Last week’s release of advisory opinions related to the Foreign Agents Registration Act (FARA) – the first such opinions from the new Chief of the Department of Justice’s FARA Unit (the “Unit”) – signal that the Unit will continue to take an expansive view of the types of activities that require registration pursuant to FARA. Collectively, the advisory opinions reflect a narrow reading of the circumstances in which FARA’s commercial exemption is available and an expansive reading of the types of activities that constitute dissemination of information in the United States.
FARA imposes registration and disclosure requirements on any entity that acts as an “agent of a foreign principal,” except if an exemption applies. The statute requires three things in order to trigger registration requirements: a foreign principal; an agent acting on behalf of that foreign principal; and that agent engaging in activities enumerated in the statute. The recently released advisory opinions address three enumerated activities:
While the scope of FARA is broad, a wide range of conduct is exempt from registration, even if it meets one of the definitions above. The most common of these exemptions is the commercial exemption, which exempts from registration (i) “private and nonpolitical activities in furtherance of the bona fide trade or commerce” of the foreign principal and (ii) “activities not serving predominantly a foreign interest.” Although the provisions are different, the regulations use overlapping language to describe them both. Each exemption generally requires that the activities be in furtherance of “bona fide” commercial activity, and neither exemption is available if the activities “directly promote the public or political interests of a foreign government.”
In February, the Department of Justice announced the Unit would be supervised by a new Chief, Jennifer Gellie, a long-time national security prosecutor. The release of multiple advisory opinions last week constitute Chief Gellie’s first indications of how she intends to interpret and enforce FARA. Although advisory opinions do not have precedential value and are only intended to be relied upon by the requesting party, the redacted opinions released on the Unit’s website are instructive to other parties seeking to understand the Unit’s interpretation of the statute, regulations, and enforcement priorities.
The most consequential of the new advisory opinions concerns an advisory firm’s investment attraction work on behalf of a foreign government. The advisory firm was not engaged directly by the foreign government, but instead entered into a consulting agreement with a second firm that contracted with the office of the president of the foreign country. According to the March 10, 2021 opinion, the advisory firm planned to “contact and meet with private industry leaders to present commercial opportunities” within the foreign country and provide “market analysis, industry growth strategies, and other related assistance to [foreign government] officials and private sector enterprises in the country.” The advisory firm’s proposed activities included identifying a list of more than 40 U.S. entities that the advisory firm could approach about establishing operations in the foreign country. The opinion describes the purpose of the activities as identifying business opportunities in the foreign country for industry leaders in the United States.
As a threshold matter, the Unit first determined that the advisory firm would be engaged in “political activities” because it “would be intending to influence a section of the U.S. public – namely, U.S. companies – with respect to the public interests of the [foreign country’s] economic sector writ large (as opposed to with respect to a specific company or transaction)” and “contacting and meeting with private industry leaders to present commercial opportunities within the [foreign country] . . . would be advancing the political interests of the government of the [foreign country].” The conclusion signals that the Unit continues to view investment attraction work in the United States for foreign countries as generally within the scope of “political activities.” It is important to note the parenthetical, which suggests that the work would potentially not trigger an obligation if it targeted a “specific company or transaction,” rather than 40 U.S. companies about a range of commercial opportunities. While there is ambiguity about the scope of the parenthetical, it is an important acknowledgement that investment attraction activity targeted at a specific entity may not to constitute “intending to influence a section of the U.S. public,” and therefore would not meet the definition of “political activities.”
As for the commercial exemption, the opinion is as important for what it does not say, as for what it does. The opinion’s analysis is very limited, and only considers one of the two commercial exemption provisions. Specifically, it concludes that the commercial exemption does not apply under the first provision since that provision covers only “nonpolitical activities,” and the activities at issue here are “political activities.” Since it appears the requester did not mention the second provision, the Unit did not address it in the opinion. Nevertheless, it is reasonable to conclude that the Unit’s opinion that the commercial exemption did not apply implies that the second provision was likewise unavailable. One can assume from the advisory opinion that the Unit viewed the advisory firm’s work to contact, meet with, and provide materials to industry leaders in the United States “to present commercial opportunities within the [foreign country]” as directly promoting the political interests of the foreign government.
Given the opinion’s limited analysis of the commercial exemption provision, it is unclear whether a less extensive combination of investment attraction work for the foreign government would have satisfied the exemption, as opposed to contacting, meeting, and providing materials. Nevertheless, the opinion’s key takeaway for entities engaging in investment attraction work in the United States is to be cautious since even ostensibly commercial activity connected to a foreign government may not be exempt from FARA.
