After a delay of 18 months, Ontario has announced that a stronger lobbying law will finally take effect. The new law will profoundly affect most businesses and organizations that have dealings with Ontario public officials. The impact on corporate CEOs will be especially significant.
While the necessary Cabinet order has yet to be made, on April 11 Premier Kathleen Wynne issued a statement promising that sweeping amendments to the Lobbyists Registration Act, passed in December 2014 but not yet in operation, will come into force sometime in July.
Businesses, in particular, must prepare now for the new legal obligations about to fall on corporate CEOs. Failure to file a registration that is accurate, complete and on time is a strict liability offence. Each company or organization needs an internal mechanism to track communications with government officials by employees, officers and directors, and should have a corporate policy on dealings with public office holders.
More information on compliance readiness is available from Fasken Martineau.
Impact on Businesses, Organizations and Consultants
The newly revised Lobbyists Registration Act will reflect 15 substantive changes, plus several additional minor, technical or clarifying amendments. (The figures do not include changes that relocate existing provisions without changing their text.)
- Making corporate CEOs legally responsible for registering the lobbying activities of employees, officers and directors.
- Replacing the current minimum volume thresholds (commonly known as the "20% rule") for registration of in-house lobbying with a new, annual, 50-hour threshold. This change would have a profound impact on Ontario's business community and non-profit sector.
- Prohibiting consultant lobbying on a contingency-fee or success-fee basis.
- Prohibiting reprisals against people who seek, or assist with, enforcement of the Act
- Prohibiting the discouragement of lobbying-law compliance.
- Prohibiting lobbying by an individual consultant lobbyist paid to advise the Government or a government agency concerning the same subject.
- Empowering the Registrar to investigate possible violations of the Act or the regulation.
- Authorizing the Registrar to impose a temporary lobbying ban and/or to publish the name of someone who contravenes the Act or regulation.
Expanding the reporting obligation to include disclosure of:
- The goals of the lobbying;
- The identity of a Cabinet Minister or MPP who is or will be lobbied, or whose office is or will be lobbied;
- Whether any lobbyist has ever held a senior position in the Ontario Government or a government agency.
- Amending the deadline to renew an in-house lobbyist registration.
- Increasing the maximum fine for a repeat offence under the Act.
- Confirming that corporate directors, when they lobby on behalf of the corporation, are treated as in-house lobbyists.
- Providing for a five-year review of the Act by a legislative committee.
Two of the minor changes include:
- Allowing Cabinet to require additional information disclosures on the lobbyist registration form.
- Authorizing the Registrar to issue a non-binding, unenforceable code of conduct for lobbyists.
Changes 1, 3, 7, 11 and 17, above, would bring the Ontario law more into line with the federal Lobbying Act. Changes 1, 7, 8, 11 and 16 respond loosely to recommendations made by the former Integrity Commissioner/Lobbyists Registrar, but only change 14 actually implements a specific recommendation of the former Commissioner.
1. Corporate CEOs now legally responsible for registering the lobbying activities of employees, officers and directors
Under the revised law, the most senior officer (usually the CEO or President) of a business corporation will be required to file a lobbyist registration that covers all Ontario provincial lobbying by company employees, officers and directors. Senior officers of not-for-profit organizations are already subject to this requirement.
A CEO who fails to file a registration, or files a registration that is incomplete, inaccurate or late, could be convicted of a strict liability offence.
2. New 50-hour annual threshold for registration of in-house lobbying
Under the new law, the CEO of a business or organization must file a lobbyist registration if the total volume of Ontario provincial lobbying, across the business or organization, amounts to 50 or more hours per year.
This will be a marked departure from the current thresholds, which differ depending on whether the lobbying is by employees of a business or employees of a non-profit organization. In the business context, an individual employee meets the threshold if 20 per cent of his or her duties involve lobbying of provincial officials. In the non-profit context, all employees of the organization who lobby meet the threshold if collectively their combined lobbying of provincial officials is equivalent to 20 per cent of one employee's time.
These two 20-per-cent thresholds will now be replaced with a consistent, 50-hour, annual threshold across all businesses and organizations.
The newly revised law will permit the Ontario Cabinet to alter the 50-hour threshold, making it higher or lower. At the time of writing the Cabinet has not announced an intention to do so. Unless Cabinet intervenes to change the threshold, it will remain at 50 hours.
Replacement of the old 20-per-cent thresholds with a universal 50-hour threshold has great potential to affect every business and association that deals with Ontario provincial government officials.
3. No consultant lobbying for contingency fees
The prohibition of success fees or contingency fees for consultant lobbyists will mirror the federal law.
4. No Reprisals
The newly revised Act creates the new offence of retaliation against a person because of a disclosure to the Lobbyist Registrar or evidence that has been or might be given in a proceeding.
This anti-reprisal provision is precedent-setting in Canadian lobbying law.
