Lobbying law: major changes to the Lobbyist Registration Act and Regulations could affect your business with government. Make sure you know the rules.

On June 20, 2005, the amended Lobbyist Registration Act and Regulations (LRA) came into effect, introducing major changes to federal law surrounding lobbying that business executives and their advisors need to understand. Many individuals and institutions may be affected by the changes, including academic institutions, charities, trade and professional associations, and provincial and municipal government entities. In addition, certain executive officers now have new responsibilities under the LRA, although they may not be personally involved in lobbying public office holders. Similarly, members of boards of directors for all types of organizations may be affected.

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As trusted advisors, employees, directors and community volunteers, CMAs should be aware of these important changes.

What is lobbying?

Before reviewing the changes to the LRA, some discussion of lobbying may be useful--the legal coverage of the LRA is broader than some may think, and non-compliance can lead to criminal charges.

The media, at times, portray lobbying and lobbyists in a strictly negative manner--as individuals or organizations acting in self-interest rather than for the public good. While some messages to government from lobbyists may not be in the public interest, many are. Lobbying is a legitimate activity in our democratic society and offers useful input to public policy makers. Citizens are entitled to communicate their individual and collective views to government and are entitled to engage others to assist them in doing so. The LRA brings a degree of transparency to the process so the public may be aware of it.

A perusal of the LRA Public Registry lists many major corporations, which would be expected. But it also includes trade associations, professional bodies, charities, universities, research institutes, provincial and municipal governments, unions and aboriginal groups.

Any paid communication with a public office holder on behalf of a client or employer may be considered lobbying. This would include consultations on the development of a legislative proposal, the introduction of a bill or resolution, the making or amendment of a regulation, policy or program, or the awarding of a grant, contribution, tax credit or other financial benefit. In the case of an award of a contract, the activities of a consultant lobbyist is considered lobbying, but the activities of sales and marketing personnel attempting to sell goods and services to the government is not lobbying.

The lobbyist need not initiate the consultations with public office holders to require registration under the LRA. The government may initiate the dialogue but registration is still required under the LRA. Coalitions and special interest groups should register individual members under the LRA.

When the communication with a public office holder takes place in an open, public forum and the names and statements of participants are recorded in a public record, these activities are not considered lobbying under the LRA.

Certain conduct is prescribed for public office holders and former public office holders called the Conflict of Interest Code, which is administered by the Ethics Commissioner, now an Officer of Parliament. A public office holder is defined in the legislation as "any officer or employee of Her Majesty in right of Canada, and includes Members of Parliament, Senators and their respective staff, Cabinet or ministerial appointees (except judges and provincial lieutenant governors), officers, directors and employees of federal boards, commissions and tribunals, members of the armed forces and members of the Royal Canadian Mounted Police."

The new LRA changes the definitions of lobbying and lobbyists. It also changes the registration requirements.

Lobbying was previously defined as taking place when a paid individual communicated, on behalf of any person or organization, with a public office holder in an attempt to influence him or her. The Act now states that lobbying will consist of "any oral or written communication made to a public office holder." In addition, the new Act removes the exception for written communications initiated by a public office holder. In other words, "in an attempt to influence" has been dropped from the definition. Apparently, these changes were initiated by Parliament because it concluded it was too difficult to determine a lobbyist's intent.

Simple information requests orally or in writing are excluded. The Registrar has written an interpretation bulletin on this called "communicating with public office holders."

Types of lobbyists and a new role for CEOs

The LRA continues to distinguish among three types of lobbyists and their registration requirements.

Consultant lobbyists are individuals who are paid to lobby on behalf of clients. They may be consultants in public relations or marketing; lawyers, engineers or accountants. Consultant lobbyists must register within ten days of entering into an undertaking and must advise the Registrar within 30 days of completing an undertaking. Semi-annual registrations are required. Consultant lobbyists who are former public office holders must now include a description of their former positions in the government as part of their registration.

In-house lobbyists (corporate and organization) are salaried employees of either corporations or non-profit organizations such as industry associations who lobby on behalf of their members. Individual corporate employees are no longer required to register themselves. This has shifted to the corporate officer "responsible for filing returns"--that is, the most senior officer of the corporation. This registration will include the name of the most senior officer of the corporation, whether or not he or she personally engages in lobbying activity.

