Overview
Title
To amend the Higher Education Act of 1965 to require staff and faculty to report foreign gifts and contracts, and for other purposes.
ELI5 AI
The “Disclose GIFT Act” is a rule that says colleges must tell everyone about big gifts or contracts they get from other countries, so everyone knows where the money comes from, like showing where your allowance comes from. If they forget or do it wrong, they might have to pay a big fine, just like getting in trouble for not cleaning your room.
Summary AI
H. R. 1999, also known as the “Disclose GIFT Act,” proposes amendments to the Higher Education Act of 1965, focusing on transparency regarding foreign gifts and contracts in U.S. higher education. It requires staff and faculty to report gifts over a certain value or contracts with foreign sources, maintaining a public database with these details to avoid conflicts of interest. Institutions must establish policies to implement these requirements and designate compliance officers. The bill also outlines enforcement actions for non-compliance, such as fines and possible loss of eligibility for federal funding.
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AnalysisAI
General Summary of the Bill
The bill, known as the “Disclose Getting Involved in Foreign Transactions Act” (or "Disclose GIFT Act"), represents an amendment to the Higher Education Act of 1965. The primary purpose of this legislation is to require faculty and staff at certain higher education institutions to disclose gifts and contracts they receive from foreign sources. The bill specifically targets institutions that have received significant federal funding and outlines various procedures and penalties aimed at ensuring compliance with these disclosure requirements.
The act mandates the creation of a public database containing details of these foreign gifts and contracts, excluding personal identification data. It requires institutions to have policies in place to manage and disclose potential conflicts of interest that arise from foreign engagements. Additionally, it sets out enforcement protocols and penalties for institutions that fail to comply, involving coordination between different government agencies.
Summary of Significant Issues
Several issues arise from the proposed legislation. One of the most prominent concerns is the broad definition of a "foreign source," which could place substantial compliance burdens on institutions by extending to a wide variety of entities that might not actually pose a security risk. This might lead to unsolicited reporting and administrative expense.
The requirement for a publicly accessible and searchable database raises significant privacy and security concerns, potentially putting sensitive contractual details at risk. Additionally, the complexity of the legislation—with its numerous references to other legal documents and federal codes—could make it difficult for many institutions, especially those without robust legal teams, to navigate and comply with the stipulations.
Enforcement involves the Secretary of Education and the Attorney General, raising concerns about inefficiencies and burdens especially for smaller institutions. Additionally, the substantial fines for non-compliance are notable, with penalties potentially being financially crippling for smaller colleges.
Impact on the Public and Specific Stakeholders
Broad Public Impact
The measure could potentially enhance transparency and public trust in higher educational institutions by revealing foreign engagements. The focus on preventing undue foreign influence and protecting national security is likely seen as a positive step. However, it also runs the risk of branding non-threatening foreign interactions similarly to genuine security concerns, fostering an environment of unnecessary suspicion.
Specific Stakeholder Impact
For educational institutions, especially smaller ones, the financial and administrative burdens arise as significant. Complying with the many requirements of the bill might necessitate hiring additional legal and administrative personnel, potentially diverting funding from educational programs, which could adversely impact students and faculty.
Faculty and staff members at these institutions may encounter increased scrutiny over their professional engagements, leading to self-censorship in their academic activities and collaborations. The intricate requirements could also discourage beneficial foreign partnerships.
Foreign entities and international students could negatively view these measures as indicative of an unwelcoming environment, potentially deterring valuable cultural and academic exchanges.
Conclusion
Overall, the Disclose GIFT Act, if enacted, represents a legislative effort to increase transparency in the context of foreign interactions within higher education institutions. While well-intentioned in safeguarding national interests, the bill could have significant fiscal and operational repercussions for institutions required to comply. Balancing transparency and security with practical administration remains a significant challenge that stakeholders will need to address for the legislation's effective implementation.
