backIntroduction
On December 19, 2024, the Department of Justice submitted a long-awaited Notice of Proposed Rulemaking (NPRM) to amend and clarify regulations issued under the Foreign Agents Registration Act (FARA). More than four years ago, an Advance Notice of Proposed Rulemaking (ANPRM), published on December 13, 2021, solicited public comments on 19 questions regarding the revision of the FARA regulations. The NPRM comes on the heels of a busy year of FARA enforcement, including the conviction of a Senator, the indictment of a Congressman, the indictment of a New York government official, and the first plea to a misdemeanor FARA charge.
The FARA NPRM proposes significant regulatory changes in three main areas: 1) exemptions to FARA’s registration requirement; 2) the filing and labelling of informational materials designed to keep pace with technological advances; and 3) rules concerning electronic filing of FARA advisory opinions and FARA registration documents.
The proposed changes will complicate efforts to comply with FARA’s already ambiguous requirements and entrust DOJ with more discretion in interpreting and enforcing the law. The proposed regulations were issued as the Biden Administration exits the regulatory arena, with a 60-day comment period that will span the transition into the Trump Administration. The Trump Administration may decide to reject all or some of the proposals. It will not be long before we find out. In the interim, it is useful to take note of the proposed changes.
Below, we discuss the changes to the exemptions and informational materials, detailing the changes outlined in the NPRM, and the impact these changes, if enacted, might have on individuals and businesses.
Changes to Exemptions
The NPRM proposes several changes to FARA exemptions: a) the commercial exemption, (22 U.S.C. § 613(d)(1)), which concerns “trade and commerce, or activity that does not serve predominantly a foreign interest,” b) the exemption for other activities not serving predominantly a foreign interest, (22 U.S.C. § 613(d)(2), and c)) the exemption for activity by attorneys in connection with proceedings, investigations, and inquiries, (22 U.S.C. § 613(g)).
Commercial
Currently, the FARA regulations state that a person engaged in political activities on behalf of a foreign corporation is not serving a foreign interest where those activities are directly in furtherance of commercial operations of the foreign corporation, so long as the political activities are not directed by a foreign government or party and the activities do not “directly promote” the interests of the foreign party.[i]
The NPRM would change the commercial exemption by removing the word “directly,” meaning the exemption would not apply when the agent engages in some political activities that directly or indirectly promote the political or public interest of a foreign government or foreign political party.
Other Activities
Currently, the FARA regulations covering the registration exemption for “other activities” not serving predominantly a foreign interest only references actions taken on behalf of foreign corporations. In addition to clarifying that the exemption applies to both noncommercial and commercial interests, the NPRM would create a set of four exclusions to the “other activities not serving predominantly a foreign interest” exemption. These exclusions focus on the nature of the relationship between the activities and the foreign government or political party. Under this new rule, an agent would be considered to serve predominantly a foreign interest and therefore excluded from the “other activities” exemption in any of these four circumstances:
- The intent or purpose is to benefit the political or public interest of the foreign government or party;
- A foreign government or party influences the activities;
- The principal beneficiary is a foreign government or party; or
- The activities are undertaken on behalf of an entity that is directed or supervised by a foreign government or political party, such as a state-owned enterprise, to promote its political or public interests.
If none of the four exclusions apply, the proposed new regulation creates a totality-of-the-circumstances test that is then used to determine if the activities predominantly serve a foreign interest. Drawing on FARA legislative history, DOJ proposes five non-exhaustive factors:
- Whether the public and relevant government officials already know about the relationship between the agent and the foreign principal;
- Whether the commercial activities further the interests of the domestic commercial entity more or less than the foreign commercial entity;
- The degree of influence (including through financing) that foreign sources have over domestic non-commercial entities such as nonprofits;
- Whether the activities concern laws and policies applicable to domestic or foreign interests; and
- The extent to which any foreign principal influences the activities.
