Following a decade of increased enforcement of what has been considered an oft-confusing law, the Department of Justice recently published a Notice of Proposed Rulemaking proposing several changes to regulations implemented under the Foreign Agent Registration Act including, most notably, limiting the current exemptions for commercial activities and legal representation—two exemptions about which DOJ sought public comment. Many companies and individuals rely on these two exemptions to avoid registration, so these proposals, if adopted, provide material changes that could narrow the claims for exemptions.
The Notice of Proposed Rulemaking (NPRM) follows an Advance Notice of Proposed Rulemaking (ANPRM) published in December 2021. The DOJ decided not to pursue other changed it had considered making, such as to the exemption for religious, scholastic, or scientific pursuits and clarifying the definitions of “agency” and “political consultant.” Other proposed technical amendments are summarized below. The deadline for submitting comments on these rules is March 3, 2025.
The DOJ, at the end of the Obama-Biden administration and continuing under both the Trump-Pence and Biden-Harris administrations, increased Foreign Agent Registration Act (FARA) enforcement. In the past decade, prosecutions have resulted in high-profile convictions of, among others, both Democratic and Republican government and political officials, including in the House of Representatives and the Senate as well as in state governments. In one salient recent example, Senator Bob Menendez was convicted of, among other charges, acting as a nonregistered foreign agent for the Egyptian government.
Because of the increased enforcement, the number of registrations has skyrocketed. Further, state legislatures have begun proposing parallel state-level foreign agent registration requirements, but it is unclear to what extent these requirements will be adopted or become widespread.
FARA was originally passed in 1938 to regulate foreign propaganda, and in 1966 an amendment shifted the law’s focus instead to political lobbying and added a pathway for the DOJ to pursue civil actions against violators. Rather than prohibiting political lobbying, FARA requires persons engaged in lobbying on behalf of “foreign principals” to register with the DOJ and disclose their status. The term “foreign principal” is defined broadly to include foreign governments, companies, and individuals. Until 2015, criminal prosecutions under FARA were extraordinarily rare, and even civil enforcement was seldom.
With a history of limited enforcement, definitions that require clarifications, and regulation largely through DOJ’s advisory opinion process restricted to fact-specific assessments, companies and individuals—and even practitioners—are often left frustrated. Even the advisory opinion process—intended to provide guidance as to DOJ’s “present enforcement intentions”—can be time consuming and frequently results in DOJ taking a conservative approach toward requiring FARA registration that may or may not be upheld if challenged in court.
The timing of the NPRM publication is notable. Within weeks of a new presidential administration, the publication appears to be a late attempt to clarify the regulations though a rulemaking process that appeared to have stalled. Although legislative amendments to FARA have been previously proposed—including one to eliminate the Lobbying Disclosure Act (LDA) exemption—no amendments have gained traction since an unremarkable amendment passed in 2007.
It is unclear what position the Trump-Vance administration will take on FARA. The rulemaking process may be paused while the political appointees to DOJ are confirmed and have an opportunity to conduct an internal review of FARA. Nevertheless, it would be a mistake to assume that enforcement of FARA will decrease given DOJ’s increasing use of it as an enforcement tool, including during the first Trump term.
The Commercial Activity Exemption
FARA has several exemptions that allow some individuals or organizations to avoid registering. The commercial activities exemption is the most commonly used. This exemption allows persons who engage “only (1) in private and nonpolitical activities in furtherance of the bona fide trade or commerce of such foreign principal; or (2) in other activities not serving predominantly a foreign interest;” to not register as foreign agents with the DOJ (22 USC § 613(d)). Because this exemption has been interpreted broadly, many representatives of foreign principals rely on this exemption to avoid registration.
To narrow the exemption, the DOJ proposes three important changes to the second prong of the commercial activity exemption relating to “other activities not serving predominantly a foreign interest.”
First, it clarifies that the exemption can apply to noncommercial interests as well as commercial interests including nonprofits in the pool of persons who can claim the exemption. Second, the DOJ proposes adding four exclusions, which would require a person to register with the DOJ when:
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;
3. the principal beneficiary is a foreign government or political party; or
4. activities on behalf of a state-owned enterprise (or an entity that is directed or supervised by a foreign government or political party) promote the political or public interests of that foreign government or political party.
