Title: Foreign Funding Accountability Act of 2021
Policy area: Education

Summary:
Foreign Funding Accountability Act of 2021
This bill requires institutions of higher education (IHEs) to disclose additional information related to gifts and contracts from foreign sources.
Under current law, an IHE is required to disclose in a report to the Department of Education (ED) a gift or contract that is from a foreign source and is valued at $250,000 or more, considered alone or in combination with all other gifts from or contracts with a foreign source. The bill instead requires the IHE to disclose such a gift or contract that is valued at $25,000 or more, considered alone or in combination with all other gifts or contracts. In-kind gifts, gifts to foundations, and gifts to other legal entities that operate substantially for the benefit of the IHE are included in this limit.
An IHE must disclose additional information in its report, including the intended purpose and function of the gift or contract.
Further, an IHE must disclose gifts and contracts from foreign agents.
Next, the bill authorizes ED to impose civil penalties on an IHE for failing to comply with disclosure requirements. An IHE that has violated these disclosure requirements three or more times shall be ineligible to enroll foreign students under the Student and Exchange Visitor Program and shall lose its tax-exempt status.
An IHE must submit to ED a report for every qualifying event (e.g., each time it received a gift or contract valued at $25,000 or more) that occurred since October 7, 1998.

[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 2060 Introduced in Senate (IS)]

<DOC>






117th CONGRESS
  1st Session
                                S. 2060

 To amend disclosure requirements of foreign gifts and contracts under 
                   the Higher Education Act of 1965.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 15, 2021

  Mr. Cotton introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend disclosure requirements of foreign gifts and contracts under 
                   the Higher Education Act of 1965.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Foreign Funding Accountability Act 
of 2021''.

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--
            (1) 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.'';
            (2) by striking subsections (c) and (d);
            (3) by redesignating subsections (e) through (h) as 
        subsections (c) through (f), respectively;
            (4) 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.'';
            (5) 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.'';
            (6) in subsection (f)(2), as redesignated by paragraph 
        (3)--
                    (A) in subparagraph (C), by striking ``and'' after 
                the semicolon;
                    (B) in subparagraph (D), by adding ``and'' after 
                the semicolon; and
                    (C) 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.

    (a) 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.
    (b) 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.
    (c) 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.
    (d) Enforcement.--
            (1) 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.
            (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 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).
            (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 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.
    (e) Definitions.--In this section:
            (1) 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).
            (2) Qualifying event.--In this section the term 
        ``qualifying event'' means an institution--
                    (A) being owned or controlled by a foreign source; 
                or
                    (B) 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.''.
                                 <all>