[Federal Register Volume 85, Number 220 (Friday, November 13, 2020)]
[Rules and Regulations]
[Pages 72567-72569]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-23526]



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DEPARTMENT OF EDUCATION

34 CFR Part 668

[Docket ID ED-2020-OGC-0165]


The Department's Enforcement Authority for Failure to Adequately 
Report Under Section 117 of the Higher Education Act of 1965, as 
Amended

AGENCY: Office of the General Counsel, Department of Education.

ACTION: Notification of interpretation; request for comments.

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SUMMARY: The U.S. Department of Education (Department) issues this 
interpretation to clarify the Department's enforcement authority for 
failure to adequately report under section 117 of the Higher Education 
Act of 1965, as amended (HEA).

DATES: This interpretation is effective November 13, 2020. Comments 
must be received by the Department on or before December 14, 2020.

ADDRESSES: Submit your comments through the Federal eRulemaking Portal 
or via postal mail, commercial delivery, or hand delivery. We will not 
accept comments submitted by fax or by email or those submitted after 
the comment period. To ensure that we do not receive duplicate copies, 
please submit your comments only once. In addition, please include the 
Docket ID at the top of your comments.
     Federal eRulemaking Portal: Go to www.regulations.gov to 
submit your comments electronically. Information on using 
Regulations.gov, including instructions for accessing agency documents, 
submitting comments, and viewing the docket, is available on the site 
under ``Help.''
     Postal Mail, Commercial Delivery, or Hand Delivery: The 
Department strongly encourages commenters to submit their comments 
electronically. However, if you mail or deliver your comments about the 
interpretation, address them to Levon Schlichter, U.S. Department of 
Education, 400 Maryland Avenue SW, 6E-235, Washington, DC 20202.
    Privacy Note: The Department's policy is to make all comments 
received from members of the public available for public viewing in 
their entirety on the Federal eRulemaking Portal at 
www.regulations.gov. Therefore, commenters should be careful to include 
in their comments only information that they wish to make publicly 
available.

FOR FURTHER INFORMATION CONTACT: Levon Schlichter, U.S. Department of 
Education, 400 Maryland Avenue SW, Room 6E-235, Washington, DC 20202-
5076. Telephone: (202) 453-6387. Email: [email protected].

