The Department of Justice’s FARA Unit released several new advisory opinions today interpreting the Foreign Agents Registration Act (“FARA”) and its regulations.  While the newly published opinions addressed a number of topics, the FARA Unit’s scrutiny of the activity of nonprofits was a prominent and recurring theme.

Many nonprofits, think tanks, universities, religious organizations, educational institutions, and charitable organizations, rely on the so-called academic exemption to FARA.  This exemption applies to those who engage “only” in activities in furtherance of bona fide religious, scholastic, academic, or scientific pursuits or of the fine arts.  However, regulations to the statute provide that this exemption does not apply where the agent of a foreign principal engages in political activities “for or in the interests of” the foreign principal.

The new advisory opinions shed important light on the scope and limitations of the exemption. In one opinion, the FARA Unit interpreted the exemption narrowly, concluding that the Vice President of a private foreign university was required to register under FARA for “conduct[ing] outreach and advocacy” to U.S. government officials “to promote [the foreign university’s] mission, goals, and financial priorities.”  The FARA Unit reasoned that the outreach involved advocacy to obtain grants from the U.S. government and was, therefore, not only in furtherance of the scholastic and academic pursuits of the University.

In another opinion, the FARA Unit concluded that a not-for-profit charitable organization established by a foreign government to increase “friendship and goodwill” between a foreign country and “the rest of the world” through exchange programs was required to register.  The FARA Unit reasoned that the activities would influence the U.S. public to view the foreign government “in a positive light” and “ultimately foster beneficial U.S. foreign policies” with respect to the foreign country.  Because the organization was engaged in political activities, the academic exemption did not apply.

Not all of the advisory opinions were as foreboding with respect to academic activity. The FARA Unit decided that a university professor was not required to register for providing a foreign government with factual, “independent analysis of issues of international law” within the professor’s expertise because the information was not intended to influence the U.S. public with regard to U.S. or foreign policy. The opinion did not reach the academic exemption, instead concluding that the professor’s activity did not meet any of the FARA-enumerated activities.

These interpretations of the exemption should prompt nonprofits and other organizations relying on the academic exemption to consider whether registration may be required. As Covington reported last year, the DOJ is currently considering changes to the academic exemption through an advance notice of proposed rulemaking (“ANPRM”).  While the ANPRM is still an early step in the administrative law process, further changes to the scope of the exemption may be significant for nonprofits that deal with foreign government and policy issues and that are not currently registered.

FCC Chairperson Jessica Rosenworcel issued a press release on Wednesday stating that she has circulated to her fellow FCC commissioners and proposal that, if adopted by the agency, will clarify that the TCPA and related FCC rules impose a consent standard on “ringless voicemails” delivered to a user’s voicemail inbox.

The proposed action responds to a 2017 Petition for Declaratory Ruling filed by a company called All About the Message that argued that because ringless voicemails bypass telephone networks and are transmitted directly to telephone company voicemail servers at no charge to users, they are not “calls” governed by the TCPA and FCC rules.

The text of the proposed action is not yet public; but, if adopted, the action is expected to impose a consent standard on ringless voicemails when they are transmitted to a recipient’s voicemail inbox.  It also may require those transmitting ringless voicemails to comply with other TCPA and FCC rules governing prerecorded calls.

Last week, the Department of Justice published an Advance Notice of Proposed Rulemaking (ANPRM), the first step toward a major rulemaking that DOJ says would “modernize” the current regulations, including by clarifying certain exemptions and definitions.

In a client alert today, we review key portions of the ANPRM and the direction it suggests the DOJ envisions for new FARA regulations, which would have implications for our clients, as well as other foreign entities and those who engage with them.

Late last week, the Supreme Court indicated that it intends to review a challenge by Senator Ted Cruz (R-TX) to federal limits on the use of post-election contributions to repay pre-election loans that candidates make to their own campaigns.  This follows an earlier three-judge district court decision that struck down those limits as unconstitutional under the First Amendment.  Although the question presented in Federal Election Commission v. Ted Cruz for Senate relates most directly to the relatively obscure rules governing the repayment of candidate loans, the case represents a continuation of the steady shift in the courts towards a less restrictive federal campaign finance system.

For decades, courts considering constitutional challenges to federal campaign finance regulations have weighed the government’s interest in preventing actual or perceived corruption against individual speech rights protected by the First Amendment.  Most famously, in Buckley v. Valeo, the Supreme Court upheld federal contribution limits as a means of preventing even the appearance of quid pro quo corruption while at the same time striking down campaign expenditure limits that the Court found did little to prevent actual or perceived political corruption.  Since Buckley, this emphasis on the degree to which a challenged regulation serves as an effective check on actual or perceived corruption has been a central feature of federal campaign finance law.

Though never explicitly retreating from this basic proposition, in recent years the Supreme Court has taken an increasingly cramped view of what actually constitutes political corruption.  For instance, the Supreme Court has rejected as insufficiently compelling the prevention of “generic favoritism or influence” (McConnell v. FEC) or merely seeking “influence over or access to” elected officials (Citizens United v. FEC).  Most recently, in McCutcheon v. FEC, the Court struck down aggregate individual contribution limits on the grounds that those limits did “little, if anything,” to address explicit quid pro quo corruption.  Cruz may be the latest example of this trend.

