US Department of Justice Issues Long-Awaited Proposal to Revamp Regulations Implementing the Foreign Agents Registration Act (FARA)
On December 20, 2024, the US Department of Justice (DOJ) issued a long-awaited notice of proposed rulemaking (NPRM) to revise regulations under FARA, three years after an Advance Notice of Proposed Rulemaking sought input on 19 questions about them. Below we discuss the most significant proposed changes to the rules. The comment period will run for 60 days from publication of the NPRM in the Federal Register.
The Commercial Exemption
FARA’s statutory language exempts from registration those private and nonpolitical activities that further the trade or commerce of the foreign principal, 22 U.S.C. § 613(d)(1). This is a critical exclusion for foreign corporations engaged in marketing, commercial transactions, and other trade or commerce through agents in the United States (which would otherwise be captured by § 611’s broad categories of registrable activities).
Under the current regulation, these activities—even by the agents of foreign, state-owned enterprises—are exempt from registration provided they do not “directly promote” the public or political interests of a foreign government (or political party).1 The proposed rule would remove “directly” from the exemption, meaning that these commercial activities will no longer be exempt if they “promote” those public or political interests. In the commentary of the NPRM, DOJ justifies the proposal as removing the ambiguity under the current regulation, which requires analysis of whether the interests are promoted “directly” or merely “indirectly.” By removing the modifier, however, DOJ may intend to require registration for a broader array of activities that align with, and ultimately benefit, a foreign government’s political or public interests, even if only “indirectly,” as a collateral consequence of benefitting a foreign company. Indeed, it is hard to imagine any benefit to a foreign, state-owned enterprise that does not also somehow benefit the state that owns it, at least through increased revenue.
By that same token, however, DOJ proposes to exempt from registration those who engage “only in transparently promoting bona fide recreational or business travel to a foreign country,” deeming it private and nonpolitical activity in furtherance of the bona fide trade or commerce of the foreign state.2 DOJ argues that promoting tourism is “too attenuated from the definition of political activities to warrant imposing FARA registration obligations,” and it leverages legislative history that acknowledged that foreign states engage in “private activities of a commercial nature.” (In addition, it’s usually obvious who the principal behind a tourism ad is, making FARA registration less important, according to DOJ.)
Promoting investment in a foreign country has been a frequent subject of opinions advising US agents to register for promoting their principal’s public interest. Reconciling these two proposals—and drawing the line between a state’s political or public interests (on the one hand) and its economic or commercial ones (on the other)—will have to wait for another day.
The “Domestic Interests” Exemption
As we have discussed in prior Legal Updates, DOJ officials have telegraphed in public statements (and recent advisory opinions) a desire to move away from the current regulation interpreting 22 U.S.C. § 613(d)(2). The regulation currently exempts political activities on behalf of foreign corporations (even state-owned enterprises) provided that those activities are not directed by a foreign government (or political party) and do not “directly promote” its public or political interests.3 In the NPRM, DOJ proposes a wholesale restructuring of this exemption to focus on whether the political activities “predominantly” serve domestic interests over foreign ones (regardless of whether the foreign principal is privately held or a state-owned enterprise).
First, and of particular interest to non-profits and non-governmental organizations, DOJ would make explicit that this exemption applies to noncommercial interests as well as commercial interests provided the activities do not “serve predominantly a foreign interest.”4
Second, DOJ would list four factors, any one of which would establish that foreign interests predominate over domestic ones and exclude the activities from the exemption. The factors focus on “the relationship (if any) between the activities and a foreign government or foreign political party, which is the key relationship animating the need for FARA registration.”5 The exemption would not be available to any agent if any one of the following is true:
- The intent or purpose of the activities is to promote the political or public interests of a foreign government or foreign political party;
- A foreign government or foreign political party influences the activities;
- The principal beneficiary of the activities is a foreign government or foreign political party; or
- In the case of a person whose activities are directly or indirectly supervised, directed, controlled, or financed in whole or in substantial part by a foreign government or political party, the activities promote that entity’s public or political interests.6
Third, even where none of these exclusions from the exemption is triggered, DOJ would adopt a totality-of-the-circumstances test to determine whether the activities serve predominantly a foreign or domestic interest by considering the following non-exclusive factors:
- Whether the relationship to and identity of any foreign principal is open and obvious (and disclosed to any US agency or official);
- Whether any political activities on behalf of a domestic commercial entity further the commercial, industrial, or financial interests of that entity “as much or more than” the interests of a related, foreign commercial entity;
- In the case of a nonprofit, the extent to which the activities “are influenced by a foreign entity or concern a foreign jurisdiction,” including the extent to which “domestic sources rather than foreign ones fund the activities of the organization”;
- Whether the activities “concern laws or policies applicable to the U.S. operations or interests of the domestic person”; and
- “The extent to which a foreign principal influences the activities of the domestic person.”7
In its commentary on the proposal, DOJ makes clear an aversion to relying on the subjective intent of the US agent alone to establish promotion of a foreign interest (in part because of the difficulty of proving intent without access to compulsory legal process). Instead, DOJ proposes to rely on a mix of subjective and objective factors, the upshot of which is that it would be easier in some ways for privately held entities to qualify for this exemption (because the test of whether their activities “promote” a foreign government’s interest will apply only to state-owned enterprises, not to them) but only if their activities promote the commercial interests of a domestic subsidiary. On the other hand, political activities that promote the interests of a foreign company (even the commercial interests of a privately held enterprise) would no longer be exempt from registration, putting increasing weight on the applicability of the exemption under the Lobbying Disclosure Act (LDA).
