HARMON CURRAN NONPROFIT LAW BLOG

The National Security Division of the Department of Justice (DOJ) is seeking public comment about potential “clarifying” and “modernizing” changes to the regulations implementing the Foreign Agents Registration Act (FARA), presenting an opportunity for those in the regulated community to provide their views on the public record.  This presents a rare and important opportunity for nonprofits, particularly those that engage in public education and advocacy activities in the United States and who receive or may receive funds from foreign sources, to comment on the public record about a law that DOJ has in recent years increasingly applied to nonprofit activity. 

FARA generally requires an “agent of a foreign principal” to register unless one of several exemptions applies.  FARA defines “agent of a foreign principal” broadly, to include any person who acts “at the order, request, or under the direction or control” of a foreign government, foreign political party, or (essentially) any foreign person or entity (including a foreign nonprofit), or any other person whose activities are “supervised, directed, controlled, financed, or subsidized” by such person, and engages in “political activities” within the United States. 

FARA’s language is broad, and DOJ has applied FARA’s requirements to U.S. nonprofit organizations in a way that may surprise many observers.  Perhaps most notably, in an advisory opinion issued in March 2020 (and later publicly released in redacted form), DOJ concluded that an environmental nonprofit’s acceptance of a grant from a foreign government agency to influence corporations’ product-sourcing practices with respect to the use of natural resources outside of the U.S. required the nonprofit to register as an “agent of a foreign principal.”

On Monday, the Department of Justice published an advance notice of proposed rulemaking (ANPRM) entitled “Clarification and Modernization of Foreign Agents Registration Act (FARA) Implementing Regulations.”  This represents the first opportunity, outside of the context of individual cases, for the regulated community to formally offer views about the scope and meaning of FARA in this era of heightened enforcement. 

The ANPRM poses a series of questions for public response, and those with an interest in the subject matter are encouraged to read the entire notice.  Below, I highlighted the questions that may be of particular interest to nonprofit organizations who engage in public advocacy in the United States and may receive funds from foreign sources:

• Question 1 asks whether DOJ should incorporate into its FARA regulations some or all of a guidance document issued last year entitled “The Scope of Agency Under FARA” with the aim of “provid[ing] greater clarity with respect to the Department’s understanding of a key threshold determination in assessing when the requirements of the Act apply—i.e., the definition of ‘agent of a foreign principal.’ ” This guidance publicly identified factors that DOJ says it relies on in evaluating whether a person is an “agent of a foreign principal” within the meaning of FARA. 

  While perhaps helpful, this guidance is of limited use to a nonprofit organization trying to determine, in a particular case, whether its acceptance of grant funds from a foreign source may require it to register under FARA.  The ANPRM is an opportunity for nonprofit organizations to urge DOJ to include in any regulation intended to clarify the scope of agency under FARA a discussion of under what circumstances a U.S. nonprofit engaged in bona fide activities on behalf of its exempt purposes would become an “agent of a foreign principal” upon accepting a grant from a foreign source. 

• Question 5 generally asks what, if any, changes should be made to the regulations regarding what is known as FARA’s “commercial exemption,” which covers those engaging only in “private and nonpolitical activities in furtherance of the bona fide trade or commerce of [a] foreign principal” or in “other activities not serving predominantly a foreign interest.” It is not clear under existing regulations whether and under what circumstances this exemption may apply to foreign-sourced gifts to nonprofits, making this another area in which nonprofits might seek clarity.

• Question 6 asks whether DOJ should issue new or clarifying regulations explaining the scope of the exemption for persons engaging only in “activities in furtherance of bona fide religious, scholastic, academic, or scientific pursuits or of the fine arts.” Current regulation provides that the exemption does not apply where activities include “political activities” on behalf of a “foreign principal” within the meaning of FARA.  This exemption has obvious import to many nonprofits, but the somewhat archaic statutory terminology and the exclusion of “political activities” makes clarification necessary so that nonprofits can understand what categories of organizations and activities this exemption covers.

The public comment period ends on February, 11, 2022.  If your organization is interested in commenting on the ANPRM and would like our help, please contact the author.