Rulemaking Directorate Preliminary Regulatory Impact Assessment Explanatory Note 2012/2013 1 What is the purpose of the Pre-RIA?... 2 2 What is new?... 2 3 Rulemaking procedure and workflow... 3 4 Description of the Pre-RIA content by section... 3
1 What is the purpose of the Pre-RIA? The purpose of the Pre-RIA is to support the prioritisation process for the establishment of the Agency s 4-year Rulemaking Programme 1. Thus, the Pre-RIA should be a tool to answer the following questions: Is rulemaking necessary? Which task should be next on the Rulemaking Programme once there is capacity available taking into account existing tasks, obligations and commitments? It is important to note that the Pre-RIA system is a management support tool. It supports the decision-making process by illustrating the Agency s experts opinion in a score, but does not produce a rigid or in any way binding decision. The final ranking, which is presented in the draft Rulemaking Programme, always needs to be discussed in view of available resources, political decisions, new safety recommendations and with the sounding boards of RAG/TAG and SSCC. The Agency s consultative bodies are invited to comment on the content of the individual Pre- RIAs. 2 What is new? As a result of the review of the Rulemaking Process and the comments received internally as well as from AGNA and SSCC, the following improvements were introduced: A new title page summarising all key information with: executive summary; radar chart to illustrate the composition of the Pre-RIA score; an applicability box indicating affected rules and stakeholders; a process map indicating the basic features of the proposed rulemaking task, if applicable. Indicative criteria to assess the complexity/controversy of a task. Annexes moved to this explanatory note in order not to inflate the document. Simplified layout for the questionnaire. Reduced number of questions (from 16 to 13): questions on environmental issues are combined into a single one; questions on social issues are combined into a single one; questions on implementation problems and regulatory overlap are combined into a single one. The risk matrix and the risk assessment are currently under review. 1 The Pre-RIAs support this process, but do not finalise it as other criteria (like resource availability) need to be considered and the Pre-RIAs by definition only support the prioritisation of the rulemaking tasks contained under the production of rules activity in the respective planning documents. Page 2 of 8
3 Rulemaking procedure and workflow The Agency receives new rulemaking proposals on a continuous basis. If a proposal is accepted after initial review, a Preliminary Regulatory Impact Assessment (Pre-RIA) is prepared. All proposals that were received before the cut-off date of 30 June in n-2 (2012) are taken into account for the Rulemaking Programme in the year n (2014). The score resulting from the Pre- RIAs is then a key element to prepare the draft Rulemaking Programme which will be presented to RAG/TAG/SSCC in June of n-1 (2013). Figure 1: Overview of the workflow 4 Description of the Pre-RIA content by section The objective and content of the sections in the Pre-RIA are described below. The numbering follows the Pre-RIA s table of contents for easy reference: Title page 1 Introduction 2 Issue analysis and safety risk assessment 3 Baseline assessment (Pre-RIA scoring) 4 Objectives of the proposal 5 Options, preliminary impacts and recommended action 6 Complexity and controversy 7 References 8 RIA data needs Title page The new title page intends to give a quick overview of the main elements of the issue, including: Title and rulemaking task number. A radar chart to quickly inform about the composition of the Pre-RIA score regarding safety, environment, economic and proportionality as well as regulatory coordination and harmonisation. Executive summary of the objective and technical content of the task. Applicability box: affected regulations and decisions, affected stakeholders, origin, driver and references of the task. The process map informs about the major rulemaking steps involved, e.g. Concept Paper, involvement of rulemaking group, type of RIA, focused consultation. Thus the process map defines the process depending on the complexity and controversy of a task. Note that not all of this information may be available at the time of drafting the Pre-RIA or may change during the lifetime of a task. The process map may thus be updated with all subsequent milestone documents (ToR, NPA, Decsion/Opinion with CRD). Page 3 of 8
Table 1: Process map Process elements Rulemaking lead Concept Paper Rulemaking group Regulatory Impact Assessment type Technical consultation during NPA drafting Duration of NPA public consultation Review of comments with review group Focused consultation during comment review Process options R2/R3/R4/R5 Yes/No Yes/No Full/light/none Yes/No 1/2/3 Months Yes/No/tbd Yes/No/tbd Introduction (Pre-RIA section 1) Issue analysis and safety risk assessment (Pre-RIA section 2) This section is the heart of the document. The issue/problem in the current situation is analysed as thoroughly as possible with currently available data and background in order to understand why (rulemaking or other) action is required. The analysis of the issue should be presented in a concise and clear manner. The issue analysis shall identify the risks in the current situation (i.e. without rulemaking action) related to safety, environmental, economic and proportionality as well as regulatory coordination and harmonisation issues. This forms the baseline scenario. Due to the remit of the Agency, a specific analysis is performed on the safety risks in the baseline scenario. Safety risk assessment ICAO defines safety as the state in which the risk of harm to persons or property damage is reduced to, and maintained at or below, an acceptable level through a continuous process of hazard identification and risk management. Thus, risk assessment is a key element managing safety. Risk is expressed in terms of predicted probability and severity of the consequences of a hazard taking as a reference the worst foreseeable situation. In order to define the elements probability and severity, the following tables are used as in the ICAO SMS Manual. Page 4 of 8
Probability of occurrence Definition Frequent Occasional Remote Improbable Extremely improbable Description Likely to occur many times (has occurred frequently) Likely to occur sometimes (has occurred infrequently) Unlikely, but possible to occur (has occurred rarely) Very unlikely to occur Almost inconceivable that the event will occur Severity of occurrences Definition Catastrophic Hazardous Major Minor Negligible Description Multiple deaths and equipment destroyed (hull loss) A large reduction of safety margins Serious injury Major equipment damage A significant reduction of safety margins Serious incident Injury of persons Nuisance Operating limitations Use of emergency procedures Minor incident Little consequences The below risk matrix combines the severity and probability dimensions to derive the risk index. The risk index may lead to a high, medium or low safety risk classification. Risk index matrix Probability of occurrence Severity of occurrence Negligible Minor Major Hazardous Catastrophic 1 2 3 5 8 2 Extremely improbable 1 X Improbable 2 Remote 3 Occasional 4 Frequent 5 2 Scaling is non-linear in order to ensure that Extremely improbable/catastrophic has a high risk level than frequent/negligible Page 5 of 8
