On January 2, 2025, the Department of Justice (DOJ) published in the Federal Register proposed amendments to the DOJ regulations that implement the Foreign Agents Registration Act, 22 U.S.C. §§ 611 et. seq. (FARA). The DOJ will accept comments on the proposed amendments until March 3, 2025. The FARA Unit published an Advance Notice of Proposed Rulemaking in late 2021 soliciting comments on what the FARA Unit should or should not do in amending the FARA regulations. The regulated community has therefore been on notice for several years that proposed amendments were in the works.
FARA is administered by a fairly small office within the DOJ, the FARA Unit, that is part of the DOJ’s larger Counterintelligence and Export Control Section in the National Security Division. FARA used to be a sleepy backwater of U.S. law, but it has attracted increased focus and been the subject of increasing enforcement in recent years. Paul Manafort, briefly the manager of President Trump’s 2016 campaign, and an associate of General Michael Flynn, briefly the National Security Advisor in the first Trump Administration, were both prosecuted for violating FARA, and, more recently, Democratic Senator Bob Menendez was convicted of violating a FARA-like statute, to name only a few recent high-profile examples.
Commercial Activity Exemptions
The most significant proposed amendments relate to the regulations that implement the two FARA exemptions provided for by 22 U.S.C. § 613(d) relating to commercial activity. The first exemption (under 22 U.S.C. § 613(d)(1)) exempts those who engage only “in private and nonpolitical activities in furtherance of the bona fide trade or commerce of [a] foreign principal.” Under existing regulations, persons in the U.S. qualify for the exemption as long as their activities do not “directly promote the public or political interests of the foreign government” 28 CFR § 5.304(b) (emphasis added).
The proposed amendments would make two changes to the current regulations governing “(d)(1).” First, the modifier, “directly,” would be deleted. The FARA Unit claims that this deletion will remove ambiguity. However, it seems to grant the FARA Unit even greater discretion in determining when and whether the exemption applies.
The second change to the current regulations governing (d) (1) is that a person (or employee of that person) who engages (or agrees to engage) in promoting bona fide recreational or business travel to a foreign country would be exempt from registration, so long as it is apparent to the public that the person is doing so on behalf of the foreign country.
The second § 613(d) exemption (under 22 U.S.C. § 613(d) (2)) exempts those who engage in “activities not serving predominantly a foreign interest.” This has been perhaps the area of greatest interest and concern among FARA practitioners. The FARA Unit has been particularly aggressive in this area and has issued some determinations requiring U.S. lobbyists to register under FARA even though they represent private companies, in some cases, U.S. subsidiaries of foreign parent companies.
The FARA Unit proposes three major changes to the regulation, 28 CFR 5.304(c), governing this “(d)(2) exemption.” First, it would make clear that it applies to both commercial and non-commercial entities (like non-profits, for example), as long as the interest being served is not predominantly a foreign one.
Second, it proposes four “exclusions” to the exemption. The exemption would not be available if: (1) the intent or purpose of the activities is to benefit the political or public interests of the foreign government or political party; (2) a foreign government or political party influences the activities (note that such influence can be exercised directly or indirectly, through an intermediary); (3) the principal beneficiary of the activities is a foreign government or political party; or (4) 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) and they promote the political or public interests of that foreign government or political party (note that, likewise as with the (d)(1) exemption, the qualifier, “directly,” before “promote” in the current regulation, is removed).
Third, if none of the foregoing exclusions to the exemption applies, a “totality of the circumstances,” facts-intensive test would be used to determine whether the predominant interest being served is domestic or foreign. The DOJ offered a “non-exhaustive” list of factors to be considered, namely: (1) whether the public and relevant government offcials already know the relationship between the agent and the foreign principal; (2) whether the commercial activities further the commercial interests of a foreign commercial entity more than those of a domestic commercial entity; (3) the degree of influence (including through financing) that foreign sources have over domestic non-commercial entities; (4) whether the activities concern laws and policies applicable to domestic or foreign interests; and (5) the extent to which any foreign principal influences the activities.
The “Lawyers’ Exemption”
The so-called “lawyers’ exemption,” 22 U.S.C. 613(g), whose corresponding regulation is 28 CFR § 5.306(a), exempts lawyers’ activities on behalf of foreign principals only “in the course of judicial proceedings, criminal or civil law enforcement inquiries, investigations, or proceedings, or agency proceedings required by statute or regulation to be conducted on the record.” The FARA Unit proposes changes to the regulation that would: (1) make clear that the activities must be non-political, as “political” is defined in FARA and within the “bounds of normal legal representation;” and (2) specify that the activity could include providing information about the matter, during the time that it is pending, to persons other than the decision-making agency or court.
Surprisingly, the proposed amendments do not define “within the bounds of normal legal representation.” In the notice of proposed rulemaking, making statements outside of the courtroom or agency hearing room is provided as an example. But it is only one example, and such statements only could qualify. It is questionable, then, whether the amendments clarify the scope of the exemption.
The Lobbyist Disclosure Act (LDA) Exemption
If a U.S. lobbyist lobbies the U.S. government on behalf of a foreign corporation (as opposed to a foreign government or foreign political party), FARA’s “LDA exemption” exempts the lobbyist from the need to register under FARA if instead the lobbyist properly registers under the Lobbying Disclosure Act (LDA). In recent years, the FARA Unit has been quite vocal in expressing concerns about the possible overuse or misuse of the LDA exemption to avoid the more stringent registration requirements of FARA. Responding to those concerns, several bills have been introduced in Congress that would revoke the LDA exemption or limit it in some way. However, surprisingly, the proposed amendments to the DOJ’s FARA regulations do not amend the existing regulation implementing the LDA exemption.
Helpful Updates
FARA requires that written communications governed by the statute include a “FARA legend” that identifies the sender as a foreign agent registered under FARA and identifies the client. The proposed amendments cover issues relating to the inclusion of the FARA legend on things like podcasts or tweets posted on X (formerly Twitter), which limits the number of letters or characters that can be posted. The proposed amendments also specify that non-substantive communications, such as a scheduling email, must include the FARA legend.
Several years ago, the FARA Unit started requiring the use of its “Efile system” pursuant to which filings, payments, and submissions required by FARA are submitted electronically. The existing regulations nowhere reference the Efile system, whereas the proposed amendments do.
The FARA Unit claims to apply its interpretations of FARA regardless of the foreign country at issue. In fact, however, the FARA Unit in recent years has been focusing on China and, to a lesser degree, Russia.
In some cases, it appears that the FARA Unit is prepared to accept the assumption that everything that comes out of China is in some way directed or controlled by the Chinese government or the Chinese Communist Party. If that were true, the FARA Unit would be correct in requiring FARA registration. But what if a U.S. lobbyist lobbies in favor of its client’s interest, but that interest happens to coincide with the foreign government’s interest? In some such cases, the FARA Unit has required the U.S. lobbyist to register under FARA.
