Investigations into the relationships Chinese entities have with U.S. academia have grown ten-fold this year. The Department of Education recently issued letters to Harvard and Yale  requesting a vast amount of information, under section 117 of the Higher Education Act.  The letters seek records related to the governments of Saudi Arabia, United Arab Emirates, Qatar and China among others. Something of a relic from the Cold War era, section 117 requires schools to disclose all gifts from or contracts entered into with a foreign government, foreign citizens, or foreign corporation when valued at $250,000 or more.  In practice, bi-annual reports fulfill this obligation.

The letters suggest that the Department has broadened its interpretation of the administrative requirements.  Records requested include those below the $250K threshold, even if intended to be a gift from an anonymous donor.  Further, the Department does not take adequate measures to consider confidentiality.  Reporting appears to include U.S. companies owned or operated by foreign entities, about which a school may not know.  Earlier letters included requests for data from independent foundations affiliated with the Universities as well. These are not the first records requests issued under 20 U.S.C. § 1011f. Last year’s letters were sent to Georgetown University, Texas A&M University, Cornell University, Rutgers University, the Massachusetts Institute of Technology and the University of Maryland.

Enter the dragon. As insecurities about economic espionage perpetrated by China have amplified, so too have allegations that colleges and universities have not reported the full breadth of information related to foreign entities as required.  In its report entitled, “China’s Impact on the U.S. Education System.”, the Senate Committee on Homeland Security and Governmental Affairs’ Permanent Subcommittee on Investigations called the area of gifts and contracts related to Confucius Institutes a “black hole”.  As an example, these types of inquiries explain in part a wave of decisions by schools to close Confucius Institutes. With the indictment of Chinese telecom conglomerate Huawei, and related law enforcement activities, stakes run higher for gifts or contracts related to such sanctioned companies. The most recent letters under section 117 seek records related to Chinese telecommunications companies, Huawei Technologies Co. and ZTE Corp.; two Russian groups, the Kaspersky Lab and Skolkovo Foundation; and Iran’s Alavi Foundation among others.

Demand for transparency and more reporting under section 117 will continue. Problematically, the Department relies on the statute alone, having never issued regulations on reporting.  Before receiving a similar letter, it may be worth preemptively pulling records of gifts or contracts in relation to the government of the People’s Republic of China, Huawei Technologies Co. Ltd., Huawei Technologies USA, Inc., ZTE Corp, and their respective agents. The Office of Management & Budget proposes to add a prohibition against “using government funds to enter into contracts (or extend or renew contracts) with entities that use [certain telecommunications equipment]” – essentially, telecommunication equipment provided by Huawei Technologies Company and certain other foreign entities (new § 200.216). There are parallel administrative issues raised by both the required reporting under section 117 of the Higher Education Act and Proposed New Uniform Guidance section 200.216.