1/18/2021
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CAND-ECF

U.S. District Court California Northern District (San Francisco) CIVIL DOCKET FOR CASE #: 3:20-cv-04478-JD

ADRMOP,CLOSED

State of Michigan et al v. DeVos et al Assigned to: Judge James Donato Cause: 28:1331 Federal Question: Other Civil Rights

Date Filed: 07/07/2020 Date Terminated: 11/09/2020 Jury Demand: None Nature of Suit: 890 Other Statutory Actions Jurisdiction: U.S. Government Defendant

Plaintiff State of Michigan

represented by Fadwa Alawieh Hammoud Michigan Department of Attorney General Solicitor General P.O. Box 30212 Lansing, MI 48909 517-335-7628 Email: HammoudF1@michigan.gov LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Neil Giovanatti MI Department of Attorney General P.O. Box 30758 Lansing, MI 48909 517-335-7603 Email: giovanattin@michigan.gov PRO HAC VICE ATTORNEY TO BE NOTICED

Plaintiff State of California

Toni L. Harris Michigan Dept of Attorney General HEFS P.O. Box 30758 Lansing, MI 48933 517-335-7603 Fax: 517-335-1152 Email: harrist19@michigan.gov PRO HAC VICE ATTORNEY TO BE NOTICED
represented by James F. Zahradka , II California Department of Justice Bureau of Children's Justice 1515 Clay Street, Suite 2000 Oakland, CA 94612

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CAND-ECF
(510) 622-2239 Fax: (510) 622-2121 Email: james.zahradka@doj.ca.gov ATTORNEY TO BE NOTICED

Rebekah A Fretz California Department of Justice Bureau of Children's Justice 300 S. Spring St. Suite 1702 Los Angeles, CA 90013 213-269-6401 Email: rebekah.fretz@doj.ca.gov ATTORNEY TO BE NOTICED

Plaintiff District of Columbia

Garrett Murlan Lindsey California Department of Justice Civil Rights Enforcement Section 300 S. Spring St. Ste. 1702 Los Angeles, CA 90013 213-269-6402 Email: garrett.lindsey@doj.ca.gov ATTORNEY TO BE NOTICED
represented by Kathleen Marie Konopka 441 4th St N.W. Suite 630S Washington, DC 20001 202-724-6610 Fax: 202-514-8742 Email: Kathleen.Konopka@dc.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED

Plaintiff State of Maine

Nicole Hill Attorney General-Public Advocacy Division 441 4th Street NW Suite 630S Washington, DC 20001 202-724-6610 LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Aaron M Frey LEAD ATTORNEY ATTORNEY TO BE NOTICED

https://ecf.cand.uscourts.gov/cgi-bin/DktRpt.pl?158972653843579-L_1_0-1

Sarah Forster Ofﬁce of the Attorney General Litigation Division 6 State House Station
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Plaintiff State of New Mexico
Plaintiff State of Wisconsin
Plaintiff State of Hawaii

CAND-ECF
Augusta, ME 04333-0006 United Sta 207-626-8866 Fax: 207-287-3145 Email: sarah.forster@maine.gov LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
represented by Lisa Marie Giandomenico New Mexico Ofﬁce of the Attorney General 201 3rd St. NW, Suite 300 Albuquerque, NM 87102 United Sta (505) 490-4846 Email: lgiandomenico@nmag.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED
P. Choulla Khoury 201 Third Street NW Suite 300 Albuquerque, NM 87102 505-717-3500 Email: ckhoury@nmag.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Hannah Jurss Wisconsin Department of Justice 17 W Main Street P.O. Box 7857 Madison, WI 53707 608-266-8101 Email: jursshs@doj.state.wi.us LEAD ATTORNEY ATTORNEY TO BE NOTICED
Joshua L Kaul Wisconsin Department of Justice P.O. Box 7857 Madison, WI 53707 608-266-8101 Email: juesshs@doj.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Kevin M. Richardson State of Hawaii Department of the Attorney General

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Plaintiff The Board of Education for the City School District of the City of New York

CAND-ECF
235 S. Beretania St. Room 304 Honolulu, HI 96813 United Sta 808-586-1255 Fax: Email: kevin.m.richardson@hawaii.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Eric Proshansky 100 Church Street New York, NY 10007 212-356-2032 Email: eproshan@law.nyc.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED

Gail Rubin 100 Church Street New York, NY 10007 212-356-2032 Email: grubin@law.nyc.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED

Plaintiff
Board of Education for the City of Chicago

Hope Y Lu 100 Church Street, Room 20-101 New York, NY 10007 212-356-2294 Email: hlu@law.nyc.gov PRO HAC VICE ATTORNEY TO BE NOTICED
represented by James Ernest Mincy , III Chicago Board of Education 1 North Dearborn Street Suite 900 Chicago, IL 60602 773-553-1693 Email: jemincy1@cps.edu LEAD ATTORNEY ATTORNEY TO BE NOTICED

https://ecf.cand.uscourts.gov/cgi-bin/DktRpt.pl?158972653843579-L_1_0-1

Joseph T. Moriarty Chicago Board of Education 1 North Dearborn Street Suite 900 Chicago, IL 60602 773-553-1641 Email: jtmoriarty@cps.edu ATTORNEY TO BE NOTICED
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Plaintiff State of Maryland
Plaintiff San Francisco Uniﬁed School District

CAND-ECF
represented by Steven Marshall Sullivan Ofﬁce of the Attorney General of Maryland 200 Saint Paul Place Baltimore, MD 21202 410-576-6427 Fax: 410-576-6955 Email: ssullivan@oag.state.md.us LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Danielle Marie Houck San Francisco Uniﬁed School District Legal Department 555 Franklin Street, 3rd Floor San Francisco, CA 94102 415-241-6054 Fax: 415-241-6371 Email: daniellehouck@sfusd.edu LEAD ATTORNEY ATTORNEY TO BE NOTICED

Plaintiff
Cleveland Municipal School District Board of Education

Susanne N Kim , San Francisco Uniﬁed School District 555 Franklin Street, Legal Department San Francisco, CA 94102 United Sta 415-241-6054 Fax: Email: kims1@sfusd.edu LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Colin Robert Jennings Squire Patton Boggs (US) LLP 4900 Key Tower 127 Public Square Cleveland, OH 44114 216-479-8420 Fax: 216-479-8780 Email: colin.jennings@squirepb.com LEAD ATTORNEY ATTORNEY TO BE NOTICED

https://ecf.cand.uscourts.gov/cgi-bin/DktRpt.pl?158972653843579-L_1_0-1

Emily R. Spivak 4900 Key Tower 127 Public Square Cleveland 44114 216-479-8001 Email: emily.spivak@squirepb.com LEAD ATTORNEY
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Plaintiff Commonwealth of Pennsylvania

CAND-ECF
PRO HAC VICE ATTORNEY TO BE NOTICED
Gabriel Colwell Squire Sanders (US) LLP 555 S. Flower St. Suite 3100 Los Angeles, CA 90071 213-689-5126 Email: gabriel.colwell@squirepb.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Kevin J. Burtzlaff Cleveland Municipal School District 1111 Superior Ave East Cleveland, OH 44114 216-701-4115 Email: Kevin.Burtzlaff@clevelandmetroschools.org LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
W Michael Hanna Squire Patton Boggs 127 Public Square 4900 Key Tower 44114 216-479-8699 Email: mike.hanna@squirepb.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Michael John Fischer Ofﬁce of Attorney General 21 S. 12th Street 3rd Floor Philadelphia, PA 19107 215-560-2171 Email: mﬁscher@attorneygeneral.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED

V. Defendant Betsy DeVos

represented by William Kerwin Lane , III Department of Justice Civil Division 950 Pennsylvania Avenue NW Washington, DC 20530 202-305-7920

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Defendant United States Department of Education
Amicus The Council of the Great City Schools

CAND-ECF
Email: william.lane2@usdoj.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by William Kerwin Lane , III (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Donald J Mizerk Husch Blackwell LLP 120 South Riverside Plaza, Suite 2200 Chicago, IL 60606 (312) 526-1546 Fax: (312) 655-1501 Email: don.mizerk@huschblackwell.com LEAD ATTORNEY ATTORNEY TO BE NOTICED

John W. Borkowski Husch Blackwell LLP 120 S. Riverside Plaza Suite 2200 Chicago, IL 60606 312-655-1500 Fax: 312-655-1501 Email: john.borkowski@huschblackwell.com LEAD ATTORNEY ATTORNEY TO BE NOTICED

Aleksandra O. Rushing Husch Blackwell LLP 190 Carondelet Plaza Suite 600 St. Louis, MO 63105 314-345-6275 Fax: 314-480-1505 Email: aleks.rushing@huschblackwell.com ATTORNEY TO BE NOTICED

Mary E. Deweese Husch Blackwell LLP 120 S. Riverside Plaza Suite 2200 Chicago, IL 60606 312-655-1500 Fax: 312-655-1501 Email: mary.deweese@huschblackwell.com ATTORNEY TO BE NOTICED

Paige Duggins-Clay

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CAND-ECF
Husch Blackwell LLP 111 Congress Avenue Suite 1400 Austin, TX 78701 United Sta 512-479-1156 Fax: 512-479-1101 Email: paige.dugginsclay@huschblackwell.com ATTORNEY TO BE NOTICED

Amicus Council for American Private Education

Shmuel B. Shulman Husch Blackwell LLP 190 Carondelet Plaza Suite 600 St. Louis, MO 63105 314-480-1500 Fax: 314-480-1505 Email: shmuli.shulman@huschblackwell.com ATTORNEY TO BE NOTICED
represented by Luke N Berg Wisconsin Institute for Law and Liberty 330 E Killbourn Ave Ste 725 Milwaukee, WI 53202-3141 United Sta 608-469-6891 Email: luke@will-law.org LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus
National Catholic Educational Association

Mark W Bucher Law Ofﬁce of Mark W. Bucher 18002 Irvine Blvd Ste 108 Tustin, CA 92780 714-313-3706 Email: mark@calpolicycenter.org ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus
https://ecf.cand.uscourts.gov/cgi-bin/DktRpt.pl?158972653843579-L_1_0-1

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
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Agudath Israel of America

CAND-ECF
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus
Council of Islamic Schools in North America

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus
Association of Christian Schools International

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus
Association of Christian Teachers and Schools

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus WELS Commission on Lutheran Schools

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED

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Amicus Wisconsin Council of Religious & Independent Schools
Amicus Wisconsin Catholic Conference
Amicus School Choice Wisconsin Action
Amicus California Catholic Conference
Amicus Michigan Catholic Conference

CAND-ECF
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Mark W Bucher

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Amicus Michigan Association of Non-Public Schools

CAND-ECF
(See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus Pennsylvania Catholic Conference

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus
Pennsylvania Afﬁliate of the Council for American Private Education

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus American Federation for Children

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus
Foundation for Excellence in Education, Inc.

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

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CAND-ECF

Amicus EdChoice

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus Catholic Education Partners

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus Liberty Justice Center

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus Mackinac Center for Public Policy

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus Great Lakes Education Foundation

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY

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CAND-ECF
PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus Rio Grande Foundation

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus Buckeye Institute

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus Commonwealth Foundation

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus School Choice Wisconsin

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus Colorado Catholic Conference

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg

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CAND-ECF
(See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus Colorado Association of Private Schools

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus
Indiana Non-Public Education Association

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus
Midsouth Association of Independent Schools

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus Catholic Conference of Oklahoma

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus
https://ecf.cand.uscourts.gov/cgi-bin/DktRpt.pl?158972653843579-L_1_0-1

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
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Texas Private Schools Association

CAND-ECF
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus Goldwater Institute

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus James Madison Institute

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus Mississippi Center for Public Policy

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

Amicus Nevada Policy Research Institute

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED

https://ecf.cand.uscourts.gov/cgi-bin/DktRpt.pl?158972653843579-L_1_0-1

Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
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Amicus Roughrider Policy Center
Amicus Rhode Island Center for Freedom & Prosperity

CAND-ECF
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED
represented by Luke N Berg (See above for address) LEAD ATTORNEY PRO HAC VICE ATTORNEY TO BE NOTICED
Mark W Bucher (See above for address) ATTORNEY TO BE NOTICED

Date Filed 07/07/2020
07/07/2020 07/07/2020

# Docket Text
1 COMPLAINT for Declaratory and Injunctive Relief against Betsy DeVos, United States Department of Education ( Filing fee $ 400, receipt number 0971-14661586.). Filed byState of Wisconsin, District of Columbia, State of California, State of Maine, State of Michigan, State of New Mexico. (Attachments: # 1 Civil Cover Sheet)(Lindsey, Garrett) (Filed on 7/7/2020) (Entered: 07/07/2020)
2 Proposed Summons. (Lindsey, Garrett) (Filed on 7/7/2020) (Entered: 07/07/2020)
3 Case assigned to Magistrate Judge Sallie Kim.

Counsel for plaintiff or the removing party is responsible for serving the Complaint or Notice of Removal, Summons and the assigned judge's standing orders and all other new case documents upon the opposing parties. For information, visit E-Filing A New Civil Case at http://cand.uscourts.gov/ecf/caseopening.

Standing orders can be downloaded from the court's web page at www.cand.uscourts.gov/judges. Upon receipt, the summons will be issued and returned electronically. Counsel is required to send chambers a copy of the initiating documents pursuant to L.R. 5-1(e)(7). A scheduling order will be sent by Notice of Electronic Filing (NEF) within two business days. Consent/Declination due by 7/21/2020. (mbcS, COURT STAFF) (Filed on 7/7/2020) (Entered: 07/07/2020)

07/07/2020

4 MOTION for leave to appear in Pro Hac Vice ( Filing fee $ 310, receipt number 097114662934.) ﬁled by State of Michigan. (Attachments: # 1 Certiﬁcate of Good Standing) (Harris, Toni) (Filed on 7/7/2020) (Entered: 07/07/2020)

07/08/2020

5 MOTION for leave to appear in Pro Hac Vice ( Filing fee $ 310, receipt number 097114665682.) ﬁled by State of Michigan. (Attachments: # 1 Certiﬁcate of Good Standing) (Giovanatti, Neil) (Filed on 7/8/2020) (Entered: 07/08/2020)

07/08/2020

6 MOTION for leave to appear in Pro Hac Vice ( Filing fee $ 310, receipt number 0971-

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07/08/2020 07/08/2020 07/08/2020

CAND-ECF
14665707.) ﬁled by State of Maine. (Forster, Sarah) (Filed on 7/8/2020) (Entered: 07/08/2020)
7 NOTICE of Appearance by James F. Zahradka, II (Zahradka, James) (Filed on 7/8/2020) (Entered: 07/08/2020)
8 MOTION for leave to appear in Pro Hac Vice ( Filing fee $ 310, receipt number 097114666716.) ﬁled by State of Michigan. (Attachments: # 1 Certiﬁcate of Good Standing) (Hammoud, Fadwa) (Filed on 7/8/2020) (Entered: 07/08/2020)
9 ORDER by Judge Sallie Kim granting 4 Motion for Pro Hac Vice. (sklc1S, COURT STAFF) (Filed on 7/8/2020)

07/08/2020

Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/08/2020)
10 ORDER by Judge Sallie Kim granting 5 Motion for Pro Hac Vice. (sklc1S, COURT STAFF) (Filed on 7/8/2020)

07/08/2020

Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/08/2020)
11 ORDER by Judge Sallie Kim denying without prejudice 6 Motion for Pro Hac Vice. (sklc1S, COURT STAFF) (Filed on 7/8/2020)

07/08/2020

Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/08/2020)
12 ORDER by Judge Sallie Kim granting 8 Motion for Pro Hac Vice. (sklc1S, COURT STAFF) (Filed on 7/8/2020)

07/08/2020

Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/08/2020)
13 Initial Case Management Scheduling Order with ADR Deadlines: Case Management Statement due by 9/28/2020. Initial Case Management Conference set for 10/5/2020 01:30 PM in San Francisco, Courtroom C, 15th Floor. (hdjS, COURT STAFF) (Filed on 7/8/2020)

07/08/2020
07/09/2020 07/09/2020 07/09/2020 07/09/2020

Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/08/2020)
14 Summons Issued as to Betsy DeVos, United States Department of Education, U.S. Attorney and U.S. Attorney General (hdjS, COURT STAFF) (Filed on 7/8/2020) (Entered: 07/08/2020)
15 NOTICE of Appearance by Toni L. Harris (Harris, Toni) (Filed on 7/9/2020) (Entered: 07/09/2020)
16 NOTICE of Appearance by Neil Giovanatti (Giovanatti, Neil) (Filed on 7/9/2020) (Entered: 07/09/2020)
17 NOTICE of Appearance by Fadwa Alawieh Hammoud (Hammoud, Fadwa) (Filed on 7/9/2020) (Entered: 07/09/2020)
18 MOTION for leave to appear in Pro Hac Vice (Filing fee $ 310.) Filing fee previously paid on 7/8/2020 ﬁled by State of Maine. (Attachments: # 1 Certiﬁcate of Good Standing)(Forster, Sarah) (Filed on 7/9/2020) (Entered: 07/09/2020)

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07/09/2020

CAND-ECF
19 ORDER by Judge Sallie Kim granting 18 Motion for Pro Hac Vice. (sklc1S, COURT STAFF) (Filed on 7/9/2020)

Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/09/2020)

07/09/2020

20 NOTICE of Appearance by Rebekah A Fretz (Fretz, Rebekah) (Filed on 7/9/2020) (Entered: 07/09/2020)

07/10/2020

21 NOTICE of Appearance by Sarah Forster (Forster, Sarah) (Filed on 7/10/2020) (Entered: 07/10/2020)

07/16/2020

22 MOTION for leave to appear in Pro Hac Vice ( Filing fee $ 310, receipt number 097114700983.) ﬁled by State of New Mexico. (Giandomenico, Lisa) (Filed on 7/16/2020) (Entered: 07/16/2020)

07/16/2020

23 ORDER by Judge Sallie Kim granting 22 Motion for Pro Hac Vice. (sklc1S, COURT STAFF) (Filed on 7/16/2020)

Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/16/2020)

07/17/2020 24

AMENDED COMPLAINT for Declaratory and Injunctive Relief against Betsy DeVos, United States Department of Education. Filed byState of Wisconsin, District of Columbia, State of California, State of Maine, State of Michigan, State of New Mexico, State of Hawaii, The Board of Education for the City School District of the City of New York, Board of Education for the City of Chicago, State of Maryland, San Francisco Uniﬁed School District, Cleveland Municipal School District Board of Education, Commonwealth of Pennsylvania. (Lindsey, Garrett) (Filed on 7/17/2020) (Entered: 07/17/2020)

07/17/2020 25

ADMINISTRATIVE MOTION Exceed Applicable Page Limits and Expedite Brieﬁng Schedule for Plaintiffs Motion for Preliminary Injunction ﬁled by Board of Education for the City of Chicago, Cleveland Municipal School District Board of Education, Commonwealth of Pennsylvania, District of Columbia, San Francisco Uniﬁed School District, State of California, State of Hawaii, State of Maine, State of Maryland, State of Michigan, State of New Mexico, State of Wisconsin, The Board of Education for the City School District of the City of New York. Responses due by 7/21/2020. (Attachments: # 1 Proposed Order, # 2 Declaration, # 3 Motion for Preliminary Injunction, # 4 Proposed Order, # 5 Appendix, # 6 Request for Judicial Notice) (Lindsey, Garrett) (Filed on 7/17/2020) (Entered: 07/17/2020)

07/20/2020

26 MOTION for leave to appear in Pro Hac Vice of W. Michael Hanna ( Filing fee $ 310, receipt number 0971-14709898.) ﬁled by Cleveland Municipal School District Board of Education. (Attachments: # 1 Certiﬁcate of Good Standing)(Colwell, Gabriel) (Filed on 7/20/2020) (Entered: 07/20/2020)

07/20/2020

27 MOTION for leave to appear in Pro Hac Vice Colin r. Jennings ( Filing fee $ 310, receipt number 0971-14709983.) ﬁled by Cleveland Municipal School District Board of Education. (Attachments: # 1 Certiﬁcate of Good Standing)(Colwell, Gabriel) (Filed on 7/20/2020) (Entered: 07/20/2020)

07/20/2020

28 MOTION for leave to appear in Pro Hac Vice Emily r. Spivack ( Filing fee $ 310, receipt number 0971-14710008.) ﬁled by Cleveland Municipal School District Board of Education. (Attachments: # 1 Certiﬁcate of Good Standing)(Colwell, Gabriel) (Filed on 7/20/2020) (Entered: 07/20/2020)

07/20/2020

29 MOTION for leave to appear in Pro Hac Vice Kevin J. Burtzlaff ( Filing fee $ 310,

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07/21/2020

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receipt number 0971-14710032.) ﬁled by Cleveland Municipal School District Board of Education. (Attachments: # 1 Certiﬁcate of Good Standing)(Colwell, Gabriel) (Filed on 7/20/2020) (Entered: 07/20/2020)
30 ORDER by Judge Sallie Kim granting 25 Administrative Motion Regarding Brieﬁng Schedule and Page Limits. (sklc1S, COURT STAFF) (Filed on 7/20/2020)
Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/20/2020)
31 ORDER by Judge Sallie Kim granting 26 Motion for Pro Hac Vice. (sklc1S, COURT STAFF) (Filed on 7/20/2020)
Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/20/2020)
32 ORDER by Judge Sallie Kim granting 27 Motion for Pro Hac Vice. (sklc1S, COURT STAFF) (Filed on 7/20/2020)
Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/20/2020)
33 ORDER by Judge Sallie Kim granting 28 Motion for Pro Hac Vice. (sklc1S, COURT STAFF) (Filed on 7/20/2020)
Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/20/2020)
34 ORDER by Judge Sallie Kim granting 29 Motion for Pro Hac Vice. (sklc1S, COURT STAFF) (Filed on 7/20/2020)
Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/20/2020)
35 MOTION for Preliminary Injunction ; Memorandum of Points and Authorities in Support Thereof ﬁled by Board of Education for the City of Chicago, Cleveland Municipal School District Board of Education, Commonwealth of Pennsylvania, District of Columbia, San Francisco Uniﬁed School District, State of California, State of Hawaii, State of Maine, State of Maryland, State of Michigan, State of New Mexico, State of Wisconsin, The Board of Education for the City School District of the City of New York. Motion Hearing set for 8/24/2020 09:30 AM in San Francisco, Courtroom C, 15th Floor before Magistrate Judge Sallie Kim. Responses due by 7/29/2020. Replies due by 8/3/2020. (Attachments: # 1 Proposed Order, # 2 Appendix, # 3 Request for Judicial Notice)(Lindsey, Garrett) (Filed on 7/20/2020) (Entered: 07/20/2020)
36 CLERK'S NOTICE OF IMPENDING REASSIGNMENT TO A U.S. DISTRICT COURT JUDGE: The Clerk of this Court will now randomly reassign this case to a District Judge because either (1) a party has not consented to the jurisdiction of a Magistrate Judge (see docket no. [25-1]), or (2) time is of the essence in deciding a pending judicial action for which the necessary consents to Magistrate Judge jurisdiction have not been secured. You will be informed by separate notice of the district judge to whom this case is reassigned.

