Canada: British Columbia Responds to USA Patriot Act with Tough New Rules on How Service Providers Manage Public Sector Data

In addition to B.C.’s legislative action, recent remarks from Canada’s federal privacy commissioner raise the issue of whether private sector organizations should place restrictions on out-of-country data transfers.

In response to public concerns about threats to privacy arising under the USA Patriot Act, the province of British Columbia has amended its public sector privacy legislation, the Freedom of Information and Protection of Privacy Act (FOIPPA). The amendments, which became law on October 21, 2004, place tough new restrictions on storing, accessing and disclosing of B.C. public sector data by service providers.

The amendments, and related new government policies, will have a significant impact on how service providers store or access personal information in the course of providing services to an estimated 2,000 public sector bodies in British Columbia. These bodies include government ministries, hospitals, boards of health, universities and colleges, school boards, municipal governments and certain Crown corporations and agencies.

While the measures enacted in B.C. apply to public sector data only, both the B.C. and federal privacy commissioners have indicated that privacy protections should be enhanced for transborder data sharing and transfers of personal information held by private sector organizations in Canada.

Impact on Service Providers

The new legislative rules make it a provincial offence for services providers to:

  • Store, access or disclose personal information of a B.C. public sector body outside of Canada (although there are narrowly defined exceptions);
  • Fail to provide notice to the Minister of Management Services of any foreign demand for disclosure of personal information held by the service provider; or
  • Discipline, suspend, demote, harass or otherwise disadvantage an employee who, acting in good and on the basis of reasonable belief, complies with the notice obligations or acts to ensure compliance with FOIPPA.

The maximum penalty for non-compliance is a fine of $500,000.

Personal information is defined to mean recorded information about an identifiable individual other than contact information. No distinction is made between the treatment of sensitive and non-sensitive personal information.

In addition to amending FOIPPA, the province has indicated that all service delivery contracts where personal information is involved will be with companies based in Canada and subject to Canadian and B.C. law. It is expected that "companies based in Canada" will be interpreted to include at least some Canadian incorporated affiliates of foreign-based corporations. It is unclear whether 100% of the directors and officers of eligible Canadian corporations will have to be citizens and residents of Canada.

The new rules will apply to all services providers who store or process personal information on behalf of a public sector body in B.C.– and not just those service providers who store or process personal information as the "outsourcer" of public sector services or operations. For example, it may be necessary for the supplier of remote diagnostic computer support services to locate all of its technicians in Canada if they will have access to personal information on a government computer in the course of providing diagnostic services.

Although the amendments to FOIPPA took effect on October 21, the restrictions on data storage, access and disclosures, as well as the notification obligations regarding foreign demands for disclosure, do not apply to contracts with a commitment date earlier than:

  • October 12, 2004, in the case of contracts entered into by the government or a ministry; or
  • October 21, 2004, in the case of contracts entered into by another public sector body.

Debate over USA Patriot Act Continues

The amendments to FOIPPA followed an application to the B.C. Supreme Court by a government employees’ union for a declaration that the contracting out of services involving the provincial medical services plan contravenes applicable legislation, including FOIPPA. The union’s pleadings argue that when the service provider is an American corporation or an affiliate of an American corporation, the USA Patriot Act may be used to require the service provider to disclose to American authorities personal health information about British Columbians held by the service provider. (The oral hearing for the case has not yet been scheduled.)

In response to the legal proceedings, the government undertook an analysis of the related privacy protection issues in British Columbia. Although it concluded that the USA Patriot Act posed only "a minimal and largely theoretical threat," it chose to enact the amendments to FOIPPA described above.

On October 29, 2004, B.C.’s Information and Privacy Commissioner released a 151- page report on the privacy implications of the USA Patriot Act on public sector outsourcing. In his report, and in a related letter to the Minister of Management Services, the commissioner endorsed the amendments to FOIPPA made by the government, but went on to recommend additional amendments to further strengthen privacy protections. The commissioner’s report is also noteworthy in that he placed little weight on the relevance of efficiency or international trade obligations when interpreting the nature of privacy protections required under FOIPPA.

Critical Issues to Watch

The enactment of amendments to FOIPPA may well be the beginning, rather than the end, of this story. It remains to be seen whether other provinces or the federal government will follow B.C. and make similar amendments to their public sector privacy statutes. Further, and potentially of even greater significance, there is speculation that restrictions on out-of-country data transfers and related privacy safeguards may be extended to personal information under the control of private sector organizations in Canada.

B.C.’s Information and Privacy Commissioner appears to support this idea. His report on public sector outsourcing includes a recommendation that the provincial and federal governments "consider and address" the implications of the USA Patriot Act for the security of personal information in respect of private sector activities.

The Privacy Commissioner of Canada has also made her views known on the obligation of organizations that either transfer personal information offshore or store the data in Canada. The Commissioner’s Web-site states that the legislative review of the Personal Information Protection and Electronic Documents Act in 2006 will be a forum for developing further privacy protection measures related to transborder information-sharing by the private sector.

In written submissions to the B.C. commissioner made during the summer, the federal commissioner wrote that, "at the very least," a company in Canada that outsources information processing to organizations based abroad should notify its customers that the information may be available to the foreign government or its agencies under a lawful order made in that country. In discussing organizations that hold personal information about Canadians in Canada, she also indicated they must take appropriate security measures to prevent the unauthorized disclosure of the personal information, and that this "may mean" employing technical measures to prevent their foreign affiliates from "inappropriately" gaining access to the personal information held in Canada.

Also noteworthy is that the federal commissioner has encouraged individuals to file complaints with her office where they are concerned about their personal information being held in databases outside Canada.

What Comes Next for Private Sector Organizations

The developments described above have the potential to impact on virtually every large- or medium-sized private sector organization in Canada. Obviously, any service provider who stores, accesses or processes personal information on behalf of any public sector body in Canada will want to immediately consider whether any existing service arrangements are impacted by the amendments to FOIPPA in B.C. As well, these organizations will want to be alert to the possibility of provincial or federal legislative initiatives in other Canadian jurisdictions.

More broadly, any private sector organization in Canada involved in transborder transfers of personal information, whether to a foreign office, to a foreign affiliate or to a foreign service provider, will want to consider the impact of the statements of the federal privacy commissioner described above regarding when it is necessary to provide notice to customers that personal information may be available to the foreign government. Finally, any Canadian business with a foreign affiliate will want to consider whether technical measures exist or should be implemented to prevent the affiliate from "inappropriately" gaining access to the personal information held in Canada.

Michael Fekete is a partner in Osler's Business Law Department practising in the Technology Business Group in Toronto, where his practice focuses on information technology, software development and licensing, e-commerce and privacy. Patricia Wilson is a partner in the Litigation Department in our Ottawa office and provides extensive litigation and advisory experience in the access-to-information and privacy areas.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions