The long-awaited amendments to the federal Lobbyists Registration Act are now scheduled to come into effect on July 1, 2008. Those amendments were part of the Accountability Act that was passed in December 2006, but were not implemented pending the development of new regulations. The draft of the new regulations was issued on January 5, 2008, with an effective date of July 1, 2008.
The amendments and new regulations will increase the reporting burden of companies and organizations which engage in lobbying activities, as well as consultant lobbyists who are hired by companies or organizations to lobby on their behalf. Accordingly, companies doing business with the federal government and companies or organizations involved in promoting changes to government policy should act now to ensure that they and their external consultants will be ready to comply with the new rules.
A. NEW RULES AND BURDENS
The major changes introduced by the amendments and new regulations are as follows:
(a) a change of name to the “Lobbying Act” (the “Act”);
(b) the creation of a new class of public office holders called “designated public office holders”;
(c) a new requirement that monthly returns be filed to report certain communications with designated public office holders;
(d) an implied requirement for directors of corporations to register as consultant lobbyists if they receive directors’ fees and engage in lobbying activities;
(e) a five-year ban on lobbying activities by former designated public office holders, subject to possible exemptions;
(f) a clear ban on payment of contingency fees to consultant lobbyists based on the outcome of their lobbying activities;
(g) a new requirement that all returns be filed electronically, except in limited circumstances;
(h) the criminal monetary penalties for failing to comply with the Act are doubled to a maximum of $50,000 on summary conviction and $200,000 on indictment; and,
(i) the creation of a new Commissioner of Lobbying whose duties include maintaining the lobbyist registration system, conducting investigations to ensure compliance with the Act and the Lobbyists’ Code of Conduct, providing annual reports to Parliament with respect to the administration of the Act and developing and implementing educational programs to foster public awareness of the requirements of the Act.
The good news is that the Act does not make any fundamental changes to the current regime regarding the registration of lobbyists. The Act still requires that companies or organizations that lobby the government must register, as must all persons hired by companies or organizations to lobby on their behalf. As well, the underlying concept of lobbying remains the same. In essence, it includes all written and oral communications with “public officer holders” concerning government policy matters and government assistance. Also untouched is the purpose of the registration of persons and enterprises who lobby, which is to allow the public to know who is engaged in lobbying the federal government and what they are lobbying about. The information contained in a registration under the Act is a matter of public record and is accessible through the internet.
The Act does, however, make the important changes noted above. Before turning to those changes, the basic rules that have not changed will be reviewed.
B. BASIC RULES THAT CONTINUE IN EFFECT
The Act requires that persons who lobby public office holders in the federal government must register and then file returns every six months that provide certain information regarding their lobbying activities. The Act does not contain a definition of “lobbying”. Instead it imposes registration and reporting requirements on two categories of lobbyists, primarily in regard to communications with public officer holders on certain prescribed subject matters.
The two categories of lobbyists who must register and file returns if they engage in “lobbying” activities are as follows:
- Consultant Lobbyists: This category includes any individual who is paid by a third party to “communicate” with a public office holder in respect of a prescribed subject matter or who undertakes to arrange a meeting between a public office holder and any other person. This category includes a wide variety of persons, including government relations consultants, accountants and lawyers.
- In-house Lobbyist: This category applies to officers of corporations or organizations and any employee if a significant part of the duties of the employee includes communicating with public office holders on behalf of the company or organization with respect to a prescribed subject. It is the corporation or organization itself that must register through its senior officer and not the individual officers or employees who actually “lobby”, although their names will also be disclosed in the information return filed under the Act.
For both in-house and consultant lobbyists, the registration requirement is triggered when they communicate orally or in writing with a “public office holder” regarding a prescribed subject.
Definition of Public Office Holder
The term “public office holder” is broadly defined to include any federal government employee, including members of the Senate or House of Commons and their staff, public servants, members and staff of any federal board, commission or other tribunal, members of the armed forces and members of the Royal Canadian Mounted Police.
The prescribed subjects for which registration is required for any oral or written communications with a public office holder are:
1. the development of any legislative proposal by the Government of Canada or by a member of the Senate or House of Commons;
2. the introduction of any Bill or Resolution before either House of Parliament or the passage, defeat or amendment of any Bill or resolution that is before either House of Parliament;
3. the making or amendment of any regulation within the meaning of the Statutory Instruments Act;
4. the development or amendment of any policy or program of the Government of Canada; or,
5. the awarding of any grant or contribution or other financial benefit by or on behalf of the federal government.
In addition, consultant lobbyists, but not in-house lobbyists, must register if paid to (i) communicate with a public office holder regarding the awarding of any contract by or on behalf of the federal government; or (ii) arrange a meeting between a public office holder and any other person.
There are three main categories of oral and written communications which are excluded from registration requirements, being:
1. any oral or written submission made to a committee of the Senate or House of Commons or of both Houses of Parliament or to any body or person having jurisdiction or powers conferred by or under an Act of Parliament, in proceedings that are a matter of public record;
2. any oral or written communication made to a public office holder by an individual on behalf of any person or organization with respect to the enforcement, interpretation or application of any Act of Parliament or regulation by that public office holder with respect to that person or organization; or,
3. any oral or written communication made to a public office holder by an individual on behalf of any person or organization if the communication is restricted to a request for information.
The second category is very broad and exempts most interactions with federal regulatory authorities. For the most part, the obligation to register under the Act only applies when advocating a change to laws, policies or regulations or if seeking government assistance.