ALL HEARING DATES PRESENTLY SCHEDULED BEFORE THE CURRENT MAGISTRATE JUDGE ARE VACATED AND SHOULD BE RE-NOTICED FOR

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HEARING BEFORE THE JUDGE TO WHOM THIS CASE IS REASSIGNED.
This is a text only docket entry; there is no document associated with this notice. (mklS, COURT STAFF) (Filed on 7/21/2020)

07/21/2020 07/22/2020
07/23/2020 07/23/2020 07/24/2020 07/24/2020 07/24/2020 07/24/2020 07/24/2020 07/24/2020 07/24/2020

Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
Modiﬁed on 7/21/2020 (mklS, COURT STAFF). (Entered: 07/21/2020)
37 MOTION for leave to appear in Pro Hac Vice ( Filing fee $ 310, receipt number 097114716168.) ﬁled by State of Wisconsin. (Attachments: # 1 Supplement)(Jurss, Hannah) (Filed on 7/21/2020) (Entered: 07/21/2020)
38 ORDER, Case Reassigned using a proportionate, random, and blind system pursuant to General Order No. 44 to Judge James Donato for all further proceedings. Magistrate Judge Sallie Kim no longer assigned to the case. Notice: The assigned judge participates in the Cameras in the Courtroom Pilot Project. See General Order No. 65 and http://cand.uscourts.gov/cameras.. Signed by The Clerk on 7/22/20. (Attachments: # 1 Notice of Eligibility for Video Recording) (haS, COURT STAFF) (Filed on 7/22/2020)
Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/22/2020)
39 MOTION for leave to appear in Pro Hac Vice ( Filing fee $ 310, receipt number 097114726015.) ﬁled by Board of Education for the City of Chicago. (Attachments: # 1 Exhibit)(Mincy, James) (Filed on 7/23/2020) (Entered: 07/23/2020)
40 MOTION for leave to appear in Pro Hac Vice ( Filing fee $ 310, receipt number 097114726237.) ﬁled by Board of Education for the City of Chicago. (Attachments: # 1 Exhibit)(Moriarty, Joseph) (Filed on 7/23/2020) (Entered: 07/23/2020)
41 NOTICE of Appearance by Donald J Mizerk on behalf of Proposed Amicus Curiae Party, The Council of the Great City Schools (Mizerk, Donald) (Filed on 7/24/2020) (Entered: 07/24/2020)
42 MOTION for leave to appear in Pro Hac Vice ( Filing fee $ 310, receipt number 097114731909.) ﬁled by The Council of the Great City Schools. (Borkowski, John) (Filed on 7/24/2020) (Entered: 07/24/2020)
43 MOTION for leave to appear in Pro Hac Vice ( Filing fee $ 310, receipt number 097114731934.) ﬁled by The Council of the Great City Schools. (Shulman, Shmuel) (Filed on 7/24/2020) (Entered: 07/24/2020)
44 MOTION for leave to appear in Pro Hac Vice ( Filing fee $ 310, receipt number 097114731999.) ﬁled by The Council of the Great City Schools. (Rushing, Aleksandra) (Filed on 7/24/2020) (Entered: 07/24/2020)
45 MOTION for leave to appear in Pro Hac Vice ( Filing fee $ 310, receipt number 097114732036.) ﬁled by The Council of the Great City Schools. (Duggins-Clay, Paige) (Filed on 7/24/2020) (Entered: 07/24/2020)
46 MOTION for leave to appear in Pro Hac Vice ( Filing fee $ 310, receipt number 097114732073.) ﬁled by The Council of the Great City Schools. (Deweese, Mary) (Filed on 7/24/2020) (Entered: 07/24/2020)
47 MOTION for Leave to File Amicus Curiae Brief in Support of Plaintiffs' Motion for Preliminary Injunction and in Excess of Applicable Page Limitations ﬁled by The

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07/27/2020 07/27/2020 07/27/2020 07/27/2020 07/27/2020 07/27/2020

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Council of the Great City Schools. (Attachments: # 1 Amicus Curiae brief, # 2 Proposed Order)(Mizerk, Donald) (Filed on 7/24/2020) (Entered: 07/24/2020)
48 ORDER by Judge James Donato granting 39 Motion for Pro Hac Vice as to James Ernest Mincy III. (lrcS, COURT STAFF) (Filed on 7/27/2020)
Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/27/2020)
49 ORDER by Judge James Donato granting 40 Motion for Pro Hac Vice as to Joseph Moriarty. (lrcS, COURT STAFF) (Filed on 7/27/2020)
Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/27/2020)
50 CASE MANAGEMENT SCHEDULING ORDER: Initial Case Management Conference set for 10/8/2020 10:00 AM. Case Management Statement due by 10/1/2020. Signed by Judge James Donato on 7/27/2020. (lrcS, COURT STAFF) (Filed on 7/27/2020)
Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/27/2020)
51 ORDER by Judge James Donato granting 37 Motion for Pro Hac Vice as to Hannah S. Jurss. (lrcS, COURT STAFF) (Filed on 7/27/2020)
Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/27/2020)
52 ORDER by Judge James Donato granting 42 Motion for Pro Hac Vice as to John W. Borkowski. (lrcS, COURT STAFF) (Filed on 7/27/2020)
Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/27/2020)
53 ORDER by Judge James Donato granting 43 Motion for Pro Hac Vice as to Shmuel B. Shulman. (lrcS, COURT STAFF) (Filed on 7/27/2020)
Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/27/2020)
54 ORDER by Judge James Donato granting 44 Motion for Pro Hac Vice as to Aleksandra O. Rushing. (lrcS, COURT STAFF) (Filed on 7/27/2020)
Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/27/2020)
55 ORDER by Judge James Donato granting 45 Motion for Pro Hac Vice as to Paige Duggins-Clay. (lrcS, COURT STAFF) (Filed on 7/27/2020)
Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/27/2020)
56 ORDER by Judge James Donato granting 46 Motion for Pro Hac Vice as to Mary E. Deweese. (lrcS, COURT STAFF) (Filed on 7/27/2020)

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07/29/2020
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Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/27/2020)
57 MOTION for leave to appear in Pro Hac Vice ( Filing fee $ 310, receipt number 097114744101.) ﬁled by State of Maryland. (Attachments: # 1 Exhibit Certiﬁcate of Good Standing)(Sullivan, Steven) (Filed on 7/28/2020) (Entered: 07/28/2020)
58 ORDER by Judge James Donato granting 57 Motion for Pro Hac Vice as to Steven M. Sullivan. (lrcS, COURT STAFF) (Filed on 7/29/2020)
Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
(Entered: 07/29/2020)
59 MOTION for leave to appear in Pro Hac Vice ( Filing fee $ 310, receipt number 097114748747.) ﬁled by Council for American Private Education, National Catholic Educational Association, Agudath Israel of America, Council of Islamic Schools in North America, Association of Christian Schools International, Association of Christian Teachers and Schools, WELS Commission on Lutheran Schools, Wisconsin Council of Religious & Independent Schools, Wisconsin Catholic Conference, School Choice Wisconsin Action, California Catholic Conference, Michigan Catholic Conference, Michigan Association of Non-Public Schools, Pennsylvania Catholic Conference, Pennsylvania Afﬁliate of the Council for American Private Education, American Federation for Children, Foundation for Excellence in Education, Inc., EdChoice, Catholic Education Partners, Liberty Justice Center, Mackinac Center for Public Policy, Great Lakes Education Foundation, Rio Grande Foundation, Buckeye Institute, Commonwealth Foundation, School Choice Wisconsin, Colorado Catholic Conference, Colorado Association of Private Schools, Indiana Non-Public Education Association, Midsouth Association of Independent Schools, Catholic Conference of Oklahoma, Texas Private Schools Association, Goldwater Institute, James Madison Institute, Mississippi Center for Public Policy, Nevada Policy Research Institute, Roughrider Policy Center, Rhode Island Center for Freedom & Prosperity. (Berg, Luke) (Filed on 7/29/2020) (Entered: 07/29/2020)
60 ADMINISTRATIVE MOTION Leave to File Amicus Brief ﬁled by Agudath Israel of America, American Federation for Children, Association of Christian Schools International, Association of Christian Teachers and Schools, Buckeye Institute, California Catholic Conference, Catholic Conference of Oklahoma, Catholic Education Partners, Colorado Association of Private Schools, Colorado Catholic Conference, Commonwealth Foundation, Council for American Private Education, Council of Islamic Schools in North America, EdChoice, Foundation for Excellence in Education, Inc., Goldwater Institute, Great Lakes Education Foundation, Indiana Non-Public Education Association, James Madison Institute, Liberty Justice Center, Mackinac Center for Public Policy, Michigan Association of Non-Public Schools, Michigan Catholic Conference, Midsouth Association of Independent Schools, Mississippi Center for Public Policy, National Catholic Educational Association, Nevada Policy Research Institute, Pennsylvania Afﬁliate of the Council for American Private Education, Pennsylvania Catholic Conference, Rhode Island Center for Freedom & Prosperity, Rio Grande Foundation, Roughrider Policy Center, School Choice Wisconsin, School Choice Wisconsin Action, Texas Private Schools Association, WELS Commission on Lutheran Schools, Wisconsin Catholic Conference, Wisconsin Council of Religious & Independent Schools. Responses due by 8/3/2020. (Attachments: # 1 Amicus Brief, # 2 Proposed Order Proposed Order)(Berg, Luke) (Filed on 7/29/2020) (Entered: 07/29/2020)
61 MOTION for Preliminary Injunction Plaintiffs' Renotice of Motion for Preliminary

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Injunction ﬁled by Board of Education for the City of Chicago, Cleveland Municipal School District Board of Education, Commonwealth of Pennsylvania, District of Columbia, San Francisco Uniﬁed School District, State of California, State of Hawaii, State of Maine, State of Maryland, State of Michigan, State of New Mexico, State of Wisconsin, The Board of Education for the City School District of the City of New York. Motion Hearing set for 9/3/2020 10:00 AM in San Francisco, Courtroom 11, 19th Floor before Judge James Donato. Responses due by 7/29/2020. Replies due by 8/3/2020. (Lindsey, Garrett) (Filed on 7/29/2020) (Entered: 07/29/2020)

07/29/2020 62

STIPULATION WITH PROPOSED ORDER Stipulation to Set Brieﬁng Schedule and Set Hearing for Plaintiffs' Motion for Preliminary Injunction ﬁled by Board of Education for the City of Chicago, Cleveland Municipal School District Board of Education, Commonwealth of Pennsylvania, District of Columbia, San Francisco Uniﬁed School District, State of California, State of Hawaii, State of Maine, State of Maryland, State of Michigan, State of New Mexico, State of Wisconsin, The Board of Education for the City School District of the City of New York. (Attachments: # 1 Proposed Order to Set Brieﬁng Schedule and Hearing, # 2 Declaration of Lindsey in Support of Stipulation to Set Brieﬁng Schedule and Hearing)(Lindsey, Garrett) (Filed on 7/29/2020) (Entered: 07/29/2020)

07/29/2020

63 MOTION for leave to appear in Pro Hac Vice ( Filing fee $ 310, receipt number 097114751742.) ﬁled by State of Hawaii. (Attachments: # 1 Exhibit)(Richardson, Kevin) (Filed on 7/29/2020) (Entered: 07/29/2020)

07/30/2020 64 ORDER by Judge James Donato denying 59 Motion for Pro Hac Vice. (lrcS, COURT STAFF) (Filed on 7/30/2020) (Entered: 07/30/2020)

07/30/2020

65 ORDER by Judge James Donato granting 63 Motion for Pro Hac Vice as to Kevin M. Richardson. (lrcS, COURT STAFF) (Filed on 7/30/2020) (Entered: 07/30/2020)

07/30/2020

66 NOTICE of Appearance by Mark W Bucher (Bucher, Mark) (Filed on 7/30/2020) (Entered: 07/30/2020)

07/30/2020

67 Second MOTION for leave to appear in Pro Hac Vice ( Filing fee $ 310, receipt number 0971-14748747.) Filing fee previously paid on 7/29/20 ﬁled by Agudath Israel of America, American Federation for Children, Association of Christian Schools International, Association of Christian Teachers and Schools, Buckeye Institute, California Catholic Conference, Catholic Conference of Oklahoma, Catholic Education Partners, Colorado Association of Private Schools, Colorado Catholic Conference, Commonwealth Foundation, Council for American Private Education, Council of Islamic Schools in North America, EdChoice, Foundation for Excellence in Education, Inc., Goldwater Institute, Great Lakes Education Foundation, Indiana Non-Public Education Association, James Madison Institute, Liberty Justice Center, Mackinac Center for Public Policy, Michigan Association of Non-Public Schools, Michigan Catholic Conference, Midsouth Association of Independent Schools, Mississippi Center for Public Policy, National Catholic Educational Association, Nevada Policy Research Institute, Pennsylvania Afﬁliate of the Council for American Private Education, Pennsylvania Catholic Conference, Rhode Island Center for Freedom & Prosperity, Rio Grande Foundation, Roughrider Policy Center, School Choice Wisconsin, School Choice Wisconsin Action, Texas Private Schools Association, WELS Commission on Lutheran Schools, Wisconsin Catholic Conference, Wisconsin Council of Religious & Independent Schools. (Berg, Luke) (Filed on 7/30/2020) (Entered: 07/30/2020)

07/30/2020 68 OPPOSITION/RESPONSE (re 35 MOTION for Preliminary Injunction ; Memorandum of Points and Authorities in Support Thereof ) ﬁled byBetsy DeVos, United States Department of Education. (Lane, William) (Filed on 7/30/2020) (Entered: 07/30/2020)

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07/31/2020 07/31/2020
07/31/2020
08/03/2020 08/05/2020
08/10/2020 08/11/2020 08/13/2020

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69 ORDER by Judge James Donato granting 67 Motion for Pro Hac Vice as to Luke N. Berg. (lrcS, COURT STAFF) (Filed on 7/31/2020) (Entered: 07/31/2020)
70 ORDER. At the parties' 62 joint request, defendants' opposition to the motion for a preliminary injunction is due by July 30, 2020. Plaintiffs' reply is due by August 5, 2020. An online hearing is set for August 18, 2020, at 11:30 a.m. Instructions for accessing the hearing will be posted separately. Signed by Judge James Donato on 7/31/2020. (This is a text-only entry generated by the court. There is no document associated with this entry.) (jdlc3S, COURT STAFF) (Filed on 7/31/2020) (Entered: 07/31/2020)
71 CERTIFICATE OF SERVICE by Board of Education for the City of Chicago, Cleveland Municipal School District Board of Education, Commonwealth of Pennsylvania, District of Columbia, San Francisco Uniﬁed School District, State of California, State of Hawaii, State of Maine, State of Maryland, State of Michigan, State of New Mexico, State of Wisconsin, The Board of Education for the City School District of the City of New York Proofs of Service (Lindsey, Garrett) (Filed on 7/31/2020) (Entered: 07/31/2020)
72 NOTICE of Appearance by Steven Marshall Sullivan for the State of Maryland (Sullivan, Steven) (Filed on 8/3/2020) (Entered: 08/03/2020)
73 REPLY (re 35 MOTION for Preliminary Injunction ; Memorandum of Points and Authorities in Support Thereof ) ﬁled byBoard of Education for the City of Chicago, Cleveland Municipal School District Board of Education, Commonwealth of Pennsylvania, District of Columbia, San Francisco Uniﬁed School District, State of California, State of Hawaii, State of Maine, State of Maryland, State of Michigan, State of New Mexico, State of Wisconsin, The Board of Education for the City School District of the City of New York. (Attachments: # 1 Supplemental Request for Judicial Notice)(Giovanatti, Neil) (Filed on 8/5/2020) (Entered: 08/05/2020)
74 MOTION for leave to appear in Pro Hac Vice ( Filing fee $ 310, receipt number 097114793702.) ﬁled by The Board of Education for the City School District of the City of New York. (Attachments: # 1 Exhibit Certiﬁcate of Good Standing)(Lu, Hope) (Filed on 8/10/2020) (Entered: 08/10/2020)
75 ORDER by Judge James Donato granting 74 Motion for Pro Hac Vice as to Hope Lu. (lrcS, COURT STAFF) (Filed on 8/11/2020) (Entered: 08/11/2020)
76 ORDER. The preliminary injunction hearing set for August 18, 2020, at 11:30 a.m., will be held by Zoom Webinar.

Each party should designate a lead counsel to speak at the hearing by emailing the name of their lead counsel to Judge Donato's Courtroom Deputy, Ms. Lisa Clark, at jdcrd@cand.uscourts.gov by August 17, 2020, at 12:00 p.m. California time. The names for lead counsel are needed so that Ms. Clark can identify them during the Zoom hearing when the case is called. All lead counsel must call in ﬁfteen minutes before the hearing to test internet, video, and audio capabilities.

All counsel, parties, members of the public, and press may join the webinar using the link or information below:

https://cand-uscourts.zoomgov.com/j/1617171523? pwd=VWJqM2ZYT1UvNFZ0ZHNZUUhGWTBCZz09

Webinar ID: 161 717 1523 Password: 213597

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Or iPhone one-tap : US: +16692545252,,1617171523#,,1#,213597# or +16468287666,,1617171523#,,1#,213597#

Or Telephone: Dial (for higher quality, dial a number based on your current location): US: +1 669 254 5252 or +1 646 828 7666

PLEASE NOTE: Persons granted remote access to court proceedings are reminded of the general prohibition against photographing, recording, and rebroadcasting of court proceedings (including those held by telephone or videoconference). See General Order 58 at Paragraph III. Any recording of a court proceeding held by video or teleconference, including screen-shots or other visual copying of a hearing, is absolutely prohibited. Violation of these prohibitions may result in sanctions, including removal of court-issued media credentials, restricted entry to future hearings, or any other sanctions deemed necessary by the court. Please see https://www.cand.uscourts.gov/zoom for information on preparing for and participating in a Zoom Webinar.

Signed by Judge James Donato on 8/13/2020. (This is a text-only entry generated by the court. There is no document associated with this entry.) (jdlc3S, COURT STAFF) (Filed on 8/13/2020) (Entered: 08/13/2020)

08/18/2020

77 Minute Entry for proceedings held before Judge James Donato: Motion Hearing held on 8/18/2020. (jdlc2S, COURT STAFF) (Date Filed: 8/18/2020) (Entered: 08/18/2020)

08/19/2020

78 TRANSCRIPT ORDER for proceedings held on 08-18-2020 before Judge James Donato by State of Michigan, for Court Reporter Belle Ball. (Giovanatti, Neil) (Filed on 8/19/2020) (Entered: 08/19/2020)

08/19/2020

79 ORDER. The parties are directed to jointly ﬁle by August 24, 2020, a notice of related proceedings in any other federal court. Civil L.R. 3-13. Signed by Judge James Donato on 8/19/2020. (This is a text-only entry generated by the court. There is no document associated with this entry.) (jdlc3, COURT STAFF) (Filed on 8/19/2020) (Entered: 08/19/2020)

08/24/2020 80

NOTICE by Board of Education for the City of Chicago, Cleveland Municipal School District Board of Education, Commonwealth of Pennsylvania, District of Columbia, San Francisco Uniﬁed School District, State of California, State of Hawaii, State of Maine, State of Maryland, State of Michigan, State of New Mexico, State of Wisconsin, The Board of Education for the City School District of the City of New York Joint Notice of Pendency of Other Actions (Attachments: # 1 Exhibit A - WA Preliminary Injunction Order)(Giovanatti, Neil) (Filed on 8/24/2020) (Entered: 08/24/2020)

08/26/2020

81 Transcript of Proceedings held on August 18, 2020, before Judge James Donato. Court Reporter Belle Ball, CSR, CRR, RDR, telephone number (415)373-2529, belle_ball@cand.uscourts.gov. Per General Order No. 59 and Judicial Conference policy, this transcript may be viewed only at the Clerk's Ofﬁce public terminal or may be purchased through the Court Reporter until the deadline for the Release of Transcript Restriction. After that date it may be obtained through PACER. Any Notice of Intent to Request Redaction, if required, is due no later than 5 business days from date of this ﬁling. (Re 78 Transcript Order ) Release of Transcript Restriction set for 11/24/2020. (Related documents(s) 78 ) (ballbb15S, COURT STAFF) (Filed on 8/26/2020) (Entered: 08/26/2020)

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09/11/2020
09/14/2020

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82 ORDER RE PRELIMINARY INJUNCTION. Case Management Statement due by 9/10/2020. Initial Case Management Conference set for 9/17/2020 at 10:00 AM. Signed by Judge James Donato on 08/26/2020. (jdlc3S, COURT STAFF) (Filed on 8/26/2020) (Entered: 08/26/2020)
83 STIPULATION re 24 Amended Complaint,, STIPULATED REQUEST TO ENLARGE TIME TO ANSWER THE COMPLAINT ﬁled by Betsy DeVos, United States Department of Education. (Lane, William) (Filed on 9/8/2020) (Entered: 09/08/2020)
84 JOINT CASE MANAGEMENT STATEMENT ﬁled by Board of Education for the City of Chicago, Cleveland Municipal School District Board of Education, Commonwealth of Pennsylvania, District of Columbia, San Francisco Uniﬁed School District, State of California, State of Hawaii, State of Maine, State of Maryland, State of Michigan, State of New Mexico, State of Wisconsin, The Board of Education for the City School District of the City of New York. (Lindsey, Garrett) (Filed on 9/10/2020) (Entered: 09/10/2020)
85 ORDER. At the parties' joint request, Dkt. No. 83 , defendants' response to the amended complaint is due by September 22, 2020. Signed by Judge James Donato on 9/11/2020. (This is a text-only entry generated by the court. There is no document associated with this entry.) (jdlc3S, COURT STAFF) (Filed on 9/11/2020) (Entered: 09/11/2020)
ORDER. The hearing set for September 17, 2020, at 10:00 a.m., will be held by Zoom Webinar.

Each party should designate a lead counsel to speak at the hearing by emailing the name of their lead counsel to Judge Donato's Courtroom Deputy, Ms. Lisa Clark, at jdcrd@cand.uscourts.gov by September 15, 2020, at 5:00 p.m. California time. The names for lead counsel are needed so that Ms. Clark can identify them during the Zoom hearing when the case is called. All lead counsel must call in ﬁfteen minutes before the hearing to test internet, video, and audio capabilities.

All counsel, parties, members of the public, and press may join the webinar using the link or information below:

https://cand-uscourts.zoomgov.com/j/1617171523? pwd=VWJqM2ZYT1UvNFZ0ZHNZUUhGWTBCZz09

Webinar ID: 161 717 1523 Password: 213597

Or iPhone one-tap : US: +16692545252,,1617171523#,,1#,213597# or +16468287666,,1617171523#,,1#,213597#

Or Telephone: Dial (for higher quality, dial a number based on your current location): US: +1 669 254 5252 or +1 646 828 7666

PLEASE NOTE: Persons granted remote access to court proceedings are reminded of the general prohibition against photographing, recording, and rebroadcasting of court proceedings (including those held by telephone or videoconference). See General Order 58 at Paragraph III. Any recording of a court proceeding held by video or teleconference, including screen-shots or other visual copying of a hearing, is absolutely prohibited. Violation of these prohibitions

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1/18/2021

CAND-ECF
may result in sanctions, including removal of court-issued media credentials, restricted entry to future hearings, or any other sanctions deemed necessary by the court. Please see https://www.cand.uscourts.gov/zoom for information on preparing for and participating in a Zoom Webinar.

09/17/2020 10/08/2020
10/12/2020

Signed by Judge James Donato on 9/14/2020. (This is a text-only entry generated by the court. There is no document associated with this entry.) (jdlc3S, COURT STAFF) (Filed on 9/14/2020) (Entered: 09/14/2020)
86 Minute Entry for proceedings held before Judge James Donato: Further Case Management Conference set for 10/15/2020 at 10:00 a.m. Total Time in Court: 14 minutes. Court Reporter: Debra Pas. (jdlc3S, COURT STAFF) (Date Filed: 9/17/2020) (Entered: 09/17/2020)
87 JOINT CASE MANAGEMENT STATEMENT ﬁled by Board of Education for the City of Chicago, Cleveland Municipal School District Board of Education, Commonwealth of Pennsylvania, District of Columbia, San Francisco Uniﬁed School District, State of California, State of Hawaii, State of Maine, State of Maryland, State of Michigan, State of New Mexico, State of Wisconsin, The Board of Education for the City School District of the City of New York. (Lindsey, Garrett) (Filed on 10/8/2020) (Entered: 10/08/2020)
88 ORDER. The case management conference set for October 15, 2020, at 10:00 a.m., will be held by Zoom Webinar.

Each party should designate a lead counsel to speak at the hearing by emailing the name of their lead counsel to Judge Donato's Courtroom Deputy, Ms. Lisa Clark, at jdcrd@cand.uscourts.gov by October 13, 2020, at 5:00 p.m. California time. The names for lead counsel are needed so that Ms. Clark can identify them during the Zoom hearing when the case is called. All lead counsel must call in ﬁfteen minutes before the hearing to test internet, video, and audio capabilities.