The NPRM would also change the treatment of tourism promotion under FARA, which has historically required tourism development boards and their representatives to register. The regulations would exclude from FARA registration a person who engages in promoting bona fide recreational or business travel to a foreign country, when the person’s relationship to the foreign principal is apparent to the public. This marks a change from DOJ’s existing interpretation of FARA, which treats tourism promotion as a political activity.
Attorneys
The new rules would specify activities outside of the courtroom that fall within the FARA attorney exemption. The new rules would clarify that the attorney of record in any covered proceeding, investigation, or inquiry can also provide certain information about the activities at issue to others, including the press, without losing the exemption. However, in order to stay within the parameter of the exemption, the attorney’s activities cannot be “political activities” within the meaning of FARA. As an example, the NPRM says that an attorney seeking to persuade the public or Congress to adopt or change a policy would exceed normal legal representation of a specific client and, therefore, fall outside the exemption.
Defining Informational Materials
Regarding ongoing compliance with FARA, the new rule would define “informational materials” as any material that the disseminating person intends, believes or has reason to believe will influence any agency or official of the United States Government or any section of the United States public, with reference to formulating, adopting, or changing United States domestic or foreign policies or with reference to the political or public interests, policies, or relations of a government of a foreign country or a foreign political party.
The rule would require that all such disseminated materials include a conspicuous statement identifying them as being distributed on behalf of a foreign principal, regardless of the method of distribution. And the rule also has a labeling requirement, setting out standards for how the information is displayed and requiring that the name of the country or territory of the foreign principal be included.
The NPRM also proposes a rule mandating that when an agent of a foreign principal requests information or advice from any agency or official of the U.S. government, including Congress, they must disclose the agent’s relationship with the foreign principal.
Finally, the NPRM would address some updates accounting for technological advances, such as electronic filing, online payments, providing labelling requirements for different media, and defining informational materials to include online publications and streaming.
Analysis
While designed to resolve questions, in certain aspects of FARA interpretation the NPRM adds more ambiguity and will require additional guidance from DOJ in order for individuals and entities to fully understand their obligations. Instead of promoting clarity through bright-line tests, the regulations provide just the opposite and create additional enforcement discretion in their interpretation and application.
For example, one significant regulatory change that businesses and individuals should examine closely is the change from “directly promote” to simply “promote” in the commercial exemption. This change would narrow the applicability of the exemption, effectively broadening the reach of enforcement, and leaving ambiguity about what type of impact would constitute indirect promotion and fall outside of this exemption. Additionally, this change to the commercial exemption may increase the importance of the Lobbying Disclosure Act (LDA) registration exemption, although recently Congress has considered amending the LDA to limit its applicability.
Interestingly, DOJ acknowledges that in the new totality-of-the-circumstances test, used to determine if the activities in question predominantly serve a foreign or domestic interest, a “single factor may prove dispositive.” DOJ suggests that “advisory opinion and enforcement actions will clarify how these factors apply,” making clear that DOJ contemplates pursuing enforcement actions despite recognizing the ambiguity of its own rules.
Of note, while the NPRM proposes regulatory changes in a number of areas, DOJ declined to propose regulatory changes in response to all the questions it raised in the 2021 FARA ANPRM. On multiple occasions, instead of providing a clear rule, the NPRM encourages individuals or entities with questions about their obligations to use the FARA advisory opinion process.
Adding to the uncertainty found within the NPRM, two key external factors add additional questions. First, it is unclear how courts will view new FARA regulations. As Loper Bright v. Raimondo made clear, the Supreme Court has tasked lower courts with determining the “best reading” of statutes, and it is unclear if courts will agree that the new rules governing FARA exemptions are an accurate reading of FARA’s statutory language. Second, a new administration is set to take control of DOJ and the FARA regulatory process in the middle of the 60-day comment period.
Conclusion
The NPRM is unlikely to be adopted without revisions by the incoming Administration, but anyone who takes actions in the United States for the benefit of a foreign person or organization should closely analyze the implications of the proposed new FARA rules.
