Overview
The Foreign Agents Registration Act (“FARA”) is a complicated, arcane, and exceedingly broad statute. Enacted in 1938 to combat foreign propaganda activities in the United States, FARA received little attention until recent years when the Department of Justice (“DOJ”) escalated its FARA enforcement efforts. Consequently, it has become a popular topic of discussion for reform. The American Bar Association created a task force on FARA and published a report, in 2021, which outlined numerous potential reforms. That same year, DOJ’s National Security Division, which administers and enforces FARA, issued an advanced notice of proposed rulemaking “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.”[1] A subsequent notice of proposed rulemaking, setting forth clarifications and updates to DOJ’s FARA regulations, has yet to issue, but is expected this year, as confirmed last month in public remarks by Deputy Attorney General Lisa Monaco. For their part, the House and Senate have also introduced over fifty bills related to FARA since 2019 and have already introduced six bills this Congress. With momentum for reform growing, will the 118th Congress finally pass FARA legislation?
What Have Lawmakers Tried to Accomplish in the Past?
In recent years, Congress has approached FARA reform in a variety of ways, but a few key issues, discussed below, have emerged.
DOJ’s Enforcement Authority
Numerous bills have been introduced in the last two Congresses to enhance DOJ’s enforcement authority. Presently, DOJ’s FARA Unit both administers and enforces FARA. Some legislative proposals contemplate an entirely separate division within DOJ for FARA enforcement. Other bills would provide DOJ with expanded enforcement tools, such as civil investigative demand authority, which is similar in function to subpoena power, increased fines for criminal violations, and the introduction of civil monetary penalties for lesser technical violations of FARA or instances where criminal intent is absent. Unsurprisingly, DOJ has signaled its support for this approach, noting in a recent letter that increased enforcement authority would “provide the Department with the same basic civil investigative tools and remedies with respect to FARA that other Department components use routinely in their civil enforcement efforts, including the Antitrust Division and the Civil Division.”[2]
Exemptions
There are several statutory exemptions that allow agents of foreign principals, who would otherwise be subject to FARA’s registration requirements, to avoid registration. A perception persists that these exemptions are subject to abuse and undermine FARA’s core purpose of increasing transparency. Consequently, lawmakers have focused on reforming two of the most frequently used exemptions – the LDA exemption and the commercial exemption. Under the LDA exemption, FARA’s registration requirements do not apply if the agent is registered under the LDA, has engaged in lobbying activities, and the representation is not on behalf of either a foreign government or foreign political party. The LDA exemption is often seen as “a loophole to avoid FARA registration and disclosure” because prospective agents want to file under the least burdensome and comprehensive disclosure regime.[3] Last year, in an attempt to address this issue, the Senate unanimously passed two bills related to the LDA exemption, including the “Disclosing Foreign Influence in Lobbying Act,” introduced by Sen. Grassley (R-IA), and the “Lobbying Disclosure Improvement Act,” introduced by Sen. Peters (D-MI). Although these bills did not pass the House, the “Lobbying Disclosure Improvement Act” was reintroduced this Congress by Senators Peters and Grassley and would require LDA registrants to disclose on their registration whether they are claiming the LDA exemption under FARA, making it easier for the FARA Unit to audit LDAs to ensure compliance with FARA. Lawmakers have also tried and failed to reform the so-called commercial exemption, which exempts certain activities “in furtherance of the bona fide trade or commerce” of a foreign principal. These legislative proposals prohibited agents of foreign principals of certain countries from utilizing the commercial exemption. DOJ’s anticipated rulemaking is expected to modernize and clarify the scope of FARA’s exemptions, including the LDA and commercial exemptions, but the timing and scope of those regulatory updates remains uncertain.
Countries of Concern
As in many other areas, numerous FARA reform bills have focused on China and Russia, including, most recently, an amendment to the National Defense Authorization Act (“NDAA”) for 2023 offered by Senators Cornyn, Whitehouse, Hagerty, and Fischer that would have designated China, Russia, Iran, North Korea, Cuba, and Syria as “countr[ies] of concern.” Agents of a foreign principal that is a “country of concern” would be prohibited from utilizing the commercial exemption or the LDA exemption. Ultimately, this provision was dropped in the conference report. However, Senators Cornyn, Whitehouse, and Risch have introduced an identical bill in the 118th Congress entitled the “Preventing Adversary Influence, Disinformation and Obscured Foreign Financing (PAID OFF) Act,” which would similarly designate the aforementioned countries as “countr[ies] of concern” and prevent agents of foreign principals of those countries from utilizing the LDA and commercial exemptions.
What’s Next?
It is difficult to predict whether Congress will pass FARA legislation. There are significant obstacles to passing any legislation, including partisan divide, procedural hurdles, executive branch opposition, and competing legislative priorities. Nevertheless, there are compelling factors to suggest this Congress will pass FARA legislation. For example, the “Lobbying Disclosure Improvement Act,” sponsored by Senators Peters and Grassley, passed the Senate by unanimous consent last Congress and demonstrates that there is bipartisan support for FARA reform under the right circumstances. Further, many of the bills introduced this Congress were also introduced in previous sessions both as stand-alone legislation and as part of an omnibus package. In addition to stand-alone legislation, we may see lawmakers try again to use the NDAA as the vehicle for reform. We may even see the DOJ’s own legislative proposal for FARA reform, which the Department noted it is currently working on in its December 2022 letter to Congress, as a companion to the forthcoming new regulations DOJ is expected to issue this year and could, at long last, help modernize and clarify the scope of FARA. With momentum for reform growing, evidence of bipartisan support, and a potential legislative proposal from DOJ, it is possible this Congress will finally pass FARA legislation.
[1] Clarification and Modernization of Foreign Agents Registration Act (FARA) Implementing Regulations, 86 Fed. Reg. 70787 (proposed Dec. 13, 2021).
[2] Dep’t of Justice, Office of Legislative Affairs, Department of Justice Letter in Support of S. 1724, at 3 (2022), available at https://www.justice.gov/ola/page/file/1553341/download.
[3] Dep’t of Justice, Office of the Inspector Gen., Audit of the National Security Division’s Enforcement and Administration of the Foreign Agents Registration Act, at 9 (2016), available at https://oig.justice.gov/reports/2016/a1624.pdf.