Financial Assessment
The “Disclose GIFT Act” brings several financial implications, primarily concerning compliance and penalties that could significantly impact higher education institutions. This commentary will focus on these financial aspects as outlined in the bill.
Financial Penalties and Compliance Costs
The bill introduces stringent fines for non-compliance with the reporting requirements on foreign gifts and contracts. For an institution that is compelled to adhere to these requirements through civil action, the Secretary is mandated to impose a fine for first-time violations amounting to the greater of $250,000 or the total amount of unreported gifts or contracts. Subsequent violations attract even harsher penalties, with fines amounting to the greater of $500,000 or twice the total amount of gifts or contracts involved.
These financial repercussions can be particularly burdensome for smaller institutions that may not have the resources to manage rigorous compliance frameworks. Such substantial fines might lead to financial distress or, in extreme cases, the closure of institutions that cannot meet the bill’s demands.
Administrative and Compliance Burden
The bill requires institutions to establish comprehensive policies and databases to report foreign gifts and contracts above a certain threshold, with the objective of maintaining transparency. Institutions receiving more than $50,000,000 in federal funds over five years become subject to these requirements. The costs associated with creating and maintaining these systems, including hiring compliance officers and other necessary administrative staff, could be significant.
The costs tied to these administrative functions detract financial resources that might be better employed in educational or developmental initiatives, aligning with the issue of compliance burdens posed by the broad definition of "foreign source". This might lead to a diversion of funds from educational expenditures to regulatory adherence.
Impact on Smaller Institutions
The bill’s measures might disproportionately affect smaller institutions. The costs of compliance and potential fines for violations are the same regardless of an institution's size, potentially placing smaller colleges and universities at a financial disadvantage. These institutions may struggle more with the bill’s requirements, given their typically limited administrative capacities compared to larger, better-funded universities.
Overall, the financial elements of the “Disclose GIFT Act” demand diligent attention from educational institutions, both in setting up compliance structures and in understanding the potential repercussions of non-compliance. Financial planning and resource allocation will be crucial for institutions to effectively adapt to the bill’s requirements without compromising their primary educational missions.
Issues
The broad definition of 'foreign source' in Sections 117A and 117B could impose significant compliance burdens on institutions by including varied entities that may not pose a serious security threat, potentially leading to unnecessary or overzealous reporting. This is particularly impactful as it may lead institutions to spend resources on compliance that could otherwise be used for educational purposes.
The requirement in Section 117A for institutions to maintain a publicly available and searchable database containing information about foreign gifts and contracts raises privacy concerns, despite the exclusion of personally identifiable information. This could create ethical and security issues, affecting the reputation and operational security of institutions as sensitive data about contracts and partnerships is exposed.
The enforcement mechanisms in Section 117B involve both the Secretary and the Attorney General, which could lead to significant administrative burdens and possible inefficiencies, particularly for smaller institutions. The requirement for coordination among multiple agencies could delay action or lead to inconsistent enforcement outcomes.
The criteria for determining 'foreign countries of concern' or 'foreign entities of concern' in Section 3 could be perceived as subjective and politically motivated, potentially targeting specific countries without clear, objective rationale, leading to ethical and diplomatic concerns.
The fines outlined in Section 117B for non-compliance are substantial, with a minimum of $250,000 for first-time violations, and could disproportionately affect smaller institutions financially, potentially even leading to their closure or severe financial distress.
The complexity and volume of cross-references to other legal documents and federal codes throughout Sections 2, 117A, and 117B could make the bill difficult to navigate for institutions, especially those without robust legal teams, potentially leading to inadvertent non-compliance.
The mandatory public disclosure of compliance status and ongoing investigations in Section 117B(b)(2) could damage the reputation of an institution before any conclusive judgment is reached, raising legal and ethical concerns about due process and the presumption of innocence.
The language specifying contract details in Section 117A, such as dates and specific terms, could introduce significant administrative complexities for institutions, especially those with a large number of international contracts, increasing the risk of accidental non-compliance.
