115 HR 6165 IH: Reporting on Investments in Foreign Adversaries Act
U.S. House of Representatives
2023-11-01
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EN
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I
118th CONGRESS
1st Session
H. R. 6165
IN THE HOUSE OF REPRESENTATIVES
November 1, 2023
Mr. Owens (for himself and Ms. Foxx) introduced the following bill; which was referred to the Committee on Education and the Workforce
A BILL
To amend the Higher Education Act to require disclosure of certain foreign investments within endowments.
1.

Short title
This Act may be cited as the “Reporting on Investments in Foreign Adversaries Act” or the “RIFA Act”.
2.

Investment disclosure report
(a)

In general
Part B of title I of the Higher Education Act of 1965 (20 U.S.C. 1011 et seq.) is amended by inserting after section 117 the following:
“117A.

Investment disclosure report
(a)

Investment disclosure report
A specified institution shall file a disclosure report in accordance with subsection (b) with the Secretary on July 1 immediately following any calendar year in which the specified institution purchases, sells, or holds (directly or indirectly through any chain of ownership) one or more investments of concern.
(b)

Contents of report
Each report to the Secretary required by subsection (a) with respect to any calendar year shall contain the following:
(1)
A list of the investments of concern purchased, sold, or held during such calendar year.
(2)
The aggregate fair market value of all investments of concern held as of the close of such calendar year.
(3)
The combined value of all investments of concern sold over the course of such calendar year, as measured by the fair market value of such investments at the time of the sale.
(4)
The combined value of all capital gains from such sales of investments of concern.
(c)

Inclusion of certain pooled funds
(1)

In general
An investment of concern acquired through a regulated investment company, exchange traded fund, or any other pooled investment shall be treated as acquired through a chain of ownership referred to in subsection (a), unless such pooled investment is certified by the Secretary as not holding any listed investments in accordance with subparagraph (B) of paragraph (2).
(2)

Certifications of pooled funds
The Secretary, after consultation with the Secretary of the Treasury, shall establish procedures under which certain regulated investment companies, exchange traded funds, and other pooled investments—
(A)
shall be reported in accordance with the requirements under subsection (b); and
(B)
may be certified by the Secretary as not holding any listed investments.
(d)

Treatment of related organizations
For purposes of this section, assets held by any related organization (as defined in section 4968(d)(2) of the Internal Revenue Code of 1986) with respect to a specified institution shall be treated as held by such specified institution, except that—
(1)
such assets shall not be taken into account with respect to more than 1 specified institution; and
(2)
unless such organization is controlled by such institution or is described in section 509(a)(3) of the Internal Revenue Code of 1986 with respect to such institution, assets which are not intended or available for the use or benefit of such specified institution shall not be taken into account.
(e)

Valuation of debt
For purposes of this section, the fair market value of any debt shall be the principal amount of such debt.
(f)

Regulations
The Secretary, after consultation with the Secretary of the Treasury, may issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including regulations or other guidance providing for the proper application of this section with respect to certain regulated investment companies, exchange traded funds, and pooled investments.
(g)

Compliance officer
Any specified institution that is required to submit a report under subsection (a) shall designate, before the submission of such report, and maintain a compliance officer, who shall—
(1)
be a current employee or legally authorized agent of such institution; and
(2)
be responsible, on behalf of the institution, for personally certifying accurate compliance with the reporting requirements under this section.
(h)

Database requirement
Beginning not later than 60 days before the July 1 immediately following the date of the enactment of the RIFA Act, the Secretary shall—
(1)
establish and maintain a searchable database on a website of the Department, under which all reports submitted under this section (including any report submitted under this section before the date of the enactment of the RIFA Act)—
(A)
are made publicly available (in electronic and downloadable format), including any information provided in such reports;
(B)
can be individually identified and compared; and
(C)
are searchable and sortable; and
(2)
not later than 30 days after receipt of a disclosure report under this section, include such report in such database.
(i)

Interagency information sharing
Not later than 30 days after receiving a disclosure report from an institution in compliance with this section, the Secretary shall transmit an unredacted copy of such report to the Director of the Federal Bureau of Investigation, the Director of National Intelligence, the Assistant Attorney General for National Security, the Director of the Central Intelligence Agency, and the Director of the National Science Foundation.
(j)

Enforcement
(1)

Investigation
The Secretary (acting through the General Counsel of the Department) may conduct investigations of possible violations of this section by institutions.
(2)

