Bill would give federal agencies new oversight of colleges’ foreign dealings

by Emma

Dive Brief:

  • Federal agencies would have more power to review colleges’ gifts and contracts from outside the U.S. under a bipartisan legislative package to combat foreign influence.
  • The legislation would give a federal oversight body the ability to scrutinize foreign financial transactions with colleges of $1 million or more if they relate to research or development of “critical technologies” and provide “access to any material nonpublic technical information.”
  • Higher education lobbying groups oppose the proposal, arguing it would damage research opportunities and economic competitiveness in the U.S.

Dive Insight:

Bill would give federal agencies new oversight of colleges’ foreign dealings

The proposed legislation, called the Strategic Competition Act of 2021, would expand the influence of the Committee on Foreign Investment in the U.S., also known as CFIUS. This interagency group examines foreign transactions involving American businesses. It is chaired by the U.S. Treasury Secretary.

In addition to enabling CFIUS to review colleges’ foreign gifts and contracts worth $1 million or more that deal with technology research and production, the bill would also open the panel’s scrutiny to those that carry conditions, such as those that endow a professorship. The amounts in question could be a one-off or a combined $1 million or more received over two years from the same source and for the same purpose.

CFIUS would need to determine whether there were “malign foreign influence or espionage activities” aimed at extracting from colleges “research and development methods or secrets related to critical technologies.”

The American Council on Education and a handful of other industry groups sent a letter to Senate leaders Tuesday opposing the proposal.

Although the measure applies to all foreign dealings, the bill was crafted to address relations between the U.S. and China. It represents the “first major proposal to bring Democrats and Republicans together in laying out a strategic approach towards Beijing,” according to a statement from the Senate Foreign Relations Committee.

The Trump administration follows a multiyear campaign to beef up enforcement of a part of the Higher Education Act —- Section 117 — that requires colleges to report foreign financial dealings worth $250,000 or more in a single year. It was a largely obscure part of the law until about 2018 when concerns over China’s influence in the U.S. started mounting.

The Trump Education Department accused colleges of neglecting their reporting mandates and opened investigations into more than a dozen high-profile institutions.  ACE officials repeatedly sought clarity about Section 117 requirements but said the department stonewalled them.

ACE wants to engage in negotiated rulemaking on how colleges are expected to report under Section 117, said Sarah Spreitzer, its director of government relations, in an interview Thursday. This regulatory process should be done instead of giving CFIUS a new role, she said.

“Until you fix Section 117, it’s tough to identify whether or not there are any holes in reporting,” Spreitzer said.

ACE said 700 transactions worth more than $1 million were reported to the department in 2019 that would be subject to a CFIUS review.

Spreitzer said the new requirements would hamper colleges’ ability to partner with foreign entities, as the panel’s review could take six months to a year. The body might skip trying to work with a U.S. college if it wanted to develop a vaccine, for example, she said. “Is a foreign partner really going to wait that long?”

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