All counsel, parties, members of the public, and press may join the webinar using the link or information below:

https://cand-uscourts.zoomgov.com/j/1617171523? pwd=VWJqM2ZYT1UvNFZ0ZHNZUUhGWTBCZz09

Webinar ID: 161 717 1523 Password: 213597

Or iPhone one-tap : US: +16692545252,,1617171523#,,1#,213597# or +16468287666,,1617171523#,,1#,213597#

Or Telephone: Dial (for higher quality, dial a number based on your current location): US: +1 669 254 5252 or +1 646 828 7666

PLEASE NOTE: Persons granted remote access to court proceedings are reminded of the general prohibition against photographing, recording, and rebroadcasting of court proceedings (including those held by telephone or videoconference). See General Order 58 at Paragraph III. Any recording of a court proceeding held by video or teleconference, including "screen-shots" or other visual copying of a hearing, is absolutely prohibited. Violation of these prohibitions may result in sanctions, including removal of court-issued media

https://ecf.cand.uscourts.gov/cgi-bin/DktRpt.pl?158972653843579-L_1_0-1

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1/18/2021
10/15/2020 11/06/2020
11/09/2020 11/11/2020

CAND-ECF
credentials, restricted entry to future hearings, or any other sanctions deemed necessary by the court. Please see https://www.cand.uscourts.gov/zoom for information on preparing for and participating in a Zoom Webinar.
Signed by Judge James Donato on 10/12/2020. (This is a text-only entry generated by the court. There is no document associated with this entry.) (jdlc3S, COURT STAFF) (Filed on 10/12/2020) (Entered: 10/12/2020)
89 ORDER. At the parties' joint request via email to the Court's CRD, the status conference is vacated. The parties will advise the Court in a docket ﬁling by November 6, 2020, about a proposed ﬁnal resolution for this case. (This is a textonly entry generated by the court. There is no document associated with this entry.) (Donato, James) (Filed on 10/15/2020) (Entered: 10/15/2020)
90 STIPULATION WITH PROPOSED ORDER re 89 Order, ﬁled by Board of Education for the City of Chicago, Cleveland Municipal School District Board of Education, Commonwealth of Pennsylvania, District of Columbia, San Francisco Uniﬁed School District, State of California, State of Hawaii, State of Maine, State of Maryland, State of Michigan, State of New Mexico, State of Wisconsin, The Board of Education for the City School District of the City of New York. (Attachments: # 1 Proposed Order and Judgment Granting a Permanent Injunction and Closing the Case)(Lindsey, Garrett) (Filed on 11/6/2020) (Entered: 11/06/2020)
91 ORDER RE PERMANENT INJUNCTION. Signed by Judge James Donato on 11/9/2020. (jdlc3S, COURT STAFF) (Filed on 11/9/2020) (Entered: 11/09/2020)
92 JUDGMENT. Signed by Judge James Donato on 11/11/2020. (jdlc3S, COURT STAFF) (Filed on 11/11/2020) (Entered: 11/11/2020)

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 Case 3:20-cv-04478-SK Document 1 Filed 07/07/20 Page 1 of 69

1 XAVIER BECERRA Attorney General of California
2 MICHAEL NEWMAN Senior Assistant Attorney General
3 SARAH E. BELTON Supervising Deputy Attorney General
4 REBEKAH A. FRETZ JAMES F. ZAHRADKA II
5 GARRETT M. LINDSEY (SBN 293456) Deputy Attorneys General
6 300 South Spring Street, Suite 1702 Los Angeles, CA 90013
7 Telephone: (213) 269-6402 E-mail: Garrett.Lindsey@doj.ca.gov
8 Attorneys for Plaintiff State of California

9 (List of other Plaintiffs’ counsel continued on next page)

10

IN THE UNITED STATES DISTRICT COURT

11

FOR THE NORTHERN DISTRICT OF CALIFORNIA

12

13

14

STATE OF MICHIGAN, STATE OF

Civil Case No.

15 CALIFORNIA, DISTRICT OF

COLUMBIA, STATE OF MAINE, STATE

16 OF NEW MEXICO, and STATE OF

WISCONSIN,

COMPLAINT FOR DECLARATORY

17

AND INJUNCTIVE RELIEF

Plaintiffs,

18

v.

19

20 ELISABETH D. DEVOS, in her official capacity as the United States Secretary of
21 Education, and UNITED STATES DEPARTMENT OF EDUCATION,
22 Defendants.
23

24

25

26

27

28

Complaint for Declaratory and Injunctive Relief

Case 3:20-cv-04478-SK Document 1 Filed 07/07/20 Page 2 of 69

1 DANA NESSEL Attorney General of Michigan
2 FADWA A. HAMMOUD Solicitor General
3 TONI L. HARRIS NEIL GIOVANATTI
4 Assistant Attorneys General Michigan Department of Attorney General
5 P.O. Box 30758 Lansing, MI 48909
6 (517) 335-7603 HammoudF1@michigan.gov
7 HarrisT19@michigan.gov GiovanattiN@michigan.gov
8 Attorneys for Plaintiff State of Michigan 9 10 KARL A. RACINE
Attorney General of the District of Columbia 11 KATHLEEN KONOPKA
Deputy Attorney General, Public Advocacy 12 Division
BRENDAN B. DOWNES 13 NICOLE HILL
Assistant Attorneys General, Public 14 Advocacy Division
Office of the Attorney General for the 15 District of Columbia
441 4th St., N.W. Suite 630S 16 Washington, DC 20001
(202) 724-6610 17 Kathleen.Konopka@dc.gov
Attorneys for Plaintiff District of Columbia 18 19 AARON M. FREY
Attorney General of Maine 20 SARAH A. FORSTER
Assistant Attorney General 21 6 State House Station
Augusta, ME 04333-0006 22 (207) 626-8866
sarah.forster@maine.gov 23 Attorneys for Plaintiff State of Maine 24 25 26 27 28

HECTOR BALDERAS Attorney General of New Mexico P. CHOLLA KHOURY LISA GIANDOMENICO Assistant Attorneys General Consumer & Environmental Protection Division
New Mexico Attorney General’s Office 201 Third Street NW, Suite 300 Albuquerque, NM 87102 (505) 717-3500 ckhoury@nmag.gov lgiandomenico@nmag.gov Attorneys for Plaintiff State of New Mexico
JOSHUA L. KAUL Attorney General of Wisconsin HANNAH S. JURSS Assistant Attorney General
Wisconsin Department of Justice Post Office Box 7857 Madison, WI 53707 (608) 266-8101 jursshs@doj.state.wi.us Attorneys for Plaintiff State of Wisconsin

Complaint for Declaratory and Injunctive Relief

Case 3:20-cv-04478-SK Document 1 Filed 07/07/20 Page 3 of 69

1

INTRODUCTION

2

1. The State of Michigan, the State of California, the District of Columbia, the State of

3 Maine, the State of New Mexico, and the State of Wisconsin (collectively, the Plaintiffs, Plaintiff

4 States, or the States) bring this action to challenge a rule promulgated by Defendants Secretary

5 Elisabeth D. DeVos and the United States Department of Education (the Department)

6 (collectively, Defendants), unlawfully and erroneously interpreting the Coronavirus Aid, Relief,

7 and Economic Security Act (CARES Act), Public Law 116–136, 134 Stat. 281. The

8 Department’s interpretation will deprive low-income and at-risk students, their teachers, and the

9 public schools that serve them of critical resources to meet students’ educational and social-

10 emotional needs during and after pandemic-related school closures. The States will also be

11 harmed by the loss of these critical resources at a time of severe crisis.

12

2. The CARES Act was enacted on March 27, 2020, to address some of the financial

13 challenges faced by Americans as businesses closed, employees lost their jobs, and schools shut

14 down in an unprecedented effort to slow the spread of the virus. The statute authorizes the

15 allocation of $30.75 billion for elementary and secondary schools and higher education in

16 response to the COVID-19 pandemic, including assisting students to transition to distance

17 learning. The statute directs states to distribute CARES Act funds to local educational agencies

18 (LEAs) in proportion to their allocation under part A of Title I of the Elementary and Secondary

19 Education Act of 1965 (ESEA) in the previous fiscal year. Title I-A funds are allocated to LEAs

20 and schools based on the number of children who are economically disadvantaged. These funds

21 benefit many of the vulnerable students whom the States serve, including children with

22 disabilities, migrant children, English language learners, children in residential or day programs

23 for students in the foster care or juvenile justice systems, and homeless children.

24

3. Congress directed LEAs to use a portion of the funds they receive from the CARES

25 Act to provide equitable services to eligible private-school students and teachers in the same

26 manner as provided under Section 1117 of the ESEA. Under Section 1117, LEAs calculate the

27 amount of Title I-A funds reserved for equitable services based on the number of low-income

28 students who attend private schools as a percentage of the total number of low-income students in 1

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Case 3:20-cv-04478-SK Document 1 Filed 07/07/20 Page 4 of 69

1 public and private schools combined. Once the money is apportioned, the LEA then provides

2 equitable services to private-school students who are academically at-risk.

3

4. Section 1117 is clear that LEAs are to use Title I-A funds to provide services to at-

4 risk private-school students, and neither Section 1117 nor the CARES Act requires the funds at

5 issue to be used to provide equitable services to all students enrolled in private schools. Yet,

6 despite these clear mandates and contrary to the will of Congress, the Department grafted its own

7 allocation and eligibility rules on Congress’s directive.

8

5. The Department first issued its interpretation of how LEAs should apportion the

9 CARES Act moneys and which private-school students were eligible for equitable services on

10 April 30, 2020, through a guidance document (Guidance Document).1 The Guidance

11 Document—which was inconsistent with prior guidance issued by the Department—provided that

12 LEAs must apportion funds for equitable services using the total numbers of private and public-

13 school students rather than only low-income students. If every LEA receiving CARES Act funds

14 in the Plaintiff States were required to apportion CARES Act funds in this manner, millions of

15 dollars in CARES Act funding would be diverted from their public schools to the private schools.

16 In addition, the Guidance Document directed LEAs to provide equitable services to all private-

17 school students, regardless of whether the private-school students were low income, were

18 academically at-risk of failing, or resided in Title I school attendance areas. Neither of these

19 mandates is consistent with Section 1117.

20

6. After widespread pushback regarding the Department’s incorrect and unlawful

21 guidance, the Department doubled-down on its erroneous interpretation of the CARES Act with

22 the publication of an interim final rule entitled Providing Equitable Services to Students and

23 Teachers in Non-public Schools, 85 Fed. Reg. 39,479 (July 1, 2020) (the Equitable Services Rule

24 or Rule).2 The Rule was published as an interim final rule, which is effective upon publication.

25

26

1 The Guidance Document is attached hereto as Exhibit A. The Department took down its

original Guidance Document from its website and now displays an updated version of the

27 Guidance Document, which is available at https://oese.ed.gov/files/2020/06/Providing-Equitable-

Services-under-the-CARES-Act-Programs-Update-6-25-2020.pdf.

28

2 The Rule is attached hereto as Exhibit B.

2

Complaint for Declaratory and Injunctive Relief

Case 3:20-cv-04478-SK Document 1 Filed 07/07/20 Page 5 of 69

1

7. Contrary to the Act, the Department’s Rule requires LEAs to make an untenable

2 choice about how to apportion the CARES Act funds for private-school students, a choice

3 unsupported by the relevant statutes: (1) follow the same interpretation contained in the Guidance

4 Document by apportioning funds for equitable services based on the number of all private school

5 children enrolled, rather than low-income private school children as required by Section 1117; or

6 (2) apportion funds for equitable services based on the number of low-income non-public school

7 children, as required under Section 1117, but then incur strict, poison-pill requirements found

8 nowhere in the CARES Act on how the public-school share of the funds can be used. Under

9 either option, all private-school students would still be eligible to receive equitable services,

10 which negates the eligibility requirements for services in Section 1117.

11

8. The first poison-pill “option” for LEAs prohibits them from using the public-school

12 share of the funds for any non-Title I schools. As a result, depending on the district, numerous

13 schools—which, despite not being designated as Title I schools, serve many low-income and at-

14 risk students—are excluded from receiving any funds. This restriction cannot square with the

15 flexibility Congress provided to LEAs to use the funds for all schools in their districts, not only

16 Title I schools. The second requirement cautions the LEAs from using the funds in a way that

17 would result in other federal funds “supplant[ing],” rather than “supplement[ing],” traditional

18 school funding from state and local sources. In effect, this second requirement prohibits many

19 LEAs from using CARES Act funds for existing expenditures, which is nonsensical since filling

20 the gap created by reduced state and local funding is a key purpose of the CARES Act funding.

21 These two poison pill restrictions on the use of the CARES Act funds penalize LEAs for

22 following the proportional share calculation in Section 1117 (and required by the CARES Act),

23 and push LEAs to apportion funds in accordance with the Department’s Guidance Document—

24 forcing LEAs to grant a higher proportion of funds to private schools, contrary to the CARES

25 Act’s clear mandate. They also undermine the flexibility that Congress intended to grant LEAs

26 when it enacted a broad set of permitted uses for CARES Act funds, which expressly include

27 maintaining continuity of services and continuing to employ existing staff of the local educational

28 agency. See CARES Act §§ 18002(c)(1), 18003(d)(12). 3
Complaint for Declaratory and Injunctive Relief

Case 3:20-cv-04478-SK Document 1 Filed 07/07/20 Page 6 of 69

1

9. The Rule is thus inconsistent with and not in accordance with the law. The

2 discrepancy between the plain language of the CARES Act and the Department’s inaccurate

3 interpretations has led to widespread confusion for State Education Agencies (SEAs), LEAs, and

4 private schools across the Nation. The Rule strips funds Congress specifically directed to public

5 schools to support their response to the COVID-19 pandemic and requires that those funds be

6 reallocated, including to affluent private schools, with consideration neither of the private

7 schools’ needs or available resources nor the harms these reallocations cause to public schools.

8 While Congress intended to provide some assistance to private-school students and teachers

9 through the inclusion of equitable services, it intended that assistance go to vulnerable students

10 and used the Title I-A formula and equitable services requirement applicable to those funds to

11 that end.

12

10. The CARES Act does not expressly delegate to the Department the authority to

13 promulgate administrative rules that interpret, let alone completely re-write, the Act’s allocation

14 requirements for moneys provided to private-school students. Nor does the Department’s general

15 rulemaking authority, see 20 U.S.C. § 1221e-3, allow it to impose these restrictions.

16

11. Because Congress unambiguously directed the allocation of money in accordance

17 with Title I-A, Congress neither explicitly nor implicitly left any gaps in the statute that might

18 justify rulemaking by the Department. The Department’s guidance and the Rule are accordingly

19 entitled to no deference.

20

12. The Rule is arbitrary and capricious in several respects.

21

13. First, as discussed above, the Department failed to articulate how its position

22 comports with the plain text of section 18005 of the CARES Act. Thus, it must be set aside as

23 based on an incorrect legal premise. See Safe Air for Everyone v. U.S. EPA, 488 F.3d 1088, 1101

24 (9th Cir. 2007).

25

14. Second, the Department failed to adequately explain—consistent with the evidence

26 before it—why it was reversing its own guidance regarding how equitable services under Section

27 1117 should be provided. See, e.g., Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut.

28 Auto. Ins. Co., 463 U.S. 29, 52 (1983) (requiring agencies to “explain the evidence which is 4
Complaint for Declaratory and Injunctive Relief

Case 3:20-cv-04478-SK Document 1 Filed 07/07/20 Page 7 of 69

1 available, and . . . offer a rational connection between the facts found and the choice made . . .

2 [including] justification for rescinding the regulation”); see also Dep’t of Homeland Sec. v.

3 Regents of the Univ. of Cal., No. 18-587, 2020 WL 3271746, at *14 (U.S. June 18, 2020)

4 (requiring “reasoned analysis to support” rescission of prior policy) (quoting State Farm, 463

5 U.S. at 42).

6

15. Third, the Department ignored important aspects of the problem, see State Farm, 463

7 U.S. at 43, including, among others, the harms to students, States, and LEAs discussed herein.

8 For example, the Department failed to consider that communities with Title I-eligible schools are

9 likely to experience a greater concentration of difficulties relating to COVID-19, and that

10 therefore Congress intended the flexible uses of the CARES Act funds to be concentrated in these

11 communities’ schools.

12

16. Fourth, the Department took into account factors Congress did not intend it to

13 consider. See id. For example, the Department’s prioritization of support for all private-school

14 students, even those not Title I-A eligible, appears to be based on the erroneous premise that

15 Congress intended to direct these funds to affluent, economically secure private-school students

16 on an equal basis as public schools that educate large populations of at-risk and low-income

17 students. Congress unambiguously expressed clear intent to the contrary by using the Title I-A

18 allocation method, which tracks low-income students.

19

17. Fifth, the Department failed to take into account the reliance interests that its former

20 position generated. The States and LEAs have relied on the Department’s prior interpretations,

21 and there is no indication that the Department took this into account when making its decision.

22 “When an agency changes course . . . it must be cognizant that longstanding policies may have

23 engendered serious reliance interests that must be taken into account. It would be arbitrary and

24 capricious to ignore such matters.” Regents, 2020 WL 3271746, at *14 (citations and punctuation

25 omitted).

26

18. Sixth, the Department’s ever-changing position has generated an “[u]nexplained

27 inconsistency,” and the Department has not shown any awareness of its changed position. Nat’l

28 Cable & Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S. 967, 981 (2005). 5
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Case 3:20-cv-04478-SK Document 1 Filed 07/07/20 Page 8 of 69

1

19. In addition, the Department flouted the procedural steps required under the

2 Administrative Procedure Act (APA) for the promulgation of the Rule, as the Department did not

3 have good cause for issuing the Rule as an interim final rule. 5 U.S.C. § 553(b)(B); see, e.g.,

4 California v. Azar, 911 F.3d 558, 576 (9th Cir. 2018) (“[A]n agency’s desire to eliminate more

5 quickly legal and regulatory uncertainty is not by itself good cause.”).

6

20. The Rule also violates core separation of powers principles in the Constitution.

7 “[W]here previously appropriated money is available for an agency to perform a statutorily

8 mandated activity,” separation of powers principles and the Spending Clause prevent agencies

9 from “ignor[ing] statutory mandates or prohibitions.” In re Aiken County, 725 F.3d 255, 260

10 (D.C. Cir. 2013); see also City & Cty. of San Francisco v. Trump, 897 F.3d 1225, 1232 (9th Cir.

11 2018) (agencies are without “[the] unilateral authority” to “thwart congressional will by canceling

12 appropriations passed by Congress”) (internal quotation marks and citations omitted). Congress

13 intended to deliver LEAs “need[ed] funding flexibility due to the disruption in the academic year

14 from COVID-19.” 166 Cong. Rec. H1856 (Mar. 27, 2020) (statement of Rep. Underwood).

15 Congress intended that LEAs have this funding to “help alleviate the challenges educators,

16 students and families are struggling with in light of school closures” particularly those “students

17 with disabilities, English language learners, and students experiencing homeless.” 166 Cong.

18 Rec. E340 (Mar. 31, 2020) (statement of Rep. Jayapal).

19

21. Relatedly, the Rule violates the Spending Clause: (1) it is contrary to Congress’s

20 plainly expressed intent in the CARES Act; (2) Congress has not “unambiguously” imposed the

21 requirements of the Rule, South Dakota v. Dole, 483 U.S. 203, 207 (1987) (internal citations

22 omitted, brackets in original); and (3) it is an improper “post acceptance” restriction on the States’

23 and LEAs’ use of the funds, Pennhurst State Sch. & Hosp. v. Halderman, 451 U.S. 1, 25 (1981).

24

22. Further, the additional funding requirements on schools that the Department would

25 impose under one of the so-called “choices” provided in the Rule violates the plain language of

26 the CARES Act requiring that funds be allocated in the same manner as required in Section 1117

27 of the ESEA and specifying that funds could be used to maintain existing operations and retain

28 existing personnel. The Department’s allocation scheme will dilute the per-pupil amount 6
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Case 3:20-cv-04478-SK Document 1 Filed 07/07/20 Page 9 of 69

1 available to all public schools by directing Title I-A funds to support private-school students not

2 eligible for equitable services.

3

23. To avert irreparable injury to the Plaintiff States and the students, teachers, and

4 schools within their states, the Plaintiff States bring this suit to declare unlawful and enjoin the

5 Department’s Guidance Document and the Rule.

6

JURISDICTION AND VENUE

7

24. This action arises under the APA, 5 U.S.C. §§ 553, 701-06, and the U.S. Constitution.

8 This Court has subject matter jurisdiction under 28 U.S.C. §§ 1331 and 1346.

9

25. This Court has the authority to issue declaratory relief, injunctive relief, and other

10 relief pursuant to the Declaratory Judgment Act, 28 U.S.C. §§ 2201-02, and the APA, 5 U.S.C. §§

11 702, 705-06.

12

26. This is a civil action in which Defendants are agencies of the United States or officers

13 of such an agency. Venue is proper in this Court because a substantial part of the events giving

14 rise to this action occurred in this district. See 28 U.S.C. § 1391(e)(1).

15

PLAINTIFFS

16

27. Plaintiff State of Michigan is a sovereign state of the United States of America. This

17 action is being brought on behalf of the State by Attorney General Dana Nessel pursuant to her

18 statutory authority. Mich. Comp. Laws § 14.28.

19

28. Plaintiff State of California is a sovereign state of the United States of America. This

20 action is being brought on behalf of the State by California Attorney General Xavier Becerra, the

21 State’s chief law officer, Cal. Const., art. V, § 13, who has the duty to see that the laws of the

22 State are uniformly and adequately enforced, and Governor Gavin Newsom, the State’s chief

23 executive officer, who is responsible for overseeing the operations of the State and ensuring that

24 its laws are faithfully executed, Cal. Const., art. V, § 1.

25

29. Plaintiff District of Columbia is a sovereign municipal corporation organized under

26 the Constitution of the United States. It is empowered to sue and be sued, and it is the local

27 government for the territory constituting the permanent seat of the federal government. The

28 District is represented by and through its chief legal officer, the Attorney General for the District 7
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Case 3:20-cv-04478-SK Document 1 Filed 07/07/20 Page 10 of 69

1 of Columbia, Karl A. Racine. The Attorney General has general charge and conduct of all legal

2 business of the District and all suits initiated by and against the District and is responsible for

3 upholding the public interest. D.C. Code § 1-301.81.

4

30. Plaintiff State of Maine is a sovereign state of the United States of America. The

5 Attorney General of Maine, Aaron M. Frey, is a constitutional officer with the authority to

6 represent the State of Maine in all matters and serves as its chief legal officer with general charge,

7 supervision, and direction of the State’s legal business. Me. Const. art. IX, § 11; Me. Rev. Stat.,

8 tit. 5, §§ 191 et seq. The Attorney General’s powers and duties include acting on behalf of the

9 State and the people of Maine in the federal courts on matters of public interest. The Attorney

10 General has the authority to file suit to challenge action by the federal government that threatens

11 the public interest and welfare of Maine residents as a matter of constitutional, statutory, and

12 common-law authority.

13

31. Plaintiff State of New Mexico is a sovereign state of the United States of America.

14 New Mexico is represented by its Attorney General, Hector Balderas, who is authorized to assert

15 the state’s interests in state and federal courts.

16

32. Plaintiff State of Wisconsin is a sovereign state of the United States of America and

17 brings this action by and through its Attorney General, Joshua L. Kaul, who is the chief legal

18 officer of the State of Wisconsin and has the authority to file civil actions to protect Wisconsin’s

19 rights and interests. See Wis. Stat. § 165.25(1m). The Attorney General’s powers and duties

20 include appearing for and representing the State, on the governor’s request, “in any court or

21 before any officer, any cause or matter, civil or criminal, in which the state or the people of this

22 state may be interested.” Id.

23

33. In filing this action, Plaintiff States seek to redress harms to their interests as

24 recipients of CARES Act emergency relief funding. Plaintiff States are affected by the

25 Department’s interpretation of the CARES Act through the Rule and Guidance Document, are

26 directly injured by them, and the relief requested will redress their injuries.

27

28 8
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1

DEFENDANTS

2

34. Defendant Elisabeth D. DeVos is Secretary of the United States Department of

3 Education and is sued in her official capacity pursuant to 5 U.S.C. § 702. Her principal address is

4 400 Maryland Avenue, S.W., Washington, D.C. 20202.

5

35. Defendant the United States Department of Education is an executive agency of the

6 United States of America pursuant to 5 U.S.C. § 101, and a federal agency within the meaning of

7 28 U.S.C. § 2671. As such, it engages in agency action and is named as a defendant in this action

8 pursuant to 5 U.S.C. § 702. Its principal address is 400 Maryland Avenue, S.W., Washington,

9 D.C. 20202.

10

36. Secretary DeVos is responsible for carrying out the duties of the Department of

11 Education under the Constitution of the United States of America and relevant statutes, including

12 the CARES Act and the ESEA.

13 14 I. 15

FACTUAL ALLEGATIONS COVID-19 PANDEMIC 37. COVID-19 is a public health emergency that has caused and continues to have

16 devastating impacts on countless individuals, families, communities, businesses, and

17 governments. Our Nation’s educational agencies and school systems have had to respond

18 urgently to the crisis and take drastic measures to protect the health and safety of their students

19 and staff.

