In 2017, when the U.S. Department of Justice’s (DOJ) investigation into the Russian government’s efforts to interfere in the 2016 presidential election became public, the Foreign Agents Registration Act (FARA) experienced a resurgence of activity not seen since the statute’s inception prior to World War II. That year, DOJ and the Federal Bureau of Investigation (FBI) underwent a paradigm shift, identifying malign foreign influence as a national security priority. DOJ escalated its FARA enforcement efforts, the FBI created a task force targeting foreign influence, and, most prominently, Special Counsel Robert Mueller charged multiple FARA cases. The ripple effects of this increased attention meaningfully altered the FARA compliance landscape. The number of active registrants today is fifty percent higher than in 2016.
This year has the hallmarks of being FARA’s next big year, with expected regulatory changes, potential statutory updates, and escalated enforcement.
Enacted in 1938 in response to growing fascist and communist propaganda, FARA was intended to “protect the integrity of American democracy by combatting covert foreign government influence in our political process.” It is a broad statute that imposes registration and disclosure requirements on any entity or individual that acts as an “agent of a foreign principal,” unless an exemption applies. There are three elements necessary to trigger FARA’s registration requirement: a foreign person or entity; an agent acting in the United States on behalf of that foreign person or entity; and that agent engaging in activities enumerated in the statute. “Agency” is broadly defined in the statute, to include acting at the mere “request” of a foreign person or entity. The list of activities that come within FARA’s purview is long, and includes efforts to influence public opinion or government action, disseminating information in the United States, and political consulting. While the scope of FARA is extensive, a wide range of conduct is exempt from registration (including certain commercial, religious, or academic activities).
New FARA Regulations
One of the most significant actions that will impact FARA in 2022 is DOJ’s effort to amend and update the statute’s implementing regulations. Last month, in an Advanced Notice of Proposed Rulemaking (ANPRM), DOJ floated a series of open-ended questions on ways to clarify and modernize FARA’s regulations, and invited suggestions from the public. The ANPRM’s public comment period does not close until February 11, 2022, after which DOJ will publish a Notice of Proposed Rulemaking that contains its proposed amendments to the regulations. Only after yet another public comment period will DOJ be able to publish new, final regulations.
Big changes are in store, as DOJ has not made significant changes to FARA regulations in almost 30 years, which means they are out of step with our digital world of news and commerce. In the ANPRM, DOJ signaled that it intends to change the most widely used statutory exemption: the commercial exemption. The commercial exemption provides that an agent of a foreign principal engaged in otherwise registrable activity does not have to register in two situations: if the agent is engaged in “private and nonpolitical activities,” or if the agent is engaged in political activities “not serving predominantly a foreign interest.” Those vague categories are clarified to a limited degree in the regulations, which provide that the exemption is only generally available for activities in furtherance of commercial operations that, among other requirements, “[d]o not directly promote the public or political interests of a foreign government or of a foreign political party.” (Emphasis added).
The ANPRM asks whether the word “indirectly” should be added, so that any activity that even indirectly promotes the public or political interests of a foreign government or of a foreign political party would no longer fall within the scope of the commercial exemption. This change alone has potential to have a far-reaching impact, depending on how broadly DOJ construes “indirect” benefits. Many organizations are engaged in activities that primarily further their own commercial interests, but that could indirectly benefit a foreign government or that government’s interests.
DOJ is also scrutinizing the exemption for “activities in furtherance of bona fide religious, scholastic, academic, or scientific pursuits or of the fine arts.” The broad language of the exemption is seemingly only limited by the meaning of “bona fide,” which DOJ has never defined. The ANPRM notes that the current regulation only articulates when the exemption does not apply—when a person is engaged in political activities—and asks whether the regulation should also clarify when it does apply. DOJ does not reveal how it intends to provide that clarity, but any change will affect countless academic institutions, research facilities, and think tanks across the country.
Beyond the exemptions, DOJ is considering fundamental changes to FARA’s requirements for labeling information distributed for foreign principals, called “informational materials.” FARA requires that informational materials include a “conspicuous statement,” which current DOJ guidance suggests should state that “This material is distributed by (name of registrant) on behalf of (name of foreign principal). Additional information is available at the Department of Justice, Washington, DC.” The ANPRM acknowledges that these rules—largely unchanged since the late 1960s—are obsolete and seeks comment on several topics, including what labeling requirements should apply to social media content. Updates to these regulations will affect nearly all registered agents, potentially bringing more communications within the scope of what is considered “informational material” and opening the door for more enforcement actions.
Critically, the ANPRM is open-ended and invites comments or suggested revisions on any aspect of FARA. All aspects of the law are thus fair game, including the exemption for registrants under the Lobbying Disclosure Act (a less burdensome disclosure statute commonly used by lobbyists to avoid FARA), the exemption for lawyers (available for counsel who represent foreign clients in U.S. courts or before federal agencies), other parts of the commercial exemption, and the definition of “agency.”
