Prepare for Big Changes to FARA Enforcement

White Collar Alert
11.15.2017

The Foreign Agents Registration Act (FARA) is receiving unprecedented attention these days. With the specter of foreign influence in U.S. politics a permanent fixture in the headlines, FARA has never been more relevant.

Until August, I worked in the National Security Division of the U.S. Department of Justice (DOJ), which includes the office responsible for administering and enforcing the Act, the FARA Registration Unit. For those of us who know FARA, the recent surge in attention is somewhat surprising, but not unwarranted.

FARA's primary purpose is exposing the otherwise hidden role of foreign governments in communications aimed at influencing the American public and U.S. government officials. Encouraging FARA disclosures, rather than deterring FARA evasion, has been the DOJ's traditional operating posture. Consequently, there is a general impression both on K Street and outside the Beltway that FARA is essentially toothless, despite the potential for criminal penalties, without real consequences for those who fail to register.

That perception finally appears to be changing. More importantly, however, is the reality that simply ignoring FARA, or claiming refuge under its exemptions, may become more challenging. For current and potential FARA registrants, a few specific issues merit watching closely in the coming months.

All signs point to the DOJ enforcing FARA more aggressively. This shift traces back to September 2016, when the DOJ's Office of the Inspector General (OIG) issued a report examining FARA enforcement. In sum, the OIG report concluded that the DOJ lacks a comprehensive FARA enforcement strategy and that such a strategy should be developed. The DOJ has since acknowledged publicly that it is actively implementing and documenting a strategy for the administration and enforcement of FARA, which will include updates regarding how it evaluates FARA criminal charges.

Pressure to devise a comprehensive FARA enforcement strategy has not been limited to the OIG report, however, as Sen. Chuck Grassley, R-Iowa, and others in Congress also have pressed the DOJ on this issue. In July, the Senate Judiciary Committee convened a hearing focused primarily on FARA oversight and foreign influence on U.S. elections. In connection with that hearing, a senior DOJ official confirmed that the DOJ recently expanded the sources of information used by the FARA Unit to identify potential or delinquent foreign agents to include information held by other government agencies, such as the Federal Bureau of Investigation, the U.S. Department of State and the Central Intelligence Agency. The wider net being cast by the DOJ could ensnare those who previously escaped notice.

Beyond the DOJ's FARA enforcement strategy, multiple pending legislative proposals would strengthen FARA and expand the DOJ's enforcement powers. The most recent of these bills – the Disclosing Foreign Influence Act, introduced two weeks ago by Sen. Grassley and Rep. Mike Johnson, R-La., – would not only give DOJ civil investigative demand authority over possible violations of the act, it would also eliminate the Lobbying Disclosure Act (LDA) exemption to FARA. Those two changes, if enacted, would represent a significant expansion of the DOJ's FARA enforcement mandate.

For years, the DOJ has maintained that one of its primary FARA enforcement challenges stems from its lack of authority to compel information from those who may be foreign agents. Civil investigative demand (CID) authority would squarely address that problem and end the era when voluntary letter requests were the sole means of gathering information in most cases. As proposed in the Grassley-Johnson bill, the DOJ would be able to utilize civil investigative demands to compel parties to produce documents, answer written interrogatories, and provide oral testimony. Most importantly, in the event of a failure to comply with a CID, the DOJ could seek enforcement in a U.S. district court, which has the power both to order compliance with the demand and, if necessary, find the noncompliant party in contempt. Traditionally, FARA enforcement has relied upon far more carrot than stick, but CID authority would unquestionably alter that balance.

Although CID authority would be an important step in the evolution of FARA enforcement, eliminating the LDA exemption might be even more significant. The Grassley-Johnson bill proposes to repeal the LDA exemption to FARA, which has been in effect since 1995. To many, the LDA exemption is perceived as a loophole to FARA because it is an exemption to a transparency law that fosters a conspicuous lack of transparency. For those lobbying on behalf of foreign principals, the LDA's less burdensome disclosure requirements make registering under the LDA strongly preferable to FARA. As such, the LDA exemption can have the effect of undermining FARA by obscuring the true nature of lobbying arrangements on behalf of foreign principals. Removing the LDA exemption would likely create a substantial increase in FARA registrations and make it more difficult for foreign agents to hide in plain sight by subjecting them to more rigorous public registration requirements. Although some in the lobbying community may bristle at the prospect of contending with FARA's heightened information requirements, they should proceed cautiously before publicly opposing a measure intended to increase openness and transparency regarding foreign influence in the U.S. political sphere.

Even if the LDA exemption survives a legislative change to FARA, it is unlikely to remain the safe harbor that lobbyists have enjoyed for the past two decades. The current LDA exemption is not available to those lobbying on behalf of a foreign government or foreign political party. Before bypassing FARA in favor of the LDA, one should give serious consideration to whether the foreign client is actually directed, controlled, or financed by a foreign government or foreign political party. It is safe to assume that the DOJ will be asking those same questions. The consequences of ignoring clear signs of foreign government involvement in such a representation could be significant.

Several of FARA's other exemptions – e.g., for persons whose activities are of a purely commercial nature; for persons qualified to practice law whose activities are limited to representation of a foreign principal in court or before U.S. government agencies; and for persons engaged in activities in furtherance of religious, scholastic, academic, or scientific pursuits, or the fine arts – could also be reassessed by DOJ. The OIG report noted that DOJ has challenges in determining whether these and other broadly worded exemptions apply to activities conducted by certain groups, such as think tanks, nongovernmental organizations, university and college campus groups, foreign media entities, and grassroots organizations that may receive funding and direction from foreign governments. In the past, asserting the applicability of an exemption was essentially a cost-free exercise for a potential registrant, but that may no longer be the case, especially if CID authority becomes a reality. Those deciding whether to claim an exemption should ensure that their position has been fully vetted and carefully considered.

FARA was originally enacted to inform the American public about the ultimate sources of Nazi propaganda disseminated in the United States in the years just before World War II. Modern political influence doesn't come from flyers or leaflets; it comes in the form of tweets, blogposts and closed-door meetings. Keeping the true foreign beneficiaries of such influence hidden from public view is a dangerous gambit with the potential to threaten the integrity of our political system. Potential FARA registrants owe it to themselves to weigh the consequences of less than full transparency when the current climate almost invariably demands more.


For more information, please contact:

Brian J. Fleming, bfleming@milchev.com, 202-626-5871

This article first appeared in Law360 on November 14, 2017.


The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.

This, and related communications, are protected by copyright laws and treaties. You may make a single copy for personal use. You may make copies for others, but not for commercial purposes. If you give a copy to anyone else, it must be in its original, unmodified form, and must include all attributions of authorship, copyright notices, and republication notices. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this presentation without prior written consent of the copyright holder.