20

38. The Plaintiff States’ educational agencies and school districts have been forced to

21 transition to remote delivery of instruction, implement new health and safety guidelines, and meet

22 the novel and challenging needs of their students arising from the pandemic, including supports

23 for their vulnerable populations beyond the provision of core educational services. These efforts

24 include, but are not limited to, serving meals to qualifying students and families; providing

25 special education and related services to students with disabilities remotely; enabling English

26 learners and migrant students to access remote learning by providing accessible technology,

27 online instruction and translations; and offering computing devices and connectivity to low-

28 income students at no cost. 9
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1

39. Compounding the programmatic challenges in serving students during the pandemic

2 is the uncertainty and economic stress caused by COVID-19 on the Plaintiff States, their SEAs,

3 and their LEAs. Public education largely depends on state funding. State budgets have been hit

4 hard by dramatic reductions in revenues from state sales and income taxes caused by the COVID-

5 19 pandemic, as well as increased expenditures necessary for the public health response. This

6 revenue decline inevitably impacts the amount of state aid available to school districts. And yet,

7 school districts have incurred and continue to incur significant costs related to the pandemic,

8 including paying for deep-cleaning campuses, obtaining personal protective equipment for

9 employees, purchasing distance learning materials as well as new software and hardware, and

10 preparing and delivering meals to students and families.

11 II. THE CARES ACT

12

40. In late March 2020, the United States Congress acted to address the fiscal impact of

13 the COVID-19 outbreak. It passed legislation, signed by the President, including appropriations

14 to federal agencies with explicit direction for distributing the funding.

15

41. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Pub. L. No.

16 116–136, 134 Stat. 281, enacted on March 27, 2020, appropriated funds for K-12 and higher

17 education in response to the economic impact of the COVID-19 pandemic.

18

42. Specifically, Congress created the Education Stabilization Fund to help educational

19 entities across the country “prevent, prepare for, and respond to coronavirus,” and appropriated

20 $30.75 billion for the Fund. CARES Act § 18001.

21

43. Congress tasked the Department with allocating the moneys appropriated to the

22 Education Stabilization Fund through the CARES Act. The vast majority of the moneys in the

23 Education Stabilization Fund are divided into three separate funds, each with its own rules for

24 distribution and use: the Governor’s Emergency Education Relief Fund (GEER), the Elementary

25 and Secondary School Emergency Relief Fund (ESSER), and the Higher Education Emergency

26 Relief Fund. Id. §§ 18002-18004. The funds are allocated as follows: 9.8% for GEER; 43.9% for

27 ESSER; and 46.3% for the Higher Education Emergency Relief Fund. Id. §§ 18001(b)(1)-(3).

28 10
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1

44. According to the Department’s website, $2,953,230,000 was allocated for the GEER

2 Fund and $13,229,265,000 for the ESSER Fund.3

3

A. The Governor’s Emergency Education Relief (GEER) Fund

4

45. The CARES Act directs the Department to provide emergency grants from the GEER

5 Fund to state governors. CARES Act § 18002(a).

6

46. The Department must allocate the GEER Fund moneys to governors as follows: (1)

7 60% based on the “relative population of individuals aged 5 through 24” in each state, and (2)

8 40% based on the state’s “relative number of children counted under section 1124(c) of the

9 [ESEA].” Id. § 18002(b). Section 1124(c) of the ESEA describes the children to be counted for

10 purposes of distributing funds under Part A, Title I of the ESEA, commonly referred to as Title I-

11 A funds. Children to be counted in this section include children 5 to 17 who are “from families

12 below the poverty level,” “in institutions for neglected and delinquent children . . . or being

13 supported in foster homes with public funds,” and “from families above the poverty level” but

14 who receive payments under the Social Security Act, Title IV, Part A (Temporary Assistance for

15 Needy Families). 20 U.S.C. §§ 6333(c)(1)(A)-(C), (c)(4)(A).

16

47. Governors, along with SEAs, may use GEER funds for three purposes:

17

(1) To provide emergency support through grants to local educational agencies

that the State educational agency deems have been most significantly impacted by

18

coronavirus to support the ability of such local educational agencies to continue to

provide educational services to their students and to support the on-going

19

functionality of the local educational agency;

20

(2) To provide emergency support through grants to institutions of higher

education serving students within the State that the Governor determines have been

21

most significantly impacted by coronavirus to support the ability of such institutions

to continue to provide educational services and support the ongoing functionality of

22

the institution; and

23

(3) To provide support to any other institution of higher education, local

educational agency, or education-related entity within the State that the Governor

24

deems essential for carrying out emergency educational services to students for

authorized activities . . . the provision of child care and early childhood education,

25

social and emotional support, and the protection of education-related jobs.

26 3 U.S. Dep’t of Educ., Governor’s Emergency Education Relief Fund, State Allocation
27 Table, available at https://oese.ed.gov/files/2020/04/GEER-Fund-State-Allocations-Table.pdf; U.S. Dep’t of Educ., Elementary and Secondary School Emergency Relief Fund, State Allocation
28 Table, available at https://oese.ed.gov/files/2020/04/ESSER-Fund-State-Allocations-Table.pdf.
11

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1 CARES Act §§ 18002(c)(1)-(3).

2

48. While they are directed per the above criteria to focus the GEER funds on the most

3 significantly impacted districts, governors may allocate moneys from the GEER Fund to any

4 LEA, regardless of whether the LEA or its public schools receive Title I-A funds. Moreover,

5 there are no federal restrictions on the use of funds by the LEAs and any other restrictions on the

6 use of funds is left to the discretion of each state. The CARES Act provides broad flexibility to

7 the LEAs to use the moneys “to provide educational services to their students and to support the

8 on-going functionality of the local educational agency.” Id. §§ 18002(c)(1), (3).

9

49. The Plaintiff States expect to receive the following amounts from the GEER Fund:4

10

a. Michigan: $89,432,673;

11

b. California: $355,227,235;

12

c. District of Columbia: $5,807,678;

13

d. Maine: $9,273,552;

14

e. New Mexico: $22,262,663; and

15

f. Wisconsin: $46,550,411.

16

B. Elementary and Secondary School Emergency Relief (ESSER) Fund

17

50. Through the CARES Act, Congress also directed the Department to provide

18 emergency grants from the ESSER Fund to SEAs. CARES Act § 18003(a).

19

51. The Department is required to allocate the ESSER Fund moneys to SEAs “in the

20 same proportion as each State received under [Title I-A] in the most recent fiscal year.” Id. §

21 18003(b). Allocation of Title I-A funds to States is governed by the formulas included in 20

22 U.S.C. §§ 6332-39, and is based primarily on the numbers of children from low-income families

23 and foster children in each state’s LEAs.

24

52. The CARES Act requires at least 90 percent of the moneys received by the SEAs

25 from the ESSER Fund to be sub-granted to LEAs within the state. Id. § 18003(c). Like the

26 Department’s allocation to the states, the SEAs are to sub-grant the funds to LEAs “in proportion

27 4 U.S. Dep’t of Educ., Governor’s Emergency Education Relief Fund, State Allocation
28 Table, available at https://oese.ed.gov/files/2020/04/GEER-Fund-State-Allocations-Table.pdf. 12
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1 to the amount of funds such local educational agencies and charter schools that are local

2 educational agencies received under [Title I-A] in the most recent fiscal year.” Id.

3

53. The Department’s May 8, 2020 guidance discussing the ESSER allocations and

4 LEAs’ eligibility acknowledged that LEAs are only eligible for the ESSER funding to the extent

5 they participate in the Title I-A program.5 In other words, moneys from the ESSER Fund are

6 designated, through the SEAs, for LEAs that receive Title I-A funds, which in turn support those

7 public schools with populations of economically-disadvantaged children in each state. LEAs that

8 do not receive Title I-A funds (generally, LEAs without significant numbers of low-income

9 students) are not eligible for the ESSER Funds.

10

54. LEAs may use the moneys from the ESSER Fund for twelve broad purposes, as

11 described in the CARES Act. See CARES Act § 18003(d). Like the GEER Fund, there are no

12 restrictions in the statutory language on which schools within the eligible LEAs may receive the

13 funds, regardless of whether the public school receives Title I-A funds. These funds can be used

14 for expressly broad purposes, including “[o]ther activities that are necessary to maintain the

15 operation of and continuity of services in [LEAs] and continuing to employ existing staff of the

16 [LEA],” i.e., to support any operation, service, or staff existing prior to the pandemic. Id. §

17 18003(d)(12).

18

55. For the SEAs to receive the ESSER funds from the Department, the Plaintiff States’

19 SEAs were required to complete and submit a Certification and Agreement form.6

20

56. Within the Certification and Agreement form, the Plaintiff SEAs are required to:

21

[A]cknowledge and agree that the failure to comply with all Assurances and

22

Certifications in this Agreement, all relevant provisions and requirements of the CARES Act, Pub. L. No. 116-136 (March 27, 2020), or any other applicable law or

23

regulation may result in liability under the False Claims Act, 31 U.S.C. § 3729, et

seq.; OMB Guidelines to Agencies on Governmentwide Debarment and Suspension

24

25

5 U.S. Dep’t of Educ., Frequently Asked Questions about the Elementary and Secondary

26

School Emergency Relief Fund (ESSER), May 5, 2020, available at https://oese.ed.gov/files/2020/05/ESSER-Fund-Frequently-Asked-Questions.pdf.

6 U.S. Dep’t of Educ., Certification and Agreement for Funding under the Education

27 Stabilization Fund Program Elementary and Secondary School Emergency Relief Fund (ESSER

28

Fund), CFDA Number 84.425D, April 24, 2020, available at https://oese.ed.gov/files/2020/04/ESSERF-Certification-and-Agreement-2.pdf.

13

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1

(Nonprocurement) in 2 CFR part 180, as adopted and amended as regulations of the

2

Department in 2 CFR part 3485; and 18 USC § 1001, as appropriate.

Certification and Agreement at 1. 3

57. Within the specific assurances and certifications, the SEAs are required to ensure 4

that: 5

6

[] LEAs receiving ESSER funds will provide equitable services to students and teachers in non-public schools as required under 18005 of Division B of the CARES

7

Act.

8

[] [A]n LEA receiving ESSER funds will provide equitable services to students and teachers in non-public schools located within the LEA in the same manner as

9

provided under section 1117 of the ESEA, as determined through timely and meaningful consultation with representatives of non-public schools.

10 Id. at 2.

11

58. Each of the Plaintiff States’ SEAs submitted a Certification and Agreement to the

12 Department to secure the ESSER Funds for their states.

13

59. The Department also requires SEAs to submit quarterly reporting regarding how the

14 SEA and the LEAs used the ESSER funds. Id. at 3; see also CARES Act § 15011(b)(2).

15

60. From the ESSER Fund, the Plaintiff States each received the following amounts:7

16

a. Michigan: $389,796,984;

17

b. California: $1,647,306,127;

18

c. District of Columbia: $42,006,354;

19

d. Maine: $43,793,319;

20

e. New Mexico: $108,574,786; and

21

f. Wisconsin: $174,777,774.

22

C. Equitable Services for Private-School Students and Teachers Required by

23

the CARES Act.

61. The CARES Act requires that LEAs that receive moneys from the GEER Fund and/or 24

ESSER Fund must allocate some of the moneys to provide “equitable services” to students and 25

teachers at private schools. CARES Act § 18005(a). Crucial to this action, the CARES Act 26

27

7 U.S. Dep’t of Educ., Elementary and Secondary School Emergency Relief Fund, State

28

Allocation Table, available at https://oese.ed.gov/files/2020/04/ESSER-Fund-State-AllocationsTable.pdf.

14

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1 specifies that each LEA “shall provide equitable services in the same manner as provided under

2 Section 1117 of the ESEA of 1965 to students and teachers in non-public schools.” Id. (emphasis

3 added).

4

62. Section 1117 of the ESEA, 20 U.S.C. § 6320, requires LEAs to allocate a portion of

5 their Title I-A funds to provide equitable services to eligible students and teachers at private

6 schools. Section 1117 calculates the proportionate share of funds to be used for equitable

7 services “based on the number of children from low-income families who attend private schools”

8 and reside in the “participating school attendance areas” (i.e., the geographic area in which

9 children are normally served by a Title I-A school). 20 U.S.C. § 6320(a)(4)(A); see also 20

10 U.S.C. § 6313(a)(2) (defining “school attendance area”). Services are then provided to those

11 private-school students identified “as failing, or most at risk of failing, to meet State academic

12 standards.” 20 U.S.C. § 6320(a) (incorporating the definition of “eligible children” from 20

13 U.S.C. § 6315(c)). In other words, the LEAs must provide equitable services only to low-

14 achieving children who attend private schools and reside in a Title I-A school attendance area.

15 Id. §§ 6315(c), 6320(a).

16

63. The Department’s Title I-A guidance for providing equitable services under Section

17 1117 to private-school students—issued under the current administration less than a year ago—

18 confirms that equitable services should only be provided to at-risk students who reside in Title I

19 public school attendance areas. As stated in that document: “to be eligible for Title I services, a

20 private school child must reside in a participating Title I public school attendance area and must

21 be identified by the LEA as low achieving on the basis of multiple, educationally related,

22 objective criteria.”8

23

64. While services are based on low-achievement and residence in a Title I-A school

24 attendance area, the amount of money LEAs are required to set-aside under Section 1117 of the

25

26

8 U.S. Dep’t of Educ., Title I, Part A of the Elementary and Secondary Education Act of

1965, as amended by the Every Student Succeeds Act: Providing Equitable Services to Eligible

27 Private School Children, Teachers, and Families Updated Non-Regulatory Guidance, October 7,

28

2019, p. 30, available at https://www2.ed.gov/about/inits/ed/non-public-education/files/equitableservices-guidance-100419.pdf.

15

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1 ESEA is based on the number of economically disadvantaged students attending private schools

2 who reside in the LEA’s attendance area. 20 U.S.C. § 6320(c).

3

65. Again, it has been the Department’s own position that, under Section 1117 of the

4 ESEA, funding for equitable services should be based on the number of children in private

5 schools who are economically disadvantaged or in foster care—the LEAs should “determine an

6 accurate count of children from low-income families who attend public and private schools and

7 reside in participating Title I public school attendance areas in order to allocate the proportional

8 share.”9

9

66. Notably, the CARES Act does not require that LEAs provide equitable services in the

10 same manner as Section 8501 of the ESEA, a general provision that measures equitable services

11 based on proportional total enrollments. 20 U.S.C. § 7881(b). Rather, the CARES Act

12 specifically references Section 1117. By referencing Section 1117, Congress explicitly and

13 clearly directed LEAs to provide equitable services only based on the number of low-income

14 private-school students, not all private-school students, as would have been required had the

15 CARES Act instead referenced Section 8501.

16 III. THE DEPARTMENT’S APRIL 30, 2020 GUIDANCE DOCUMENT

17

67. On April 30, 2020, the Department issued the Guidance Document, titled Providing

18 Equitable Services to Students and Teachers in Non-Public Schools Under the CARES Act

19 Programs. See Guidance Document, Ex. A.

20

68. The Guidance Document advises LEAs to (i) determine the allocation of funds for

21 equitable services based on all students enrolled in non-public schools, rather than only

22 economically disadvantaged students, and (ii) ignore Section 1117’s eligibility requirements for

23 private-school students to receive services, including residence in a Title I-A school attendance

24 area and low-achievement.

25

26

27

28

9 Id. at 19.

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1

A. Determining the Proportional Share of Funds to Be Reserved for Equitable

Services

2 69. In section 10 of the Guidance Document, the Department incorrectly states that an

3 LEA must calculate the proportional share available for equitable services from the comparative

4 enrollments of all students in public and private schools in the district, rather than the

5 comparative enrollments of low-income students, as required by Section 1117(a)(4)(A)(i).

6 Guidance Document, Ex. A at 6-7; see also 20 U.S.C. § 6320(a)(4)(A)(i).

7 70. Essentially, the guidance rejects the calculation of the proportionate share under

8 Section 1117 that Congress specified in the CARES Act and instead adopts the calculation in

9 Section 8501, which drastically inflates the amount of CARES Act funds required to be allocated

10 for services for private-school students.

11 71. Under the Department’s Guidance Document, the share of funds diverted from public

12 schools to private schools in many LEAs is substantial.

13

B. Eligibility Requirements for Private-School Students to Receive CARES

14

Act Equitable Services

15

72. In section 9 of the Guidance Document, the Department erroneously determines that

16 “[a]ll students and teachers in a non-public school are eligible for equitable services under the

17 CARES Act programs.” Guidance Document, Ex. A at 5.

18

73. The Department cites no section of the CARES Act that requires—or even suggests—

19 that all students and teachers at non-public schools are eligible for equitable services.

20

74. The plain language of the CARES Act makes clear that LEAs that receive GEER or

21 ESSER funds must provide equitable services “in the same manner as provided under section

22 1117 of the ESEA.” CARES Act § 18005(a) (emphasis added). And Section 1117 of the ESEA

23 requires LEAs to provide equitable services for eligible, at-risk children enrolled in non-public

24 schools who reside in attendance areas where public schools qualify for Title I-A funding, rather

25 than all students enrolled. 20 U.S.C. § 6320(a)(1).

26

75. Section 7 of the Guidance Document misinterprets the requirement under § 18005(a)

27 of the CARES Act that equitable services be provided “in the same manner as provided under

28 section 1117 of the ESEA.” See Guidance Document, Ex. A at 3-5. Contrary to the Act, this 17

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1 section of the Guidance Document states that this requirement in the CARES Act “necessitates

2 that the Department interpret how the requirements of section 1117 apply to the CARES Act

3 programs” because “an LEA under the CARES Act programs may serve all non-public-school

4 students and teachers without regard to family income, residency, or eligibility based on low

5 achievement.” Id. at 3. But Section 18005(a) of the CARES Act does not necessitate any

6 interpretation by the Department. Instead, the plain language of the Act makes clear that, while

7 LEAs have discretion in spending money for public schools, Congress intended that the LEAs

8 should provide equitable services to private schools under the CARES Act “in the same manner”

9 as they do for at-risk students under Title I-A.

10

76. Also, in section 7 of the Guidance Document, the Department purports to

11 “reconcile[]” various subsections of Section 1117 of the ESEA using an erroneous and

12 incongruous interpretation of the Act. Guidance Document, Ex. A at 3. For example, after noting

13 that Section 1117(a)(1) of the ESEA requires LEAs to “provide equitable services to low-

14 achieving students,” the Department nevertheless states that “an LEA may provide equitable

15 services . . . to any students and teachers in non-public schools.” Id. The Department provides no

16 explanation or basis for this distinction.

17

77. The Guidance Document’s conclusion that the non-public proportion must be

18 calculated based on total enrollments, rather than enrollment of low-income students, and its

19 interpretation of the requirements for equitable services under § 18005(a) of the CARES Act are

20 arbitrary and capricious, misstate and misapply the law as written, and exceed the Department’s

21 authority.

22

C. Reaction to the Department’s Guidance Document

23

78. The Guidance Document faced immediate backlash by Congressional leaders, SEAs,

24 and national education groups due to its incorrect interpretation of the CARES Act.

25

79. On May 5, 2020, the Council of Chief State School Officers (CCSSO), a nationwide

26 organization of public officials who head SEAs, wrote a letter to urge Secretary DeVos to clarify

27

28 18
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1 the Guidance Document to align it with the CARES Act’s requirements for equitable services.10

2 The CCSSO’s letter specifically requested that the Department issue new guidance to “advise

3 LEAs to look at the percentage of FY2019 Title I-A funds they set aside for equitable services

4 and apply that percentage to ESSER Funds.”11 Secretary DeVos responded to CCSSO’s letter on

5 May 22, 2020, rejecting its request to clarify the Guidance Document in accordance with the plain

6 text of the CARES Act.12 Secretary DeVos stated that if LEAs “insist on acting contrary to the

7 Department’s stated position, they should, at a minimum, put into an escrow account the

8 difference between the amount generated by the proportional-student enrollment formula and the

9 Title I, Part A formula.”13 The instruction to put funds in escrow is nonsensical given the crisis,

10 and clearly inconsistent with the intent of the CARES Act, which is to provide funding

11 expeditiously to LEAs to address their immediate needs in light of the COVID-19 pandemic.

12

80. Additionally, multiple SEAs published memoranda and guidance to their LEAs

13 instructing the LEAs to follow the plain text of the CARES Act and not the Department’s

14 Guidance Document.14 For example, on May 12, 2020, the Indiana Department of Education

15 published a memorandum for its LEAs, instructing the LEAs to disregard the Department’s

16

10 Letter from Carissa Moffat Miller, CCSSO, to Betsy DeVos, U.S. Sec’y of Educ., (May

17

5, 2020), available at https://ccsso.org/sites/default/files/2020-05/DeVosESLetter050520.pdf. 11 Id.

12 Letter from Betsy DeVos, U.S. Sec’y of Educ., to Carissa Moffat Miller, CCSSO (May

18 22, 2020), available at https://ccsso.org/sites/default/files/2020-

06/Secretary%20DeVos%20Response%20to%20Carrisa%20Moffat%20Miller%205%2022%202

19 0.pdf.

20

13 Id. 14 See, e.g., Pennsylvania Department of Education, Letter from Pedro Rivera, Sec’y of

Educ., to Frank Brogan, Asst. Sec’y. for Elementary and Secondary Educ., (May 7, 2020),

21 available at https://www.education.pa.gov/Documents/K-

12/Safe%20Schools/COVID/CARESAct/Letter%20to%20Secretary%20Brogan.pdf;

22 Memorandum from New Mexico Public Education Department, Funds available under

Coronavirus Aid, Relief and Economic Security (CARES) Act through the Elementary and

23 Secondary School Education Relief Fund (ESSER), Index 24301 (May 14, 2020), available at

https://webnew.ped.state.nm.us/wp-content/uploads/2020/05/CARES-Act-memo-ESSER-Funds-

24 2020-05-14-Final.pdf; Mississippi Department of Education, CARES Act Equitable Service,

25

EdUpdate (May 21, 2020), available at https://msachieves.mdek12.org/cares-act-equitableservices/; Maine Department of Education, Priority Notice, CARES Act: Frequently Asked

26

Questions (May 27, 2020), available at https://mailchi.mp/maine/cu5lemq6y0-1321452; Memorandum from Illinois State Board of Education (March 31, 2020), available at

https://www.isbe.net/Documents/CARES-Act-District-Info-3-31-20.pdf; Memorandum from

27 Connecticut State Board of Education, (June 8, 2020), available at https://portal.ct.gov/-

/media/SDE/Digest/2019-20/Equitable-services-under-ESSERF-CARES-Act-06082020.pdf.

28

19

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1 Guidance Document and “enact[] the CARES Act as written in the law . . . including the

2 provision to administer equitable services according to Sec. 1117 of the [ESEA].”15 The

3 memorandum described its decision as “ensur[ing] the funds are distributed according to

4 Congressional intent and a plain reading of the law, which prioritizes communities and schools

5 with high-poverty who are at most risk and in need of additional funds.”16

6

81. On May 20, 2020, Chairman Bobby Scott of the House Committee on Education and

7 Labor; Chairwoman Rosa DeLauro of the House Subcommittee on Labor, Health, Human

8 Services, and Related Agencies; and Ranking Member Patty Murray of the Senate Committee on

9 Health, Education, Labor, and Pensions wrote to Secretary DeVos, to urge the Department to

10 “immediately revise your April 30 guidance, including Question 10 of the guidance document to

11 come into compliance with the CARES Act and section 1117 of ESEA.”17 The bicameral letter

12 also requested the Department’s internal records related to the development of “its interpretation

13 of the equitable services provision and its inconsistency with long-standing requirements related

14 to equitable services.”18

15

82. On May 21, 2020, Senator Lamar Alexander, Chair of the Senate Committee on

16 Health, Education, Labor, and Pensions, was quoted as disagreeing with the Department’s

17 Guidance Document: “My sense was that the money should have been distributed in the same

18 way we distributed Title I money. . . . I think that’s what most of Congress was expecting.”19

19

83. On June 4, 2020, fifty national education organizations, including the CCSSO, wrote

20 to United States Senate and House leaders, asking for Congress to “pass[] legislation rescinding

21

15 Memorandum from Indiana Department of Education, Final Language for Equitable

22 Share of CARES Act Funds (May 12, 2020), available at

https://www.doe.in.gov/sites/default/files/news/final-language-equitable-share-cares-act-

23 funds.pdf.

