Government Relations Pros and Politicos Take Note – Possible Changes to Foreign Intervention and Lobbying Rules Are on the Horizon
The week of December 6th, the House of Representatives passed the Protecting Our Democracy Act, HR 5314, which contains a proposal to require candidates, political committees and a wide swath of others involved in politics to report any contact they receive from foreign national governments political parties to the Federal Election Commission (FEC) and, in turn, the Federal Bureau of Investigation (FBI).
In parallel, the Department of Justice Foreign Agent Registration Act (FARA) Unit issued an Advanced Notice of Proposed Rulemaking (ANPRM) that could begin the process to amend FARA regulations for the first time since 2007. Importantly, the ANPRM seeks to clarify the scope of “agency” required to be covered by FARA. It also could narrow the activities that would constitute acting as a “political consultant,” thereby triggering registration as a foreign agent.
The DOJ FARA Unit has more vigorously enforced the FARA rules of late, but there has not been a re-write of rules affecting foreign nationals’ political involvement in over a decade. The same goes for foreign national rules enforced by the FEC, and the foreign contacts reporting requirements would be a new law altogether. Although neither HR 5314 nor the potential DOJ regulations are on the books yet, they signal that those who interact with foreign nationals, whether on legislation, in elections or through policy forums, should survey the landscape and assess whether their business or political operations may be affected and change course accordingly. Additionally, several of the reforms in HR 5314 might garner more bipartisan support in the Senate. Thus, it remains to be seen how the bill, or individual provisions of it, will fare in the Senate.
HR 5314’s Reporting of Foreign Interference in Elections
Who is required to report? Candidates and their family members, political committees and any official, employee or agent of a political committee are now required to report foreign interference in elections.
What type of contact must be reported? The above individuals must report any contact from a “covered foreign national,” which includes any foreign government or political party, their agents, as that term is used in FARA, and anyone on the specially designated national list of the Office of Foreign Asset Control (OFAC).
Not all contact will trigger reporting, but any offer or proposal for a foreign national contribution, donation, expenditure, disbursement or a solicitation of the same requires a report. So too does any communication that involves coordination or collaboration, an offer or provision of information or services (whether to or from the foreign government or political party) and even persistent or repeated contact from a covered foreign national.
What are the compliance mechanisms? The FEC is tasked with administering compliance and will oversee reporting as well as new certifications required by political committees and candidates attesting to the fact that they have adequate policies and procedures in place to comply with this law. Failure to comply carries serious potential consequences: a knowing and willful violation is a felony, subject to fines of up to $500,000 and five years in prison.
DOJ’s Potential Changes to FARA Regulations
The DOJ ANPRM does not contain proposed language or amendments, nor does it even commit to engaging in a rulemaking, but the ANPRM does open the door to possibly changing some provisions of the FARA regulations that have long been viewed as problematic by many practitioners. In fact, some of DOJ’s possible changes in the ANPRM echo those from the July 2021 ABA FARA Taskforce report.
Although there are no certain outcomes with this endeavor, two salient amendments include clarifying the scope of “agency” used in FARA, as well as narrowing what activities constitute acting as a “political consultant” for a foreign principal, thereby triggering FARA registration. There are also questions about clarifying certain common exceptions to registration, most notably the bona fide commercial activity exception. Absent from the ANPRM, however, are changes related to the so-called Lobbying Disclosure Act or LDA exemption.
What Do These Proposals Mean for My Government Relations Program or Political Campaign?
For those who represent or work with foreign governments and political parties or run political campaigns and organizations, you may be able to view these two efforts in tandem to triangulate your position on the regulatory map. Although you cannot design a specific compliance program or make business decisions based on these unpassed rules, we think there are several high-level trends that can help you strategically position your operations to be able to pivot quickly and effectively when change does come.
Focus on proactive transparency compliance. Both FARA and the Protect Our Democracy Act center around transparency. Government relations professionals are already familiar with the FARA regime that requires a high degree of public disclosure – contracts with clients, contacts with members of government or the public and operating or partnership agreements of your company are all documents that are publicly reported to DOJ. HR 5314 proposes a similarly granular reporting of contact in the electoral realm. Under either regime, a proactive compliance program that captures these activities as they happen, and not well after the fact, will help protect against fines, bad press and, in the most severe cases, jail time.
More politically active Americans may need to worry about foreign contacts. Under HR 5314, individuals with reporting obligations include officials, employees and agents of all political committees. There were nearly 30,000 active PACs registered with the FEC since the start of 2016. Beyond campaign and PAC officials and employees, each one of those committee’s “agents” is also covered. But what counts as an “agent”? With a term such as “agent” that can be broadly interpreted, the question may be who doesn’tcount more than who does?
The DOJ FARA Unit, for its part, appears to recognize that “agency” in the FARA context is a much more specific concept, and, to DOJ’s credit, it may codify its FARA Unit’s guidance, which it helpfully provides in the context of Advisory Opinions. Still, at the moment, it appears that FARA continues to extend its reach to cover more and more government relations professional, although the ANPRM may signal DOJ’s willingness to pump the brakes to more narrowly tailor its application.
Government relations and campaign operations are going to need more robust due diligence. The financial services industry is familiar with “KYC” (“know your client” or “know your customer”) requirements from anti-money laundering regimes. Politically active Americans should be prepared for a similar KYC requirement – “know your contacts.” HR 5314 places a burden on the individual who must report to act on the facts as they reasonably are known or should be known. This assumes a certain level of due diligence that campaign actors, such as volunteers or temporary staff, may not appreciate. It also places a higher burden on campaign vendors to understand when they may be targets of a foreign interference campaign. Similarly, FARA requires a government relations professional to have a deep understanding of their foreign-based client so that they (or more likely their lawyer) can analyze whether FARA registration has been triggered or whether an exemption might apply. If DOJ proceeds with a rulemaking, we will be watching to see whether they clarify or narrow these definitions sufficiently to ease some of the regulatory due diligence currently required.
After remaining relatively static for decades, the laws governing political interactions by and with foreign national entities may now be rapidly evolving. The fact that Congress, the FEC and DOJ have all indicated that this is an area of priority suggests there will be significant movement, at least from one of these bodies. Of the three, DOJ has the clearest path forward to revise its regulations. Regardless of whether any of the specific proposals become law, lobbyists, campaigns and political committees, as well as vendors to political organizations should consider what procedures and best practices they have in place to navigate potential interactions with foreign nationals and entities.