exceeding now 600 pages – and claim that some of its elements are not specific enough to be operational”. He also highlighted a specific concern around stakeholder concerns -  “The Impact Assessments prepared by Commission services are largely considered a major progress. However, many stakeholders consider that their priorities are not sufficiently taken into consideration in these IAs”.

Responding to this perceived weakness, Letta suggests that “To enhance the effectiveness and transparency of the regulatory framework it is necessary to streamline the Better Regulation toolbox and upgrade it without multiplying ‘pass or fail’ tests. Upgrading the Better Regulation toolbox should prominently incorporate a robust 'risk-risk assessment' to centralise its application. The abundance of governance literature evidences that addressing one risk often precipitates the emergence of another. Implementing an 'ecosystem' approach, as initiated by the Commission, facilitates such assessments”. He importantly adds: “Furthermore, the production of Impact Assessments should be aimed at elucidating, rather than obscuring, the political decisions involved, thus promoting a more transparent decision-making process”.

A final point made by Letta concerns that related to the definition and choice of policy options he comments that: “choosing a preferred policy option is inherently a political decision, balancing various advantages and disadvantages. Consequently, this choice should be articulated at the outset of a political document - the legislative proposal issued by the College of Commissioners - rather than at the conclusion of a technical document, the Impact Assessment”.

In reflecting on these important observations, I thought it useful to take a look at the latest Regulatory Scrutiny Board (RSB) Annual Report 2023 (for the year 2022). To recall, the RSB is the effective quality assurance dimension for the impact assessment process. It has the power to reject or pass IAs. An IA must be given a positive opinion by the RSB before any interservice procedure can be launched for a prospective proposal.

The 2023 report contains a wealth of information on the quality of IAs generally and also the quality of specific types of analysis that must be done in compliance with the Better Regulation guidance or Toolbox. Its interesting to see in this report echoes and more precise assessment of the issues brought up by Letta.

For instance, concerning overall quality of IAs, the RSB states: “The average quality scores varied in a different manner depending on the opinion type of the draft impact assessment. On average, there was no significant change of the quality of initial draft impact assessment compared to last year. Regarding the ‘positive’ and the ‘negative’ opinions, the quality has dropped for both in relation to the previous years, with a more significant effect for negative opinions”.

The RSB further note that “deficiencies in the draft impact assessments were often caused by omission of certain impacts in the analysis, lack of or reliance on single sources of evidence, unbalanced inclusion of stakeholder feedback, lack of depth and rigor of impact analysis as well as lack of acknowledgement of uncertainties”.
The RSB goes further and points that draft IAs receiving negative opinions from them often have major deficiencies with respect to the way stakeholder comments are taken on board. In particular, these IAs do not take into account often contradictory views of stakeholders in a sufficient and transparent manner.

On the issue of policy options analysis,  the 2023 RSB report noted: “No significant improvement could be observed with respect to the definition of options. It remained one of the weakest elements of all first submission draft impact assessments in 2022. The Board continued to observe often that the range of credible options considered was too limited, option designs were biased towards a preferred option, did not bring out clearly the available political choices or did not sufficiently anticipate combinations of options that were likely to emerge in the decisions making process”.

Taken together the Letta Report and the latest RSB report clearly point to deficiencies in aspects of the IA process, particularly around stakeholder consultations are conducted and how results of these consultations are taken into account. Equally, Letta raises an important point with respect to the separation of technical assessment of possible options for a policy instrument from any political decision as to which option to be chosen.

My own further reflection is around the draft IA. In the interests of transparency and to ensure effective evaluation of IAs by the RSB, the Secretary General should give consideration to requiring the publication of the draft IA prior to its submission to the RSB. A minimum 15 day period should be given for stakeholder comments organised in a structured manner to aid review and comment by the lead service. The lead service then adds its comments or responses and sends the commented IA to the RSB. This way the RSB review can also see what issues or aspects of the IA are of concern to stakeholders, particularly those likely to be impacted by increased costs due to changes to their licence to operate or licence to market. While adding some time to the overall process, it would help with “better regulation” and enhanced transparency and importantly aid quality assurance of stakeholder inputs by the RSB.