‘Regulatory Guillotine’: A New Look at Old Requirements
Goal of ‘regulatory guillotine’ is serving interests of whole society
I think, the term ‘regulatory guillotine’ does not fully and accurately describe what we do. Our goal is not to destroy the bad old, but to create the good new. And this good new should be of use for people, for those inspected. Our goal is to find balance between serving interests of society through respecting guarantees, rights, and legal interests of people and common sensible, optimal, reasonable monitoring and supervision activities, because we do not want to kill business and want to provide normal conditions not only for business, but for all those inspected — Konstantin Chuychenko, Deputy Prime Minister of the Russian Federation – Chief of the Government Staff.
A lot of ‘regulatory guillotines’ have been implemented over the last 30 years all around the world. This reform contributed to higher GPD — Christopher Miller, Program Leader, World Bank Russian Federation .
Concept of ‘regulatory guillotine’ designed
The text of our law on mandatory requirements is ready, it is published for discussion. <…> What do we find important to address in this law? First, it is important to understand the regulatory system and mandatory requirements. Second, we think that it is crucial to define the effect of a mandatory requirement in time and space. A significant part that has already been included in the current law structure is various competition types between mandatory requirements, that are imposed by different acts of different and equivalent legal force. Certain articles will be about instructions on compliance with the mandatory requirements. It is important for us to define the status of the comments made by a regulatory body — Yuri Lyubimov, Deputy Chief of the Government Staff of the Russian Federation.
Growing administrative burden on business
We have delivered a special report [for the Russian President, – Ed.] on oversight and monitoring, which defines the major set of current challenges. Most entrepreneurs stated that, even though the number of inspections has decreased by 42%, the administrative burden grows. Administrative penalties have been imposed over 984 thousand legal entities, which means that every fourth legal entity has not only been inspected but has become subject to administrative proceedings. Besides, the amount of fines has risen to 179 billion roubles, which is almost a fiscal measure — Boris Titov, Presidential Commissioner of the Russian Federation for the Protection of Entrepreneurs’ Rights.
Regulatory legislation and oversight activities being imperfect
I would say that the biggest obstacle [for starting ‘regulatory guillotine’, – Ed.] is the existing disagreement about regulating monitoring and oversight activities. On one hand, we are said to be developing economy providing freedom of entrepreneurship; on the other hand, oversight bodies are set to identify non-compliance, impose sanctions, and sometimes, by default perform fiscal functions — Talia Khabrieva, Director, Institute of Legislation and Comparative Law under the Government of the Russian Federation.
Slow process of changes in legislation
The second obstacle is certain conservatism of law, because it is sustained by well-established law-making procedures. It is clear that at the level of subordinate acts, everything would work out quite quickly. But introduction of amendments to legislation will take a well-known scenario which includes approval by departments. This is an obstacle in terms of content, in terms of procedures, and in terms of time. Finally, do not forget about sluggishness of legal regulations — Talia Khabrieva, Director, Institute of Legislation and Comparative Law under the Government of the Russian Federation.
Regularly monitoring applicability of legal standards
Law and law enforcement must be conceptually instrumental. This implies a significantly higher part of the strategic element in law enforcement and law making. From the practical point of view, it means four things. First, we must initially agree what concepts and values we consider applicable. Second, we must adapt them to today’s reality and determine what reality lies ahead of us in the near future. Third, law making itself and law enforcement must be exercised in this regard. Four, we should arrange highly qualified monitoring of legal standards performance to know if it’s time to change them — Alexander Konovalov, Minister of Justice of the Russian Federation.
We should limit the life span of requirements. Applicability of every requirement must be reviewed. We think that the general rule for this span would be five years, but if an appropriate decision would be made, it can be extended to ten years — Savva Shipov, Deputy Minister of Economic Development of the Russian Federation.
Resolving contradictions in requirements and increasing transparency
Unfortunately, we have many examples when the same entity is subject to the same requirements by different bodies – in this case they all come and check against the same requirements – or, which is worse – to different requirements that contradict each other. That is why we think it is necessary that the bill clearly rules such things out — Savva Shipov, Deputy Minister of Economic Development of the Russian Federation.
The number of planned inspections has, indeed, decreased in recent years while the number of exceptional inspections has risen. Communication across inspecting authorities is not great. I have never heard the word ‘prevention’ here. This is what should be a priority. You should tell people how to work properly, explain the requirements to them — Andrey Kutepov, Chairman of the Federation Council of the Federal Assembly of the Russian Federation on Economic Policy .
What were the major challenges and problems that governments were facing? Those were political, legislative, institutional and other challenges. <…> You cannot solve a problem using the same instruments that have caused this problem in the first place. That’s why we need not only to change mentality and perception of this problem, but also to change the instruments — Vedran Antoljak, General Partner, Apsolon.
Legal experiments to test requirements
Some requirements must not be introduced throughout all the country at once, it can cause risks. That is why we suggest a possibility of legal experiments — Savva Shipov, Deputy Minister of Economic Development of the Russian Federation.
The requirements must not be introduced all over the country at once, we need some pilot projects at first to see what problems arise, if we are doing it right or we have missed something — Boris Titov, Presidential Commissioner of the Russian Federation for the Protection of Entrepreneurs’ Rights.
Risk-oriented approach to sanctions for non-compliance
The first question is if the punishment matches the requirement. We suggest dividing the mandatory requirements into three groups: high-risk, medium-risk, and low-risk requirements. This must be based on the consequences of non-compliance. It is very important in this regard that the reform of ‘regulatory guillotine’ is being implemented simultaneously with drafting a new Administrative Code, because there is a direct connection between non-compliance with a mandatory requirement and administrative liability. We suggest revision of a scenario when non-compliance with a high-risk mandatory requirement would entail administrative liability, non-compliance with a medium-risk requirement would not directly entail liability, but an order would be issued. <…> And finally, we suggest that even no order would be issued in case of low-risk requirements, but recommendations would be given, which the entrepreneur would comply with without any sanctions — Savva Shipov, Deputy Minister of Economic Development of the Russian Federation.
Creating clear rules for introducing requirements
The requirements are supposed to be clear for an entrepreneur. Any unexpected requirement is a ‘black swan’ that can critically affect business operations. Therefore, we think it is necessary to establish clear rules of enacting such requirements. We suggest determining two dates when and only when laws with new mandatory requirements can be enacted. In any case, time between adoption of such law and the enactment should be, at least, six months, so that everyone can get ready to avoid involuntary non-compliance — Savva Shipov, Deputy Minister of Economic Development of the Russian Federation.
Requirements in line with realities
We think it is important that all mandatory requirements are reviewed based on technological opportunities, the realities we live in. There will be no economic growth without that — Savva Shipov, Deputy Minister of Economic Development of the Russian Federation.
Removing abundant technical details from legal requirements
Legislation must be kept technically neutral. In other words, the Civil Code should not specify what type of electronic signature is required. Or traffic regulations should not describe equipment of a driving school vehicle, because everything changes quite rapidly. We need to take edit out all those technical standards from the acts of higher legal power — Igor Drozdov, Chairman of the Board, Skolkovo Foundation.
The material was prepared by the Russian news agency TASS