DOJ Proposes New FARA Regulations Significantly Impacting Nonprofits
On January 2, 2025, DOJ posted proposed amendments to the regulations implementing the Foreign Agents Registration Act. The proposed amendments are of significant interests to nonprofits because they focus on 22 USC 613(d) and (e), which articulate exemptions from the FARA requirements for the following:
(d)Private and nonpolitical activities; solicitation of funds
Any person engaging or agreeing to engage only (1) in private and nonpolitical activities in furtherance of the bona fide trade or commerce of such foreign principal; or (2) in other activities not serving predominantly a foreign interest; or (3) in the soliciting or collecting of funds and contributions within the United States to be used only for medical aid and assistance, or for food and clothing to relieve human suffering, if such solicitation or collection of funds and contributions is in accordance with and subject to the provisions of subchapter II of chapter 9 of this title, and such rules and regulations as may be prescribed thereunder;
(e)Religious, scholastic, or scientific pursuits
Any person engaging or agreeing to engage only in activities in furtherance of bona fide religious, scholastic, academic, or scientific pursuits or of the fine arts;
The deadline to submit public comments is March 3, 2025. I have read the proposed regs once quickly and I am definitely not a FARA expert. We probably should all be experts because the Act can sneak up on so many nonprofits. Here is the Background as stated in the preamble:
The Foreign Agents Registration Act of 1938, as amended, 22 U.S.C. 611et seq. (“FARA” or “the Act”), was enacted to ensure that the United States Government and the American people are aware of persons who are acting within this country as agents of “foreign principals,” as defined by the Act, and are informed about the activities undertaken by such agents to influence public opinion or governmental action on political or policy matters.
The Act requires that persons acting as agents of foreign principals label the informational materials they distribute and make periodic public disclosures of their agency relationship and activities as well as their receipts and disbursements in support of these activities. Disclosure of the required information allows the American public and government officials to evaluate the agents’ statements and activities with knowledge of the foreign interests they serve. The FARA Unit of the Counterintelligence and Export Control Section (“CES”) in the National Security Division (“NSD”) of DOJ is responsible for the administration and enforcement of FARA.
Here are some quick observations:
1. Most of the comments received to a prior “Advance Notice of Proposed Rulemaking” issued on December 13, 2021 came from nonprofit organizations so the proposed regulations seem particularly responsive to nonprofit concerns.
2. DOJ declined to adopt a presumption that tax-exempt nonprofits are generally excluded from FARA or a definition of “agent” consistent with common law:
Several nonprofit organizations, or those representing their interests, suggested ways to exclude nonprofit entities from any definition of agency under FARA. For example, one commenter urged the Department to adopt a presumption that tax-exempt nonprofits are not generally acting “for or in the interest of a foreign principal when conducting activities consistent with their missions” and past practice—even if those activities are funded in part by a foreign principal. Having considered the public comments, the Department is not proposing to adopt the common-law definition of agency or to codify the Scope of Agency guidance document in the FARA regulations at this time.
As discussed below, courts have held that the scope of agency under FARA is broader than the scope of agency under the common law. The scope of agency under FARA involves a two-part inquiry that considers both the relationship between the agent and the foreign principal and the activities the agent performs in the principal’s interests.
3. DOJ declined to adopt non-exhaustive factors to help nonprofits determine whether they are subject to FARA. Instead, DOJ thinks case-by-case advisory opinions are better means to make determinations and provide guidance:
Second, after significant consideration of the issue, the Department believes that the non-exhaustive factors identified in the guidance are not well suited to adaptation as a test in a regulation intended to capture the full scope of the statute’s broad concept of agency. It would not be feasible to codify the broad range of factors that may inform whether a person qualifies as an agent of a foreign principal under FARA. Instead, analyzing whether a registrant has an agency relationship with a foreign principal is a fact-intensive exercise better suited to the advisory-opinion process, where persons who are unclear as to the applicability of the Act can seek and receive definitive guidance as to whether they have a registration obligation.