Indeed, a close reading of the earlier district court decision suggests that the case may have significant implications well beyond the loan-repayment rules themselves.  Most notably, the district court imposed a remarkably high factual burden in considering whether the loan-repayment rules serve to prevent demonstrable corruption.  The “appearance” of corruption, in either the form of how the public perceived these payments, or what donors expected, carried nearly no weight in the analysis.  Instead, it was actual corruption the government needed to show.  In striking down the rules, the court noted that the government did “not identif[y] a single case of actual quid pro quo corruption” in the context of the loan‑repayment limit, which the court contrasted with prior cases in which the government put forward evidence of an anti-corruptive effect through witness testimony and detailed factual findings.  According to the court, even “[a] lengthy record may not be sufficient to demonstrate corruption, but the absence of any record of such corruption undermines the government’s proffered interest.”

While the fate of the loan-repayment rules may be of little interest to those not currently running for office, the Court’s consideration of these little-noticed rules may offer important insights into the future of campaign finance regulation more broadly.  If the Supreme Court affirms the district court’s approach, rules that currently may have a weaker connection to threats of “actual corruption”—for example, spousal contribution limits and the remaining restrictions on independent corporate political activities (facilitation of contributions, communications to all employees, etc.)—may be the next to face a challenge.

In the meantime, if the district court decision stands, we would expect all future candidates to cease “contributing” to their campaigns and recast those payments as loans, with a suitable rate of interest.  Striking down the limits on post-election contributions to repay loans may also incentivize candidates who believe they can win to boost late-race self-funding.  This change could also mean that incumbent officeholders with such loans on the books will be more attentive to the fundraising needed to ensure that the loans are repaid.

This post was written with research assistance from Summer Associate Jacob Lichtenstein.

Congressional investigations have continued to play a significant role in the 117th Congress. In February 2021, we predicted that the Democratic majorities in both the House and the Senate would target investigations at the private sector, and this prediction turned out to be correct. Already in 2021, committees in both chambers have launched investigations across a broad range of subjects.

Congressional investigations are deeply infused with politics. Although investigations may seem to proceed by familiar legal process—including document productions and witness testimony—there is actually very little due process in congressional investigations. There are no motions to dismiss, protective orders, or limited discovery orders. There are, however, some rules, and the rules that exist are important.

At the start of a new Congress, the House and Senate, and their committees, adopt internal rules that govern their operations, including rules that affect congressional investigations. These rules are often revised from Congress to Congress. To assist our clients responding to congressional investigations, this alert summarizes House, Senate, and key committee rules relevant to investigations for the 117th Congress, with a particular focus on the rules related to subpoena authority, depositions, and, where applicable, confidentiality.

Throughout recent months, we have closely monitored important developments in the courts and on Capitol Hill related to Congress’s power to issue and enforce subpoenas for documents or witness testimony.  As members of the 117th Congress continue to develop legislative and oversight priorities, a number of recent events signal continued uncertainty in congressional subpoena authority and interest in Congress in clarifying and strengthening that authority.  As discussed below, these recent developments hold significant implications for Congress’s ability to compel cooperation with their investigations.

Continue Reading Recent Developments Shed Further Light on Congressional Subpoena Authority

Earlier today, the House Committee on Oversight and Reform’s “Oversight Plan” was published. The Oversight Plan provides a very useful roadmap of the Committee’s investigative priorities and should be seen as a fair warning to the industries and companies identified in the plan.

In a client alert today, we review key portions of the Committee’s Oversight Plan that are likely to have implications for our clients and others in the private sector.

Yesterday, the Supreme Court issued its decision in Facebook v. Duguid, adopting a narrow interpretation of a key definitional term in the Telephone Consumer Protection Act (TCPA) and resolving the circuit split we previously described here and here.

Continue Reading Supreme Court Narrows Meaning of TCPA Autodialer Definition

There are few things as seductive in politics today as good data, and few things as challenging for commercial firms as the statutory bar on the use of FEC data for commercial purposes.  That came to a head yesterday, when the FEC was unable to reach a decision on an advisory opinion request on use of the FEC’s donor data to, among other things, confirm the identity and score potential donors in a client’s existing database.  The case highlights the gap between the regulated community and where a majority of FEC Commissioners may soon take the law.

Continue Reading Use of FEC Data – The Vice Chair Says the FEC Has Taken “A Wrong Turn”

It appears increasingly likely that California Governor Gavin Newsom will face a recall election, leading to questions about how to support or oppose his removal.  The “recall” will actually consist of two ballots, voted at the same election—a vote on whether to recall Newsom and a vote for his replacement if the recall passes.  Potential contributors may be surprised to learn that the state’s contribution limits apply differently to groups supporting or opposing the recall vote than to candidates seeking to replace Newsom.

Continue Reading California Recall Contribution Limits Would Vary for Newsom and Replacement Candidates