Civil action
Whenever it appears that an institution has knowingly or willfully failed to comply with a requirement of this section (including any rule or regulation promulgated under this section) based on such an investigation, 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 requirement of this section.
(3)

Costs and other fines
An institution that is compelled to comply with a requirement of this section pursuant to paragraph (2) shall—
(A)
pay to the Treasury of the United States the full costs to the United States of obtaining compliance with the requirement of this section, including all associated costs of investigation and enforcement; and
(B)
be subject to the applicable fines described in paragraph (4).
(4)

Fines for violations
The Secretary shall impose a fine on an institution that knowingly or willfully fails to comply with a requirement of this section as follows:
(A)

First-time violations
In the case of a specified institution that knowingly or willfully fails to comply with a requirement of this section with respect to a calendar year, and that has not previously knowingly or willfully failed to comply with such a requirement, the Secretary shall impose a fine on the institution in an amount that is not less than 50 percent and not more than 100 percent of the sum of—
(i)
the aggregate fair market value of all investments of concern held by such institution as of the close of such calendar year; and
(ii)
the combined value of all investments of concern sold over the course of such calendar year, as measured by the fair market value of such investments at the time of the sale.
(B)

Subsequent violations
In the case of a specified institution that has been fined pursuant to clause (i) with respect to a calendar year, and that knowingly or willfully fails to comply with a requirement of this section with respect to any additional calendar year, the Secretary shall impose a fine on the institution with respect to any such additional calendar year in an amount that is not less than 100 percent and not more than 200 percent of the sum of—
(i)
the aggregate fair market value of all investments of concern held by such institution as of the close of such additional calendar year; and
(ii)
the combined value of all investments of concern sold over the course of such additional calendar year, as measured by the fair market value of such investments at the time of the sale.
(k)

Definitions
In this section:
(1)

Foreign country of concern
The term foreign country of concern includes the following:
(A)
A country that is a covered nation (as defined in section 4872(d) of title 10, United States Code).
(B)
Any country that the Secretary, in consultation with the Secretary of Defense, the Secretary of State, and the Director of National Intelligence, determines to be engaged in conduct that is detrimental to the national security or foreign policy of the United States.
(2)

Foreign entity of concern
The term foreign entity of concern has the meaning given such term in section 10612(a) of the Research and Development, Competition, and Innovation Act (42 U.S.C. 19221(a)) and includes a foreign entity that is identified on the list published under section 1286(c)(8)(A) of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (10 U.S.C. 22 4001 note; Public Law 115–232).
(3)

Institution
The term institution means an institution of higher education (as such term is defined in section 102, other than an institution described in subsection (a)(1)(c) of such section).
(4)

Investment of concern
(A)

In general
The term investment of concern means any specified interest with respect to any of the following:
(i)
A foreign country of concern.
(ii)
A foreign entity of concern.
(B)

Specified interest
The term specified interest means, with respect to any entity—
(i)
stock or any other equity or profits interest of such entity;
(ii)
debt issued by such entity; and
(iii)
any contract or derivative with respect to any property described in clause (i) or (ii).
(5)

Specified institution
(A)

In general
The term specified institution, as determined with respect to any calendar year, means an institution if—
(i)
such institution is not a public institution; and
(ii)
the aggregate fair market value of—
(I)
the assets held by such institution at the end of such calendar year (other than those assets which are used directly in carrying out the institution’s exempt purpose) is in excess of $6,000,000,000; or
(II)
the investments of concern held by such institution at the end of such calendar year is in excess of $250,000,000.
(B)

References to certain terms
For the purpose of applying the definition under subparagraph (A), the terms aggregate fair market value and assets which are used directly in carrying out the institution’s exempt purpose shall be applied in the same manner as such terms are applied for the purposes of section 4968(b)(1)(D) of the Internal Revenue Code of 1986.”.
(b)

Program participation agreement
Section 487(a) of the Higher Education Act of 1965 (20 U.S.C. 1094) is amended by adding at the end the following:
“(30)
(A)
An institution will comply with the requirements of section 117A.
(B)
An institution that, for 3 consecutive institutional fiscal years, violates any requirement of section 117A shall—
(i)
be ineligible to participate in the programs authorized by this title for a period of not less than 2 institutional fiscal years; and
(ii)
in order to regain eligibility to participate in such programs, demonstrate compliance with all requirements of such section for not less than 2 institutional fiscal years after the institutional fiscal year in which such institution became ineligible.” .