24

16 Id. 17 Letter from Robert C. “Bobby” Scott, Chair, Committee on Education and Labor, U.S.

25

House of Representatives, et al., to Betsy DeVos, U.S. Sec’y of Educ. (May 20, 2020), available at https://edlabor.house.gov/imo/media/doc/2020-5-

20%20Ltr%20to%20DeVos%20re%20Equitable%20Services.pdf.

26

18 Id.

27

19 Nicole Gaudiano, Alexander, DeVos split on stimulus support for private school kids, Politico, May 22, 2020, available at https://www.politico.com/newsletters/morning-

education/2020/05/22/alexander-devos-split-on-stimulus-support-for-private-school-kids-787837.

28

20

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1 the equitable services [G]uidance [Document], preempting any future notice from [the

2 Department] that is contrary to the legislation, and further clarifying the allocation requirements

3 for equitable services for nonpublic schools consistent with Title I.”20

4 IV. THE RULE

5

84. On June 25, 2020, the Department published an unofficial version of the Rule on its

6 website. The Rule was officially published in the Federal Register on July 1, 2020. 85 Fed. Reg.

7 39,479.

8

85. The Rule was published as an interim final rule and became effective when published.

9

A. The Rule Conflicts with the Plain Language of the CARES Act.

10

86. Like the Department’s Guidance Document, the Rule effectively rewrites both (1) the

11 proportional share calculation that Congress established for LEAs to determine the amount of

12 funds to be used for equitable services for private-school students, and (2) the eligibility criteria

13 that Congress mandated to determine which private-school students are entitled to equitable

14 services under the CARES Act.

15

87. Neither the proportional share nor eligibility mandates in the Rule comport with the

16 plain text of the CARES Act.

17

88. The Rule will divert millions of dollars to private schools and away from public

18 schools in direct contradiction of Congress’s intent.

19

89. For the proportional share calculation, the Rule provides two options to LEAs:

20

Option #1 (Title I-Only Schools Option):

21

An LEA using all its funds under a CARES Act program to serve only students and teachers in public schools participating under Title I, Part A of the ESEA may

22

calculate the proportional share in accordance with paragraph (c)(1)(ii) of this section

or by using—

23 (A) The proportional share of Title I, Part A funds it calculated under section

24

1117(a)(4)(A) of the ESEA for the 2019-2020 school year; or

25

(B) The number of children, ages 5 through 17, who attend each non-public school in

the LEA that will participate under a CARES Act program and are from low-income

26

families compared to the total number of children, ages 5 through 17, who are from

27

20 Letter from national education organizations to congressional leadership (June 4, 2020),

28

available at https://ccsso.org/sites/default/files/202006/Equitable%20Services%20Funding%20Letter%20-%20FINAL.pdf.

21

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1

low-income families in both Title I schools and participating non-public elementary

and secondary schools in the LEA.

2 34 C.F.R. § 76.665(c)(1)(i).

3 90. Functionally, this option is most similar to the ESEA, Section 1117 proportional share

4 calculation. See 20 U.S.C. § 6320(a)(4)(A); see also id. § 6320(c)(1). The two sub-options allow

5 the LEA to use the proportional share figures used for the 2019-2020 Title I-A distribution (34

6 C.F.R. § 76.665(c)(1)(i)(A)) or updated figures based on the current proportion of low-income

7 students who attend private schools in the LEA (34 C.F.R. § 76.665(c)(1)(i)(B)). By adopting the

8 ESEA, Section 1117 proportional share calculation, Option #1 similarly adopts the proportional

9 share calculation required by the CARES Act, as the funds would then be apportioned “in the

10 same manner” as Section 1117. See CARES Act § 18005(a). However, this option includes two

11 unsupported “poison pill” limitations on LEAs who choose this option, as discussed below.

12 Option #2 (Private School Enrollment Option):

13

Any other LEA must calculate the proportional share based on enrollment in

14

participating non-public elementary and secondary schools in the LEA compared to the total enrollment in both public and participating non-public elementary and

15

secondary schools in the LEA.

16 34 C.F.R. § 76.665(c)(1)(ii).

17

91. This option incorporates the Department’s erroneous proportional share calculation

18 set forth in the Guidance Document, requiring LEAs to consider all private-school students when

19 they apportion funds, similar to the calculation used to determine funds for equitable services

20 under Section 8501 of the ESEA, which Congress did not adopt for CARES Act funds. See 34

21 C.F.R. § 76.665(c)(1)(ii). This option has no basis in the CARES Act and would allow the

22 Department to divert hundreds of millions of dollars of CARES Act funds intended for public

23 schools to private schools.

24

92. As mentioned above, the Department included two poison pill requirements for using

25 Option #1 (Title I-Only Schools Option) to calculate the proportional share, with the obvious

26 effect of pushing LEAs to use Option #2.

27

93. The poison pill restrictions would force the LEAs using Option #1 to calculate the

28 proportional share to (1) use the CARES Act funds reserved for public schools for Title I schools

22

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1 only, and (2) use the CARES Act only for limited, supplemental costs to avoid a Title I

2 supplanting violation. 34 C.F.R. §§ 76.665(c)(1), (c)(3); 20 U.S.C. § 6321(b)(1) (Section 1118 of

3 ESEA). This would effectively prohibit many LEAs from using CARES Act funds, for example,

4 to retain existing staff in Title I schools while using state and local dollars for the same purpose in

5 non-Title I schools. This requires LEAs to treat CARES Act funds not as stimulus monies but as

6 additional funds, forcing them to choose between a less beneficial methodology or a requirement

7 that limits their ability to spend CARES Act dollars to most effectively meet their needs.

8

94. Neither of these restrictions is found anywhere in the CARES Act. Rather, they are

9 both contrivances of the Department, seemingly intended to force LEAs to use Option #2 for

10 apportioning the CARES Act funds. The restrictions effectively punish LEAs that attempt to

11 apportion the CARES Act funds as Congress intended.

12

95. The Department has acknowledged “Congress . . . intended that grantees have

13 substantial flexibility in the use of these [CARES Act] dollars.”21 Yet, the Department arbitrarily

14 imposes these restrictions on LEAs, significantly limiting their flexibility to use the funds.

15

96. These poison pill requirements are contradicted by the plain language of the CARES

16 Act, which specifies how the public schools’ share of the funds should be used.

17

97. The CARES Act grants LEAs that receive CARES Act funds flexibility to use the

18 funds for all schools in the district, not only Title I schools. See CARES Act §§ 18002(c)(1), (3),

19 18003(d)(1)-(12).

20

98. For the ESSER funds, the CARES Act specifies the twelve “[u]ses of [f]unds” for the

21 LEAs, including such broad uses as “[p]roviding principals and other school leaders with the

22 resources necessary to address the needs of their individual schools” and “[o]ther activities that

23 are necessary to maintain the operation of and continuity of services in [LEAs] and continuing to

24 employ existing staff of the [LEA].” CARES Act §§ 18003(d)(3), (12); see also id. §§

25 18003(d)(1)-(12). Likewise, LEAs can broadly use the GEER funds granted to LEAs at the

26

21 Letter from Mitchell M. Zais, Ph.D., Deputy Sec’y, U.S. Dep’t of Educ. to Gene

Dodaro, Comptroller Gen., U.S. Gov’t Accountability Office (June 12, 2020), at p. 3 (available as

27 pp. 375-389 of the U.S. Gov’t Accountability Office, COVID-19 Opportunities to Improve

Federal Response and Recovery Efforts, GAO-20-625, June 2020, available at

28 https://www.gao.gov/products/GAO-20-659T).

23

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1 Governor’s discretion “to continue to provide educational services to their students and support

2 on-going functionality of the [LEA].” Id. § 18002(c)(1); see also id. § 18002(c)(3). These broad

3 uses of the ESSER and GEER funds as specified by Congress explicitly allow the LEAs and

4 public schools to use the funds to “supplant” state and local funding that may have been lost due

5 to the pandemic. The Rule impermissibly exceeds the scope of the CARES Act by requiring

6 LEAs to choose between two options that are contrary to the CARES Act’s requirements and

7 prohibiting LEAs from using funds consistent with those purposes if they use Option #1.

8

99. Whether calculated under Option #1 (Title I-only schools Option) or Option #2

9 (Private school enrollment Option), CARES Act funds will be diverted from their intended

10 recipients.

11

100. Under Option #1, due to the poison pill restrictions, public-school students at non-

12 Title I schools (many of whom are low-income or otherwise at-risk) will receive no funding

13 whatsoever. The ESSER funds and part of the GEER funds were specifically designed to assist

14 all public schools in LEAs that receive CARES Act funds—not just the Title I schools within

15 these LEAs. And, even for the public-school students at Title I schools, the funds could only be

16 used for supplemental costs or else risk a Title I supplanting violation. Thus, the LEA would be

17 prohibited from using the CARES Act funds for general educational expenses in Title I schools,

18 such as teacher salaries, books, or general sanitation, among other uses. This erroneous

19 restriction is directly contradicted by many of the listed “Uses of Funds” for moneys from the

20 ESSER Fund in the CARES Act. See CARES Act §§ 18003(d)(2)-(11). In addition, at-risk

21 private-school students, who are eligible for equitable services under Section 1117, will receive

22 fewer funds per student, and the funds reserved for private-school students will be used to provide

23 services for all private-school students (both at-risk and not at-risk), diluting funding that

24 Congress intended for vulnerable students.

25

101. Under Option #2, private-school students will receive a significantly greater

26 proportion of the funds than they are entitled to under the CARES Act, as all private-school

27 students will be considered when apportioning the funds. In turn, public schools will lose funding

28 diverted to the private schools. In addition, the money set aside for private-school students will 24
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1 be used to provide services to all private-school students, reducing the amount of money per

2 student for the at-risk private-school students who are eligible for services under Section 1117.

3

102. Under either proportional share option, the Rule—like the Guidance Document—

4 requires LEAs to provide equitable services to all private-school students. 34 C.F.R. §

5 76.665(d)(2). This requirement does not comport with the plain text of the CARES Act, which

6 adopts the Section 1117 eligibility requirements, limiting equitable services to at-risk private-

7 school students. See CARES Act § 18005(a); 20 U.S.C. § 6320(a) (incorporating the definition of

8 “eligible children” from 20 U.S.C. § 6315(c)).

9

B. The Department Lacks Authority to Issue the Rule and Failed to Follow

the Procedural Requirements of the APA. 10

103. The Rule cites 20 U.S.C. § 1221e-3 and 20 U.S.C. § 3474 as authority for rulemaking

11

related to the CARES Act. Neither of these statutes authorizes the Department to issue the Rule. 12
104. Congress gave no authority to the Department to issue rules interpreting the CARES 13
Act either generally, with regard to the GEER and ESSER Funds, or in particular to the 14
distribution of appropriated funds for equitable services for private-school students. 15
105. Nor did Congress authorize the Department to issue rules related to the provision of 16
equitable services for private-school students without compliance with the notice and comment 17
procedures of the APA. 18
106. The Department issued the Rule as an interim final rule without demonstrating good 19

cause that the notice and public procedures were impracticable, unnecessary, or contrary to the 20
public interest. 21
107. Because the Department cannot satisfy the requirements for issuing the Rule as an 22

interim final rule, the Rule does not comply with the Administrative Procedure Act’s procedural 23
requirements. 24

25

V.

THE RULE WILL CAUSE IMMEDIATE AND IRREPARABLE HARM TO PLAINTIFF STATES, SCHOOLS, AND STUDENTS.

26

108. The Rule and Guidance Document will cause immediate, irreparable harm to the

27 interests of the States, LEAs, and the vulnerable students whom Congress meant to assist through

28 the CARES Act.

25
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1

109. Plaintiff States, themselves and through their publicly administered educational

2 institutions, are directly regulated by the Rule and will suffer direct harm because of the Rule.

3

110. Each of the Plaintiff States is constitutionally required to administer a system of K-12

4 public education funded primarily by state moneys:

5

a. Michigan: The Michigan Constitution charges the Michigan Legislature with

6

“maintain[ing] and support[ing] a system of free public elementary and

7

secondary schools as defined by law.” Mich. Const. art. VIII, § 2. The State

Board of Education is vested with “[l]eadership and general supervision over

8

all public education . . . .” Id. § 3. The State Board of Education further

9

“serve[s] as the general planning and coordinating body for all public

10

education . . . and shall advise the legislature as to the financial requirements

11

in connection therewith.” Id. Separate from any federal funding, Michigan

12

provides more than $13 billion each year to its approximately 831 LEAs and

13

56 intermediate school districts. The 3,400 school buildings in these districts

educate almost 1.5 million students each year. While the school districts 14
exercise primary responsibility over budgetary and other decisions within

15

their respective districts, the Michigan Department of Education (MDE)

16

implements federal and state legislative mandates in education and carries out

17

the policies of the State Board of Education. See Mich. Comp. Laws §

18

388.1009.

19

b. California: The State of California is the legal and political entity with plenary

responsibility for educating all California public-school students. California 20
has the constitutional responsibility to establish and maintain the system of

21

common schools and a free education. Cal. Const. art. IX, § 5. California

22

funds and oversees the operation of the largest common system of public

23

schools in the nation, which serves nearly 6.8 million children in more than

24

10,500 schools. In 2018–2019, California provided about $56.1 billion in

25

General Funds to its 1,037 school districts and over 1,200 charter schools.

26

Under the California Constitution, “[t]he State itself has broad responsibility

to ensure basic educational equality.” Butt v. State of California, 4 Cal. 4th

27

668, 681 (1992). Emergency conditions causing inequitable conditions may

28

26

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1

create a duty for the State to intervene and provide supplementary support.

2

See id. at 688. The California State Board of Education makes education

3

policy determinations, and adopts rules and regulations for the government of

4

elementary and secondary schools. Cal. Educ. Code §§ 33000, 33030-33031.

The California State Board of Education is responsible for applying for

5

federal funds made available to state education agencies under federal law, is

6

responsible for directing the allocation and apportionment of those federal

7

funds to public schools, and is responsible for adopting implementing rules

8

and regulations governing those federal funds. Cal. Educ. Code §§ 12000-

9

12001. The California Superintendent of Public Instruction oversees the

10

schools within the state and is the executive officer of the California State

Board of Education and the California Department of Education. Cal. Educ. 11
Code §§ 33112, 33301(b), 33302-33303. The California Department of

12

Education is a state administrative agency responsible for administering and

13

enforcing laws related to education throughout California. Cal. Educ. Code

14

§§ 33300, 33301, 33306, 33308.

15

c. District of Columbia: The Office of the State Superintendent of Education

16

(OSSE) is the state education agency for the District of Columbia charged

with raising the quality of education for all DC residents. OSSE serves as the 17
District’s liaison to the Department and works closely with the District’s

18

traditional and public charter schools to achieve its key functions. D.C. Code

19

§ 38-2601. District of Columbia public schools received more than $902

20

million in state funding last year while charter schools in the District received

21

more than $904 million. 95,820 students attend either a public or charter

22

school in the District.

23

d. Maine: Maine’s state policy on public education is that “[i]t is the intent of the

Legislature that every person within the age limitations prescribed by state

24

statute shall be provided an opportunity to receive the benefits of a free public

25

education.” Me. Rev. Stat. tit, 20-A, § 2(1). The Maine Department of

26

Education is charged with “[s]upervis[ing], guid[ing] and plan[ning] for a

27

coordinated system of public education for all citizens of the State . . . .” Me.

28

Rev. Stat., tit. 20-A, § 201(1). The Commissioner of Education is responsible

27

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1

for “[p]roviding educational public leadership for the State” and “[e]nforcing

2

applicable regulatory requirements for school administrative units.” Me. Rev.

3

Stat., tit. 20-A, § 251-A(1), (3). The Commissioner determines the amount of

4

state funding for Maine’s school administrative units through the Essential

Programs and Services Funding Act, Me. Rev. Stat., tit. 20-A, § 15670 et seq.

5

The Commissioner is responsible for the distribution of funds and the

6

oversight of the federal grants that the Department receives. Separate from

7

any federal funding, Maine provides more than $ 1.2 billion each year to its

8

265 school administrative units (including public charter schools) and two

9

state magnet schools. The 599 school buildings in these school administrative

10

units educate approximately 175,600 students each year.

e. New Mexico: The New Mexico Constitution promises to establish and 11
maintain a uniform, free public-school system “sufficient for the education of,

12

and open to, all the children of school age.” N.M. Const. Art. 12, § 1. In

13

2020, legislators appropriated $3.468 billion in state funds for public

14

education from prekindergarten through secondary schools, or 45.5 percent of

15

total recurring appropriations. In 2019, the definition of “school-age” was

16

revised to include students through age 22. The Fiscal Year 2021 budget

increased recurring appropriations by $216 million, or 6.6 percent, with 17
significant additional funding to increase educator compensation, provide

18

additional services to at-risk students, and provide professional development

19

and mentorship support for early career teachers.

20

f. Wisconsin: The Wisconsin Constitution requires the Wisconsin Legislature to

21

establish district schools which are to be “as nearly uniform as practicable”

22

and “free and without charge for tuition to all children.” Wis. Const. art. X, §

23

3. The supervision of public instruction is vested in the Superintendent of

Public Instruction (State Superintendent). The State Superintendent is

24

charged with the general supervision of public instruction and leads the

25

Department of Public Instruction (DPI) in implementing policies and

26

promulgating administrative rules. Wis. Stat. § 15.37; see also, e.g., Wis.

27

Stat. §§ 115.28(1), (3), (7). Her responsibilities also include accepting and

28

administering federal funds. Wis. Stat. §§ 115.28(9) and (19). Wisconsin

28

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1

school district funding comes from state and federal aids, property taxes, and

2

local revenue. Wisconsin provides state aids to 443 LEAs, with a combined

3

total student enrollment of 854,959. In the 2019-2020 school year, DPI

4

administered approximately $6.1 billion in state support for K-12 public

schools.

5

6

111. The CARES Act appropriates funds for the Plaintiff States and their LEAs to support

7 public K-12 schools through the COVID-19 pandemic. Plaintiff States are facing severe

8 budgetary cuts due to the economic impact of the pandemic—cuts that the ESSER and GEER

9 Fund moneys were designed to mitigate. Under the Department’s Rule and the Guidance

10 Document, public schools in the Plaintiff States will lose a significant portion of the ESSER and

11 GEER moneys that will be diverted to private schools. This result is inconsistent with the clear

12 language of the CARES Act, and inequitable because public schools do not qualify for other

13 CARES Act funding available to private schools. Accordingly, LEAs will look to States to

14 bridge the gaps in their respective public-school budgets that the ESSER and GEER moneys were

15 intended to fill.

16

112. If LEAs in the Plaintiff States follow the Rule’s Option #1 (Title I-schools only

17 Option) when apportioning CARES Act funds, non-Title I schools across the Plaintiff States

18 stand to lose significant emergency funding to support their schools, and LEAs stand to lose the

19 ability to use the funds to maintain operations that are funded on an LEA-wide basis. In addition,

20 while Title I schools in the Plaintiff States will receive some CARES Act funds under Option #1,

21 the Rule improperly limits how they can use the funds by effectively prohibiting them from using

22 such funds for existing costs. Thus, for both Title I and non-Title I schools in the LEAs that

23 receive CARES Act funds, the effect of the Rule is to stymie the States and LEAs from using the

24 funds for their intended purpose—to “support and prevent, prepare for, and respond to

25 coronavirus.” CARES Act § 18001. As a result, the Plaintiff States will be required to allocate

26 moneys to help these schools weather the budgetary storm created by the pandemic.

27

113. If LEAs in the Plaintiff States follow the Rule’s Option #2 (Private school enrollment

28 Option) when apportioning CARES Act funds, the Plaintiff States’ LEAs and public schools will

29

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1 lose out on significant amounts of ESSER and GEER moneys, which will be diverted to private

2 schools for students who would not otherwise qualify for Title I-A equitable services.

3

a. Michigan: If Michigan’s LEAs are forced to follow Option #2 in the Rule for

4

apportioning CARES Act funds, an estimated $21,604,648.63 in ESSER

5

moneys would be diverted from public schools in order to provide equitable

services to all private-school students. If Michigan LEAs distribute the 6
ESSER moneys in the same manner that Title I-A funds are usually

7

distributed for equitable services based on low-income private-school

8

students, as the plain language of the CARES Act requires, then only an

9

estimated $5,107,921 will be distributed for equitable services to eligible

10

private-school students. Thus, if the Department’s Rule stands and LEAs

11

used Option #2 to apportion their CARES Act funds, an estimated total of

12

$16,496,727.63 in ESSER moneys will be diverted from low-income public

schools to private-school students who are not qualified for Title I-A funds—

13

7% of the total ESSER moneys that Michigan received. This would amount

14

to $2,251,130.61 less for Detroit Public School Community District students;

15

$2,643,213.87 less for Grand Rapids Public Schools students, and

16

$1,474,676.48 less for Flint Community Schools students.

17

b. California: If California’s LEAs are forced to follow Option #2 in the Rule for

18

apportioning CARES Act funds, millions in ESSER and GEER moneys would

be diverted from public schools in order to provide equitable services to all

19

private-school students. If California’s LEAs distribute the ESSER and

20

GEER moneys in the same manner that Title I-A funds are usually distributed

21

for equitable services based on low-income private-school students, as the

22

plain language of the CARES Act requires, then a considerably smaller

23

portion of the ESSER and GEER moneys will be distributed for equitable

24

services to eligible private-school students. Thus, if the Department’s Rule

stands and LEAs used Option #2 to apportion their CARES Act funds, 25
millions in ESSER and GEER moneys will be diverted from low-income

26

public schools to private-school students who are not qualified for Title I-A

27

funds.

28 30

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1

c. District of Columbia: If the District of Columbia Public Schools (DCPS) is

2

forced to follow Option #2 in the Rule for apportioning CARES Act funds,

3

approximately $5,404,710.77 in ESSER and GEER moneys would be diverted

4

from public school funds in order to provide equitable services to all private-

school students. If DCPS distributes the ESSER and GEER moneys in the

5

same manner that Title I-A funds are usually distributed for equitable services

6

based on low-income private-school students, as the plain language of the

7

CARES Act requires, then only $1,550,917 will be distributed for equitable

8

services to eligible private-school students. Thus, if the Department’s Rule

9

stands and LEAs used Option #2 to proportion their CARES Act funds, a total

10

of $3,853,793.77 in ESSER and GEER moneys will be diverted from low-

income public schools to private-school students that are not qualified for 11
Title I-A funds—8.06% of the total ESSER/GEER moneys that DC received.

12

d. Maine: If Maine’s LEAs are forced to follow the Department’s Rule and

13

Guidance, the Maine Department of Education (MDOE) estimates that $2.1

14

million in ESSER money would be apportioned to provide equitable services

15

to private-school students. If Maine’s LEAs distribute the ESSER money in

16

the same manner that Title I-A funds are usually distributed for equitable

services based on low-income private-school students, as the plain language 17
of the CARES Act requires, then only $248,000 will be distributed for

18

equitable services to eligible private-school students. Thus, if the

19

Department’s Rule stands, a total of $1,852,000 in ESSER money will

20

potentially be diverted from low-income public schools to private-school

21

students that are not qualified for Title I-A funds—4.25% of the total ESSER

22

money that Maine received.

23

e. New Mexico: If New Mexico’s LEAs are forced to follow Option #2 in the

Rule for apportioning CARES Act funds, millions in ESSER and GEER

24

moneys would be diverted from public school funds in order to provide

25

equitable services to all private-school students. If New Mexico’s LEAs

26

distribute the ESSER and GEER moneys in the same manner that Title I-A

27

funds are usually distributed for equitable services based on low-income

28

private-school students, as the plain language of the CARES Act requires,

31

Complaint for Declaratory and Injunctive Relief

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1

then a considerably smaller portion of the ESSER and GEER moneys will be

2

distributed for equitable services to eligible private-school students. Thus, if

3

the Department’s Rule stands and LEAs used Option #2 to apportion their

4

CARES Act funds, millions in ESSER and GEER moneys will be diverted

from low-income public schools to private-school students that are not

5

qualified for Title I-A funds.

