On Wednesday, December 16, Senator Chuck Grassley (R-Iowa) sought, and failed to achieve, unanimous consent to pass legislation that would have granted significant new powers to the Department of Justice to enforce compliance with the Foreign Agents Registration Act.  In objecting to passage, Sen. Bob Menendez (D-N.J.) said that the Senate should “take a step back and take a comprehensive look” at the statute and reform proposals.

In one of the last Senate sessions of the year, Sen. Grassley called for the Senate to pass S. 1762, the Foreign Agents Disclosure and Registration Enhancement Act, a bipartisan bill that he introduced in 2019.  In his remarks on the Senate floor, Sen. Grassley noted that the bill was supported by the chairs and senior Democratic Senators of both the Senate Judiciary Committee and the Senate Intelligence Committee.  He noted that he recently received support from Sen. Jim Risch (R-Idaho), the Chairman of the Senate Foreign Relations Committee, a development that appears to have prompted Sen. Grassley to seek consent to pass the bill.

Notably, it was Sen. Menendez, the ranking Democratic Senator of that same Committee, who objected to passing the bill by unanimous consent.  Sen. Menendez noted his agreement with Sen. Grassley “that changes are sorely needed to FARA,” but he noted that Members of Congress had introduced numerous FARA reform bills, with a wide variety of proposals, including “additional disclosure and registration requirements, significant changes to the current FARA exemptions, or more electronic reporting.”  The Foreign Relations Committee, he said, should have an opportunity to “considering such changes . . . and to see if other changes are warranted.”

Sen. Menendez also raised concerns that FARA’s “definitions and requirements are broad and sow confusion over exactly when and under what circumstances an individual must register and report covered activities.”  He noted that some organizations are concerned that broader FARA enforcement authorities could lead to the statute being “weaponized.”

Sen. Grassley’s legislation would make several significant changes to FARA enforcement:

  • The bill would give the Attorney General the authority to issue civil investigative demands to require the production of documents, answers to interrogatories, and testimony from witnesses in FARA investigations. Grassley indicated that he modeled the provisions on similar authorities in the False Claims Act.
  • The legislation would increase the criminal penalties for willful violations and material misstatements to $200,000 (from $10,000) and increase the penalty for more minor violations to $15,000 (from $5,000).
  • The bill would create a new criminal offense for meeting with a Member of Congress or staff without disclosing that an individual is a registered foreign agent.
  • The bill would create new civil penalties for violations of the statute, including a $10,000 fine for failing to file, a $1,000 fine for failing to file a required supplemental statement, and fines up to $200,000 for other violations, including failing to rectify a deficient filing.
  • The legislation would require the Department of Justice to develop a comprehensive strategy for FARA enforcement, including an examination of all of the registration exemptions contained in the statute. The bill also would require various reviews by the Department’s Inspector General, reports by the Attorney General, and audits by the Government Accountability Office.
  • Most significantly for private sector companies, the bill would require the Government Accountability Office to audit the use of the Lobbying Disclosure Act exemption to registration, and provide recommendations for potential improvements. Notably, this bill does not contain a repeal of the LDA exemption, which had been in an earlier version of Sen. Grassley’s reform legislation and would have forced many private sector companies to register and report under FARA.

FARA has been enforced with increasing aggressiveness by the Department of Justice over the last several years, not only through formal enforcement actions but also through audits, advisory opinions, and the issuance of determination letters demanding that private parties register.  Senator Menendez’s public expression of concern regarding FARA’s breadth and its potential “weaponization” is a significant development.  Although Senator Grassley failed in his attempt to pass the bill, which has never had a full public hearing, Senator Menendez’s acknowledgement that changes in FARA are sorely need may suggest an opening for fuller consideration, and perhaps even enactment, of the bill in the next Congress.

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Photo of Robert Kelner Robert Kelner

Robert Kelner is the chair of Covington’s Election and Political Law Practice Group. Mr. Kelner provides political law compliance advice to a wide range of corporate and political clients.  His compliance practice focuses on federal and state campaign finance, lobbying disclosure, pay to…

Robert Kelner is the chair of Covington’s Election and Political Law Practice Group. Mr. Kelner provides political law compliance advice to a wide range of corporate and political clients.  His compliance practice focuses on federal and state campaign finance, lobbying disclosure, pay to play, and government ethics laws, as well as legal ethics rules.  His expertise includes the Federal Election Campaign Act, Lobbying Disclosure Act, Ethics in Government Act, Foreign Agents Registration Act, and Foreign Corrupt Practices Act.  He is also a leading authority on the arcane rules governing political contributions by municipal securities dealers, investment advisers, hedge funds, and private equity funds.  Mr. Kelner advises Presidential political appointees on the complex process of being vetted and confirmed for such appointments.

In addition, he regularly advises corporations and corporate executives on instituting political law compliance programs.  He conducts compliance training for senior corporate executives and lobbyists.  He has extensive experience conducting corporate internal investigations concerning campaign finance and lobbying law compliance, as well as other corporate compliance matters.  Mr. Kelner regularly defends clients in investigations by the Federal Election Commission, the U.S. Department of Justice, the U.S. House & Senate Ethics Committees, the House Oversight & Government Reform Committee, the House & Senate Judiciary Committees, the House Energy & Commerce Committee and its Subcommittee on Oversight & Investigations, the Senate Finance Committee, the Senate Special Committee on Aging, the Senate Permanent Subcommittee on Investigations, the Senate Health, Education, Labor, and Pensions Committee, and other congressional committees.  He has prepared numerous CEOs and corporate executives for testimony before congressional investigation panels, and he regularly leads the Practicing Law Institute’s training program on congressional investigations for in-house lawyers.  He also defends clients in Lobbying Disclosure Act audits by the GAO and enforcement actions and audits by state election and lobbying enforcement agencies.

Mr. Kelner has appeared as a commentator on political law matters on The PBS News Hour, CNBC, Fox News, and NPR, and he has been quoted in the New York Times, Washington Post, Wall Street Journal, Legal Times, Washington Times, Roll Call, The Hill, Politico, USA Today, Financial Times, and other publications.

Photo of Brian D. Smith Brian D. Smith

Brian Smith provides strategic and legal advice on matters that require substantial political, reputational, or government relations considerations.  He represents companies and individuals in high-profile or high-risk investigations, particularly congressional investigations, criminal investigations with political implications, and investigations related to political law compliance. …

Brian Smith provides strategic and legal advice on matters that require substantial political, reputational, or government relations considerations.  He represents companies and individuals in high-profile or high-risk investigations, particularly congressional investigations, criminal investigations with political implications, and investigations related to political law compliance.  He has significant experience in crisis management, where he advises clients facing combined legal, political, and media relations risks.  His practice also includes the development and execution of government relations initiatives, including securing the U.S. government’s political support on behalf of U.S. companies facing international legal issues.