The GAO study and report timeline outlined in Section 3(c) might not allow for the capture of long-term implications or effectiveness of the amendments, potentially leading to superficial assessments or recommendations that do not fully address systemic issues.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The section provides the short title of the Act, which is officially named the "Disclose Getting Involved in Foreign Transactions Act" or simply the "Disclose GIFT Act."
2. Policy regarding conflicts of interest from foreign gifts and contracts Read Opens in new tab
Summary AI
The bill introduces a new requirement for certain U.S. higher educational institutions to establish policies and maintain a database for reporting foreign gifts and contracts received by their faculty and staff. It specifies which institutions are subject to these requirements, the types of gifts and contracts to be disclosed, and how this information should be made publicly available, while also defining key terms like "foreign source" and "gift."
Money References
- “(a) Requirement To maintain policy and database.—Beginning not later than 90 days after the date of enactment of the Disclose GIFT Act, each institution described in subsection (b) shall maintain— “(1) a policy requiring covered individuals employed at the institution to disclose in a report to such institution on July 31 of each calendar year that begins after the year in which such enactment date occurs— “(A) any gift received from a foreign source in the previous calendar year, the value of which is greater than the minimal value (as such term is defined in section 7342(a) of title 5, United States Code) or is of undetermined value, and including the date on which the gift was received; “(B) any contract with a foreign source (other than a foreign country of concern or foreign entity of concern) entered into or in effect during the previous calendar year, the value of which is $5,000 or more, considered alone or in combination with all other contracts with that foreign source within the calendar year, and including the date on which such contract is entered into, the date on which the contract first takes effect, and, as applicable, the date on which such contract terminates; “(C) any contract with a foreign source (other than a foreign country of concern or foreign entity of concern) entered into or in effect during the previous calendar year that has an undetermined monetary value, and including the date on which such contract is entered into, the date on which the contract first takes effect, and, as applicable, the date on which such contract terminates; and “(D) any contract entered into or in effect with a foreign country of concern or foreign entity of concern during the previous calendar year, the value of which is $0 or more or which has an undetermined monetary value, and including— “(i) the date on which such contract is entered into; “(ii) the date on which the contract first takes effect; “(iii) if the contract has a termination date, such termination date; and “(iv) the full text of such contract and any addenda; “(2) a publicly available and searchable database (in electronic and downloadable format), on a website of the institution, of the information required to be disclosed under paragraph (1) (other than the name or any other personally identifiable information of a covered individual) that— “(A) makes available the information disclosed under paragraph (1) (other than the name or any other personally identifiable information of a covered individual) beginning on the date that is 30 days after receipt of the report under such paragraph containing such information and until the latest of— “(i) the date that is 5 years after the date on which— “(I) a gift referred to in paragraph (1)(A) is received; or “(II) a contract referred to in subparagraph (B), (C) or (D) of paragraph (1) first takes effect; or “(ii) the date on which a contract referred to in subparagraph (B), (C) or (D) of paragraph (1) terminates; and “(B) is searchable and sortable— “(i) if the subject of the disclosure is a gift, by the date on which the gift is received; “(ii) if the subject of the disclosure is a contract— “(I) by the date on which such contract is entered into; and “(II) by the date on which such contract first takes effect; “(iii) by the attributable country with respect to which information is being disclosed; “(iv) by the narrowest of the department, school, or college of the institution, as applicable, for which the individual making the disclosure works; and “(v) by the name of the foreign source (other than a foreign source who is a natural person); and “(3) an effective plan to identify and manage potential information gathering by foreign sources through espionage targeting covered individuals that may arise from gifts received from, or contracts entered into with, a foreign source, including through the use of— “(A) periodic communications; “(B) accurate reporting under paragraph (2) of the information required to be disclosed under paragraph (1); and “(C) enforcement of the policy described in paragraph (1); and “(4) for purposes of investigations under section 117B(a)(1) or responses to requests under section 552 of title 5, United States Code (commonly known as the ‘Freedom of Information Act’), a record of the names of the individuals making disclosures under paragraph (1).