6

f. Wisconsin: If Wisconsin’s LEAs are forced to follow Option #2 in the Rule

7

for apportioning CARES Act funds, $28,429,916.56 in ESSER and GEER

8

moneys would be diverted from public school funds in order to provide

9

equitable services to all private-school students. If Wisconsin LEAs distribute

10

the ESSER and GEER moneys in the same manner that Title I-A funds are

usually distributed for equitable services based on low-income private-school 11
students, as the plain language of the CARES Act requires, then only

12

$24,245,400.92 will be distributed for equitable services to eligible private-

13

school students. Thus, if the Department’s Rule stands and LEAs used Option

14

#2 to apportion their CARES Act funds, a total of $4,184,515.64 in ESSER

15

and GEER moneys will be diverted from low-income public schools to

16

private-school students that are not qualified for Title I-A funds—

approximately 2% of the total ESSER/GEER moneys that Wisconsin will 17
distribute to LEAs.

18

19

114. In total, if every LEA receiving CARES Act funds in the Plaintiff States uses Option

20 #2 to apportion CARES Act funds, the Plaintiff States will be required to divert tens of millions

21 of dollars in CARES Act funding to provide services to private-school students. The States’

22 public schools were expecting to receive these ESSER and/or GEER moneys.

23

115. Many LEAs may also have to rework their methodologies for allocating State and

24 local funds to public schools to accommodate the new funds and ensure that CARES Act dollars

25 do not result in a violation of the Title I-A supplement, not supplant requirement. This is a result

26 that was not contemplated by Congress and an administrative cost not taken into account in the

27 Rule.

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1

116. On top of the additional funding that each Plaintiff State will be required to expend in

2 lieu of the CARES Act funds diverted to private school services, the Department’s Guidance

3 Document and Rule impose significant administrative burdens on SEAs, which have fielded and

4 will continue to field numerous questions from LEAs about how ESSER and/or GEER Fund

5 moneys should be apportioned in light of the Department’s Rule, which is particularly confusing

6 given its clear inconsistency with the CARES Act.

7

117. The confusion caused by the Department has required the SEAs to divert resources to

8 drafting and issuing memoranda, letters, and other technical assistance to assist LEAs in

9 apportioning the moneys.

10

118. While facing numerous remote learning-related challenges in the throes of the

11 pandemic, the SEAs are now forced to redirect resources to assist LEAs in addressing the

12 conflicting requirements generated by the Department’s Rule that misinterprets the Act.

13

119. In addition, the Department’s Rule imposes strict restrictions on LEAs using Option

14 #1 to apportion the funds, which will increase costs incurred by the SEAs and LEAs to administer

15 equitable services and provide necessary oversight and control over funding, as required under

16 CARES Act Section 18005(b).

17

120. The additional time and work caused by the Department’s confusing and erroneous

18 interpretation of Section 18005 of the CARES Act will create a substantial burden on the SEAs.

19 Since the COVID-19 pandemic enveloped the nation, SEAs, LEAs, and schools in the Plaintiff

20 States have been working tirelessly to transition to remote learning; secure computers and other

21 electronic devices to facilitate students’ continued learning; create health and safety plans for

22 returning to school; and plan for the 2020-2021 school year. The time, money, and effort SEAs

23 have diverted to assisting LEAs with how to apportion ESSER/GEER moneys for equitable

24 services for private-school students are directly caused by the Department’s Guidance Document

25 and the Rule. The Department’s estimate of administrative burden does not adequately capture

26 the amount of administrative time that will be needed to implement this new Rule.

27

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1

121. The Department’s inconsistent interpretations in the Guidance Document and the

2 Rule have also caused a delay in distributing funds to students and teachers—the intended

3 beneficiaries of these funds—which is contrary to the purpose of the CARES Act funding.

4

122. Moreover, the Plaintiff States’ SEAs are required to certify in their ESSER Fund

5 applications that the SEAs and the LEAs will comply with the equitable service provision of the

6 CARES Act (§ 18005) and “any other applicable law or regulation.”22

7

123. Because the Department’s Rule contradicts the CARES Act’s requirements, SEAs

8 (and LEAs) cannot certify that they will comply both with the CARES Act and the Rule.

9

124. The Department’s Rule places the SEAs in a position where they would be in breach

10 of the certification in the Certification and Agreement, subjecting the SEAs to “liability under the

11 False Claims Act . . . [and the] OMB Guidelines to Agencies on Governmentwide Debarment and

12 Suspension (Non-procurement).”23 Accordingly, SEAs may face potential legal consequences as

13 a direct result of the Department’s Rule.

14

125. The Plaintiff States incurred, and will continue to incur, these financial, legal, and

15 other harms vis-a-vis their SEAs, and the other state-supported K-12 educational institutions in

16 the Plaintiff States.

17

126. The Plaintiff States also have an interest in protecting the health, safety, education,

18 and well-being of their residents. The Department’s interpretation severely impacts the use of the

19 emergency ESSER/GEER funds for public-school students affected by the COVID-19 pandemic.

20 It therefore jeopardizes the education of the Plaintiff States’ nearly ten million public-school

21 students.

22

127. Indeed, above and beyond their state constitutional obligations to educate school-aged

23 children, as set forth above, the States have made it a priority to ensure that vulnerable students

24 like those who are served by Title I-A receive robust educational opportunities. See, e.g., Cal.

25 Educ. Code §§ 8801 (Healthy Start Support Services for Children Act), 42920 (educational

26

22 U.S. Dep’t of Educ., Certification and Agreement for Funding under the Education

Stabilization Fund Program Elementary and Secondary School Emergency Relief Fund (ESSER

27 Fund), CFDA Number 84.425D (April 24, 2020), available at

https://oese.ed.gov/files/2020/04/ESSERF-Certification-and-Agreement-2.pdf.

28

23 Id.

34

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1 services for foster youth); Wis. Stat. §§ 118.43-44 (Achievement Gap Reduction Program),

2 121.136 (state aid for high-poverty school districts), 115.28(23) & 115.43-44 (Wisconsin

3 Educational Opportunity Program). The Rule undermines and frustrates these State policies.

4

128. Option #2 (Private school enrollment Option) of the Rule harms the States’ interest in

5 providing educational opportunities for their most vulnerable students by requiring LEAs to

6 divert moneys away from their public schools to private-school students who are not at-risk and

7 therefore would not be eligible for equitable services under Title I-A.

8

129. Even if LEAs in Plaintiff States calculate the proportional share of CARES Act funds

9 for private-school students under Option #1 in the Rule, public schools in the Plaintiff States that

10 were intended to receive money under the CARES Act will lose access to these funds. Non-Title

11 I schools will receive no funds. And Title I schools will not be able to use the CARES Acts to

12 cover existing, ongoing costs, even if related to the pandemic, as such allocation would lead to a

13 violation of the LEA’s Title I-A supplanting prohibition.

14

130. Public school systems depend on state moneys. The CARES Act education

15 stabilization funding is intended to assist public school systems, including both Title I and non-

16 Title I schools, to address the numerous issues created by the pandemic. Private-school interests

17 are addressed through eligibility for other stimulus funding within the CARES Act.

18

131. Protecting and maintaining public-school education in the Plaintiff States is

19 imperative to ensuring the long-term success of students. The loss of federal funding for public

20 schools will have significant, adverse impacts on public-school students. The States have an

21 interest in ensuring that funds are not diverted from other vital state priorities and programs

22 providing long-term assistance to public-school students who would otherwise have had access to

23 a free and quality public education absent the Rule.

24

132. The Rule will injure the States’ interests by causing significant harm to their

25 residents, including children and other students who attend K-12 public-school educational

26 institutions within the States.

27

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1

CAUSES OF ACTION

2

COUNT I

3

Violation of Separation of Powers Principles

4

133. Plaintiffs incorporate by reference the foregoing paragraphs of this Complaint as if set

5 forth herein.

6

134. Article I, Section 1 of the U.S. Constitution enumerates that “[a]ll legislative Powers

7 herein granted shall be vested in . . . Congress.”

8

135. Article I, Section 8 of the U.S. Constitution vests exclusively in Congress the

9 spending power to “provide for . . . the general Welfare of the United States.”

10

136. The executive branch’s authority to act “must stem either from an act of Congress or

11 from the Constitution itself.” Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 585 12 (1952); see also Clinton v. City of New York, 524 U.S. 417, 438 (1998) (“[N]o provision in the 13 Constitution . . . authorizes the President to enact, to amend, or to repeal statutes.”).

14

137. This principle is particularly strong in the spending context, because “[w]hen it comes

15 to spending, the President has none of his own constitutional powers to rely upon.” California v. 16 Trump, No. 19-16299, 2020 WL 3480841, at *16 (9th Cir. June 26, 2020) (quoting San

17 Francisco, 897 F.3d at 1233–34). Thus, “[a]bsent congressional authorization, the

18 Administration may not redistribute or withhold properly appropriated funds in order to effectuate

19 its own policy goals.” See San Francisco, 897 F.3d at 1235. Nor may it impose conditions on

20 funds appropriated by Congress without congressional authorization. See id. at 1233–34.

21

138. The Department’s Rule and Guidance Document require LEAs to allocate or use

22 GEER and ESSER funds in a manner that is contrary to the plain language of Section 18005 of

23 the CARES Act, thereby violating constitutional separation of powers principles by requiring

24 distribution of funds based on conditions not provided for in the CARES Act. Defendants did not

25 have inherent authority to change the manner in which LEAs distribute the GEER and ESSER

26 funds. Nor did Congress afford Defendants any discretion or authority to issue rules governing

27 the LEAs’ allocation or use of these funds through the CARES Act.

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1

139. By unilaterally imposing its interpretation of Section 18005 of the CARES Act, the

2 Department abrogated the significant discretion given to the SEAs and LEAs in the CARES Act

3 and usurped Congress’ power to legislate in violation of the principles of separation of powers.

4

140. Absent injunctive and declaratory relief suspending and vacating the Rule and the

5 Guidance Document, Plaintiff States and their residents will be immediately, continuously, and

6 irreparably harmed by Defendants’ illegal actions.

7

COUNT II

8

Ultra Vires Action

9

141. Plaintiffs incorporate by reference the foregoing paragraphs of this Complaint as if set

10 forth herein.

11

142. An agency acts ultra vires when it exceeds its statutory authority conferred by

12 Congress.

13

143. There is no provision in the CARES Act that imposes the proportional share

14 calculations, use restrictions, or eligibility requirements in the Rule for CARES Act funds.

15 Further, Congress has not delegated to Defendants the authority to impose such requirements.

16

144. Nothing in the CARES Act requires LEAs to calculate the private-school student

17 share of CARES Act funds using the Section 8501 calculation; prohibits non-Title I schools from

18 receiving funds; prohibits Title I schools from using CARES Act funds on any of the permissible

19 uses in the statute; or requires LEAs to provide equitable services to all private-school students.

20 Moreover, Congress explicitly required that LEAs follow Section 1117 when apportioning

21 CARES Act funds for equitable services and determining which private students were eligible for

22 such services. Congress also explicitly listed permitted uses for the CARES Act funds and

23 permitted both Title I and non-Title I schools to receive and use CARES Act funds.

24

145. Through the CARES Act, Congress required the Department to issue ESSER funds to

25 Plaintiff States’ SEAs without conditioning the receipt of funds on Plaintiffs’ agreement to

26 require LEAs to calculate the proportional share for equitable services with the improper Section

27 8501 formula, prohibit non-Title I schools from receiving funds, prohibit Title I schools from

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1 using CARES Acts on any of the permissible uses in the statute, or require LEAs to provide

2 equitable services to all private-school students.

3

146. Absent injunctive and declaratory relief suspending and vacating the Rule and the

4 Guidance Document, Plaintiff States and their residents will be immediately, continuously, and

5 irreparably harmed by Defendants’ illegal actions.

6

COUNT III

7

Spending Clause

8

147. Plaintiffs incorporate by reference the foregoing paragraphs of this Complaint as if set

9 forth herein.

10

148. Article I, Section 8, Clause 1 of the United States Constitution, also known as the

11 Spending Clause, states that “Congress shall have Power to lay and collect Taxes, Duties, Imposts

12 and Excises, to pay the Debts and provide for the common Defense and general Welfare of the

13 United States[.]”

14

149. Under the Spending Clause, conditions may not be placed on federal funds that are

15 (1) so coercive that they compel (rather than encourage) recipients to comply, (2) ambiguous, (3)

16 retroactive, or (4) unrelated to the federal interest in a particular program. Nat’l Fed’n of Indep.

17 Bus. v. Sebelius (NFIB), 567 U.S. 519, 575–78 (2012); South Dakota, 483 U.S. at 206–08.

18

150. To the extent that Congress delegated its authority to the Department to impose its

19 own requirements on the allocation and use of GEER and ESSER funds (which it has not), the

20 Department’s Rule and Guidance Document violate the Spending Clause of the U.S. Constitution.

21

151. The Department’s interpretation of Section 18005 of the CARES Act in the Rule and

22 Guidance Document violates the relatedness requirement under the Spending Clause because it is

23 contrary to Congress’s plainly expressed intent in the CARES Act to require SEAs and LEAs to

24 follow Section 1117 when apportioning CARES Act funds for equitable services and determining

25 which private-school students were eligible for such services, and to permit specific uses for the

26 CARES Act funds by both Title I and non-Title I schools.

27

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1

152. The Department’s Rule and Guidance Document also violate the “unambiguous”

2 requirement under the Spending Clause. Congress has not “unambiguously” imposed the

3 requirement that LEAs calculate and set aside their GEER and ESSER Funds for equitable

4 services to all private-school students and teachers, provide equitable services to all private-

5 school students, limit their uses of funds, and limit their distribution of funds to Title I schools

6 only. See Pennhurst, 451 U.S. at 17 (“[I]f Congress intends to impose a condition on the grant of

7 federal moneys, it must do so unambiguously.”).

8

153. In addition, the Department’s interpretation was an improper “post-acceptance”

9 restriction. Id. at 17, 25. States “cannot knowingly accept conditions of which they are

10 ‘unaware’ or which they are ‘unable to ascertain.’” Arlington Cent. Sch. Dist. Bd. of Educ. v.

11 Murphy, 548 U.S. 291, 296 (2006) (quoting Pennhurst, 451 U.S. at 17). Accordingly, the

12 Spending Clause does not permit what the Department has improperly done here through

13 unauthorized rulemaking: “surprising participating States with post acceptance or ‘retroactive’

14 conditions” on congressionally appropriated funds. Pennhurst, 451 U.S. at 25; see also NFIB,

15 567 U.S. at 519.

16

154. Plaintiff States did not know of the Department’s interpretation at the time they

17 applied for and received emergency financial aid grants from the GEER and ESSER funds.

18 Therefore, they were unable to exercise their choice knowingly, cognizant of the consequences of

19 their participation, and they were surprised with post acceptance or retroactive conditions.

20

155. Absent injunctive and declaratory relief suspending and vacating the Rule and the

21 Guidance Document, Plaintiff States and their residents will be immediately, continuously, and

22 irreparably harmed by Defendants’ illegal actions.

23

24

25

26

27

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1

COUNT IV

2

Violation of the Administrative Procedure Act (Agency Action in Excess of Statutory Authority, Short of Statutory Right, or Not in

3

Accordance with Law)

4

156. Plaintiffs incorporate by reference the foregoing paragraphs of this Complaint as if set

5 forth herein.

6

157. The APA requires that a court hold unlawful and set aside agency action, findings,

7 and conclusions found to be in excess of statutory authority, short of statutory right, or not in

8 accordance with law. 5 U.S.C. § 706(2)(A), (C).

9

158. Congress did not grant the Department authority to interpret or make rules regarding

10 Section 18005 of the CARES Act. The Department’s Rule and the Guidance Document are

11 unauthorized by and contrary to Section 18005 of the CARES Act. They therefore are in excess

12 of statutory authority, short of statutory right, and not in accordance with law.

13

159. To the extent the Department claims that its Guidance Document is merely an

14 interpretation contained in a policy statement, agency manual, or enforcement guideline that lacks

15 the force of law, the Department’s interpretation is entitled to no or only limited deference. The

16 Guidance Document is not persuasive, nor does it reflect thorough consideration, and is contrary

17 to the plain language of the statute it purports to interpret. Congress’s intent in the CARES Act is

18 clear that equitable services are to be provided by LEAs to private-school students and teachers in

19 the same manner as required under Section 1117 of the ESEA.

20

160. Absent injunctive and declaratory relief suspending and vacating the Rule and the

21 Guidance Document, Plaintiff States and their residents will be immediately, continuously, and

22 irreparably harmed by Defendants’ illegal actions.

23

COUNT V

24

Violation of the Administrative Procedure Act (Arbitrary and Capricious Agency Action)

25

161. Plaintiffs incorporate by reference the foregoing paragraphs of this Complaint as if set

26 forth herein.

27

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1

162. The APA requires that a court hold unlawful and set aside agency action, findings,

2 and conclusions found to be arbitrary, capricious, or an abuse of discretion. 5 U.S.C.

3 § 706(2)(A).

4

163. A rule is arbitrary and capricious if the agency has “relied on factors which Congress

5 has not intended it to consider, entirely failed to consider an important aspect of the problem,

6 offered an explanation for its decision that runs counter to the evidence before the agency, or is so

7 implausible that it could not be ascribed to a difference in view or the product of agency

8 expertise.” State Farm, 463 U.S. at 43.

9

164. The Department’s interpretation of Section 18005 of the CARES Act in the Rule and

10 the Guidance Document is arbitrary and capricious agency action because, among other reasons,

11 the Department failed to articulate how its position comports with the plain text of Section 18005

12 of the CARES Act and why it was reversing its own guidance regarding how equitable services

13 under Section 1117 should be provided, generating an unexplained inconsistency in the

14 Department’s position of which it appears to be unaware. Further, the Department ignores

15 important aspects of the problem, and its decision to enact the Rule runs counter to the evidence

16 before the Department. The Department also took into account factors Congress did not intend it

17 to consider. Finally, the Department failed to take into account the reliance interests that its

18 former position generated.

19

165. Absent injunctive and declaratory relief suspending and vacating the Rule and the

20 Guidance Document, Plaintiff States and their residents will be immediately, continuously, and

21 irreparably harmed by Defendants’ illegal actions.

22

COUNT VI

Violation of the Administrative Procedure Act

23

(Agency Action Without Observance of Procedure Required by Law)

24 166. Plaintiffs incorporate by reference the foregoing paragraphs of this Complaint as if set
25 forth herein.
26

27

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1

167. The APA requires that a court hold unlawful and set aside agency action, findings,

2 and conclusions found to be without observance of procedure required by law. 5 U.S.C.

3 § 706(2)(D).

4

168. The agency must publish a “[g]eneral notice of proposed rulemaking” in the Federal

5 Register. 5 U.S.C. § 553(b). That notice must describe “either the terms or substance of the

6 proposed rule or a description of the subjects and issues involved.” 5 U.S.C. § 553(b)(3).

7

169. The agency must further provide “interested persons” an “opportunity to participate

8 in the rule making through submission of written data, views, or arguments with or without

9 opportunity for oral presentation.” 5 U.S.C. § 553(c).

10

170. The Rule is a legislative rule adopted without complying with the notice and

11 comment requirements of the APA.

12

171. The Rule was issued on an interim final basis without good cause.

13

172. The Department failed to establish good cause to waive the notice and public

14 procedures required under the APA due to these procedural requirements being impracticable,

15 unnecessary, or contrary to the public interest. 5 U.S.C. § 553(b).

16

173. Absent injunctive and declaratory relief suspending and vacating the Rule and the

17 Guidance Document, Plaintiff States and their residents will be immediately, continuously, and

18 irreparably harmed by Defendants’ illegal actions.

19

PRAYER FOR RELIEF

20

WHEREFORE, Plaintiff States request that this Court enter judgment in their favor and

21 grant the following relief:

22

a. Declare the Rule and all versions of the Guidance Document unlawful within the

23 meaning of 5 U.S.C. § 706(2)(A), (C), & (D);

24

b. Preliminarily and permanently enjoin the Department and its officers, employees, and

25 agents from applying and enforcing the Rule or all versions of the Guidance Document;

26

c. Vacate and set aside the Rule and all versions of the Guidance Document;

27

d. Award Plaintiffs reasonable costs and expenses, including attorneys’ fees; and

28

e. Grant such other and further relief as the Court deems just and proper.

42

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1

2 Dated: July 7, 2020 3

Respectfully Submitted,

4

5 DANA NESSEL Attorney General of Michigan
6

7 /s/ Toni L. Harris

8

FADWA A. HAMMOUD Solicitor General

9

TONI L. HARRIS NEIL GIOVANATTI

Assistant Attorneys General 10 Attorneys for Plaintiff State of Michigan

11

Appearing pro hac vice (application forthcoming)

12

XAVIER BECERRA Attorney General of California MICHAEL NEWMAN Senior Assistant Attorney General SARAH E. BELTON Supervising Deputy Attorney General JAMES F. ZAHRADKA II REBEKAH A. FRETZ
/s/ Garrett M. Lindsey
GARRETT M. LINDSEY Deputy Attorneys General Attorneys for Plaintiff State of California

13

14 KARL A. RACINE 15 Attorney General of District of Columbia

16 /s/ Kathleen Konopka

17

KATHLEEN KONOPKA Deputy Attorney General, Public Advocacy

18

Division Attorneys for Plaintiff District of Columbia

19

Appearing pro hac vice (application forthcoming)

20

HECTOR BALDERAS New Mexico Attorney General
/s/ Cholla Khoury
P. CHOLLA KHOURY LISA GIANDOMENICO Assistant Attorneys General Attorneys for Plaintiff State of New Mexico Appearing pro hac vice (application forthcoming)

21 AARON M. FREY 22 Attorney General of Maine

23 /s/ Sarah A. Forster

24

SARAH A. FORSTER Assistant Attorney General

25

Attorneys for Plaintiff State of Maine Appearing pro hac vice (application

26 forthcoming)

JOSHUA L. KAUL Attorney General of Wisconsin
/s/ Hannah S. Jurss
HANNAH S. JURSS Assistant Attorney General Attorneys for Plaintiff State of Wisconsin Appearing pro hac vice (application forthcoming)

27

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1

ATTESTATION OF SIGNATURES

2 I, Garrett M. Lindsey, hereby attest, pursuant to Local Civil Rule 5-1(i)(3) of the Northern
3 District of California that concurrence in the filing of this document has been obtained from each
4 signatory hereto.
5

6 Dated: July 7, 2020

/s/ Garrett M. Lindsey

7

GARRETT M. LINDSEY

Deputy Attorney General

8

Attorney for State of California

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

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Exhibit A

Case 3:20-cv-04478-SK Document 1 Filed 07/07/20 Page 48 of 69
PROVIDING EQUITABLE SERVICES TO STUDENTS AND TEACHERS IN NON-PUBLIC SCHOOLS
UNDER THE CARES ACT PROGRAMS
U.S. Department of Education Washington, D.C. 20202 April 30, 2020

Case 3:20-cv-04478-SK Document 1 Filed 07/07/20 Page 49 of 69
Purpose of this Document The purpose of this document is to provide information about equitable services for students and teachers in non-public schools under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Public Law 116-136, 134 Stat. 281 (Mar. 27, 2020). The CARES Act authorized the Education Stabilization Fund (ESF), which is a new appropriation of approximately $30.75 billion that creates funding streams for several distinct education programs that address the impact of the Novel Coronavirus Disease 2019 (COVID-19) on educational services across the Nation. Under these programs, the U.S. Department of Education (Department) will make awards to Governors, State educational agencies (SEAs), and institutions of higher education (IHEs) to help States to prevent, prepare for, and respond to the devastating effects of COVID-19. The provisions of the CARES Act relevant to the ESF and other Department programs are available on the Department’s website at https://oese.ed.gov/offices/education-stabilization-fund/. Two programs in the ESF require a local educational agency (LEA) that receives funds to provide equitable services to students and teachers in non-public schools:
• The Governor’s Emergency Education Relief Fund (GEER Fund) totaling $2,953,230,000 (Section 18002 of the CARES Act).
• The Elementary and Secondary School Emergency Relief Fund (ESSER Fund) totaling $13,229,265,000 (Section 18003 of the CARES Act).
Other than statutory and regulatory requirements included in the document, such as those pursuant to the authorizing statute and other applicable laws and regulations, the contents of the guidance do not have the force and effect of law and are not meant to bind the public in any way. This document is intended only to provide clarity to the public regarding existing requirements under the law or agency policies. In addition, it does not create or confer any rights for or on any person. The Department will provide additional or updated information as necessary on the Department’s COVID-19 webpage: https://www.ed.gov/coronavirus. If you have questions that are not answered in this document, please e-mail COVID-19@ed.gov.
ii