C. NEW OBLIGATIONS AS OF JULY 1, 2008
The two most important changes resulting from the amendments that will impose new burdens are (a) the new requirement that monthly returns be filed to report certain communications with designated public office holders; and (b) the implied requirement for directors of corporations to register as consultant lobbyists if they receive directors’ fees and engage in lobbying activities.
The amendments and regulations scheduled to come into effect on July 1, 2008 require that certain communications with “designated public officer holders” be reported each month.
Designated public officer holders (“DPOHs”) are a subset of public office holders and are defined as including:
- Ministers and their staff;
- Senior public servants at the level of assistant deputy minister and above and heads and deputy heads of various government agencies and departmental corporations;
- the Comptroller General of Canada;
- Senior Advisors to the Privy Council Office; and,
- Senior staff of the Canadian Forces (the Chief and Vice Chief of the Defence Staff; the Chiefs of Maritime Staff, Land Staff, Air Staff, and Military Personnel; and the Judge Advocate General).
Consultant lobbyists must report communications with DPOHs “made orally and arranged in advance” by the consultant lobbyist that pertain to any of the prescribed subject matters noted above that constitute lobbying by consultant lobbyists. If a communication is arranged by a public office holder, there is no need to report, unless the communication by the public office holder is in regard to financial assistance or a government contract, in which case a report must be filed.
In-house lobbyists for corporations and organizations must report communications with DPOHs “made orally and arranged in advance” by the in-house lobbyist that pertain to any of the prescribed subjects noted above that constitute lobbying for in-house lobbyists. If a communication is arranged by a DPOH, there is no need to report, unless the communication by the DPOH is in regard to financial assistance.
It appears clear that written communications with DPOHs do not need to be reported. However, the question of what constitutes communications “made orally and arranged in advance” will likely be the subject of some interpretation and debate. For example:
(a) Does a direct telephone call with a DPOH that is not arranged in advance need to be reported?
(b) Does a voicemail message count?
(c) Does a chance encounter on the street with a DPOH need to be reported?
(d) Does a conversation during a plant visit by a DPOH need to be reported?
(e) Does a conversation with a DPOH at an industry association event at which the DPOH is an invited guest speaker need to be reported?
The new Commissioner of Lobbying will no doubt be called upon to issue interpretive guidelines on these and other questions that will arise once the Act and regulations are in effect.
The monthly return has to be filed within 15 days of the end of the calendar month in which the oral and arranged communication with the DPOH took place and must set out the name of the DPOH, the date of the communication and identify the subject matter of the communication.
The Commissioner of Lobbying has the power to verify with DPOHs any information contained in any monthly return by asking DPOHs to confirm any information set out in a return.
Burden of Monthly Returns
At present, there are no provisions concerning DPOHs and returns are filed every six months.
For consultant lobbyists, the requirement to file monthly returns will impose a burden as they will need to keep track of and report all specified oral and arranged communications with DPOHs and file monthly returns for each client.
For in-house lobbyists, the monthly returns will impose a more complex management burden, especially for large corporations or organizations which have various executives and employees who interact regularly with DPOHs. Systems will need to be developed and put in place to:
(a) identify corporate officers who engage in lobbying activities, regardless of the amount of time spent on such activities;
(b) identify all employees who spend 20% or more of their time engaging in lobbying activities;
(c) ensure all relevant officers and employees report all “oral and arranged communications” with DPOHs during each month with the required details (DPOH name, position, date and subject matter of communication, etc.);
(d) complete and file a return reporting the DPOH communications in each month with required details within 15 days of the end of each month.
The monthly reporting requirement also adds to the workload of CEOs. This is because the most senior officer of the corporation or organization must sign all returns under the Act, including the new monthly returns.
Implied Requirement for Directors to Register
The application of lobbying laws to directors of corporations who are not officers or employees but are paid directors’ fees or honoraria is not a clear matter. They are not in-house lobbyists as they are not employees or remunerated corporate officers. They are not really consultant lobbyists either since they are not specifically paid by the company or organization to lobby. Directors’ fees or honoraria are paid to attract and compensate directors for the corporate governance and direction role they carry out as directors, have nothing to do with lobbying and are paid to directors whether or not they lobby.
The Registrar of Lobbyists has, however, taken the view – as set out in a 1998 advisory opinion – that an outside director who receives remuneration beyond reimbursement of expenses must register as a consultant lobbyist. There has been no court or other authoritative decision on the matter.
Although the amendments and new regulations do not explicitly state that directors receiving remuneration over and above reimbursement of expenses must register as consultant lobbyists, the new forms introduced by the regulations make it an implicit requirement. They do so by requiring that the consultant lobbyists disclose the fact that they are on the board of directors.
Other Notable Changes
Two of the other changes are of note.
First, the five-year ban on lobbying activities by former DPOHs will impose limitations on the ability of companies and organizations to utilize the knowledge, abilities and contacts of retired senior public servants. They can provide advice, but cannot engage in lobbying activities. The Commissioner of Lobbying has the power to grant individual exemptions in certain circumstances, and it will be interesting to see the extent to which exemptions will be granted.
Second, the Commissioner of Lobbying is given broader powers than the current Registrar of Lobbyists. If the Commissioner’s office is adequately resourced, this could result in greater surveillance and enforcement action than is the case at present.
Although the new amendments and regulations do not change the fundamentals of the Act, they do impose new requirements that create a management challenge and a burden of compliance.
In particular, companies and organizations will need to put measures in place before the scheduled effective date – July 1, 2008 – in order to ensure compliance internally and by external consultants.