- “(b) Institutions.—An institution shall be subject to the requirements of this section if such institution— “(1) is an eligible institution for the purposes of any program authorized under title IV; and “(2)(A) received more than $50,000,000 in Federal funds in any of the previous five calendar years to support (in whole or in part) research and development (as determined by the institution and measured by the Higher Education Research and Development Survey of the National Center for Science and Engineering Statistics); or “(B) receives funds under title VI.
117A. Institutional policy regarding foreign gifts and contracts to faculty and staff Read Opens in new tab
Summary AI
Institutions receiving significant federal funding must create a policy and database for faculty and staff to report gifts and contracts from foreign sources. This includes making the disclosures public while protecting personal information and ensuring oversight to prevent foreign intelligence activities.
Money References
- (a) Requirement To maintain policy and database.—Beginning not later than 90 days after the date of enactment of the Disclose GIFT Act, each institution described in subsection (b) shall maintain— (1) a policy requiring covered individuals employed at the institution to disclose in a report to such institution on July 31 of each calendar year that begins after the year in which such enactment date occurs— (A) any gift received from a foreign source in the previous calendar year, the value of which is greater than the minimal value (as such term is defined in section 7342(a) of title 5, United States Code) or is of undetermined value, and including the date on which the gift was received; (B) any contract with a foreign source (other than a foreign country of concern or foreign entity of concern) entered into or in effect during the previous calendar year, the value of which is $5,000 or more, considered alone or in combination with all other contracts with that foreign source within the calendar year, and including the date on which such contract is entered into, the date on which the contract first takes effect, and, as applicable, the date on which such contract terminates; (C) any contract with a foreign source (other than a foreign country of concern or foreign entity of concern) entered into or in effect during the previous calendar year that has an undetermined monetary value, and including the date on which such contract is entered into, the date on which the contract first takes effect, and, as applicable, the date on which such contract terminates; and (D) any contract entered into or in effect with a foreign country of concern or foreign entity of concern during the previous calendar year, the value of which is $0 or more or which has an undetermined monetary value, and including— (i) the date on which such contract is entered into; (ii) the date on which the contract first takes effect; (iii) if the contract has a termination date, such termination date; and (iv) the full text of such contract and any addenda; (2) a publicly available and searchable database (in electronic and downloadable format), on a website of the institution, of the information required to be disclosed under paragraph (1) (other than the name or any other personally identifiable information of a covered individual) that— (A) makes available the information disclosed under paragraph (1) (other than the name or any other personally identifiable information of a covered individual) beginning on the date that is 30 days after receipt of the report under such paragraph containing such information and until the latest of— (i) the date that is 5 years after the date on which— (I) a gift referred to in paragraph (1)(A) is received; or (II) a contract referred to in subparagraph (B), (C) or (D) of paragraph (1) first takes effect; or (ii) the date on which a contract referred to in subparagraph (B), (C) or (D) of paragraph (1) terminates; and (B) is searchable and sortable— (i) if the subject of the disclosure is a gift, by the date on which the gift is received; (ii) if the subject of the disclosure is a contract— (I) by the date on which such contract is entered into; and (II) by the date on which such contract first takes effect; (iii) by the attributable country with respect to which information is being disclosed; (iv) by the narrowest of the department, school, or college of the institution, as applicable, for which the individual making the disclosure works; and (v) by the name of the foreign source (other than a foreign source who is a natural person); and (3) an effective plan to identify and manage potential information gathering by foreign sources through espionage targeting covered individuals that may arise from gifts received from, or contracts entered into with, a foreign source, including through the use of— (A) periodic communications; (B) accurate reporting under paragraph (2) of the information required to be disclosed under paragraph (1); and (C) enforcement of the policy described in paragraph (1); and (4) for purposes of investigations under section 117B(a)(1) or responses to requests under section 552 of title 5, United States Code (commonly known as the “Freedom of Information Act”), a record of the names of the individuals making disclosures under paragraph (1).