5. No Discouragement of Compliance
The Act also creates the offence of discouraging someone from filing a lobbyist registration as required by law. This, too, is precedent-setting.
6. No Lobbying While Providing Advice or Services to Government or Public Agency
The proposed legislation would prohibit individuals from lobbying on a subject if they are paid to provide advice or services to a Government or a government agency concerning the same subject. Lobbying laws in most provinces already contain a similar, but stronger, prohibition.
The restriction falls short of the proposal by former Integrity Commissioner Lynn Morrison, and in fact is the weakest such provision in Canada. Ms Morrison had urged a restriction similar to that found in the British Columbia law or in the Alberta statute prior to December 2014.
The new Ontario restriction is weaker than parallel provisions in other provinces (including Alberta and British Columbia) in two significant ways. First, it does not affect in-house lobbyists. Second, it does not prevent a company or consulting firm from simultaneously lobbying and providing advice to government so long as different individuals within the company lobby and give the advice.
7/8. Investigations by the Registrar and Consequences
The Registrar will be given the power to investigate possible breaches of the Act or a regulation.
If the Registrar finds a contravention, or following a conviction by the Court for an offence under the Act, the Registrar may impose a temporary lobbying ban of up to two years, or publish the individual's name and contravention, or both.
The former Registrar had not asked for the power to impose temporary lobbying bans. Instead, she had sought power to enforce the law by issuing administrative monetary penalties – a power possessed by several provincial counterparts. With little reason given, the Government (which introduced the legislation) and the Legislature (which passed it) decided against allowing administrative monetary penalties as a tool of enforcement.
The temporary lobbying ban may have unexpected adverse enforcement consequences for company CEOs. Under the Act, the temporary ban is only effective against individuals who lobby. A company CEO who does not lobby, but nonetheless is liable to file the registration or renewal accurately, completely and on time, would be unaffected by a temporary lobbying ban (and the Registrar would lack the power to impose the temporary ban on someone in the company who does lobby unless the lobbyist too has broken the law). The risk to corporate CEOs, therefore, is that referral to the police for enforcement by charge and prosecution might be more attractive to the regulator as the only viable consequence for default by the senior officer.
10. Disclosure of Identities of Ministers and MPPs
Lobbyist registrations would require the identification of Ministers and MPPs who are lobbied or whose staffs are lobbied. Identification would not be by name, but by portfolio (in the case of a Minister) or electoral district (in the case of an MPP).
This change is modeled on the British Columbia law. It falls short of the federal requirement to disclose all lobbying meetings with, and the names of, elected officials, political staff members and senior public servants (rank of assistant deputy minister and above).
13. Higher Maximum Fine
The bill would increase to $100,000 the maximum fine for a second or subsequent offence under the Lobbyists Registration Act. The maximum fine for a first offence would remain $25,000. The reference to conviction for a second offence may be moot because since the Ontario law took effect in 1999, nobody has ever been charged with (let alone been convicted of) a first offence under the Act.
17. Code of Conduct
The law will authorize the Lobbyist Registrar to issue a code of conduct for lobbyists. The code is expressly stated to be non-binding and the Registrar's new investigative powers will not apply to alleged contraventions of the code.
Many Canadian provinces have not yet adopted codes of conduct for lobbyists, but in those provinces that do the codes are binding and contravention is an offence.
The newly revised law gives effect to the Government's July 25, 2012, policy announcement, analyzed in a previous bulletin.
Earlier in 2012, Lynn Morrison, then the Integrity Commissioner (Lobbyist Registrar), had published her own recommendations for reform. These included: complete elimination of any threshold for in-house lobbying; empowering the Registrar to impose administrative monetary penalties; and tightening the restriction on lobbying by former public servants. Most of her recommendations were not accepted by the Government or the Legislature.
Right to Counsel
As explained, potential breaches of the Act or a regulation will now be subject to investigation by Integrity Commissioner (Lobbyist Registrar).
In other jurisdictions, individuals, businesses and organizations sometimes attempt to handle lobbying compliance investigations personally or without the benefit of counsel experienced in lobbying law. The decision to handle the matter alone or without the assistance of a lobbying-law expert should not be taken lightly.
All individuals, corporations and organizations have the right to seek advice from and be represented by legal counsel in dealings with the Lobbyist Registrar, including during an investigation. It is prudent to seek expert legal advice immediately upon being contacted by his Office, and not to answer questions without benefit of legal counsel and representation.
One reason to exercise caution is that statements made, emails sent, and other communications to the Office of the Integrity Commissioner (Lobbyist Registrar) can be used against a lobbyist or a CEO in an investigation or prosecution.
In addition to a potential fine (upon conviction) and/or temporary lobbying ban, contravention of the Lobbyists Registration Act will be a matter of public record and can cause significant reputational harm.
Any company, organization or individual that has dealings with Ontario provincial public office holders should take concrete measures to ensure compliance with the newly revised legislation.