The correspondence from the American Council on Education (ACE), co-signed by numerous higher education associations, responds to the U.S. Department of Education’s (ED) November 2020 Notification of Interpretation (NOI) concerning enforcement authority under Section 117 of the Higher Education Act (HEA). ACE emphasizes the higher education sector’s commitment to preventing illicit foreign influence and complying with Section 117’s foreign gift and contract reporting requirements, but expresses deep concern over the Department’s unilateral and punitive approach. ACE argues that the NOI overstates the extent of institutional noncompliance, misrepresents congressional intent by conflating Section 117 reporting obligations with Title IV program participation agreements, and threatens draconian consequences—including loss of federal student aid—without proper statutory grounding. The associations assert that ED’s expanded enforcement authority oversteps its legal boundaries, bypasses standard rulemaking processes, and risks undermining academic freedoms and institutional transparency.
Accompanying the letter is a legal memorandum from Hogan Lovells US LLP that systematically critiques the Department’s position. The memorandum contends that Section 117 is a distinct statutory reporting regime, providing its own compliance mechanisms and specifically assigning enforcement to the Department of Justice—not ED—without inclusion in Title IV or its enforcement framework. It argues that ED’s NOI constitutes an invalid legislative rule, as it establishes new compliance conditions for Title IV eligibility without undergoing requisite notice-and-comment or negotiated rulemaking, contrary to the Administrative Procedure Act and HEA stipulations. Furthermore, the legal analysis stresses that Congress intentionally structured Section 117 separately from Title IV, and ED’s attempt to merge the two distorts statutory text, history, and legislative design. ACE and its partners call on ED to withdraw the NOI and instead initiate collaborative rulemaking to clarify compliance expectations, ultimately aiming to promote transparency, legal consistency, and cooperative engagement between stakeholders and the Department.
