Key Takeaways
- The Department of Justice is nearing completion of its FARA Rulemaking.
- Recent DOJ statements suggest a more permissive final rule than was anticipated when the Rulemaking was announced in early 2025.
- FARA exemptions governing commercial activity, nonprofit organizations, and law firms appear likely to be affected.
On August 14, the Department of Justice (DOJ) published its semiannual Unified Agenda in the Federal Register. Buried in that lengthy document was a one-paragraph entry from DOJ’s National Security Division (NSD) announcing that NSD “is now considering a final rule that adopts many – but not all” of the proposals from DOJ’s January 2025 Foreign Agents Registration Act (FARA) Notice of Proposed Rulemaking (NPRM).[1]
Many FARA commentators had written this rulemaking off. The NPRM, which was published in the final weeks of the Biden administration, originally proposed to narrow the commercial, domestic activity, and legal exemptions that corporations, law firms, and lobbying shops have relied on for decades. But in the early days of the Trump administration, then-Attorney General Pam Bondi issued a memorandum indicating that DOJ would limit criminal FARA enforcement to cases resembling traditional state-sponsored espionage,[2] and the NPRM comment period closed without further action.
Now, a year and a half later, a final rule may be on the way. NSD’s entry, published days after Todd Blanche was sworn in as Attorney General, says the rule will “expand the availability of exemptions commonly relied upon by corporations and law firms.” Although the NPRM would have narrowed those exemptions, DOJ’s description suggests the final rule may take the opposite approach.
The Commercial Exemption
Section 613(d)(1) of FARA exempts agents engaged “in private and nonpolitical activities in furtherance of the bona fide trade or commerce” of a foreign principal. This is the single most relied-upon FARA exemption by corporations because it allows a U.S. subsidiary of a foreign company to lobby to further its own commercial interests without registering.
The NPRM proposed two changes to the exemption. First, it proposed to remove the word “directly” from the existing regulation, so that activities that “promote” – not just “directly promote” – a foreign government’s interests would lose the exemption. Second, the NPRM proposed a new carveout for tourism promotion, reversing long-standing DOJ advisory opinions that had treated tourism promotion work as inherently political and requiring registration.
The “expand the availability” language in the Unified Agenda, however, suggests that DOJ may be walking back its deletion of the word “directly.” Meanwhile, the tourism carveout, one of the few parts of the NPRM that drew broad support from commenters, could very well survive.
The Domestic Activity Exemption
Section 613(d)(2) of FARA exempts agents engaged in “other activities not serving predominantly a foreign interest.” Under current regulations, agents whose political activities on behalf of a foreign corporation are neither directed by nor directly promote a foreign government’s interests are generally exempt from registration. DOJ has applied this exemption broadly, including with respect to nonprofits.
Here, the NPRM took a harder line, with DOJ proposing a two-step framework. First, an entity would need to evaluate whether it fell into four categorical exclusions from the exemption: intent to benefit a foreign government, foreign government influence over the activities, foreign government as principal beneficiary, or activities on behalf of a state-owned enterprise that promote foreign political interests. If none of the categorical exclusions applied, the entity would then need to clear a “totality of the circumstances” test, comprising five non-exhaustive factors, to avail itself of the exemption. The NPRM also proposed to clarify that the exemption covers noncommercial interests – a response to comments from the nonprofit community.
This proposal drew the most criticism during the NPRM comment period, as the categorical exclusions and multifactor test would have given DOJ wide discretion to second-guess an entity’s reliance on the exemption after the fact. The “expand the availability” language in the Unified Agenda suggests that at least some of that original proposal could be scaled back. Whether DOJ will keep the categorical exclusions, narrow them, or drop the two-step framework altogether remains to be seen.
The Legal Exemption
Section 613(g) of FARA exempts lawyers who represent a disclosed foreign principal before a U.S. court or agency. The NPRM proposed to extend the exemption to advisory work outside the courtroom, “provided such representation does not extend beyond the bounds of normal legal representation.” But it drew a bright line: a lawyer “seeking to persuade persons who are not involved in the proceeding” – Congress, the press, the public – “to adopt or change foreign or domestic U.S. policy” would not qualify for the exemption.
The Unified Agenda, however, specifically references exemptions relied upon by “law firms,” which signals that the final rule will address the legal exemption. Whether DOJ will broaden the safe harbor for advisory work, change the definition of out-of-proceeding communications, or both, is unclear.
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The reports of the demise of the FARA rulemaking are, it seems, greatly exaggerated, and the final rule may be more favorable to the regulated community than the NPRM had indicated. Until DOJ publishes a final rule, the scope of each exemption remains an open question. No publication timeline has been provided.
BakerHostetler’s Political Law and Federal Policy teams counsel corporations, lobbying firms, trade associations, and nonprofits on FARA registration, compliance, and enforcement. We advise on exemption and registration assessments, ongoing reporting, audits, compliance programs, and responses to DOJ letters of inquiry. We also help clients prepare comments on proposed rulemakings and engage with the FARA Unit on advisory opinion requests to clarify the scope of exemptions that may be available.
[1] Amending and Clarifying Foreign Agents Registration Act Regulations, 90 Fed. Reg. 40 (Jan. 2, 2025), https://www.federalregister.gov/documents/2025/01/02/2024-30871/amending-and-clarifying-foreign-agents-registration-act-regulations.
[2] General Policy Regarding Charging, Plea Negotiations, and Sentencing, Office of the Att’y General, U.S. Dep’t of Justice (Feb. 5, 2025), https://www.justice.gov/ag/media/1388541/dl?inline.
