May 31, 2023, Covington Alert
The Department of Justice (“DOJ”)’s FARA Unit released several new advisory opinions in recent weeks that interpret the Foreign Agents Registration Act (“FARA”) and its regulations. While the newly published opinions addressed a number of topics, the FARA Unit’s broad reading of the FARA triggers and the jurisdictional scope of
Late last week, the Committee on Oversight and Accountability published the House of Representative’s “Authorization and Oversight Plans.” The massive 241-page report is required by the House rules, and the Oversight Committee’s report collects the individual oversight plans that each standing committee of the House is required to create at the start of a new Congress. The report is the most comprehensive collection of the committees’ plans for investigations in the coming Congress.
This year’s report reflects a significant shift in priorities, reflecting the change in control of the House to the Republicans. For example, the Oversight Plan speaks to expected oversight of the Administration’s alleged “collusion” with “Big Tech,” the “politicization” of the federal government, China’s interactions with the American economy and national security, and the federal government’s response to the COVID-19 pandemic and ongoing prevention efforts. A repeated priority throughout the plans is seeking out and minimizing instances of “waste, fraud, and abuse” in government programs, which includes scrutinizing the recipients and use of government funds.
The plans of the four most active oversight committees—Oversight and Accountability, Judiciary, Energy and Commerce, and Financial Services—stand out in particular for their focus on the private sector and the way companies interact with the federal government. Other committees, including the Foreign Affairs Committee, have outlined ambitious oversight agendas as well. Of note, the Foreign Affairs Committee has added a Subcommittee on Oversight and Accountability “to undertake more complex oversight and investigative activities,” including on issues related to China, the conflict in Ukraine, the United States’ withdrawal from Afghanistan, and the origins of the pandemic. The Oversight Plan does not include the oversight objectives of the newly created House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party, which we explored in a separate alert.
The following summarizes key portions of the Oversight Plan with implications for the private sector and other individuals and entities that routinely interface with government:
Continue Reading Newly Published “Oversight Plan” Outlines the House’s Investigative Priorities
Covington annually publishes a detailed survey of state campaign finance, lobbying, and gift rules. Now, for the first time, Covington is releasing an updated survey that details federal campaign finance, lobbying, and gift rules, in addition to those of the 50 states and the District of Columbia. Corporations, trade associations, non-profits, other organizations, and individuals face significant penalties and reputational harm if they violate federal or state laws governing corporate and personal political activities, the registration of lobbyists, lobbying reporting, or the giving of gifts or items of value to government officials or employees. To help organizations and individuals comply with these rules, this detailed survey—now 327 pages—summarizes the campaign finance, lobbying, and gift rules adopted by the federal government, all 50 states, and the District of Columbia.
Newly added federal sections cover the Lobbying Disclosure Act, the Foreign Agents Registration Act, Congressional gift rules, executive branch gift rules, and the Federal Election Campaign Act. Information is provided in a table question and answer format intended to address common questions with practical guidance.
February 16, 2023, Covington Alert
The 2023 proxy season is underway for public companies and their investors. Corporate secretaries, lawyers, and executives are actively engaged in the SEC’s shareholder proposal process. Consistent with recent proxy seasons, a significant number of companies are receiving proposals calling for new or enhanced political disclosures. Although these proposals have been around for some time, recent contentious election cycles, debate over hot-button issues, including the Supreme Court’s 2022 decision in Dobbs v. Jackson Women’s Health Organization, and increased investor focus on ESG matters (as well as criticism of such focus) have cast an ever-increasing focus on disclosure of corporate political expenditures.
Effectively responding to shareholder proposals on this issue is essential. Although shareholder proposals are non-binding, proposals that are approved – or that fail but with a substantial level of support – will give rise to an expectation that the company will address the subject matter of the proposal in the months following the annual meeting. A company’s failure to act on a shareholder proposal that is approved or that receives strong support can result in reputational damage to the company and could signal to shareholders and proxy advisory firms that the board is not responsive to a matter of significant shareholder concern. This can give rise to further shareholder proposals and potential votes against some or all of the company’s directors at the next annual meeting. In some circumstances, failure to effectively respond to a shareholder proposal could lead activist investors to threaten or initiate a proxy contest in advance of the next annual meeting.
In recent years, shareholders have submitted hundreds of proposals aimed at encouraging companies to voluntarily disclose more information on their websites with regard to their corporate political spending and processes. In Covington’s 2015 guide on “Responding to Corporate Political Disclosure Initiatives,” we noted that “although some have argued that these efforts are primarily intended to force companies to scale back their lobbying and political activities—not to promote transparency—they continue unabated.” The pace and breadth of these proposals has expanded in the ensuing years, with a significant number of shareholder proposals focused on two topics—political contributions and lobbying expenditures. According to the Center for Political Accountability (“CPA”), its model political disclosure resolution was used 22 times each in the 2021 and 2022 proxy seasons, resulting in six votes in excess of 50 percent in 2021 and two in 2022. We expect, and have begun to see, a similar number of politically-focused shareholder proposals this proxy season. As of December 2022, for example, CPA reported that its shareholder partners have “filed 25 proposals in the 2023 proxy season, with more expected over the coming months.”
Continue Reading Tips for Responding To Corporate Political Disclosure Shareholder Proposals
For over a decade, Covington has published a detailed survey of the “pay-to-play” laws of all 50 states. Now, for the first time, Covington is updating the survey with a new section covering federal pay-to-play rules, in addition to those of the 50 states and many cities and counties. This new section details the federal
*This guide was originally published in 2018 and we have updated it periodically.
January 31, 2023, Covington Guide
In 1938, Congress enacted the Foreign Agents Registration Act (“FARA”), requiring “foreign agents” to register with the Attorney General. As amended over the years, it applies broadly to anyone who acts on behalf of a “foreign principal” to, among other things, influence U.S. policy or public opinion. Until recently, it was a backwater of American law—and a very still backwater at that, with just seven prosecutions between 1966 and 2016.
That now has changed. Like the once obscure Foreign Corrupt Practices Act, which prosecutors revived from hibernation some years ago, FARA is receiving its close-up. Prosecutors have brought more FARA prosecutions in the last several years than they had pursued in the preceding half century. In-house lawyers have scrambled to bone up on this famously vague criminal statute, at a time when the nation’s tiny bar of experienced FARA lawyers can still hold its meetings in the back of a mini-van.
While cases related to Special Counsel Robert Mueller’s investigation are the most salient examples, the renewed focus on foreign agents actually began prior to the Mueller investigation and has continued long after the Special Counsel closed up shop. A significant uptick in audits of registered foreign agents by the FARA Unit (the Department of Justice office that administers FARA), followed by significant staffing changes in the FARA Unit, and then noticeably more aggressive interpretations of the statute in advisory opinions and informal advice from the FARA Unit, all have signaled a sea change.
Continue Reading The Foreign Agents Registration Act (FARA): A Guide for the Perplexed
The House of Representatives formally established the new “Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party,” with a bipartisan vote of 365-65. The Select Committee, to be chaired by Rep. Mike Gallagher (R-WI), a former military intelligence officer who also serves on the House Intelligence Committee, has been
Yesterday, the House Select Committee to Investigate the January 6th Attack on the United States Capitol filed a highly consequential brief in ongoing litigation relating to a subpoena seeking documents involving attorney John Eastman’s alleged participation in efforts to thwart Congress’s certification of the results of the 2020 Presidential election. Not surprisingly, the Select Committee’s