As we begin 2022, a number of indicators suggest that momentum is building to reform the Foreign Agents Registration Act (FARA). Last year, an American Bar Association task force report calling for legislative amendment and regulatory reform served as a precursor to disclosure by the Department of Justice (DOJ) that it is considering a number of regulatory changes to FARA. FARA has long suffered from interpretation, compliance, and enforcement problems. The expansive, and at times inscrutable, language of the statute renders many unsuspecting entities and individuals subject to potential registration obligations for conduct that would not establish a formal agent-principal relationship under traditional legal principles. Globalization and the rise of digital communities further complicate those dynamics. And, as former FARA Unit Chief Brandon Van Grack and co-author Haydn Forrest note in their terrific Just Security piece, FARA’s Next Big Year, DOJ has been increasingly active – in terms of resources, volume, and creativity – in enforcing the Act.
The world has changed tremendously since Congress crafted the FARA statute. That makes 2022 a good time to consider statutory and regulatory developments that could rationalize and update FARA’s role in the U.S. counterintelligence and anti-foreign influence regime. The Van Grack-Forrest article does an excellent job of laying out DOJ’s proposed regulatory changes and enforcement momentum. Here, we add further context on the origins and perspectives of calls for reform.
DOJ’s Increased Enforcement of FARA and Calls for Reform
Congress enacted FARA, as Steve Vladeck reminds us, to address concerns over the presence of Nazi and Communist propagandists in the United States. As former Assistant Attorney General John Demers put it, “FARA helps protect the integrity of American democracy by combatting covert foreign government influence in our political process.” FARA was historically underenforced. But in recent years, DOJ placed an increased emphasis on FARA enforcement for a couple of reasons.
In 2016, the House Appropriations Committee approved a legislative mandate that the DOJ Office of Inspector General (OIG) review the Department’s track record on FARA enforcement. The resulting OIG report found a many deficiencies, including a dip in registrations that began in the 1990s, an increase in untimely filings among registrants, disparate internal DOJ views about the substance of FARA’s coverage and exemptions, and a preference within the FARA Unit to pursue registration compliance rather than pursue criminal enforcement actions. (That last OIG finding strikes us as a good thing.) OIG observed that the passage of the Lobbying Disclosure Act, and the FARA exemption it contains, contributed to the slump in registrations. OIG also noted that several enforcement challenges raised by Department interviewees, including the lack of civil enforcement demand authority, would require legislative fixes to resolve.
In addition, foreign interference in U.S. elections and political discourse has been on the rise, prompting DOJ to look anew at available counterintelligence and counter-propaganda tools. Since the OIG report was released, DOJ has taken aim at high-profile individuals for FARA investigations and prosecutions. Paul Manafort, Rudy Giuliani, Bijan Rafiekian (business partner of former National Security Advisor Michael Flynn), and Greg Craig (former Obama White House Counsel) have all been targets of DOJ’s increasingly aggressive FARA enforcement. The spectacle of Craig’s acquittal does not seem to have deterred DOJ’s enforcement push.
Increased enforcement has also led to a resurgence in calls for FARA’s overhaul from counsel representing clients trying to navigate the statutory scheme (including the authors of this piece). Indeed, critics of the law have long called for clarity, citing vagueness in the statute’s terms, the statute’s overall breadth, and the DOJ’s lack of a comprehensive enforcement strategy.
The ABA Task Force Report and Recommendations
In 2019, the International Law Section of the American Bar Association established a FARA Task Force, with a goal of analyzing issues with the law and its associated administration and enforcement. The Task Force – comprised of individuals with extensive experience in FARA administration and enforcement – set out to “reexamine FARA from a fresh and comprehensive perspective” and determine “what kind of statutory and regulatory regime makes sense in the twenty-first century,” and to provide recommendations for Congress and DOJ. Its work culminated in a nearly 60-page report (Task Force Report) identifying numerous issues with FARA and providing comprehensive recommendations for reform.
The Task Force Report emphasizes the need for regulatory clarity and enforcement transparency. It also discusses the “heightened importance” attached to FARA compliance in the presence of DOJ’s “aggressive” enforcement strategy. Described by the ABA Task Force as an “antiquated statutory regime which is expansive in its jurisdictional scope,” FARA has not seen any widespread structural reform since its enactment in 1938. Given DOJ’s increased enforcement, the Task Force notes that consideration of reform “has never been more essential or timely.”
While the Report includes recommendations for both Congress and DOJ, it does not discuss the political feasibility of their implementation. However, it compiles views of individuals with tremendous experience in the FARA space, rendering the Report a valuable contribution and a must read for FARA-regulated parties.
