Foreign agent law faces sweeping changes

The Department of Justice is expected to propose a sweeping update. Affect disclosure rules Next month, for representatives of foreign clients that could change the contours of a World War II-era law.

Decades after any major legislative or regulatory changes to the Foreign Agents Registration Act (FARA), the Foreign Agents Registration Act (FARA) continues to impact U.S. policy and the public with respect to foreign interest issues. It imposed registration and reporting obligations on individuals and organizations attempting to do so.

Congress passed FARA in 1938 in response to the rise of Nazi propaganda in the United States. The law does not prohibit constitutionally protected free speech rights, but it seeks to establish transparency into foreign influence operations.

Even as the Justice Department has become more aggressive in enforcing FARA, practitioners say the law has not kept pace with recent changes in society, such as the rise of social media and multinational corporations.

“It’s been a while and the law is showing its age,” Josh Rosenstein, a member of Sandler, Leaf, Lamb, Rosenstein & Birkenstock & Birkenstock who specializes in FARA compliance, told The Hill. .

“There will be some regulatory changes. The question is what those regulations will be, what bold actions the Department of Justice wants to take through regulations, and whether they want to push the envelope.” added.

The Department of Justice has signaled potential changes to key provisions, including exemptions from the Commercial and Lobbying Disclosure Act (LDA) and updated disclosure guidance for the digital age. But some experts question how it sheds light on the truly subversive influence activities that are shaping contemporary political discourse.

“The real problem is not to step back and say that we’re trying to apply this law to modern society that is inappropriate for modern society, but it’s not actually targeting something that is subversive,” the foreign actor said. “There are a lot of concerns and issues right now, including influencing elections and foreign actors stoking anxiety in the United States,” Ballard Spahr partner Kate Belinsky told The Hill.

The Department of Justice initially said,Clarification and modernizationFARA made the announcement in December 2021, months after the departure of former FARA division chief Brandon Van Grack.

“Considering the basics, [FARA] It’s all about transparency, disclosure and awareness, and this law contains all kinds of references and expectations that don’t fit with the 21st century and social media,” said Van Gluck, now a partner at Morrison & Foerster. he told The Hill.

The Department of Justice could issue a long-awaited notice of proposed rulemaking as early as April, and practitioners told The Hill that the new rules will be applied in the modern era, with vague and sometimes contradictory guidance. He said he hoped for clarity.

Tessa Capelot, a partner at the law firm Wiley, told The Hill that “clarifying not just the exemptions but also the triggers will help enforcement.” She said: “When things are clearer and the laws are clearer and more clearly defined, it becomes easier to comply.”

The Justice Department’s Office of Public Affairs did not respond to a request from The Hill to confirm when the new rules would take effect or comment on them.

But practitioners said Justice Department officials teased possible updates to some of the FARA regulations at the annual National Forum on the Foreign Agent Registration Act in December.

In particular, comments regarding a possible review of the long-standing “commercial exemption” caught the attention of FARA watchers.

Currently, the commercial exemption exempts agents of foreign principals from registering with FARA if their activities are “private, nonpolitical activities in the furtherance of bona fide trade or commerce.” .

However, Jennifer Gerry, former head of the FARA Division and current acting head of the Counterintelligence and Export Control Division, said during the FARA meeting that the agents’ activities primarily benefit foreign individuals or entities. proposed updating the regulations to consider whether

Essentially, “The Department of Justice wants to flip it.” [the commercial exemption] “If you are engaging in political activity on behalf of a foreign principal, even if it is commercial in nature, you will need to find another exemption,” Rosenstein said.

The rule change could have knock-on effects for companies that do business with foreign governments or political entities.

The Senate Permanent Special Investigations Subcommittee on Homeland Security is embroiled in a months-long investigation into Saudi Arabia’s investments in the United States as tools of influence. At last month’s committee hearing, executives from four U.S.-based companies employed by the Saudi Public Investment Fund testified before the committee. Only one company, Teneo, is registered for that work under FARA.

Sen. Richard Blumenthal (D-Conn.), the subcommittee chairman, told The Hill after the hearing that one of the major findings from the subcommittee’s investigation was that FARA reform He said the reforms were “definitely” something he would introduce. .

Perhaps the biggest change that could result from the Justice Department’s proposal would be the hollowing out of the LDA exemption, which exempts agents who “engage in lobbying and have registered” with the LDA.

This means that lobbyists will disclose the general work they have done for their clients and the amount of money they have received, but they will also disclose information materials and supporting statements, including details such as meetings with officials that would be required if they registered with FARA. It’s not necessary. .

“Of all the potential changes, this is one of the more significant changes and ramifications,” Van Grack said, noting that after Congress passed the LDA in 1995, FARA enrollment numbers increased. pointed out that it had been significantly reduced.

“If we continue with the numbers that happened in 1995, we could potentially double or triple the number of private entities that need to register with FARA,” Van Grack added.

The Department of Justice has expressed support for Revoke exemption by letter In November 2022, Sen. Bob Menendez (DN.J.), Sen. James E. Risch (R-Idaho), Sen. Dick Durbin (D-Ill.), and Sen. Chuck Grassley (R-Ill.) – Sent to Iowa).

“The Department conducted an evaluation and concluded that the LDA exemption should be removed from FARA. Therefore, the Department does not support an audit of the effectiveness of the LDA exemption, but instead supports its repeal. ” Assistant Attorney General Carlos Felipe Uriarte said in the letter.

Changes to both the commercial and LDA exemptions are likely to face significant opposition from the business community.

Belinsky said she thought it would be “crazy” to eliminate the LDA exemption.

‘Yes, the number of people enrolling in FARA will increase, but for what purpose?’ And it will have a negative impact on the investment and business environment in the United States,” Belinsky said.

“Removing the LD exemption will not expose things like Russian election interference,” she added.

Conference attendees also heard about the new labeling of online “informational materials,” which refers to letters, emails, advertisements, and other communications distributed by investigators on behalf of foreign clients to two or more people, by Justice Department officials. He stated that he had provided guidelines.

These materials must include a conspicuous and lengthy disclaimer that they are provided by an agent of a foreign government. This becomes difficult when the disclosure is about as long as a tweet’s original 140-character limit, Rosenstein said.

“The use of modern technology in public relations, communications and lobbying is rapidly increasing,” Rosenstein said. “One of the main areas that the law has not really addressed is with regard to very simple requirements, such as the obligation to display and submit what the law used to call propaganda and now calls information material. is.”

Belinsky again questioned how effective such guidance would be.

“I think it’s great that they’re trying to modernize it, but again, that’s assuming the people who are already doing the capture and disseminating this information are properly registered. And that’s actually not the case,” she said.