Now that DOJ has started more actively prosecuting FARA violations, it decided to upload to its website a bunch of advisory opinions that apparently had been languishing in a file cabinet somewhere in the depths of Main Justice. Whether or not this is good news remains to be seen, but at least one of the advisory opinions given to a law firm handling a matter before the Office of Foreign Assets Control (“OFAC”) is more than a little troubling.
The advisory opinion responded to a request by an unnamed law firm that was representing an unnamed foreign company and an unnamed foreign individual in connection with the potential designation and blocking of the company and individual by OFAC. The opinion notes, rightly, that a law firm acting on behalf of a foreign company or a foreign individual would be an “agent of a foreign principal” (or as some newspaper reporters like to say, a “spy”) under section 1(c) of the Foreign Agents Registration Act of 1938, 22 U.S.C. § 611(c) and would be required to register under that act unless an exemption applies.
The discussion in the opinion then turns to the exemption in section 613(g) for “persons qualified to practice law.” That exemption expressly excludes, as the advisory opinion notes,
attempts to influence or persuade agency personnel or officials other than in the course of judicial proceedings, criminal or civil law enforcement inquiries, investigations, or proceedings, or agency proceedings required by statute or regulation to be conducted on the record.
The advisory opinion notes the further qualifications on this exclusion contained in section 5.306 of the FARA regulations, which limits such exclusion of activity outside the described proceedings to “only such attempts to influence or persuade with reference to formulating, adopting, or changing the domestic or foreign policies of the United States.” (Emphasis added.)
Now the ordinary, indeed the only, reading of this is that contacts with agencies outside of the proceedings, inquiries and investigations described in the exemption require registration only if they are designed to influence formulating, adopting or changing the domestic or foreign policies of the United States. But that’s not how DOJ reads it. Instead, the opinion states that attempts to influence policy will require registration even if those attempts occur during the types proceedings described in the exemption.
[T]he two primary activities you described in your letter, first [US law firm]’s representation with respect to any investigation or enforcement proceedings undertaken by the Department of Justice or another U.S. government agency involving [foreign person] or [foreign bank], and second, [US law firm]’s December 8, 2017, request to OFAC on behalf of [foreign person] and [foreign bank], that OFAC stay designation of [US law firm]’s clients until [US law firm] could present facts to OFAC, fall within the definitions set out within Section 3(g) FARA and its implementing regulations. In particular, the limited scope of [US law firm]’s December 8, 2017, letter to OFAC, appears to stop short of an attempt to influence OFAC’s policies regarding its sanctions regime beyond its specific application to [US law firm]’s representation of [foreign person and foreign bank]. If at any point in the future, [US law firm] engages in a discussion or exchange with OFAC that implicates wider policy or political considerations, then it would not be able to avail itself of the exemption and could be required to register.
It is significant here that DOJ starts by saying explicitly that the activities before OFAC by the law firm on behalf of the foreign company and individual are the types proceedings covered by the exemption for lawyers set forth in section 613(g). Even so, it applies the restriction on attempts to influence policy even though section 5.306 only refers to lawyers contacts with agencies outside of the types of proceedings described in section 613(g). It isn’t hard to see the difficulty here. If a law firm argues that its client has not violated any rules that require designation by OFAC, no FARA registration is required. But if the law firm argues, as might often be the case, that even if the client has violated those rules there are policy reasons that the agency should consider in exercising its administrative discretion not to designate the client, FARA registration is required. Even if that is what the act and the regulations say (and they do not), that would be stupid policy. Oops. Wait, do I have to register now???
My guess is that the law firm had an entirely different concern than whatever it was that caused DOJ to jump down the rabbit hole of limiting policy arguments. Although DOJ readily conceded that the proceeding in front of OFAC was one of the types of proceedings described in section 613(g), that really is a rather difficult question. The language in 613(g) could be read to cover agency proceedings only if they are required to be “on the record.”
Nothing in the International Emergency Economic Powers Act or OFAC regulations require the determination to designate a foreign company or individual to be conducted “on the record.” Not even the rules in section 501.807 for setting aside a designation require these proceedings to be “on the record.” This is probably what prompted the law firm’s inquiry in the first place since it was attempting to influence the agency’s determination to designate its clients. a proceeding that was not arguably required to be “on the record.” It seems DOJ here says, albeit indirectly, that the proceedings to designate were one of the type of proceedings described in the exemption for lawyers representing foreign clients and that, by implication, the exemption for lawyers covers agency proceedings that are not on the record. But having said that, DOJ went on and, in violation of both the statute and the rules, imposed a troublesome limitation on what lawyers can do in those proceedings without registering as a foreign agent.
Copyright © 2018 Clif Burns. All Rights Reserved. (No republication, syndication or use permitted without my consent.)