Task Force Recommendations for Reform: Congressional Action
The Report contains a significant and daunting legislative proposal to rename the FARA statute to address problems stemming from the statute’s “ubiquitous” use of the term “agent.” Specifically, the Task Force suggests that the use of the term is misleading, elicits confusion, and carries unnecessary stigmatization as it relates to FARA registration. The Report recommends both renaming the statute and replacing the term “agent” with another term – for example, “representative” – wherever it appears in the statute.
The Report also recommends Congress amend FARA’s scope and structure to bring FARA in line with its “core policy goals.” The Task Force recommends refining the law’s primary definitions, which it characterizes as “exceedingly broad,” to provide clarity to both enforcement actors and regulated parties. Specific recommendations include: (1) narrowing the definition of the term “foreign principal” and (2) altering the “agent of a foreign principal” definition, in both cases refining the terms to tie closely to activity undertaken on behalf of a foreign government or political party, or entity acting on their behalf, in a way that matches FARA’s policy goals. Additionally, the Report proposes altering the scope of FARA’s application as it relates to media organizations to focus on the degree to which foreign governments exercise control over content disseminated in the United States and advocates for “harmonization” of the regimes under FARA and the Lobbying Disclosure Act.
In recent years, Congress has seen a number of proposals aimed at FARA reform. Senator Chuck Grassley (R-IA) spearheaded the launch of a bill proposing FARA reform in 2021, cosponsored by Senators John Cornyn (R-TX), Marco Rubio (R-FL), Todd Young (R-IN), and Lindsey Graham (R-SC). The bill was a “relaunch” of an identical proposal introduced by Grassley in 2019, which ultimately failed, despite widespread bipartisan support. However, members of the Task Force expressed hope that the Report’s release would “stimulate consideration and action” by Congress.
Task Force Recommendations for Reform: DOJ Action
The Task Force Report also includes regulatory recommendations that DOJ could implement, which could be done without legislative reform, minimizing the political hurdles that the legislative process invites. The Report primarily recommends that DOJ issue additional guidance, with the goal of eliminating confusion about the meaning of key terms and the Department’s interpretation of common FARA exemptions. The Report notes that leaving the existing confusion unaddressed neither serves DOJ’s interest in promoting FARA compliance nor aids in its enforcement capabilities.
DOJ, apparently recognizing the need for clarity, has already issued a number of advisory opinions since 2019, including over 30 opinions on the contours of an agency relationship alone. However, the Task Force cautioned that the heavy reliance on advisory opinions in some areas – particularly in interpreting FARA exemptions – has left regulated parties with “inconsistent guidance.” Thus, the Task Force recommends DOJ issue more “generally applicable policy guidance,” which would allow potential registrants, regulated parties, and advisors of potential registrants or regulated parties to access simplified and streamlined guidance on FARA’s application. The Department would have to employ its resources to compile and produce such guidance, but it would ultimately serve DOJ’s interest of promoting FARA compliance, as it continues to push for an aggressive FARA enforcement strategy.
The Biden Administration’s FARA Regulatory Reform Effort
On Dec. 13, DOJ’s National Security Division (NSD), where the FARA Unit is housed, issued an advanced notice of proposed rulemaking (ANPRM) “that would amend or otherwise clarify the scope of certain exemptions, update various definitions, and make other modernizing changes to the Attorney General’s [FARA] implementing regulations.” The comment period ends on Feb. 11, 2022. This would be the first revision to FARA regulations since 2007. The Van Grack-Forrest article does a good job of laying out DOJ’s thinking on timing. What is interesting, if perhaps unsurprising, is that DOJ appears to be contemplating reforms that largely head in a different direction than those recommended by the Task Force.
The scope of DOJ’s proposed regulatory changes contained in the ANPRM’s 19 questions cover a lot of ground, from substance to procedure. The ANPRM states DOJ is now “considering amending and updating . . . key substantive provisions, such as the attorney and commercial exemptions.” Other proposed changes would address social media and electronic filing procedures, among other things.
We highlight a few of the substantive areas, below.
The Commercial Exception: Champagne Questions
Of most consequence, DOJ contemplates “limiting the scope of the exemptions so that they would not apply if the activities promoted – either directly or indirectly – the public or political interests of a foreign government or foreign political party.” Two of FARA’s three commercial exemptions (22 U.S.C. § 613(d)) provide that an agent of a foreign principal engaged in otherwise registrable activity does not have to register if the agent is engaged in “private and nonpolitical activities in furtherance of the bona fide trade or commerce of such foreign principal,” or if the agent is engaged in political activities “not serving predominantly a foreign interest.” The current FARA regulations limit that exception to activities furthering commercial operations that “do not directly promote the public or political interests of a foreign government or of a foreign political party.”
