Colleges and universities that accept $250,000 or more in foreign funding must make their semiannual report to the Department of Education under Section 117 of the Higher Education Act. This information will be shared across government agencies, including the Department of Justice.
College campuses attract students, scholars, benefactors, and research collaborators from around the world, making them vulnerable to foreign influence. The government has issued a primer to colleges about foreign influence, and longstanding worries about foreign influence have sharpened.
The government is making clear that it will use its many tools to discover whether an institution may be carelessly or knowingly permitting foreign interests to manipulate them. This includes Section 117 of the Higher Education Act, the Foreign Agents Registration Act, the False Claims Act, and export control compliance.
While different compliance regimes may identify different technical issues, the government is now considering these risks collectively, and institutions should also widen their aperture. Colleges are becoming laboratories for government enforcement, and foreign influence is a key area of focus.
Colleges should be prepared for information to be shared with other agency stakeholders in the government contracting process, and also with the Department of Justice for exploration of civil actions under Section 117, the False Claims Act, or even criminal action.
There are many areas of friction to the compliance requirement, which has contributed to the inconsistency. It is not always black and white, and recent years have turned it into an instrument of policy. For example, determining whether a counterparty is a foreign source is not always straightforward.
Section 117 has some similarities with another foreign-influence detection law — FARA. However, because Section 117 is institutionally focused, concerns for individual personnel may not be top of mind, but they can be related. The government is inclined to share data among agencies and use all tools at its disposal to make deterrent examples out of individuals as well as institutions.
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In practice, this leads to a convergence in regulatory regimes. A funding relationship that looks like an ordinary gift or sponsored research contract on its face may also raise a registrable-agent question for the individual faculty member, administrator, or consultant facilitating it.
Reporting of a foreign source by the university may lead to sharing information with the investigative agencies looking into that foreign agent question, bringing with it the risk of enforcement using seemingly unrelated tools, including FARA, immigration, espionage, export laws, or other federal laws.
For its own part, Section 117 authorizes civil action to compel compliance and permits the federal government to recover the costs of investigation and enforcement from noncompliant institutions. The Department of Education takes the position that compliance with Section 117 is a condition of an institution’s participation in Title IV student financial aid programs.
Universities evaluating their foreign funding risk in silos are likely missing this fuller regulatory picture.
They should insulate themselves and their people by building a foreign-influence program scaled to their risk and aligned with the Justice Department’s guidance on evaluating compliance programs. In practice, that means centralizing data, building a protocol to detect foreign sources across research, transfers, gifts, and personnel, auditing against Section 117, FARA, and export rules, and training people to use it.
Creating a system before the government asks questions will help identify the scope of risk, demonstrate institutional responsibility, and discourage the government from spending its time doing the investigation for them. This approach will also help universities to better understand the regulations and to ensure compliance with the relevant laws.
It is important.
