U.S. DOJ Proposes FARA Amendments to Narrow Exemptions for Commercial Lobbying

Background

On Thursday, January 2, 2025, the U.S. Department of Justice (DOJ) published a notice of proposed rulemaking (NPRM) in the Federal Register to amend and clarify the Foreign Agents Registration Act (FARA), starting a 60-day period for public comment. This follows an Advance Notice of Proposed Rulemaking (ANPRM) released on December 13, 2021, for the "Clarification and Modernization" of FARA. Initially, DOJ had indicated through media that companies lobbying for their own financial purposes in the U.S. would not need to register, even if their actions incidentally benefited their foreign parent. However, the proposed rule now raises concerns among practitioners.

Exemptions: Trade & Commerce, Lobbying and the LDA

The current analysis of FARA’s commercial exemptions and the Lobbying Disclosure Act (LDA) exemption focuses on whether the lobbying benefits a foreign government or political party. The proposed rule shifts this focus to assess how much the lobbying serves domestic versus foreign interests.

The Commercial Exemptions

There are two commercial exemptions under FARA:

1. First Commercial Exemption ("in furtherance of bona fide trade or commerce"): This applies if the representation does not involve lobbying and does not promote the interests of a foreign government or political party.
2. Second Commercial Exemption ("not serving predominantly a foreign interest"): This is available even for political activities, like lobbying, as long as these activities are not directed by a foreign government or political party and do not promote their interests.

The LDA Exemption

An exemption exists for those who engage in lobbying activities and are registered under the LDA (LDA Exemption). It is not available if a foreign government or political party is the "principal beneficiary" of the lobbying, a term interpreted by the DOJ through advisory opinions.

Proposed Amendments

The DOJ proposes to narrow the applicability of the second commercial exemption, refusing to make it available if there is any intention to directly promote foreign political interests, even without contact with foreign actors. The proposal includes three key changes:

1. Clarification: The exemption applies to both commercial and non-commercial entities if the predominant interest served is not foreign.
2. Narrowing the exemption: Four exclusions are specified, determining whether the activities predominantly serve a foreign interest.
3. Non-exhaustive list of factors: To determine when an exemption applies, a list of factors will guide if the interest served is domestic rather than foreign.

The Four Exclusions

To qualify for the exemption, an agent must clear four exclusions:

1. Intended Beneficiary: The exemption does not apply if a foreign government or political party is the intended beneficiary.
2. Influence: Activities influenced by foreign entities are presumed to be predominantly for those foreign entities.
3. Control/Evidence: Circumstantial evidence indicating foreign control will negate the exemption.
4. Indirect Supervision: The exemption does not apply if a foreign entity indirectly supervises or finances the activities.

If these exclusions do not apply, the DOJ may still consider whether the exemption is available based on factors like public awareness, the balance of interests, foreign influence over non-commercial entities, the nature of activities, and the extent of foreign principal influence.

Comment Deadline

Comments on the proposed amendments are due within 60 days, allowing for input from the incoming Trump administration and likely Attorney General Pam Bondi. Nossaman is assessing whether to file comments.