Section 1 Short title
This Act may be cited as the “Foreign Funding Accountability Act of 2021”.
Foreign Funding Accountability Act of 2021
A BILL
To amend disclosure requirements of foreign gifts and contracts under the Higher Education Act of 1965.
Sec. 2 Amendments to disclosures of foreign gifts and contracts
Section 117 of the Higher Education Act of 1965 (20 U.S.C. 1011f) is amended—
by striking subsections (a) and (b) and inserting the following:
“(a) Disclosure report
“(1) Filing—An institution shall file a disclosure report with the Department of Education on January 31 or July 31, whichever is sooner, if the institution—
“(A) is owned or controlled by a foreign source; or
“(B) receives a gift or enters into a contract with a foreign source, the value of which is $25,000 or more (including in-kind gifts, gifts to institution foundations, and gifts to any other legal entities that operate substantially for the benefit or under the auspieces of the institution), considered alone or in combination with all other gifts from or contracts with that foreign source within a calendar year.
“(2) Tuition—A tuition payment to an institution on behalf of an enrolled student by a foreign government or foundation shall be considered a gift from or contract with a foreign source under this subsection.
“(3) Designated individual—Each institution that is required to file a disclosure report under this section shall designate an officer at the institution who shall be responsible for ensuring the veracity of the disclosure report.
“(b) Contents of disclosure report
“(1) Owned or controlled by a foreign source—An institution that is required to file a disclosure report under subsection (a)(1)(A) shall include in the report:
“(A) The identity of the foreign source.
“(B) The date on which the foreign source assumed ownership or control.
“(C) Any changes in program or structure resulting from the change in ownership or control.
“(2) Gifts or contracts—An institution that is required to file a disclosure report under subsection (a)(1)(B) shall include in the report:
“(A) The amount of the gift or contract.
“(B) The country of origin of the gift or contract.
“(C) A statement from the foreign source providing the gift or entering into the contract, including, in the case of a foreign source that is—
“(i) an individual, the individual's—
“(I) name;
“(II) nationality
“(III) principal business address; and
“(IV) all business and residential addresses in the United States or elsewhere;
“(ii) a partnership—
“(I) the information described in subclause (I) through (IV) of clause (i) with respect to each member of the partnership; and
“(II) a true and complete copy of its articles of copartnership; or
“(iii) an association, corporation, organization, or any other combination of individuals—
“(I) the information described in subclauses (I) through (IV) of clause (i) with respect to each director, officer, and each individual performing the functions of a director or officer for that entity; and
“(II) a statement of the entity's ownership and control, and the publicly listed name of the entity.
“(D) The explicit and intended purpose and function of the gift or contract, including—
“(i) the name (and position if applicable) of the recipient individual, department, or benefactor at the institution receiving the gift or contract;
“(ii) any terms or conditions of the gift or contract;
“(iii) copies of each written agreement and the terms and conditions of each oral agreement, including all modifications of such agreements, relating to the gift or contract; or
“(iv) where no written or oral agreement exists, a full statement of all the circumstances relating to the gift or contract.
“(3) Attestation—Each disclosure report under this section shall include a written statement from the individual designated under subsection (a)(3) attesting that the disclosure report is true and complete.”
by striking subsections (c) and (d);
by redesignating subsections (e) through (h) as subsections (c) through (f), respectively;
in subsection (c), as redesignated by paragraph (3), by adding at the end the following: “All disclosure reports required by this section, including copies of agreements required under subsection (b)(2)(D)(iii), shall be publicly available, including by electronic means.”;
by striking subsection (d), as redesignated by paragraph (3), and inserting the following:
“(d) Enforcement
“(1) Civil penalties—Upon determination, after reasonable notice and opportunity for a hearing, that an institution—
“(A) has violated or failed to carry out any provision of this section or any regulation prescribed under this section (including by submitting a disclosure report with a material misstatement or omission), the Secretary may impose a civil penalty upon such institution of not to exceed, the greater of—
“(i) $250,000 for an initial violation or failure; or
“(ii) the value of the unreported gift or contract for an initial violation or failure;
“(B) commits a second violation or failure as described in subparagraph (A), the Secretary may impose a civil penalty upon such institution of not to exceed, the greater of—
“(i) $750,000; or
“(ii) the value of the unreported gift or contract;
“(C) commits 3 or more violations or failures as described in subparagraph (A)—
“(i) the Secretary may impose a civil penalty upon such institution of not to exceed, the greater of—
“(I) $1,000,000; or
“(II) the value of the unreported gift or contract; and
“(ii) the institution may be subject to penalties relating to the Student and Exchange Visitor Program and the institution's tax exempt status, as described in sections 4 and 5 of the Foreign Funding Accountability Act of 2021; or
“(D) commits 3 or more violations or failures as described in subparagraph (A) and has demonstrated a pattern of willful violations, the Secretary may determine that the institution is no longer eligible to receive funds under this Act.