Case 3:20-cv-04478-SK Document 1 Filed 07/07/20 Page 50 of 69
Table of Contents
1. Does the requirement to provide equitable services to students and teachers in nonpublic schools apply to any programs under the CARES Act? .........................................1 2. What is a “non-public school” under the CARES Act programs?.................................1 3. Is a for-profit non-public school eligible to receive equitable services for its students and teachers under the CARES Act programs? .................................................................1 4. Which LEA is responsible for providing equitable services to non-public school students and teachers under the CARES Act programs? ...................................................1 5. Must an LEA or another public agency maintain control of CARES Act funds used to provide equitable services? ................................................................................................2 6. Who is responsible for initiating the consultation process and how should it begin? ...2 7. How does an LEA that receives funds under the CARES Act programs provide equitable services “in the same manner as provided under section 1117 of the ESEA”? .3 8. Must an LEA offer to provide equitable services under the CARES Act programs to students and teachers in all non-public schools located in the LEA, even if a non-public school has not previously participated in equitable services under Title I, Part A or Title VIII of the ESEA?..............................................................................................................5 9. Are all students and teachers in a non-public school eligible to receive equitable services under the CARES Act programs? ........................................................................5 10. How does an LEA determine the proportional share of funds that must be reserved to provide equitable services to non-public school students and teachers under the CARES Act programs? ....................................................................................................................6
A. What is the base amount on which the proportional share is determined? .............6 B. What data does an LEA use to determine the proportional share?..........................6 C. How does an LEA calculate the proportional share? ..............................................6 11. After an LEA has determined the proportional share of funds for equitable services under each CARES Act program, how does it then determine the amount of funds available for services to students and teachers in individual non-public schools? ............7 12. Do the requirements in 34 C.F.R. § 200.66 apply to equitable services under the CARES Act programs? ......................................................................................................7 13. Is a non-public school whose students and teachers receive equitable services under the CARES Act programs a “recipient of Federal financial assistance”?..........................8 14. What services and benefits under the CARES Act programs are available to nonpublic school students and teachers?..................................................................................8
iii

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Providing Equitable Services to Students and Teachers in Non-Public Schools under the CARES Act Programs
1. Does the requirement to provide equitable services to students and teachers in nonpublic schools apply to any programs under the CARES Act?
Yes. The CARES Act establishes two new funds to which equitable services requirements apply. Specifically, a local educational agency (LEA) that receives funds under either the Governor’s Emergency Education Relief Fund (GEER Fund) (section 18002 of the CARES Act) or the Elementary and Secondary School Emergency Relief Fund (ESSER Fund) (section 18003 of the CARES Act) (“CARES Act programs” for purposes of this document) to provide equitable services to students and teachers in non-public schools in the same manner as provided under section 1117 of the Elementary and Secondary Education Act of 1965 (ESEA). (Section 18005(a) of the CARES Act).
An institution of higher education or education-related entity that receives funds under the GEER Fund is not required to provide equitable services to students and teachers in nonpublic schools.
2. What is a “non-public school” under the CARES Act programs?
A “non-public school” means a non-public elementary or secondary school that (A) is accredited, licensed, or otherwise operates in accordance with State law; and (B) was in existence prior to the date of the qualifying emergency for the CARES Act programs. For purposes of this definition, the date of the qualifying emergency is March 13, 2020. (Section 18007(6) of the CARES Act).
3. Is a for-profit non-public school eligible to receive equitable services for its students and teachers under the CARES Act programs?
No. A for-profit non-public school is not eligible to receive equitable services for its students and teachers under the CARES Act programs. Section 18007(6) of the CARES Act defines a “non-public school” as a non-public elementary or secondary school. Section 18007(8) of the CARES Act incorporates the definitions in ESEA section 8101 for any terms not defined in the CARES Act. ESEA section 8101(19) and (45) defines “elementary school” and “secondary school,” respectively, and specifies that they must be non-profit.
4. Which LEA is responsible for providing equitable services to non-public school students and teachers under the CARES Act programs?
The Department has determined that, under the CARES Act programs, the LEA in which a non-public school is located is responsible for providing equitable services to students and teachers in the school, as it is under most ESEA programs that require an LEA to provide equitable services. Outside of Title I, Part A, the responsibility typically falls on the LEA in which a non-public school is located because equitable services are generally available
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to all students or teachers in the non-public school in the LEA and the LEA in which the school is located is closest and best able to meet the needs of students and teachers.
Title I, Part A of the ESEA is different; ESEA section 1117 sets forth a student residency requirement, rather than a school location requirement, for receipt of equitable services under Title I, Part A. Only low-achieving students who live in a participating Title I public school attendance area are eligible for services and, therefore, the LEA where students reside is responsible for providing equitable services. The CARES Act programs have no such residency requirement for eligibility for services. Rather, the CARES Act programs provide LEAs full discretion, unless funds are targeted for a specific purpose or population of public and non-public school students by the Governor under the GEER Fund or by an SEA through the SEA reserve under the ESSER Fund (see section 18003(e) of the CARES Act), to use CARES Act funds to provide educational services to students in public and non-public schools in the LEA through a broad range of allowable activities. Thus, providing equitable services with CARES Act funds is similar to other ESEA programs where equitable services are provided by the LEA in which a non-public school is located.
5. Must an LEA or another public agency maintain control of CARES Act funds used to provide equitable services?
Yes. Control of funds for services and assistance provided to non-public school students and teachers under the CARES Act programs, and title to materials, equipment and property purchased with such funds, must be in a public agency, and a public agency must administer such funds, materials, equipment, and property. In other words, no funds may go directly to a non-public school. In addition, services for non-public school students and teachers must be provided by a public agency directly or through contract with another public or private entity. (Section 18005(b) of the CARES Act).
6. Who is responsible for initiating the consultation process and how should it begin?
Similar to how an LEA provides equitable services under the ESEA, an LEA is responsible for initiating the consultation process. It must contact officials in all non-public schools in the LEA to notify them of the opportunity for their students and teachers to obtain equitable services under the CARES Act programs. Through this initial contact, the LEA can explain the services available under the CARES Act programs and how non-public school students and teachers can participate. If non-public school officials have not been contacted, they may contact the LEA or the State ombudsman to inquire about equitable services under the CARES Act programs.
If non-public school officials want equitable services for their students and teachers, the LEA must consult with those officials during the design and development of the LEA’s programs and before the LEA makes any decision that affects the opportunity of nonpublic school students and teachers to participate in the activities funded under the CARES Act programs. If a non-public school declines to participate in the CARES Act programs or does not respond to an LEA’s good-faith effort to make contact, the LEA has no further responsibility to provide equitable services to students or teachers in that school. The LEA, however, must be able to demonstrate that it made a good faith effort to contact all the nonpublic schools in the LEA.
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7. How does an LEA that receives funds under the CARES Act programs provide equitable services “in the same manner as provided under section 1117 of the ESEA”?
An LEA that receives funds under the CARES Act programs must provide equitable services to students and teachers in a non-public school in the same manner as provided under section 1117 of the ESEA, as determined in consultation with representatives of non-public schools. (Section 18005(a) of the CARES Act). This requirement, on its face, necessitates that the Department interpret how the requirements of section 1117 apply to the CARES Act programs, given that an LEA under the CARES Act programs may serve all non-public school students and teachers without regard to family income, residency, or eligibility based on low achievement. Unless the requirements of section 1117 would limit equitable services under the CARES Act programs, we conclude they apply as outlined below.
We have interpreted “in the same manner as under section 1117” in light of the significantly broader eligibility and uses of funds authorized under the CARES Act as compared to Title I, Part A, reasonably reconciling differences. In doing so, we gave meaning to section 1117(a)(3), which requires educational services and other benefits for students in non-public schools to be equitable in comparison to those for public school students. The services that an LEA may provide under the CARES Act programs are clearly available to all public school students and teachers, not only low-achieving students and their teachers as under Title I, Part A. Similarly, there is no limitation on residence in a participating Title I public school attendance area for services provided in public schools under the CARES Act programs. For CARES Act services to be equitable in comparison to public school students and teachers, it follows that the same principles must apply in providing equitable services to non-public school students and teachers.
The following describes how the provisions of ESEA section 1117 apply, reconciled, when necessary, to meet the purposes of the CARES Act programs:
• 1117(a)(1) – Under Title I, Part A, an LEA must provide equitable services to lowachieving students as defined in ESEA section 1115(c) who reside in a participating Title I public school attendance area and attend a non-public school and their teachers. Under the CARES Act programs, an LEA may provide equitable services with CARES Act funds to any students and teachers in non-public schools, unless limited by a Governor under section 18002 of the CARES Act or an SEA through the SEA’s reserve under section 18003(e) of the CARES Act. (See Questions #8 and #9).
• 1117(a)(2) – Under both Title I, Part A and the CARES Act programs, an LEA must provide equitable services and other benefits, including materials and equipment, that are secular, neutral, and nonideological.
• 1117(a)(3)(A) – Under both Title I, Part A and the CARES Act programs, an LEA must provide services and other benefits for non-public school students and teachers in a timely manner that are equitable in comparison to the services and benefits provided for public school students and teachers.
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• 1117(a)(3)(B) – Under Title I, Part A, an SEA must designate an ombudsman to monitor and enforce the equitable services requirements. An SEA must use the ombudsman also to monitor and enforce the requirements of the CARES Act programs that an LEA provide equitable services to students and teachers in nonpublic schools.
• 1117(a)(4)(A) – Under both Title I, Part A and the CARES Act programs, an LEA must determine the proportional share available to provide equitable services to students and teachers in non-public schools based on the total amount of funds an LEA receives prior to any allowable expenditures or transfers. Under the CARES Act programs, the LEA calculates the proportional share based on the number of children enrolled in each non-public school whose students or teachers participate in the CARES Act programs compared to the number of students enrolled in public schools in the LEA. The LEA makes this determination under each CARES Act program separately. (See Question #10).
• 1117(a)(4)(B) – Under Title I, Part A, an LEA must obligate funds available for equitable services in the fiscal year for which the funds are received by the LEA. An LEA must obligate CARES Act funds for equitable services in the fiscal years for which those funds are intended for services to address the impact of COVID-19.
• 1117(a)(4)(C) – Under both Title I, Part A and the CARES Act programs, an SEA must provide notice in a timely manner to appropriate non-public school officials in the State of the allocation of funds for educational services and other benefits that each LEA has determined are available for non-public school students and teachers.
• 1117(b)(1) – Under both Title I, Part A and the CARES Act programs, an LEA must consult with appropriate non-public school officials during the design and development of the LEA’s activities on relevant issues such as those contained in this section of Title I, Part A. The LEA and non-public school officials shall both have the goal of reaching agreement on how to provide equitable and effective services and the LEA must transmit the results of that agreement to the ombudsman.
• 1117(b)(2) – Under both Title I, Part A and the CARES Act programs, if an LEA disagrees with the views of non-public school officials during consultation, the LEA must provide in writing to the non-public school officials the reasons why the LEA disagrees.
• 1117(b)(3) – Under both Title I, Part A and the CARES Act programs, consultation must occur before an LEA makes any decision that affects the opportunities of nonpublic students and teachers to receive equitable services. Meetings between the LEA and non-public school officials need not occur in person if they cannot be conducted due to closed schools or social distancing rules. In this case, the Department recommends LEAs and non-public school officials consult remotely.
• 1117(b)(4) – Under both Title I, Part A and the CARES Act programs, consultation must include discussion of service delivery mechanisms an LEA may use to provide equitable services.
• 1117(b)(5) – Under both Title I, Part A and the CARES Act programs, an LEA must maintain and provide to the SEA written affirmation signed by non-public
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school officials that timely and meaningful consultation has occurred and, if nonpublic school officials do not provide such affirmation, the LEA must forward to the SEA the documentation that such consultation has, or attempts at such consultation have, taken place. • 1117(b)(6) – Under both Title I, Part A and the CARES Act programs, non-public school officials have a right to file a complaint with the SEA; the SEA must provide services directly or through contracts if requested to do so by non-public school officials and the SEA determines that the LEA did not meet applicable requirements. • 1117(c)(1) – Under Title I, Part A, to determine the proportional share, an LEA must calculate the number of children, ages 5 through 17, who are from lowincome families and reside in a participating Title I public school attendance area. Because an LEA determines the proportional share based on enrollment in public and non-public schools under the CARES Act programs, the LEA need not collect poverty data from non-public schools (see Question #10 for information on determining the proportional share of CARES Act funds the LEA must reserve to provide equitable services to non-public school students and teachers). • 1117(c)(2) – Under Title I, Part A, non-public school officials may file a complaint with the SEA if they dispute the count of children from low-income families. Because an LEA need not collect poverty data to determine the proportional share available for equitable services under the CARES Act programs, there would be no reason for non-public school officials to file a complaint regarding poverty data with the SEA. • 1117(d) – Under Title I, Part A, control of funds and title to materials, equipment, and property must be in public agency. With respect to the CARES Act programs, this provision is superseded by section 18005(b) of the CARES Act, which also requires public control of funds. (See Question #5).
8. Must an LEA offer to provide equitable services under the CARES Act programs to students and teachers in all non-public schools located in the LEA, even if a nonpublic school has not previously participated in equitable services under Title I, Part A or Title VIII of the ESEA?
Yes. An LEA must offer to provide equitable services under the CARES Act programs to students and teachers in all non-public schools located in the LEA, even if a non-public school has not previously participated under Title I, Part A or Title VIII of the ESEA.
9. Are all students and teachers in a non-public school eligible to receive equitable services under the CARES Act programs?
Yes. All students and teachers in a non-public school are eligible to receive equitable services under the CARES Act programs, unless a Governor (under the GEER Fund) or an SEA (through the SEA reserve under the ESSER Fund) targets funds for a specific purpose or population of public and non-public school students. Unlike Title I, Part A, equitable services under the CARES Act programs are not based on residence in a participating Title
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I public school attendance area and are also not limited only to low-achieving students and their teachers.
10. How does an LEA determine the proportional share of funds that must be reserved to provide equitable services to non-public school students and teachers under the CARES Act programs?
A. What is the base amount on which the proportional share is determined?
Under ESEA section 1117(a)(4)(A)(ii), an LEA must determine the proportional share available for equitable services from the total amount of Title I, Part A funds it receives prior to reserving funds for allowable expenditures such as administrative costs or districtwide expenditures, and before making allocations to participating public schools. Because section 18005(a) of the CARES Act requires an LEA to provide equitable services under the CARES Act programs “in the same manner as provided under section 1117,” an LEA must use the total allocation it receives under each CARES Act program to determine the proportional share available for equitable services before reserving funds for other purposes.
B. What data does an LEA use to determine the proportional share?
An LEA uses enrollment data in non-public schools whose students and teachers will participate under the CARES Act programs compared to enrollment in public schools in the LEA to determine the proportional share. Under the CARES Act programs, services are available for all students—public and non-public—without regard to poverty, low achievement, or residence in a participating Title I public school attendance area. An LEA that receives CARES Act funds uses those funds to provide educational services to students in both public and non-public schools through a broad range of allowable activities. Using enrollment to determine the proportional share from which to provide equitable services will contribute to the equitable treatment of children and teachers within the statutory universe of permissible uses for CARES Act dollars by allowing all students and teachers in a non-public school to receive services that are equitable compared to those available to all public school students and teachers. (See ESEA section 1117(a)(3)).
C. How does an LEA calculate the proportional share?
To calculate the proportional share for equitable services under the CARES Act programs, an LEA determines the overall number of children who are enrolled in public schools and non-public schools in the LEA that wish to participate under one or both CARES Act programs. Using the proportion of students who are enrolled in participating non-public schools, the LEA determines the amount of funds available for equitable services based on that proportional share of the LEA’s total allocation under each CARES Act program separately. For example, an LEA receiving $100,000 under the GEER Fund and $900,000 under the ESSER Fund, and with 1,350 public school students and 150 non-public school students, would determine the proportional share as follows:
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EXAMPLE – DETERMINING THE PROPORTIONAL SHARE

Public

Non-Public*

Total

Enrollment

1,350

150

1,500

Proportion

90%

10%

100%

Proportional Share

$90,000

$10,000

$100,000

GEER Fund

Proportional Share

$810,000

$90,000

$900,000

ESSER Fund

*Non-public schools participating under the CARES Act programs.

11. After an LEA has determined the proportional share of funds for equitable services under each CARES Act program, how does it then determine the amount of funds available for services to students and teachers in individual non-public schools?

For consultation purposes, in order to determine what equitable services to provide to students and teachers in a given non-public school, an LEA, after reserving funds that are reasonable and necessary for administering equitable services under the CARES Act programs, would divide the remainder of the proportional share of funds available for equitable services by the total enrollment in non-public schools whose students and teachers will participate in each of the CARES Act programs to obtain a per-pupil amount. The LEA would then multiply that per-pupil amount by the enrollment in an individual non-public school to determine the amount of services the LEA can provide to students and teachers in that school. With agreement between the LEA and appropriate non-public school officials, the LEA may pool funds among a group of non-public schools and provide equitable services to students and teachers in non-public schools within the pool based on need without regard to how the funds were generated. (See ESEA section 1117(b)(1)(J)(i)).

12. Do the requirements in 34 C.F.R. § 200.66 apply to equitable services under the CARES Act programs?

No. The requirements in 34 C.F.R. § 200.66 do not apply to equitable services under the CARES Act programs. 34 C.F.R. § 200.66 is a Title I, Part A regulation that requires an LEA to provide Title I, Part A services that (1) supplement, and in no case supplant, the services that would, in the absence of Title I, Part A services, be available to participating non-public school students; and (2) only meet the needs of participating non-public school students and not the needs of the non-public school or the general needs of children in the non-public school. These provisions are necessary in the Title I, Part A context because equitable services must be supplemental to what non-public students otherwise receive and may only be provided to low-achieving students who reside in a participating Title I public school attendance area and attend a non-public school.

Equitable services under the CARES Act programs are much broader than under Title I, Part A. Equitable services under the CARES Act programs, by definition, may benefit a non-public school, such as purchasing supplies to sanitize and clean the facility, or all students in a non-public school, such as any activity authorized under the ESEA. Unlike Title I, they are not based on residence in a participating Title I public school attendance

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area or limited only to low-achieving students. Moreover, the CARES Act does not have a supplement not supplant requirement.
13. Is a non-public school whose students and teachers receive equitable services under the CARES Act programs a “recipient of Federal financial assistance”?
No. A non-public school whose students and teachers receive equitable services under the CARES Act programs is not a “recipient of Federal financial assistance.” A public agency must control and administer the CARES Act funds; in other words, no funds may go directly to a non-public school. (See Question #5). Thus, a non-public school is not a recipient of Federal financial assistance by virtue of its students and teachers receiving equitable services from an LEA under a CARES Act program. As a result, certain Federal requirements that apply to a recipient of Federal financial assistance are not directly applicable to a non-public school whose students or teachers receive equitable services under the CARES Act programs, unless the school otherwise receives Federal financial assistance for other purposes.
14. What services and benefits under the CARES Act programs are available to nonpublic school students and teachers?
In general, the services and benefits available to non-public school students and teachers are the same as those available to public school students and teachers. Specifically, the ESSER funds that flow to LEAs by formula may be used for a broad range of allowable activities. (See section 18003(d) of the CARES Act). The ESSER funds that an SEA may reserve for State purposes may also be used for a broad range of activities to address issues responding to COVID-19, unless the SEA decides to target them for a specific purpose or population of public and non-public school students. For example, an SEA could target the SEA reserve to provide technology to support distance learning for public and non-public school students from low-income families. (See section 18003(e) of the CARES Act). Similarly, a Governor may target GEER funds that it makes available to an LEA for a specific purpose or population of public and non-public school students. (See section 18002(c)(1) or (3) of the CARES Act).
In sum, equitable services permitted under sections 18002(c)(1) or (3), as applicable, and 18003(d) of the CARES Act must be available to best meet the needs of non-public school students and teachers, as determined through timely and meaningful consultation and consistent with any specific purposes established by a Governor under the GEER Fund or SEA through the SEA reserve under the ESSER Fund, regardless of the specific uses determined by the LEA to meet its own students’ and teachers’ particular needs.
As noted in Question #5, the control of any services or assistance provided to students and teachers in a non-public school, and title to materials, equipment, and property purchased with CARES Act funds, must be in a public agency and a public agency must administer those funds, materials, equipment, and property. A public entity must provide those services either directly or through a contract with a public or private entity.
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Exhibit B

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 Case 3:20-cv-04478-SK Document 24 Filed 07/17/20 Page 1 of 88

1 XAVIER BECERRA Attorney General of California
2 MICHAEL NEWMAN Senior Assistant Attorney General
3 SARAH E. BELTON Supervising Deputy Attorney General
4 REBEKAH A. FRETZ JAMES F. ZAHRADKA II
5 GARRETT M. LINDSEY (SBN 293456) Deputy Attorneys General
6 300 South Spring Street, Suite 1702 Los Angeles, CA 90013
7 Telephone: (213) 269-6402 E-mail: Garrett.Lindsey@doj.ca.gov
8 Attorneys for Plaintiff State of California

9 (List of other Plaintiffs’ counsel continued on next page)

10

IN THE UNITED STATES DISTRICT COURT

11

FOR THE NORTHERN DISTRICT OF CALIFORNIA

12

13

STATE OF MICHIGAN, STATE OF

Civil Case No. 3:20-cv-04478-SK

14 CALIFORNIA, DISTRICT OF

COLUMBIA, STATE OF HAWAII, STATE

15 OF MAINE, STATE OF MARYLAND,

STATE OF NEW MEXICO,

FIRST AMENDED COMPLAINT FOR

16 COMMONWEALTH OF

DECLARATORY AND INJUNCTIVE

PENNSYLVANIA, STATE OF

RELIEF

17 WISCONSIN, THE BOARD OF

EDUCATION FOR THE CITY SCHOOL

18 DISTRICT OF THE CITY OF NEW YORK,

BOARD OF EDUCATION FOR THE CITY

19 OF CHICAGO, CLEVELAND

MUNICIPAL SCHOOL DISTRICT

20 BOARD OF EDUCATION, and SAN

FRANCISCO UNIFIED SCHOOL

21 DISTRICT,

22

Plaintiffs,

23

v.

