On September 20, 2022 Senators Gary Peters (D) from Colorado and John Cornyn (R) from Texas introduced separate bills, both with bipartisan support, aimed at tackling issues regarding FARA exemptions.
FARA refers to the Foreign Agents Registration Act which was enacted in 1938. FARA requires certain agents of foreign principals who are engaged in political activities or other activities specified under the statute to make periodic public disclosure of their relationship with the foreign principal, as well as activities, receipts and disbursements in support of those activities.
Let’s take a look at both bills alongside the American Bar Association’s 2021 report on FARA issues and reform to get a clearer sense of what may be in store for foreign agents working in the United States.
Senator Cornyn’s bill would clarify that “any agent of a foreign principal that is listed as a foreign adversary” would not be exempt under either the “bona fide trade or commerce” or the Lobbying Disclosure Act exemptions. As the ABA’s report (hereafter, the Report) points out, Congress has pressed FARA to focus primarily on agents of “foreign governments and political parties,” and filing exemptions were put in place to help hone that focus. Prior to these exemptions, ostensibly any American doing media work for any foreign entity, even a toy company, would have to register (pdf, 27).
Senator Peters’ proposal would, in actuality, be an amendment to the Lobbying Disclosure Act of 1995 (LDA), but would require an explicit statement in the disclosure as to “whether the registrant is exempt” under FARA’s LDA exemption. Peters’ bill bears some similarity to two proposed regulatory tweaks. Due to Congress’s aforementioned stipulation regarding FARA’s focus, the proposals the DOJ put forth, first in 1999 and again in 2003, would have required lobbyists to file with FARA if a foreign government or political party was the “ultimate foreign principal” in the 1999 proposal or the “principal beneficiary” in the 2003 proposal, which was ultimately adopted (pdf, 41 of the Report).
Although DOJ adopted the 2003 regulation, it never adequately explained what it meant. The Report, for example, cites seven advisory opinions issued between 2012 and 2020 that demonstrate the cumulative lack of clarity (pdf, 41-42). The Peters bill doesn’t tackle the issues raised in the Report head-on, but by requiring every LDA registrant to state affirmatively whether they are exempt or not, every registrant will be on record one way or another.
What is interesting about these two bills is that they are, in fact, complimentary to one another. If both were to pass into law, all LDA filings would be required to state their exempt status and any registrant filing on behalf of an “adversarial” principal would not be exempt from registering with FARA. The frustrating element, however, is that neither bill addresses concerns raised in the report about the confused mess of exemption-related advisory opinions for all registrants.
Cornyn’s bill, for instance, does not clarify the nature of the “bona fide trade and commerce” exemption for state-owned enterprises; this, subsequently, leaves registrants for principals of non-adversarial states in the dark. Peters’ bill does echo the Report’s recommendation by placing more responsibility on the registrant by having to declare their exemption status, but it doesn’t include any clarifying language as to what would qualify for an exemption or not.
Congressional legislation that seemingly talks around the issues and reforms put forth in the Report is starting to look like a pattern. As we’ve previously reported, a bill introduced by Democratic Congressman Jared Golden in June addressed a matter totally absent from the Report which was who is allowed to register on behalf of a foreign principal at all. Senator Cornyn’s bill is quite akin to Golden’s in this regard.
Are Congress and the ABA talking past each other?
They are certainly approaching the issue from quite distinct vantage points. Congress sees the FARA issue through the lens of identity, or to put it differently, who can or cannot file and who is and is not exempt from filing. But the ABA approaches FARA’s problems from the perspective of practitioners, asking what types of activity require filings and which are exempt.
The solution arguably rests in taking both approaches to heart and in tandem with each other. The Report suggests, as a solution to the LDA exemption issues, that the DOJ should replace “the principal beneficiary” language “with a purpose-based test,” (pdf, 39) but in lieu of Congress’ perspective, they could go one step further and implement a person-and-purpose test. By first establishing whether the registrant themselves are required to, or even allowed to, register first and then determining the status of their activities on behalf of the principal, the DOJ may find a more streamlined approach to mending the LDA-FARA headaches.
Check back soon for another installment of the FARA Files.