DOJ may also clarify the scope of certain activities that trigger registration requirements, such as acting as a political consultant, publicity agent, or public relations counsel. Whether or not these other provisions are affected, there is no question that the new regulations will change who will have to register, what they will have to label and disclose, and how FARA will be enforced.
Momentum for Congressional Action
There are also signs that this could be the year Congress passes legislation to reform and update FARA. In the last few years, Senator Chuck Grassley (R-Iowa) has led efforts to pass the Foreign Agents Disclosure and Registration Enhancement Act (S.1724), which most notably would empower DOJ to issue civil investigative demands to require the production of documents and testimony; create civil penalties for violating FARA; and increase criminal penalties. Providing civil investigative demand authority would allow DOJ to obtain more information and cooperation from targeted individuals, whose response to FARA Unit letters for information today is entirely voluntary. Imposing civil penalties could alter the compliance landscape, as the current consequences for a non-willful violation of FARA are generally limited to forcing an entity to register or amend a filing.
In December 2020, Sen. Grassley’s attempt to pass the bill by unanimous consent was blocked by an objection from Senator Robert Menendez (D-N.J.), who agreed that “changes are sorely needed to FARA,” but requested the opportunity for the Foreign Relations Committee to consider such changes. The bill was subsequently sent to the Committee, which Sen. Menendez chairs. After a year of review, the bill may be ripe for another vote. It may also soon have a new advocate in the form of DOJ. In November, Matt Olsen began as Assistant Attorney General (AAG) for the National Security Division, whose responsibilities include oversight of the FARA Unit. By pushing for updates to the regulations, this DOJ is signaling support for and interest in FARA reform, unmatched in the Trump administration.
Nor is Sen. Grassley’s proposal the only take on FARA reform. Members of Congress from both parties have offered their own various proposals to update the law. Some proposals have been focused on particular components of the existing regime like “informational materials” or particular types of registrants, while others (including one of the Democratic Party’s signature pieces of legislation, the For the People Act) include retooling FARA as part of a broader package of influence related reforms.
Enforcement is primed for a big year in 2022 as well. The first sign that this will be a significant year is the allocation of unprecedented enforcement resources. Over the past year, DOJ added two new hires to the relatively small FARA Unit—a civil attorney and an analyst—which constitute the first such personnel for the Unit since 2016. The FARA Unit has never before had an attorney specializing in civil litigation; this will likely embolden the Unit to be more assertive and litigious when it identifies deficiencies. The new analyst expands the capacity to review the record number of FARA filings for those deficiencies. Both individuals also expand the ability of the Unit to conduct inspections of registrants, which remain at a record level according to recent comments from Jay Bratt, Chief of DOJ’s Counterintelligence and Export Control Section.
There is also likely to be an abundance of prosecution opportunities. DOJ opened a record number of FARA investigations in 2020, and white-collar investigations take time to investigate, especially in the time of COVID-19. In 2021, DOJ brought only two FARA cases: Kaveh Afrasiabi was charged last January for acting as a public relations counsel and political consultant for the government of Iran, and in June, a superseding indictment was filed against Low Taek Jho and Prakazrel “Pras” Michel for their alleged role in an undisclosed lobbying campaign on behalf of the Chinese government. Additionally, relevant political leadership, including AAG Olsen, is finally in place to review and approve prosecutions.
There are also multiple pending FARA and FARA-related criminal matters that will likely be resolved in 2022. The Afrasiabi case appears to be close to resolution, as the U.S. District Court for the Eastern District of New York has permitted the parties to delay procedural deadlines “to allow discussions to take place that could eliminate the necessity for a trial.” The criminal case against Bijan Rafiekian may finally come to an end this year, following the Fourth Circuit’s decision to reinstate the conviction last March. The U.S. District Court for the Eastern District of Virginia heard oral argument on Rafiekian’s renewed motion for a new trial on Dec. 15, 2021. The criminal case against Thomas Barrack for being an unregistered agent of the United Arab Emirates is scheduled for trial in September. Although he is charged with violating 18 U.S.C. § 951, not FARA, the alleged conduct involves foreign influence, and thus is part of DOJ’s ongoing enforcement efforts in this area. And, finally, there will be updates in the FARA investigation involving Rudy Giuliani for work related to Ukraine. To date, an appointed Special Master continues to consider objections raised by affected parties.
With anticipated changes in the law, enforcement, and administration of FARA, we may not know precisely how the landscape will look at the end of the year. But we can predict that, in 2022, DOJ and its FARA Unit are likely to have more resources, more tools, more support, more registrants, and more defendants.