SUPPLEMENTARY INFORMATION: 
    Invitation to Comment: We invite you to submit comments regarding 
this interpretation. We will consider these comments in determining 
whether to take any future action. See ADDRESSES for instructions on 
how to submit public comments.
    During and after the comment period, you may inspect all public 
comments about the interpretation by accessing Regulations.gov. Due to 
the novel coronavirus 2019 pandemic, the Department buildings are 
currently not open to the public. However, upon reopening, you may also 
inspect the comments in person at 400 Maryland Ave. SW, 6E-251, 
Washington, DC, between 8:30 a.m. and 4:00 p.m., Eastern Time, Monday 
through Friday of each week except Federal holidays. To schedule a time 
to inspect comments, please contact the person listed under FOR FURTHER 
INFORMATION CONTACT.
    Assistance to Individuals with Disabilities in Reviewing the 
Rulemaking Record: On request, we will provide an appropriate 
accommodation or auxiliary aid to an individual with a disability who 
needs assistance to review the comments or other documents in the 
public rulemaking record for the interpretation. To schedule an 
appointment for this type of accommodation or auxiliary aid, please 
contact the person listed under FOR FURTHER INFORMATION CONTACT.
    Background: Section 117 of the HEA (20 U.S.C. 1011f) provides that 
institutions of higher education (IHEs) must file a disclosure report 
with the Secretary of Education, on January 31 or July 31, whichever is 
sooner, whenever the institution is owned or controlled by a foreign 
source or receives a gift from or enters into a contract with a foreign 
source, the value of which is $250,000 or more, considered alone or in 
combination with all other gifts from or contracts with that foreign 
source within a calendar year.
    The current version of this disclosure requirement was adopted in 
1998, see Public Law 105-244, Higher Education Amendments of 1998, 
Title I, sec. 102(a), adding HEA Title I, sec. 117 (Oct. 7, 1998); but 
a substantially similar disclosure requirement has been in place since 
1986. See Public Law 99-498, Higher Education Amendments of 1986, Title 
XII, sec. 1206, adding HEA Title XII, sec. 1207 (Oct. 17, 1986) (then 
codified at 20 U.S.C. 1145d).
    We have attempted to collect Section 117 information via our 
approved Application to Participate in Federal Student Financial Aid 
Program (e-App), Office of Management and Budget (OMB) Control Number 
1845-0012, but did not receive sufficient information to faithfully 
enforce the statute. Consequently, on February 10, 2020, we established 
a new information collection request (ICR) pursuant to the Paperwork 
Reduction Act (OMB Number 1801-0006). This new collection is necessary 
to ensure institutions provide congressionally mandated transparency 
with respect to covered gifts from and contracts with foreign sources, 
the public has ready and meaningful access to this information, and the 
Secretary receives more detailed information about covered gifts or 
contracts involving a foreign source and ownership or control of the 
institution by a foreign source, to determine whether it appears an 
institution has failed to comply with the requirements of 20 U.S.C. 
1011f.
    The prior reporting by institutions through the e-App plainly did 
not collect sufficient information to determine compliance with 20 
U.S.C. 1011f, to encourage institutions full reporting of covered gifts 
and contracts from foreign sources, and to provide members of the 
public with statutorily mandated access to accurate information 
regarding institutions' gifts from and contracts with foreign sources. 
Government Accountability Office reports (see https://www.gao.gov/assets/700/696859.pdf; https://www.gao.gov/assets/700/697156.pdf; and 
https://www.gao.gov/assets/680/679322.pdf); a comprehensive 
congressional report regarding the operation of Chinese government 
propaganda centers on U.S. campuses (see http://www.hsgac.senate.gov/download/majority-and-minority-staff-report_-chinas-impact-on-the-us-education-system); and evidence obtained by the Department through its 
civil investigations, confirm the majority, and perhaps the vast 
majority, of institutions failed to file required disclosures to the 
Department when institutions were using the e-App to submit Section 117 
information. For example, our investigations regarding potential 
noncompliance with Section 117 have preliminarily shown that 
institutions have failed to disclose approximately $6.5 billion of 
gifts from and contracts with foreign sources. Therefore, we issued an 
ICR to ensure that institutions comply with the statutory disclosure 
requirement and provide the public with information as Congress has 
intended.
    Through this notification of interpretation, the Department 
clarifies

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its enforcement authority with respect to institutions that fail to 
report accurate and complete Section 117 information.
    Interpretation:

Institutions Are Required Under Their Program Participation Agreements 
(PPA) To Report Section 117 Data

    Section 20 U.S.C. 1094(a)(17) of the HEA provides that in order to 
be an eligible institution for the purposes of any program authorized 
under the subchapter, an institution must enter into a program 
participation agreement with the Secretary. The agreement shall 
condition the initial and continuing eligibility of an institution to 
participate in a program upon compliance with the following 
requirement: The institution will complete surveys conducted as a part 
of the Integrated Postsecondary Education Data System (IPEDS) or any 
other Federal postsecondary institution data collection effort, as 
designated by the Secretary, in a timely manner and to the satisfaction 
of the Secretary.
    The program participation agreement requirement was adopted in 
1986, see Public Law 99-498, Higher Education Amendments of 1986, Title 
IV, sec. 407(a), adding HEA Title IV, sec. 487 (Oct. 17, 1986); and 
subsection (a)(17) was added in 1992, see Public Law 102-325, Higher 
Education Amendments of 1992, Title IV, sec. 490 (July 23, 1992).
    On April 29, 1994, the Department promulgated 34 CFR 668.14 to 
implement the 1992 amendments. See 59 FR 22425; see also 59 FR 9526, 
9538 (Feb. 28, 1994) (notice of proposed rulemaking explaining that the 
regulatory text is ``without substantive modifications'' from 20 U.S.C. 
1094(a)(17)). Section 668.14(b)(19) provides that by entering into a 
program participation agreement, an institution agrees that it will 
complete, in a timely manner and to the satisfaction of the Secretary, 
surveys conducted as a part of the Integrated Postsecondary Education 
Data System (IPEDS) or any other Federal collection effort, as 
designated by the Secretary, regarding data on postsecondary 
institutions.
    The Secretary, in light of widespread underreporting, clarifies via 
this notification that the Section 117 information collection is part 
of a 1094(a)(17) ``Federal data collection effort, as designated by the 
Secretary'' to ensure the public understands ED's enforcement 
authority. The requirement that institutions ``file a disclosure report 
with the Secretary'' comes within the plain and ordinary public meaning 
of 20 U.S.C. 1094(a)(17) at the time of its enactment. See Bostock v. 
Clayton County, 140 S.Ct. 1731, 1749 (2020). Indeed, a substantially 
similar foreign gift reporting requirement had already been in place 
for six years when Congress added Section 1094(a)(17) in 1992. See 
Public Law 99-498, Higher Education Amendments of 1986, Title XII, sec. 
1206, adding HEA Title XII, sec. 1207 (Oct. 17, 1986) (then codified at 
20 U.S.C. 1145d). And when Congress expanded that reporting requirement 
in 1998, it did not exempt the new Section 117 from Section 1094(a)'s 
requirements. Congress' consistent understanding is reflected in 
statutory language adopted in 2008, when Congress incorporated Section 
117 standards into Title VI, and expressly referred to Section 117 
reporting as a ``data requirement.'' See 20 U.S.C. 1132-7; Public Law 
110-315, Higher Education Opportunity Act, Title VI, sec. 622, adding 
HEA sec. 638 (Aug. 14, 2008). Finally, to the extent it is relevant, we 
note that there is nothing in the legislative history of 20 U.S.C. 
1094(a)(17) suggesting that Congress intended to narrow the plain 
meaning of the words ``any other Federal postsecondary institution data 
collection effort.''
    Under 20 U.S.C. 1094(a)(17), where an institution fails to report 
Section 117 information timely and accurately, the institution has 
failed to comply with its reporting obligations under 20 U.S.C. 1011f 
and failed to comply with a requirement in its PPA. Under 20 U.S.C. 
1094(a), the Department has authority to implement a range of 
corrective measures for an institution that violates its PPA, including 
termination of the institution's Title IV participation. We note that 
under 34 CFR 668.81 through 668.99 institutions have administrative 
appeal rights when the Department imposes fines, limitations, 
suspensions, or termination of the institution's Title IV 
participation.