Finally, in cases where none of these exclusions apply, the DOJ proposes adopting a totality of the circumstances test to determine whether the activities primarily serve a foreign or domestic interest. Factors informing the totality of the circumstances test would include:
1. whether the public and relevant government officials already know about the relationship between the agent and the foreign principal;
2. whether the commercial activities further the interests of the domestic commercial entity more or less than the foreign commercial entity;
3. the degree of influence (including through financing) that foreign sources have over domestic non-commercial entities such as nonprofits;
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.
In addition, in a change from prior advisory opinions, the proposed regulation also clarifies that support for tourism and recreational activities within a country would not qualify as support for a foreign principal and therefore persons supporting international tourism would not need to register as foreign agents under FARA.
The Legal Representation Exemption
The other significant change pertains to the legal representation exemption. This exemption is for “[a]ny person qualified to practice law, insofar as he engages or agrees to engage in the legal representation of a disclosed foreign principal before any court of law or any agency of the Government of the United States.” (22 USC § 613(g).) This has allowed lawyers who represent foreign persons to advocate on their behalf without needing to register with the DOJ. Informal guidance from the DOJ clarified that this exemption applies only when there is a formal qualifying proceeding and includes activities outside of the proceeding that are related to the representation of the person.
The proposed changes in the NPRM would further restrict legal representation by preventing attorneys from engaging in “political activities” on behalf of their clients. While this would not include, for example, speaking to the press on behalf of a client where the principal-agency relationship is clear, it would encompass other activities such as persuading people, organizations, or governments to change policy in favor of the client. The proposal explains that such activity would go beyond the bounds of normal legal representation and would therefore otherwise create a loophole in FARA.
Other Changes
Finally, the regulation proposes a couple other changes to further modernize FARA such as further defining the term “informational materials,” incorporating the FARA eFile system into the regulations, and clarifying specifically what needs to be included in the “conspicuous statement” required when disclosing an affiliation as a registered foreign agent on informational materials.
These proposals, if finalized and adopted, may face legal challenges considering the recent US Supreme Court Loper Bright decision. Because certain exclusions from the commercial activity exemption are not explicitly authorized in FARA, the DOJ is relying on its interpretation of the statute to authorize these proposals. However, since Loper Bright overturned the Chevron doctrine courts are no longer required to grant deference to agencies on issues of statutory interpretation, so litigants challenging these exclusions may claim that such exclusions are not statutorily authorized.
DOJ is not proposing to change all of the exemptions and issues originally contemplated in the ANPRM. For example, DOJ ultimately decided to leave the exemption for religious, scholastic, or scientific pursuits as it stands. However, DOJ acknowledged that whether a person qualifies for this exemption is context dependent, but ultimately determined the advisory opinion process to be sufficient to address ambiguity. This decision leaves nonprofit organizations without much guidance beyond the handful of advisory opinions on whether they qualify for the exemption.
Additionally, DOJ declined requests for it to adopt the common law definition of “agency” for the purpose of FARA. Rather, DOJ chose to maintain a broader definition that involves a two-part inquiry assessing the relationship between the parties and the type of activities conducted in the foreign principal’s interest. DOJ acknowledged that such an assessment is fact intensive, and, rather than providing additional regulatory guidance, once again deferred to the advisory opinion process.
Several commentors also urged DOJ to narrow its broad definition of “political consultant”—a set of persons who are required to register under FARA—but DOJ once again declined and deferred to the advisory opinion process. Currently, the definition of political consultant is "any person who engages in informing or advising any other person with reference to the domestic or foreign policies of the United States or the political or public interest, policies, or relations of a foreign country or of a foreign political party.” (22 USC § 611(p).)
One commentor noted that the current definition “is so wide-reaching, it is virtually certain that hundreds, if not thousands, of individuals are currently in violation without ever realizing their registration obligations.” As the risk of enforcement continues to rise, persons who could potentially be considered political consultants should be particularly careful to ensure compliance with FARA requirements.
Finally, with respect to the statutory exemption from FARA for LDA registrants, DOJ reiterated its position as provided in the current regulations that the exemption would not apply where the principal beneficiary is a foreign government or foreign political party.
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