The registration must also include the names of all officers for whom lobbying is a significant part of their duties. The Registrar has issued an interpretation bulletin regarding the definition and estimation of "significant duties." This is defined as at least 20% of a person's time over the period in question. But if the combined government relations duties of a group of employees is equivalent to 20% of one equivalent employee, all such employees must be included in the registration. For example, if five employees each spend 4% of their time on lobbying, then all five must be registered. Time preparing for communicating with a public office holder (research, compiling, drafting, traveling etc.) as well as actually communicating with the public office holder should be included.

The registration of in-house lobbyists must be made within two months of undertaking the lobbying activity and the return must be reissued every six months from that date. Organizations will need to keep track of these dates as the registration dates have no relation to other corporate dates like fiscal and calendar year ends.

Many routine activities do not trigger registration under the LRA. Examples are communications restricted to straightforward requests for publicly available information, preparation and presentation to parliamentary committees, communications with public office holders regarding the enforcement, interpretation and application of existing federal statutes or regulations. Also excluded are dealings with federal inspectors or other regulatory authorities regarding the enforcement of existing regulations.

Foreign corporations and governments

Foreign corporations and Canadian subsidiaries of foreign corporations who engage in lobbying Canadian public office holders are included in the LRA as well as Canadian corporations. Employees lobbying from a Canadian base or posted abroad are both covered. If a Canadian subsidiary of a foreign corporation has to register, it is the responsibility of the most senior paid officer to register, regardless of whether that person is a Canadian citizen or resides in Canada. In the case of consultant lobbyists, if their client is a foreign corporation, a foreign organization or a foreign national or sub-national government, they must register and disclose the identity of their client.

Canadians employed by foreign companies and Canadian subsidiaries and business advisors such as lawyers and accountants will need to take it upon themselves to brief foreign CEOs of the new requirements of the LRA. In addition, they will need to keep up to date with interpretation bulletins and advisory opinions issued by the Registrar from time to time.

Funding, fees and penalties

All registrations under the LRA must reveal government funding to the party on whose behalf lobbying is undertaken. This includes the source and amount of all government funding from any Canadian or foreign government, including any municipal, provincial, regional or state government. Funding means money made available for a particular purpose for which goods and services were not received in return, or for which repayment is not required. This includes grants and non-repayable contributions but excludes loans, loan guarantees, tax credits remission orders and procurement contracts.

Contingency fees or fees based upon successful lobbying results are often politically controversial. Concerns arise about whether government funding requests or procurement bids are inflated to help the applicant or vendor pay for these fees. The LRA requires lobbyists to indicate in the registration whether contingency fees are included in their compensation. The LRA does not deal with the issue of contingency fees; this is dealt with elsewhere in government, either the contracting regulations or the Treasury Board Guideline on Grants, Contributions and Other Transfer Payments.

While managers may prefer to keep their costs variable rather than fixed and linked to results rather than effort, the controversy surrounding performance-based compensation of lobbyists detracts from the "public good" messages in the lobbying campaign and may even preclude a positive outcome.

The new LRA includes strengthened enforcement provisions, including the elimination of the condition that communication with public office holders be "an attempt to influence" legislation, regulations, etc. If the Registrar receives complaints or otherwise learns about alleged breaches to the LRA, the Registrar may undertake an administrative review to determine if there are reasonable grounds for a formal investigation. The LRA empowers the Registrar to refer possible contraventions of the registration requirements to the RCMP for investigation. Convictions for such contraventions may carry fines of up to $100,000 or jail terms of up to two years upon conviction. However, there is a two-year limit on addressing contraventions of the registration.

The Registrar may also conduct an investigation into possible breaches to the Code of Conduct for former public office holders. These breaches to the code do not carry fines or jail terms but the investigations must be reported to Parliament.

Information documents, interpretation bulletins and advisory opinions issued by the Registrar are available on Industry Canada's Lobbyist Registration Branch Web site at http://strategis.ic.gc.ca/lobby.

John M. Banigan is vice-president of Tactix Government Consulting Inc. He recently left the federal government after a 30-year career, latterly as ADM Industry at Industry Canada.

The content of this article has been taken from the website of the Registrar of the LRA and is believed to be accurate. However, it does not represent a legal opinion and should not be relied upon for compliance of the Act and its Regulations.