The Department Has Authority to Administratively Subpoena Information 
From Parties When Investigating Possible Violations of Section 117

    An institution's failure to adequately report Section 117 gifts and 
contracts is a violation of an institution's participation in the HEA 
programs and PPA under 20 U.S.C. 1094(a)(17). Therefore, in addition to 
obtaining records and employee interviews under 34 CFR 668.24 in 
furtherance of any investigation about the sufficiency of an 
institution's Section 117 reporting, under 20 U.S.C. 1097a, ``the 
Secretary is authorized to require by subpoena the production of 
information, documents, reports, answers, records, accounts, papers, 
and other documentary evidence pertaining to participation in any 
program under [Title IV of the HEA].'' Consistent with applicable law, 
the Secretary is also authorized to share such evidence with other 
agencies of the U.S. Government for law enforcement and other lawful 
purposes.

Title VI Reporting

    For institutions that receive Title VI funds, 20 U.S.C. 1132-7 
imposes a reporting obligation that is similar to Section 117. While 
the monetary threshold is almost identical in Section 117 and 20 U.S.C. 
1132-7, they reference different time periods. Section 117 requires 
IHEs to disclose reportable transactions greater or equal to $250,000 
occurring within a calendar year while 20 U.S.C. 1132-7 requires IHEs 
to disclose reportable transactions greater than $250,000 occurring 
during a fiscal year. Institutions that receive Title VI funds and 
participate in the HEA programs are advised to be mindful of this 
temporal difference when designing corporate compliance processes since 
failure to adequately report under 20 U.S.C. 1132-7 may result in 
administrative enforcement actions similar to those described above for 
failure to comply with Section 117 reporting requirements and 20 U.S.C. 
1094(a)(17).
    Accessible Format: Individuals with disabilities can obtain this 
document in an accessible format (e.g., braille, large print, 
audiotape, or compact disc) on request to the program contact person 
listed under FOR FURTHER INFORMATION CONTACT.
    Electronic Access to This Document: The official version of this 
document is the document published in the Federal Register. You may 
access the official edition of the Federal Register and the Code of 
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    You may also access documents of the Department published in the 
Federal Register by using the article search feature at 
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your search to documents published by the Department.

Reed D. Rubinstein,
Principal Deputy General Counsel delegated the authority to perform the 
functions and duties of the General Counsel for the Office of the 
General Counsel.
[FR Doc. 2020-23526 Filed 11-12-20; 8:45 am]
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