Another advisory opinion addressing the commercial exemption, dated March 29, 2021, provides insight into the Unit’s somewhat narrow interpretation of “bona fide commercial . . . operations.” The Unit concluded that a registered U.S. public relations agency was not entitled to rely on the commercial exemption, and was thus required to maintain its registration. The agency’s public relations work on behalf of a foreign corporation was focused on responding to two “adverse” government actions impacting commercial operations of the foreign corporation. These adverse actions were prohibitions on U.S. agencies from “buying, or contracting to buy, telecommunications equipment produced by several [foreign country] companies, including [the foreign corporation]” pursuant to the 2019 National Defense Authorization Act, and placement of the foreign corporation on the U.S. Department of Commerce’s Entity List. The U.S. public relations agency argued that its actions were focused on protecting and advancing the foreign corporation’s commercial interests and that it was independent from the foreign government, and thus did not “promote the public or political interests” of that foreign government.
The Unit addressed three questions when it denied the request. First, the Unit questioned whether the U.S. public relations agency’s activities were “being undertaken in direct furtherance of the bona fide commercial, industrial, or financial operations of its foreign principal.” The comment, though made in passing, signals that just because an agent’s activities have a clear commercial benefit may not alone be sufficient to qualify it as a “bona fide” commercial operation under the exemption. The Unit has rarely discussed what it means to be a “bona fide” commercial operation, and this dictum is a warning against trying to interpret the term too liberally. Second, the Unit concluded that “activities challenging U.S. government prohibitions on the basis of stated national security and human rights concerns” were both political and predominantly serving a foreign interest, and therefore beyond the scope of the commercial exemption.
Finally, the Unit made clear it will look at more than direction or control from a foreign government to determine whether activity promotes the interests of a foreign government – and thus whether the exemption applies. Although the U.S. public relations agency was providing advice for the benefit of a foreign corporation, because that corporation was “closely linked” to a foreign government, its activities to lessen the impact of measures largely directed at a foreign government “amount[ed] to ‘directly promoting the political interests of a foreign government.’” The Unit concluded that the foreign corporation was “closely linked” to the foreign government because the corporation was included on (i) the Entity List for being “implicated in human rights violations and abuses in the implementation of [the foreign country’s] campaign of repression, mass arbitrary detention, and high technology surveillance against [religious and ethnic groups] in the [region of the foreign country]”; and (ii) a Department of Defense list of “[foreign political party and country] Military Companies.”
The Unit’s conclusion that registration was required indicates that a company’s independent efforts to change U.S. government policy as it applies to a corporation can be deemed “political” and outside the ambit of the commercial exemption if the U.S. government policy that a company seeks to change has a nexus to U.S. national security or foreign policy concerns.
An advisory opinion dated February 16, 2021, reflects the Unit’s focus on the dissemination of material within the United States on behalf of a foreign principal. The Unit concluded that a U.S.-based media company had a registration obligation for work performed on behalf of a foreign principal to create a foreign country travel guide and other promotional materials. Although the travel guide materials were intended to be distributed in the United States, the U.S. company “described its activities as ‘limited to creating, publishing, and copying the tourist guide and calendars,’ stating it is not responsible for distribution or dissemination once the physical materials are delivered to [foreign principal].” However, although the foreign principal would be responsible for the physical distribution of materials, the U.S. company published digital versions of the materials. The U.S. company claimed that because its activities were “limited,” and did not include the actual “dissemination” of materials, it was not obligated to register. The Unit disagreed.
The central question was whether the U.S. company was undertaking one of the required enumerated activities. Tellingly, the Unit skipped over the discussion of “political activities” and headed straight for the enumerated activities involving dissemination – acting as an “information service employee” and a “publicity agent.” Both definitions are extremely broad. A “publicity agent” includes a person who even “indirectly” disseminates information on behalf of a foreign principal, and an “information-service employee” covers “furnishing, disseminating, or publishing” information or data with respect to benefits or facts of a foreign country. Because the U.S. company itself published the travel guide for dissemination to U.S. audiences through a website, the Unit concluded both definitions were satisfied and registration was required. The opinions demonstrate that the Unit views simply making material available on a website, and nothing more, as a trigger for a registration obligation under FARA.
These recent advisory opinions show that the breadth of FARA’s statutory and regulatory terms give the Unit wide latitude to cover activities that businesses may view as being purely commercial in nature, unconnected to a foreign government, or lacking a sufficient nexus to the United States. The opinions reflect that the Unit is unafraid to interpret the statute broadly in order to effect disclosures regarding activities that are undertaken on behalf of foreign principals in the United States.