4. DOJ declined to adopt a suggestion that persons or organizations should not be subject to FARA unless the facts indicate an “intent” or “purpose” to directly promote a public or political interest of a foreign government. DOJ adopts a much broader and worrisome standard:
Multiple commenters suggested that the Department adopt a version of an intentionality standard. Specifically, one commenter suggested the Department “include an `intent’ or `purpose’ test” to apply the provisions of section 613(d)(2). The commenter recommended that to the extent “activities are not conducted with an intent to directly promote any public or political interests of any foreign government,” the section 613(d)(2) exemption should remain available. In applying this approach, the commenter recommended a regulation that clearly provides that “mere incidental or unintentional benefit to a foreign state” does not require registration. Further, the commenter suggested that the Department make clear in a regulation that registration is not required “where an agent acting on behalf of a principal has no contact with any foreign state (or political party) actors,” and there is no conveying of any direction or request from any foreign state.
The Department declines to adopt this approach for two reasons. First, such a test is not consistent with the statutory text of the exemption, which makes no express reference to intent. Instead, the exemption requires that the activities not serve (whether intentionally or not) “predominantly a foreign interest.” The intent or the purpose of the activities is relevant only to the extent that it could shed light on whether the activities serve predominantly a foreign interest. As set forth below, the approach the Department proposes is more consistent with the statutory language and is better suited to the task of ascertaining whether the activities serve predominantly a foreign interest.
5. Nevertheless DOJ adopts some relatively detailed facts and circumstances that preclude exemptions under 613(d) and (e) (“exclusions”):
Rather, based on all the comments received, as well as the Department’s decades of experience administering and enforcing the 613(d)(2) exemption, the Department proposes three principal changes to the relevant regulation.
(1) The first change would make clear that this exemption applies to commercial and non-commercial entities alike, so long as the predominant interest being served is not foreign. This change is consistent with the statutory language, which draws no distinction between commercial and noncommercial entities, and addresses the concerns from commenters referenced above (and below in response to Question 5) about the scope of the exemption.
(2) The second change would create a set of four exclusions to the exemption. The exclusions focus only on the relationship (if any) between the activities and a foreign government or foreign political party. If there is no such relationship, then the exclusions will not apply and the exemption will remain available. In each instance, the facts would establish whether the predominant interest served by the activities is foreign. Under the proposal, an agent would be categorically precluded from obtaining the exemption if (1) the intent or purpose of the activities is to benefit the political or public interests of the foreign government or political party; (2) a foreign government or political party influences the activities; (3) the principal beneficiary is a foreign government or political party; or (4) the activities are undertaken on behalf of an entity that is directed or supervised by a foreign government or political party (such as a state-owned enterprise) and promote the political or public interests of that foreign government or political party.
(3) The third proposed change would apply when these exclusions do not preclude the exemption. In such cases, the Department has identified a non-exhaustive list of factors to determine whether, given the totality of the circumstances, the predominant interest being served is domestic rather than foreign, such that the exemption should apply. These non-exhaustive factors include, but are not limited to: (1) whether the public and relevant government officials already know about the relationship between the agent and the foreign principal; (2) whether the commercial activities further the commercial interests of a foreign commercial entity more than those of a domestic commercial entity; (3) the degree of influence (including through financing) that foreign sources have over domestic non-commercial entities, such as nonprofits; (4) whether the activities concern U.S. laws and policies applicable to domestic or foreign interests; and (5) the extent to which any foreign principal influences the activities. While in many instances several factors may prove significant, in other instances a single factor may be dispositive; further, depending on the circumstances, the factors may overlap to various degrees (and sometimes completely). The Department expects that advisory opinions and enforcement actions will clarify how these factors apply to a range of activities.
The world is so much smaller and interconnected since the dawn of the information age. A well-meaning, oblivious nonprofit with any sort of connection beyond our borders can easily find itself labeled a “foreign agent.” I intend to add a section on FARA to my nonprofit class this semester. Nonprofit counsel should read the statutes, regulations and advisory opinions closely.
darryll k. jones