Adding “or indirectly” after “directly,” as the ANPRM proposes, would enshrine in regulation a problematic position DOJ has taken in its formal and informal guidance. The focus of FARA’s regulation in the commercial context should be on an actual subversive propaganda situation in which a company or individual is acting as a front for a foreign government or political party. Instead, under the governing authorities, DOJ – in the absence of evidence of surreptitious relationship or a formal agency relationship within the meaning of traditional common law principals – engages in ad hoc analysis of what kinds of conduct undertaken by the private sector benefit another country’s interests.
The Department’s expansive reading of an already expansive statute aggrandizes DOJ’s power at the expense of a nexus to the policy rational for the statute. A recent DOJ advisory opinion determined that meetings undertaken by a U.S. advisory firm to appeal to U.S. industry leaders about investment opportunities in a foreign country, on behalf of another advisory firm engaged by a foreign government, constitute political activities under FARA because the U.S. advisory firm at issue “would be intending to influence a section of the U.S. public – namely, U.S. companies – with respect to the public interests of the [foreign country’s] economic sector writ large (as opposed to with respect to a specific company or transaction).”
Consider the distances DOJ could take with this logic. Under one reading of that advisory opinion, a private U.S. marketing firm with a private French winemaker client could potentially open itself to FARA registration liability for suggesting in ad copy, directed at the U.S. market, that wine products can only be champagne if the grapes come from the Champagne region of France. That representation to a U.S. audience made on behalf of a private company, purely motivated by commercial competitive advantage against other sparkling wine producers in a global marketplace, could further the political interests – in commerce! – of France. Under the revision the Department contemplates, the commercial exception to FARA registration might not be available to our hypothetical vintner’s marketing firm.
That may be an overly aggressive reading of DOJ reasoning because an advertisement on behalf of one company, but discussing a product sector, could be distinguishable from advice intended to advance the economic interests of a foreign company. Or, other dynamics about that particular fact pattern giving rise to the advisory opinion could be material to DOJ’s analysis. But it underscores the overall problem of the Department making an independent assessment of the beneficiary of an activity that might not flow from traditional common law principal-agent doctrine and might not involve any communications or agreements at all with a foreign government or political party.
The Attorney Exception: Modern Practice of Law
FARA’s statutory language (22 U.S.C. § 613(3)(g)) provides an exemption for lawyers representing a disclosed foreign principal before any court of law or any agency of the government, provided that the “representation does not include attempts to influence or persuade” the tribunal or regulator outside of the proceeding. The statute’s narrow language, coupled with DOJ’s narrow construction, of legal work covered by the exception has been a source of tension and confusion for attorneys trying to represent foreign-based clients. Modern practice of law often contemplates a more holistic approach to problem solving that can include communications, policy, and other tools of advocacy that do not approximate a traditional legislative lobbying effort.
In line with figuring out the right lines to draw, the ANPRM poses the question:
Should the Department amend [related regulation] 28 CFR 5.306(a) to clarify when activities that relate to criminal, civil, or agency proceedings are “in the course of” such proceedings because they are within the bounds of normal legal representation of a client in the matter for purposes of the exemption in 22 U.S.C. 613(g)? If so, how should the Department amend the regulation to address that issue?
Jennifer Gellie, who now leads the FARA Unit, has indicated on more than one occasion – witnessed by one of our authors at a conference and also during a webinar panel – that DOJ appreciates that modern practice of law may require some interface between lawyers and their client’s communications team or public relations counsel in order to fact-check messaging and otherwise protect the integrity and environment of a particular legal proceeding. The Task Force argues that the guidance on the lawyer exemption is sparse and at times inconsistent. It recommends a regulatory change, or, failing that, a legislative change, that would allow the exemption to apply to “activities routinely attendant to such disclosed legal representation” and cabin the limitation on this exemption to efforts to influence U.S. policy or relations with a foreign government or political party.
Informational Labeling in a Digital World
FARA registrants have an obligation provide conspicuous labels on advocacy materials. Digital platforms and other new communications modes present significant compliance questions. How does one conspicuously label a Tweet?
As such, the ANPRM poses the following questions:
What changes, if any, should the Department make to the current regulation, 22 CFR 5.402, relating to labeling informational materials to account for the numerous ways informational materials may appear online? For example, how should the Department require conspicuous statements on social media accounts or in other communications, particularly where text space is limited?
It will be interesting to see where the rulemaking process takes that issue, which will have substantial practical compliance ramifications.
It remains to be seen whether the Task Force’s Report will receive traction on the Hill. It appears to have had little effect, so far, on DOJ. Admittedly, the Task Force did not “conduct its fact-finding or analysis . . . burdened by the potential limitations of what types of reforms might be politically viable.” Such limitations are far more prevalent when it comes to congressional action. At the very least, the Report and DOJ’s ANPRM open a much-needed conversation regarding structural reformation of FARA – a conversation that is presently happening in Congress, albeit on a smaller scale.