Department of Education’s Final Section 117 Information Collection Request Continues to Overstep Statutory Authority

By Sarah Spreitzer and Steven Bloom

June 25, 2020

Share this

By Steven Bloom and Sarah Spreitzer

As ACE and other higher education associations have repeatedly told the Department of Education (ED), colleges and universities take seriously the risks associated with illicit technology transfer and malign foreign influence and are committed to complying with foreign gift and contract reporting requirements under Section 117 of the Higher Education Act. But it is disappointing that ED chose to dismiss the higher education community’s previously expressed concerns and released a new reporting portal on June 22 that implements the department’s expansion of the scope of Section 117 beyond what the statute provides for without first undertaking a full-fledged notice and comment rulemaking process. The first reporting deadline under the new ICR is July 31.

Since 1986, higher education institutions have been required by Section 117 to report gifts from or contracts entered into with a foreign government or nongovernmental foreign source with a value of at least $250,000. Until last year, Section 117 did not appear to be a priority for ED enforcement. But, with increased scrutiny by Congress and the administration over potential foreign interference in U.S. research efforts—particularly from China, the department has stepped up efforts to monitor whether institutions are in compliance.

While the final ICR portal was unveiled this week, this is an issue that the higher education community has been weighing in on for months. ACE first sent a letter to ED in January 2019 seeking clarification about how institutions can interpret the law correctly and comply with Section 117 requirements, noting that the department has never issued regulations, which forced colleges and universities to rely on two Dear Colleague letters, one issued in 1995 and the other in 2004. Follow up letters calling on ED to clarify the reporting requirements were sent in June, July, and August, to no avail.

Then, in September 2019, ED put out the initial version of its proposed ICR under the Paperwork Reduction Act rather than a full-fledged regulatory process consistent with the Administrative Procedure Act. ED’s September ICR sought to require the submission of information beyond anything specified in the statute. In addition to the problems stemming from overreaching the bounds of the statute, the comments submitted by ACE and other groups also expressed concern over the time it would take for institutions to comply with these expanded reporting requirements. The groups said that, by overwhelming ED with an enormous quantity of information that it would be unable to effectively use, the expansion “will actually undermine the congressional goal of bringing greater transparency to the relationships colleges and universities have with foreign entities.”

In response to the numerous comments objecting to their proposed ICR, on December 17, 2019, ED issued a revised and pared down ICR and sought emergency approval from OMB on the revised ICR before the end of the year. After OMB rejected the request for emergency approval, ED proposed a further revised ICR in February. As part of that revised ICR, ED said it would address one of the most egregious proposed overreaches, the requirement to disclose “true copies” of gift and contract agreements, through a separate notice-and-comment rulemaking process.

Still, the comments submitted March 11 by ACE and other associations on the proposed February ICR hold true: the ICR “exceeds the statutory authority set out in Section 117” in two key ways:

  • It requires reporting of detailed “disaggregated information from each” gift or contract, including the date received, recipient (including any and all intermediaries), contract start and end dates, and the names and addresses of all donors or contracting entities. This despite the fact that the law mandates only the reporting of aggregate amounts of such gifts, and it does not require the reporting of the identity of the individual or entity providing the gift or entering into the contract.
  • It requires that institutions report foreign gifts or contracts which benefit the institution if made through separate “intermediaries” even though such legal entities may be outside of their “direct control.” The ICR acknowledges that this requires institutions to make their own good faith assessment of whether an entity that operates substantially for the benefit of the institution is, in fact, sufficiently controlled by the institution to fall within the scope of the institution’s Sec.117 reporting requirements. Because the department has never regulated Sec. 117, or provided a definition of an institution, it should be bound by the narrow definition of “institution” set out in the statute.

We believe that while the final ICR is improved from the original proposed information collection ED released in September 2019, it is still has some of the “legal flaws” outlined by the memo ACE commissioned from Hogan Lovells LLP, which begins on page 18 of the November comments letter. For instance, it still contains a provision imposing potential criminal penalties on intentionally erroneous reporting, which we consider an additional overreach of what the statute provides. Nonetheless, the White House Office of Management and Budget in April concluded its review and approved the revised expansion of the reporting requirements, and, barring any successful legal challenges, the new collection portal is in effect.

If you have any questions or comments about this blog post, please contact us.

About the Authors

Sarah Spreitzer

Steven Bloom

Keep Reading

Education Department Does the Right Thing in Reimbursing Colleges for Canceled Perkins Loans

It was a long-running federal public policy question that could have ended badly for many colleges and universities. Were they going to owe tens of millions of dollars to the Treasury as the Department of Education wound down the now-defunct Perkins Loan program? Happily, the answer is no

September 30, 2019

Department of Education Should Not Leave Needy Students Out in the Cold in Midst of a Pandemic

The Trump administration has rejected the opportunity to do the right thing by all students in distributing CARES Act emergency grants. We must hope that Congress does not allow them to do it again.

July 13, 2020