The Agency has received a number of valid comments on the risk assessment approach. Based on these comments, the Agency is currently assessing alternative methodologies related to risk assessment. Therefore, this approach to risk assessment is likely to further evolve in the near future. Description of the different risk levels Risk level Description High significance Unacceptable under the existing regulatory circumstances. Rulemaking action required. Medium/High significance Medium significance Based on feedback from stakeholders this combination of probability and severity may be considered a high or a medium risk depending on the issue. Reasoning to be provided in section 2.2 of the Pre-RIA. Tolerable based on risk mitigation by the stakeholders and/or rulemaking action. Low significance Acceptable, but low priority rulemaking, monitoring or nonrulemaking action may be required. Baseline assessment (Pre-RIA section 3) The objective of this section is to give a quick overview of the various issues that may drive rulemaking and express their significance in a score. In order to make the different issues comparable, a scoring system from 0 to 5 is used. 5 is the score of the highest significance issue. Should the proposal make it to the NPA stage the full RIA would then take the finding and scores from this exercise as a starting point. The 13 questions establish the significance of this proposal related to the following assessment areas: safety risks (based on risk assessment, AAIB recommendations, etc.); environmental risks (noise and emissions); social risks and issues (e.g. where current licencing rules may have a negative impact); economic risks and proportionality issues (e.g. where current rules induce a high cost to industry or distort competition (level playing field, General Aviation)); regulatory coordination and harmonisation (FAA/TCCA harmonisation, ICAO compliance, State Letters). Page 6 of 8
For each question a significance level is to be estimated ranging from none, low, medium to high significance. Once all questions are answered, a two-step process defines the Pre-RIA score for this proposal. Step 1 Step 2 Establish the significance level Significance level A B C Criterion Establish the significance points Add up the points from all questions At least one question was answered with High significance (5) in section 3.1 Safety risks. At least one question was answered with Medium significance (3) in section 3.1 Safety risks or any other question from section 3.2 3.6 was answered with High or Medium significance. Only issues with Low significance (1) or No significance. In the first step the significance level is defined. Proposals with a high significance score from safety (5) receive the significance level A. Proposals with at least one medium significance score (3) are significance level B. Proposals with at least one low significance score (1) are on level C. Thus, for significance level A only high significance safety findings are considered. This approach is to ensure that a high significance finding in safety cannot be overruled by high or several medium significance findings in other areas. The significance points are then derived by adding up all points allocated to the issue in the questionnaire. For example, if an issue was rated with one high significance (5 points) and two medium ones (3 points) it will receive a total of 11 points. The significance points will be used to further prioritise within each significance level. The resulting Pre-RIA score adds the level and the points (e.g. B12) and will be used to prepare the Rulemaking Programme. In a nutshell The basic aim of this exercise is to thoroughly analyse the issue, make it transparent and produce a scoring that can be used to decide which task should be started next once capacity is available. The proposed ranking will be presented to RAG/TAG and SSCC for commenting. The mechanism used here has the following advantages: it is relatively simple and transparent as compared to more sophisticated and weighted approaches; each reviewer can directly work out the result; it is ensured that high significance safety issues are not overruled by other issues that received a lot of scores from different areas; only high significance safety issues can become level A items. Page 7 of 8
Objectives of the proposal (Pre-RIA section 4) In this section a clear specific objective directly related to the issue analysis is defined. Options, preliminary impacts and recommended action (Pre-RIA section 5) In order to achieve the above objective options are identified if possible at this stage. These options are non-exhaustive, preliminary and indicative and thus do not prejudge future rulemaking activities, which may contain more or less options as well as options of a different content. The baseline option (no regulatory change, i.e. the issue analysis) is assessed in order to define if the decision not to take on rulemaking action in this area is the most efficient. Concerning options other than the baseline option 0, at this stage of the Rulemaking Process there is in most cases not sufficient information to define a preferred option. A preliminary impact analysis may be performed if sufficient information is available. This will be the basis for the future Terms of Reference (ToR) and Regulatory Impact Assessment (RIA), but should in no way limit the thinking or prejudge the outcome of a rulemaking task. Based on this preliminary impact analysis a proposal is made whether rulemaking should be envisaged or not. Complexity and controversy (Pre-RIA section 6) This rulemaking proposal is considered complex and/or controversial for the following reasons: It may be complex when: it affects several disciplines; or it affects several parts and CSs; or it proposes a new rulemaking concept; or it deals with a new subject, needs research and data are not yet available; or cooperation is needed with other bodies apart from the Agency (e.g. ECTRL). It may be controversial when: there is no consensus among stakeholders on the issue to be addressed (i.e. on the concept, the approach, the interpretation of the Basic Regulation, etc.); or it has significant economic or social impacts. References (Pre-RIA section 7) RIA data needs (Pre-RIA section 8) Preliminary list of information to be gathered if a RIA has to be performed. Page 8 of 8