- (b) Institutions.—An institution shall be subject to the requirements of this section if such institution— (1) is an eligible institution for the purposes of any program authorized under title IV; and (2)(A) received more than $50,000,000 in Federal funds in any of the previous five calendar years to support (in whole or in part) research and development (as determined by the institution and measured by the Higher Education Research and Development Survey of the National Center for Science and Engineering Statistics); or (B) receives funds under title VI. (c) Definitions.—In this section— (1) the term “attributable country” means— (A) the country of citizenship of a foreign source who is a natural person, or, if such country is unknown, the principal residence (as applicable) of such foreign source; or (B) the country of incorporation of a foreign source that is a legal entity, or, if such country is unknown, the principal place of business (as applicable) of such foreign source.
3. Enforcement and other general provisions Read Opens in new tab
Summary AI
The text outlines enforcement measures and requirements for higher education institutions under the Higher Education Act, including penalties for non-compliance, the establishment of compliance officers, and the maintenance of a public list of foreign entities of concern. It also mandates a study to improve government coordination in implementing these sections and sets conditions for institutions to regain eligibility for federal programs after non-compliance.
Money References
- “(4) FINES FOR VIOLATIONS.—The Secretary shall impose a fine on an institution that is compelled to comply with a requirement of section 117A pursuant to paragraph (2) as follows: “(A) FIRST-TIME VIOLATIONS.—In the case of an institution that is compelled to comply with a requirement of section 117A pursuant to a civil action described in paragraph (2), and that has not previously been compelled to comply with any such requirement pursuant to such a civil action, the Secretary shall impose a fine on the institution for such violation in an amount that is the greater of— “(i) $250,000; or “(ii) the total amount of gifts or contracts that the institution is compelled to report pursuant to such civil action.
- “(B) SUBSEQUENT VIOLATIONS.—In the case of an institution that has previously been compelled to comply with a requirement of section 117A pursuant to a civil action described in paragraph (2), and is subsequently compelled to comply with such a requirement pursuant to a subsequent civil action described in paragraph (2), the Secretary shall impose a fine on the institution in an amount that is the greater of— “(i) $500,000; or “(ii) twice the total amount of gifts or contracts that the institution is compelled to report pursuant to such civil action.
117B. Enforcement; single point-of-contact; institutional requirements Read Opens in new tab
Summary AI
The section outlines enforcement procedures and requirements for institutions to comply with certain regulations, including penalties for violations, the establishment of compliance officers, and maintaining a single point of contact for assistance. Additionally, it defines key terms like "foreign country of concern" and "foreign entity of concern," and requires updates on compliance investigations and actions.
Money References
- (4) FINES FOR VIOLATIONS.—The Secretary shall impose a fine on an institution that is compelled to comply with a requirement of section 117A pursuant to paragraph (2) as follows: (A) FIRST-TIME VIOLATIONS.—In the case of an institution that is compelled to comply with a requirement of section 117A pursuant to a civil action described in paragraph (2), and that has not previously been compelled to comply with any such requirement pursuant to such a civil action, the Secretary shall impose a fine on the institution for such violation in an amount that is the greater of— (i) $250,000; or (ii) the total amount of gifts or contracts that the institution is compelled to report pursuant to such civil action.
- (B) SUBSEQUENT VIOLATIONS.—In the case of an institution that has previously been compelled to comply with a requirement of section 117A pursuant to a civil action described in paragraph (2), and is subsequently compelled to comply with such a requirement pursuant to a subsequent civil action described in paragraph (2), the Secretary shall impose a fine on the institution in an amount that is the greater of— (i) $500,000; or (ii) twice the total amount of gifts or contracts that the institution is compelled to report pursuant to such civil action.