The Legal Exemption
The NPRM proposes to reformulate the legal exemption under 22 U.S.C. § 613(g), making it more readable and incorporating guidance that is currently on the FARA website concerning statements outside the underlying legal proceedings. The legal exemption would apply to counsel “provided such representation does not extend beyond the bounds of normal legal representation”—with that italicized term later defined in the regulation as activities intended to influence or persuade in the course of “judicial proceedings,” “criminal law or civil enforcement inquiries, investigations, or proceedings,” and “agency proceedings conducted on the record”— and provided the attorney’s foreign principal is disclosed.8 In addition, efforts to provide information about those proceedings “to persons other than the agency or official decision-makers,” e.g., a defense counsel’s statements on the courthouse steps, could be included within the bounds of “normal legal representation” provided they do not qualify as “political activities.”
The LDA Exemption
The LDA exemption, 22 U.S.C. § 613(h), exempts from FARA those who have registered under the LDA provided that neither a foreign government nor a foreign political party is “the principal beneficiary” of those activities.9 A footnote in a prior advisory opinion had suggested that the exemption may be unavailable when an entity is one of multiple “principal beneficiaries,” causing substantial confusion about the scope of the exemption (and, it seems, the meaning of the word “the”). Although DOJ proposes no changes to the regulation implementing this exemption, it took the opportunity of the NPRM to disavow that advisory opinion’s footnote, which “does not reflect the present enforcement intentions of the Department.”10 As a result, agents of foreign principals claiming this exemption need only establish that their principal, and not a foreign government or political party, is the “principal” beneficiary even if a foreign government or political party also benefits from the political activities.
Informational Materials: Definition, Filing, and Labeling
For FARA registrants who are required to label and file the “informational materials” they disseminate on behalf of their principal, the NPRM proposes substantial changes.
First, the regulations would (for the first time) define the term “informational materials” and explicitly tie the definition to the statutory definition of “political activities” (and whether the person disseminating them believes or intends that they will influence US policy or the political or public interests of a foreign government or political party), without regard to the form of dissemination.11 This important definition excludes materials that are not related to political activities (which becomes all the more important, to the extent the proposed rule would narrow the traditional commercial exemptions).
The regulations also would formalize common practice by requiring agents to file their informational materials through the FARA website (known as eFile).12
And the “conspicuous statement” that informational materials must carry—identifying them as the product of a foreign agent, pursuant to § 614(b)—would be required to include the name of the country or territory where the foreign principal is located.13
The proposed rule also outlines specific expectations for the contents, format, and placement of the conspicuous statement depending on the medium, such as with the byline or biography of an author, at the beginning and end of a broadcast or film, or on the “home” and “about” pages of a website the registrant administers.14
Of particular debate in recent years has been the labeling of informational materials disseminated through social media, especially where posts are limited in length. The proposed rule addresses situations where the registrant lacks administrative rights to an internet site (and, thus, may not have enough space to post the entire conspicuous statement, such as a post on X).
In this scenario, the registrant must include in each post or comment “an embedded image of the conspicuous statement on the face of the comment or post, along with the term ‘FARA,’” the registrant’s registration number, and a link to their FARA registration on DOJ’s website.15
In addition, in a proposal to implement § 614(e), agents would need to include the conspicuous statement on all communications with any agency or official, including even scheduling communications (to avoid circumstances where the government official arrives at a meeting without knowing it was requested on behalf of a foreign principal).
Other Notable Provisions
DOJ ultimately decided against certain changes raised by the ANPRM three years ago: using regulations to provide additional guidance on the scope of agency under FARA, the definition of “political consultant” and its relationship to “political activities” or other activities requiring registrations, and the scope of certain other exemptions.
Several other proposed changes (or aspects of the commentary) deserve mention, however:
- The proposed rule contains a number of provisions that would change the manner in which advisory opinions are sought.16
- With respect to the exemptions for foreign government personnel, under § 613(b) and (c), the proposed rule would require these personnel to register online with the Department of State’s electronic system (eGov).17
- DOJ considered whether residential addresses of FARA registrants could be redacted by the FARA Unit prior to their being posted publicly and concluded that the statute’s specific language, 22 U.S.C. § 612(a) (requiring that registration statements contain residential addresses), precluded that change.18 But the proposed rule would require registrants to provide, under separate cover, their e-mail addresses and telephone numbers.19
* * *
The proposed changes to the FARA regulations focus on a subset of topics identified three years ago in the ANPRM and, in the main, implement changes that DOJ officials have long forecast would be coming. The most significant changes, to the rules related to § 613(d) and the commercial exemption, would require registration for more political activities benefitting foreign corporations and a larger number of activities (even non-political ones) by foreign, state-owned enterprises. Those that currently rely on the LDA exemption, however, may be heartened that the proposed rule makes relatively minor changes to that exemption (and indeed, those changes may have the effect of allowing greater use of the exemption).
Those that currently avail themselves of the commercial and LDA exemptions might consider commenting on the proposed changes during the next 60 days.
1 28 C.F.R. § 5.304(b).
2 Proposed 28 C.F.R. § 5.304(b)(2).
4 Proposed 28 C.F.R. § 5.304(c).
6 Proposed 28 C.F.R. § 5.304(d)(1).
7 Proposed 28 C.F.R. § 5.304(d)(2).
11 Proposed 28 C.F.R. § 5.100(g).
12 Proposed 28 C.F.R. § 5.400.
13 Proposed 28 C.F.R. § 5.401(a).
14 Proposed 28 C.F.R. § 5.401 (b)-(f).
15 Proposed 28 C.F.R. § 5.401(g).