“(2) Court orders—Whenever it appears that an institution has failed to comply with the requirements of this section, including any rule or regulation promulgated under this section, a civil action may be brought by the Attorney General, at the request of the Secretary, in an appropriate district court of the United States, or the appropriate United States court of any territory or other place subject to the jurisdiction of the United States, to request such court to compel compliance with the requirements of this section (including for the collection of civil penalties under this subsection). In case of contumacy by, or refusal to obey a subpoena issued to, any person, the Secretary may request the Attorney General to invoke the aid of any court of the United States where such person resides or transacts business for a court order for the enforcement of this section.
“(3) Costs—For knowing or willful failure to comply with the requirements of this section, including any rule or regulation promulgated thereunder, an institution shall pay to the Treasury of the United States the full costs to the United States of obtaining compliance, including all associated costs of investigation and enforcement.
“(4) Investigation; Subpoena authority—The Secretary shall establish an investigative process to identify gifts or contracts with respect to which a disclosure report under this section is required and has not been submitted. To assist the Secretary in the conduct of investigations of possible violations of this section, the Secretary is authorized to require by subpoena the production of information, documents, reports, answers, records, accounts, papers, and other documentary evidence pertaining to this section. The production of any such records may be required from any place in a State.”
in subsection (f)(2), as redesignated by paragraph (3)—
in subparagraph (C), by striking “and” after the semicolon;
in subparagraph (D), by adding “and” after the semicolon; and
by adding at the end the following:
“(E) any person registered under the Foreign Agents Registration Act of 1938 (22 U.S.C. 611 et seq.)”
Sec. 3 Report on past years required
In General— Not later than 1 year after the date of enactment of this Act, each institution shall prepare and submit to the Secretary of Education a disclosure report containing the information described in subsection (b) of section 117 of the Higher Education Act of 1965 (20 U.S.C. 1011f(b)) (as amended by section 2 of this Act) as required under subsection (a) of such section 117 (as amended by section 2 of this Act) for every qualifying event that has occurred on or after the date of enactment of the Higher Education Amendments of 1998 (Public Law 105–244) and before the date of enactment of this Act.
Institutions unable To comply— In the case of an institution that is unable to comply with the requirements of subsection (a) with respect to a qualifying event, that institution shall submit a statement to the Secretary of Education, for each such qualifying event, describing in detail in detail why the institution cannot comply with respect to that qualifying event.
Waiver— An institution may request, and the Secretary of Education may grant, a waiver with respect to the report required under this section if the institution demonstrates good cause for requiring such a waiver.
Enforcement—
In General— Upon determination, after reasonable notice and opportunity for a hearing, that an institution has violated or failed to carry out any provision of this section or any regulation prescribed under this section (including by submitting a disclosure report with a material misstatement or omission), the Secretary of Education may impose a civil penalty upon such institution not to exceed $25,000 for each qualifying event that the institution has failed to report in accordance with this section.
Court orders— Whenever it appears that an institution has failed to comply with the requirements of this section, including any rule or regulation promulgated under this section, a civil action may be brought by the Attorney General, at the request of the Secretary of Education, in an appropriate district court of the United States, or the appropriate United States court of any territory or other place subject to the jurisdiction of the United States, to request such court to compel compliance with the requirements of this section (including for the collection of civil penalties under this subsection).
Costs— For knowing or willful failure to comply with the requirements of this section, including any rule or regulation promulgated thereunder, an institution shall pay to the Treasury of the United States the full costs to the United States of obtaining compliance, including all associated costs of investigation and enforcement.
Investigation; Subpoena authority— The Secretary of Education shall establish an investigative process to identify gifts or contracts with respect to which a disclosure under this section is required and has not been submitted. The Secretary of Education may use administrative subpoena authority as authorized under law to conduct such investigations.
Definitions— In this section:
Institution— The term institution has the meaning given that term in section 117 of the Higher Education Act of 1965 (20 U.S.C. 1011f).
Qualifying event— In this section the term qualifying event means an institution—
being owned or controlled by a foreign source; or
receiving a gift or entering into a contract with a foreign source, the value of which is $25,000 or more (including in-kind gifts, or gifts to university or college foundations), considered alone or in combination with all other gifts from or contracts with that foreign source within a calendar year.
Sec. 4 Disqualification from the Student and Exchange Visitor Program
Any institution of higher education that is found to have violated the disclosure requirements set forth in section 117 of the Higher Education Act of 1965 (20 U.S.C. 1011f) on 3 or more occasions shall be ineligible to enroll foreign students under the Student and Exchange Visitor Program.
Sec. 5 Loss of tax-exempt status
Section 501 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
“(s) Loss of exempt status for certain institutions of higher education—An organization which is described in section 501(c)(3) and which is an institution (as defined in section 117 of the Higher Education Act of 1965 (20 U.S.C. 1011f)) shall not be exempt from taxation under section 501(a) if there has been a determination under section 117(d) of the Higher Education Act of 1965 that such institution has committed, after the date of the enactment of this section, 3 or more violations or failures described in section 117(d) of the Higher Education Act of 1965.”