24 ELISABETH D. DEVOS, IN HER OFFICIAL
25 CAPACITY AS THE UNITED STATES SECRETARY OF EDUCATION, AND UNITED
26 STATES DEPARTMENT OF EDUCATION,
27 Defendants.
28

First Amended Complaint for Declaratory and Injunctive Relief

Case 3:20-cv-04478-SK Document 24 Filed 07/17/20 Page 2 of 88

1 DANA NESSEL Attorney General of Michigan
2 FADWA A. HAMMOUD Solicitor General
3 TONI L. HARRIS NEIL GIOVANATTI
4 Assistant Attorneys General Michigan Department of Attorney General
5 P.O. Box 30758 Lansing, MI 48909
6 (517) 335-7603 HammoudF1@michigan.gov
7 HarrisT19@michigan.gov GiovanattiN@michigan.gov
8 Attorneys for Plaintiff State of Michigan
9 KARL A. RACINE Attorney General of the District of Columbia
10 KATHLEEN KONOPKA Deputy Attorney General, Public Advocacy
11 Division BRENDAN B. DOWNES
12 NICOLE HILL Assistant Attorneys General, Public
13 Advocacy Division Office of the Attorney General for the
14 District of Columbia 441 4th St., N.W. Suite 630S
15 Washington, DC 20001 (202) 724-6610
16 Kathleen.Konopka@dc.gov Attorneys for Plaintiff District of Columbia
17 CLARE E. CONNORS
18 Attorney General of Hawaii HOLLY T. SHIKADA
19 KEVIN M. RICHARDSON Deputy Attorneys General
20 Education Division 235 South Beretania Street, Suite 304
21 Honolulu, HI 96813 (808) 586-1255
22 Kevin.M.Richardson@hawaii.gov Attorneys for Plaintiff State of Hawaii
23 AARON M. FREY
24 Attorney General of Maine SARAH A. FORSTER
25 Assistant Attorney General 6 State House Station
26 Augusta, ME 04333-0006 (207) 626-8866
27 sarah.forster@maine.gov Attorneys for Plaintiff State of Maine
28

BRIAN E. FROSH Attorney General of Maryland STEVEN M. SULLIVAN Solicitor General 200 Saint Paul Place
Baltimore, Maryland 21202 (410) 576-6427 sullivan@oag.state.md.us Attorneys for Plaintiff State of Maryland
HECTOR BALDERAS Attorney General of New Mexico P. CHOLLA KHOURY LISA GIANDOMENICO Assistant Attorneys General Consumer & Environmental Protection Division
New Mexico Attorney General’s Office 201 Third Street NW, Suite 300 Albuquerque, NM 87102 (505) 490-4846 ckhoury@nmag.gov lgiandomenico@nmag.gov Attorneys for Plaintiff State of New Mexico
JOSH SHAPIRO Attorney General of Pennsylvania MICHAEL J. FISCHER Chief Deputy Attorney General
Impact Litigation Section Pennsylvania Office of Attorney General 21 S. 12th Street, 3rd Floor Philadelphia, PA 19107 (215) 560-2171 mfischer@attorneygeneral.gov Attorneys for Plaintiff Commonwealth of Pennsylvania
JOSHUA L. KAUL Attorney General of Wisconsin HANNAH S. JURSS Assistant Attorney General
Wisconsin Department of Justice Post Office Box 7857 Madison, WI 53707 (608) 266-8101 jursshs@doj.state.wi.us Attorneys for Plaintiff State of Wisconsin

First Amended Complaint for Declaratory and Injunctive Relief

Case 3:20-cv-04478-SK Document 24 Filed 07/17/20 Page 3 of 88

1 JAMES E. JOHNSON Corporation Counsel of the City of New
2 York ERIC PROSHANSKY
3 HOPE LU GAIL RUBIN
4 Assistant Corporation Counsel 100 Church Street
5 New York, NY 10007 (212) 356-2032
6 eproshan@law.nyc.gov hlu@law.nyc.gov
7 grubin@law.nyc.gov Attorneys for Plaintiff the Board of
8 Education of the City School District of the City of New York
9 BOARD OF EDUCATION, CITY OF CHICAGO
10 DEPARTMENT OF LAW JOSEPH MORIARTY
11 General Counsel J. ERNEST MINCY
12 Deputy General Counsel for Litigation 1 North Dearborn Street, Suite 900
13 Chicago, IL 60602 (773) 553-1693
14 jemincy1@cps.edu Attorneys for Plaintiff Chicago Board of
15 Education 16 17 18 19 20 21 22 23 24 25 26 27 28

SQUIRE PATTON BOGGS (US) LLP GABRIEL COLWELL (CABN 216783) COLIN R. JENNINGS (OHBN 0068704) W. MICHAEL HANNA (OHBN 0020149) EMILY R. SPIVACK (OHBN 0090777)
555 South Flower Street, Suite 3100 Los Angeles, CA 90071 (213) 624-2500 gabriel.colwell@squirepb.com colin.jennings@squirepb.com mike.hanna@squirepb.com emily.spivack@squirepb.com CLEVELAND MUNICIPAL SCHOOL DISTRICT BOARD OF EDUCATION KEVIN J. BURTZLAFF (OHBN 0039648) Board Attorney and Liaison 1111 Superior Ave E Cleveland, OH 44114 (216) 838-0032 kevin.burtzlaff@clevelandmetroschools.org Attorneys for Plaintiff Cleveland Municipal School District Board of Education
SAN FRANCISCO UNIFIED SCHOOL DISTRICT DANIELLE HOUCK General Counsel SUSANNE NAOMI STARECKI KIM Sr. Deputy General Counsel LEGAL DEPARTMENT 555 Franklin Street, 3rd Floor San Francisco, CA 94102
(415) 241-6216 Kims1@sfusd.edu Attorneys for Plaintiff San Francisco Unified School District

First Amended Complaint for Declaratory and Injunctive Relief

Case 3:20-cv-04478-SK Document 24 Filed 07/17/20 Page 4 of 88

1

INTRODUCTION

2

1. The State of Michigan, the State of California, the District of Columbia, the State of

3 Hawaii, the State of Maine, the State of Maryland, the State of New Mexico, the Commonwealth

4 of Pennsylvania, and the State of Wisconsin (collectively, Plaintiff States or the States), the Board

5 of Education of the City School District of the City of New York (New York City Department of

6 Education), Board of Education for the City of Chicago, Cleveland Municipal School District

7 Board of Education, and San Francisco Unified School District (collectively, Plaintiff LEAs) (and

8 collectively with Plaintiff States, Plaintiffs) bring this action to challenge a rule promulgated by

9 Defendants Secretary Elisabeth D. DeVos and the United States Department of Education (the

10 Department) (collectively, Defendants), unlawfully and erroneously interpreting the Coronavirus

11 Aid, Relief, and Economic Security Act (CARES Act), Public Law 116–136, 134 Stat. 281. The

12 Department’s interpretation will deprive low-income and at-risk students, their teachers, and the

13 public schools that serve them of critical resources to meet students’ educational and social-

14 emotional needs during and after pandemic-related school closures. Plaintiffs will also be harmed

15 by the loss of these critical resources at a time of severe crisis.

16

2. The CARES Act was enacted on March 27, 2020, to address some of the financial

17 challenges faced by Americans as businesses closed, employees lost their jobs, and schools closed

18 their buildings and transitioned to remote learning in an unprecedented effort to slow the spread

19 of the virus. The statute authorizes the allocation of $30.75 billion for elementary and secondary

20 schools and higher education in response to the COVID-19 pandemic, including assisting students

21 to transition to distance learning. The statute directs states to distribute CARES Act funds to

22 local educational agencies (LEAs) in proportion to their allocation under part A of Title I of the

23 Elementary and Secondary Education Act of 1965 (ESEA) in the previous fiscal year. Title I-A

24 funds are allocated to LEAs and schools based on the number of children who are economically

25 disadvantaged. These funds benefit many of the vulnerable students whom the Plaintiff States

26 and LEAs serve, including children with disabilities, migrant children, English language learners,

27 children in residential or day programs for students in the foster care or juvenile justice systems,

28 and homeless children. 1

First Amended Complaint for Declaratory and Injunctive Relief

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1

3. Congress directed LEAs to use a portion of the funds they receive from the CARES

2 Act to provide equitable services to eligible private-school students and teachers in the same

3 manner as provided under Section 1117 of the ESEA. CARES Act § 18005. Under Section

4 1117, LEAs calculate the amount of Title I-A funds reserved for equitable services based on the

5 number of low-income students who attend private schools as a percentage of the total number of

6 low-income students in public and private schools combined. Once the money is apportioned, the

7 LEA then provides equitable services to private-school students who are academically at-risk.

8

4. Section 1117 is clear that LEAs are to use Title I-A funds to provide services to at-

9 risk private-school students, and neither Section 1117 nor the CARES Act allows the funds at

10 issue to be used to provide equitable services to all students enrolled in private schools. Yet,

11 despite these clear mandates and contrary to the will of Congress, the Department grafted its own

12 allocation and eligibility rules on Congress’s directive.

13

5. The Department first issued its interpretation of how LEAs should apportion the

14 CARES Act moneys and which private-school students were eligible for equitable services on

15 April 30, 2020, through a guidance document (Guidance Document).1 The Guidance

16 Document—which was inconsistent with prior Title I guidance issued by the Department less

17 than a year ago—provided that LEAs must apportion funds for equitable services using the total

18 numbers of private and public-school students rather than only low-income students. If every

19 LEA receiving CARES Act funds were required to apportion CARES Act funds in this manner,

20 millions of dollars in CARES Act funding would be diverted from their public schools to the

21 private schools. In addition, the Guidance Document directed LEAs to provide equitable services

22 to all private-school students, regardless of whether the private-school students were low income,

23 were academically at-risk of failing, or resided in Title I school attendance areas. Neither of these

24 mandates is consistent with Section 1117.

25

26

1 The Guidance Document is attached hereto as Exhibit A. The Department removed this

27

original version of the Guidance Document from its website and has posted a different version of the Guidance Document, available at https://oese.ed.gov/files/2020/06/Providing-Equitable-

28 Services-under-the-CARES-Act-Programs-Update-6-25-2020.pdf.

2

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1

6. After widespread pushback regarding the Department’s incorrect and unlawful

2 guidance, the Department doubled-down on its erroneous interpretation of the CARES Act with

3 the publication of an interim final rule entitled Providing Equitable Services to Students and

4 Teachers in Non-public Schools, 85 Fed. Reg. 39,479 (July 1, 2020) (the Equitable Services Rule

5 or Rule).2 The Rule was published as an interim final rule, which is effective upon publication.

6

7. Contrary to the Act, the Department’s Rule requires LEAs to make an untenable

7 choice about how to apportion the CARES Act funds for private-school students, with neither

8 option supported by the relevant statutes: (1) follow the same interpretation contained in the

9 Guidance Document by apportioning funds for equitable services based on the number of all

10 private school children enrolled, rather than low-income private school children as required by

11 Section 1117; or (2) apportion funds for equitable services based on the number of low-income

12 non-public school children, as required under Section 1117, but then incur strict, poison-pill

13 requirements found nowhere in the CARES Act on how the public-school share of the funds can

14 be used. Under either option, all private-school students would still be eligible to receive

15 equitable services, which negates the eligibility requirements for services in Section 1117.

16

8. The first poison-pill “option” for LEAs prohibits them from using the public-school

17 share of the funds for any non-Title I schools. As a result, depending on the district, numerous

18 schools—which, despite not being designated as Title I schools, serve many low-income and at-

19 risk students—are excluded from receiving any funds. This restriction cannot square with the

20 flexibility Congress provided to LEAs to use the funds for all schools in their districts, not only

21 Title I schools. The second requirement cautions the LEAs from using the funds in a way that

22 would result in other federal funds “supplant[ing],” rather than “supplement[ing],” traditional

23 school funding from state and local sources. In effect, this second requirement prohibits many

24 LEAs from using CARES Act funds for existing expenditures, which is nonsensical since filling

25 the gap created by reduced state and local funding is a key purpose of the CARES Act funding.

26 These two poison pill restrictions on the use of the CARES Act funds penalize LEAs for

27

28

2 The Rule is attached hereto as Exhibit B.

3

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1 following the proportional share calculation in Section 1117 (and required by the CARES Act),

2 and push LEAs to apportion funds in accordance with the Department’s Guidance Document—

3 forcing LEAs to grant a higher proportion of funds to private schools, contrary to the CARES

4 Act’s clear mandate. They also undermine the flexibility that Congress intended to grant LEAs

5 when it enacted a broad set of permitted uses for CARES Act funds, which expressly include

6 maintaining continuity of services and continuing to employ existing staff of the local educational

7 agency. See CARES Act §§ 18002(c)(1), 18003(d)(12).

8

9. The Rule is thus inconsistent with and not in accordance with the law. The

9 discrepancy between the plain language of the CARES Act and the Department’s inaccurate

10 interpretations has led to widespread confusion for State Education Agencies (SEAs), LEAs, and

11 private schools across the Nation. The Rule strips funds Congress specifically directed to public

12 schools to support their response to the COVID-19 pandemic and requires that those funds be

13 reallocated, including to affluent private schools, with consideration neither of the private

14 schools’ needs or available resources nor the harms these reallocations cause to public schools.

15 While Congress intended to provide some assistance to private-school students and teachers

16 through the inclusion of equitable services, it intended that assistance go to vulnerable students

17 and used the Title I-A formula and equitable services requirement applicable to those funds to

18 that end.

19

10. The CARES Act does not expressly delegate to the Department the authority to

20 promulgate administrative rules that interpret, let alone completely re-write, the Act’s allocation

21 requirements for moneys provided to private-school students. Nor does the Department’s general

22 rulemaking authority, see 20 U.S.C. § 1221e-3, allow it to impose these restrictions.

23

11. Because Congress unambiguously directed the allocation of money in accordance

24 with Title I-A, Congress neither explicitly nor implicitly left any gaps in the statute that might

25 justify rulemaking by the Department. The Department’s guidance and the Rule are accordingly

26 entitled to no deference.

27

12. The Rule is arbitrary and capricious in several respects.

28 4
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1

13. First, as discussed above, the Department failed to articulate how its position

2 comports with the plain text of section 18005 of the CARES Act. Thus, it must be set aside as

3 based on an incorrect legal premise. See Safe Air for Everyone v. U.S. EPA, 488 F.3d 1088, 1101

4 (9th Cir. 2007).

5

14. Second, the Department failed to adequately explain—consistent with the evidence

6 before it—why it was reversing its own Title I guidance regarding how equitable services under

7 Section 1117 should be provided. See, e.g., Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm

8 Mut. Auto. Ins. Co., 463 U.S. 29, 52 (1983) (requiring agencies to “explain the evidence which is

9 available, and . . . offer a rational connection between the facts found and the choice made . . .

10 [including] justification for rescinding the regulation”); see also Dep’t of Homeland Sec. v.

11 Regents of the Univ. of Cal., 140 S. Ct. 1891, 1913 (2020) (requiring “reasoned analysis to

12 support” rescission of prior policy) (quoting State Farm, 463 U.S. at 42) (punctuation omitted).

13

15. Third, the Department ignored important aspects of the problem, see State Farm, 463

14 U.S. at 43, including, among others, the harms to students, States, and LEAs discussed herein.

15 For example, the Department failed to consider that communities with Title I-eligible schools are

16 likely to experience a greater concentration of difficulties relating to COVID-19, and that

17 therefore Congress intended the flexible uses of the CARES Act funds to be concentrated in these

18 communities’ schools.

19

16. Fourth, the Department took into account factors Congress did not intend it to

20 consider. See id. For example, the Department’s prioritization of support for all private-school

21 students, even those not Title I-A eligible, appears to be based on the erroneous premise that

22 Congress intended to direct these funds to affluent, economically secure private-school students

23 on an equal basis as public schools that educate large populations of at-risk and low-income

24 students. Congress unambiguously expressed clear intent to the contrary by using the Title I-A

25 allocation method, which tracks low-income students.

26

17. Fifth, the Department failed to take into account the reliance interests that its former

27 position generated. The Plaintiff States and LEAs have relied on the Department’s prior

28 interpretations of Title I equitable services, and there is no indication that the Department took 5
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1 this into account when making its decision. “When an agency changes course . . . it must be

2 cognizant that longstanding policies may have engendered serious reliance interests that must be

3 taken into account. It would be arbitrary and capricious to ignore such matters.” Regents, 140 S.

4 Ct. at 1913 (citations and punctuation omitted).

5

18. Sixth, the Department’s ever-changing position has generated an “[u]nexplained

6 inconsistency,” and the Department has not shown any awareness of its changed position. Nat’l

7 Cable & Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S. 967, 981 (2005).

8

19. In addition, the Department flouted the procedural steps required under the

9 Administrative Procedure Act (APA) for the promulgation of the Rule, as the Department did not

10 have good cause for issuing the Rule as an interim final rule. 5 U.S.C. § 553(b)(B); see, e.g.,

11 California v. Azar, 911 F.3d 558, 576 (9th Cir. 2018) (“[A]n agency’s desire to eliminate more

12 quickly legal and regulatory uncertainty is not by itself good cause.”).

13

20. The Rule also violates core separation of powers principles in the Constitution.

14 “[W]here previously appropriated money is available for an agency to perform a statutorily

15 mandated activity,” separation of powers principles and the Spending Clause prevent agencies

16 from “ignor[ing] statutory mandates or prohibitions.” In re Aiken County, 725 F.3d 255, 260

17 (D.C. Cir. 2013); see also City & Cty. of San Francisco v. Trump, 897 F.3d 1225, 1232 (9th Cir.

18 2018) (agencies are without “[the] unilateral authority” to “thwart congressional will by canceling

19 appropriations passed by Congress”) (internal quotation marks and citations omitted). Congress

20 intended to deliver LEAs “need[ed] funding flexibility due to the disruption in the academic year

21 from COVID-19.” 166 Cong. Rec. H1856 (Mar. 27, 2020) (statement of Rep. Underwood).

22 Congress intended that LEAs have this funding to “help alleviate the challenges educators,

23 students and families are struggling with in light of school closures” particularly those “students

24 with disabilities, English language learners, and students experiencing homeless.” 166 Cong.

25 Rec. E340 (Mar. 31, 2020) (statement of Rep. Jayapal).

26

21. Relatedly, the Rule violates the Spending Clause: (1) it is contrary to Congress’s

27 plainly expressed intent in the CARES Act; (2) Congress has not “unambiguously” imposed the

28 requirements of the Rule, South Dakota v. Dole, 483 U.S. 203, 207 (1987) (internal citations 6
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1 omitted, brackets in original); and (3) it is an improper “post acceptance” restriction on the States’

2 and LEAs’ use of the funds, Pennhurst State Sch. & Hosp. v. Halderman, 451 U.S. 1, 25 (1981).

3

22. Further, the additional funding requirements on schools that the Department would

4 impose under one of the so-called “choices” provided in the Rule violate the plain language of the

5 CARES Act requiring that funds be allocated in the same manner as required in Section 1117 and

6 specifying that funds could be used to maintain existing operations and retain existing personnel.

7 The Department’s allocation scheme will dilute the per-pupil amount available to all public

8 schools by directing CARES Act funds to support private-school students not eligible for

9 equitable services.

10

23. To avert irreparable injury to the Plaintiff States, Plaintiff LEAs, and the students,

11 teachers, and schools within their states and school districts, Plaintiffs bring this suit to declare

12 unlawful and enjoin the Department’s Guidance Document and the Rule.

13

JURISDICTION AND VENUE

14

24. This action arises under the APA, 5 U.S.C. §§ 553, 701-06, and the U.S. Constitution.

15 This Court has subject matter jurisdiction under 28 U.S.C. §§ 1331 and 1346.

16

25. This Court has the authority to issue declaratory relief, injunctive relief, and other

17 relief pursuant to the Declaratory Judgment Act, 28 U.S.C. §§ 2201-02, and the APA, 5 U.S.C. §§

18 702, 705-06.

19

26. This is a civil action in which Defendants are agencies of the United States or officers

20 of such an agency. Venue is proper in this Court because a substantial part of the events giving

21 rise to this action occurred in this district. See 28 U.S.C. § 1391(e)(1).

22

PLAINTIFFS

23

27. Plaintiff State of Michigan is a sovereign state of the United States of America. This

24 action is being brought on behalf of the State by Attorney General Dana Nessel pursuant to her

25 statutory authority. Mich. Comp. Laws § 14.28.

26

28. Plaintiff State of California is a sovereign state of the United States of America. This

27 action is being brought on behalf of the State by California Attorney General Xavier Becerra, the

28 State’s chief law officer, Cal. Const., art. V, § 13, who has the duty to see that the laws of the 7
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1 State are uniformly and adequately enforced, and Governor Gavin Newsom, the State’s chief

2 executive officer, who is responsible for overseeing the operations of the State and ensuring that

3 its laws are faithfully executed, Cal. Const., art. V, § 1.

4

29. Plaintiff District of Columbia is a sovereign municipal corporation organized under

5 the Constitution of the United States. It is empowered to sue and be sued, and it is the local

6 government for the territory constituting the permanent seat of the federal government. The

7 District is represented by and through its chief legal officer, the Attorney General for the District

8 of Columbia, Karl A. Racine. The Attorney General has general charge and conduct of all legal

9 business of the District and all suits initiated by and against the District and is responsible for

10 upholding the public interest. D.C. Code § 1-301.81.

11

30. Plaintiff State of Hawaii is a sovereign state of the United States of America. The

12 Attorney General is the chief legal officer and chief law enforcement officer of the State of

13 Hawaii. The Attorney General’s powers and duties include appearing for and representing the

14 State “in all the courts of record, in all cases criminal or civil in which the State may be a party, or

15 be interested, and may in like manner appear in the district courts in such cases.” Haw. Rev. Stat.

16 § 28-1. Hawaii is represented by its Attorney General, Clare E. Connors, who is authorized to file

17 civil actions to protect Hawaii’s rights and interests in state and federal courts.

18

31. Plaintiff State of Maine is a sovereign state of the United States of America. The

19 Attorney General of Maine, Aaron M. Frey, is a constitutional officer with the authority to

20 represent the State of Maine in all matters and serves as its chief legal officer with general charge,

21 supervision, and direction of the State’s legal business. Me. Const. art. IX, § 11; Me. Rev. Stat.,

22 tit. 5, §§ 191 et seq. The Attorney General’s powers and duties include acting on behalf of the

23 State and the people of Maine in the federal courts on matters of public interest. The Attorney

24 General has the authority to file suit to challenge action by the federal government that threatens

25 the public interest and welfare of Maine residents as a matter of constitutional, statutory, and

26 common-law authority.

27

32. Plaintiff State of Maryland is a sovereign state of the United States of America. The

28 State is represented by and through the Attorney General of Maryland, its chief legal officer with 8
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1 general charge, supervision, and direction of the State’s legal business. The Attorney General’s

2 powers and duties include acting on behalf of the State and the people of Maryland in the federal

3 courts on matters of public concern. Under the Constitution of Maryland, and as directed by the

4 Maryland General Assembly, the Attorney General has the authority to file suit to challenge

5 action by the federal government that threatens the public interest and the welfare of Maryland

6 residents. Md. Const. art. V, § 3(a)(2); 2017 Md. Laws, Joint Resolution 1.

7

33. Plaintiff State of New Mexico is a sovereign state of the United States of America.

8 New Mexico is represented by its Attorney General, Hector Balderas, who is authorized to assert

9 the State’s interests in state and federal courts.

10

34. Plaintiff the Commonwealth of Pennsylvania is a sovereign state of the United States

11 of America. This action is brought on behalf of the Commonwealth by Attorney General Josh

12 Shapiro, the “chief law officer of the Commonwealth.” Pa. Const. art. IV, § 4.1. Attorney

13 General Shapiro brings this action on behalf of the Commonwealth pursuant to his statutory

14 authority under 71 Pa. Stat. § 732-204.

15

35. Plaintiff State of Wisconsin is a sovereign state of the United States of America and

16 brings this action by and through its Attorney General, Joshua L. Kaul, who is the chief legal

17 officer of the State of Wisconsin and has the authority to file civil actions to protect Wisconsin’s

18 rights and interests. See Wis. Stat. § 165.25(1m). The Attorney General’s powers and duties

19 include appearing for and representing the State, on the governor’s request, “in any court or

20 before any officer, any cause or matter, civil or criminal, in which the state or the people of this

21 state may be interested.” Id.

22

36. Plaintiff Board of Education of the City School District of the City of New York

23 (a/k/a the New York City Department of Education and hereafter the NYCDOE) is a city school

24 district governed by Article 52-A of New York Education Law. NYCDOE is the largest public

25 school district in the nation. It serves about 1.1 million students in approximately 1,600 schools.

26 The NYCDOE has standing to bring this action because the Rule harms the NYCDOE’s

27 economic and proprietary interests, and inhibits its ability to provide its students, teachers, and

28 9
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1 schools the essential support and services needed during and in response to the COVID-19

2 pandemic.

3

37. Plaintiff Board of Education for the City of Chicago (CBOE), also known as the

4 Chicago Public Schools (CPS), is a city school district governed by the School Code of the State

5 of Illinois. CBOE is the third largest public-school district in the nation. It serves about 360,000

6 students in approximately 600 schools. The CBOE has standing to bring this action because the

7 Rule harms the CBOE’s economic and proprietary interests, and inhibits its ability to provide its

8 students, teachers, and schools the essential support and services needed during and in response to

9 the COVID-19 pandemic.

10

38. Plaintiff Cleveland Municipal School District Board of Education (CMSD) is a

11 municipal school district governed by Title 33 of the Ohio Revised Code. CMSD is the second-

12 largest school district in Ohio, serving approximately 37,700 students in 103 schools. CMSD has

13 been a leader in innovating creative approaches to urban education, and has developed extensive

14 partnerships with its community to further its students’ success. CMSD has standing to bring this

15 action because the Rule harms CMSD’s economic and proprietary interests, and interferes with its

16 ability to provide its students, teachers, schools and community the essential support and services

17 needed during and in response to the COVID-19 pandemic.

18

39. Plaintiff San Francisco Unified School District (SFUSD or San Francisco) is a LEA

19 and one of the largest school districts in California, operating pursuant to the laws of the State of

20 California. SFUSD serves approximately 52,468 students, of whom 28,556 are

21 socioeconomically disadvantaged, 15,028 are English Learners, 2,064 are homeless, 6,275 are

22 students with disabilities, and 254 are foster youth. SFUSD oversees approximately 133 schools

23 of which about 53 qualify as Title I schools. SFUSD’s offices are located on Franklin Street in

24 San Francisco, California.

25

40. In filing this action, Plaintiffs seek to redress harms to their interests as recipients of

26 CARES Act emergency relief funding. Plaintiffs are affected by the Department’s interpretation

27 of the CARES Act through the Rule and Guidance Document, are directly injured by them, and

28 the relief requested will redress their injuries. 10
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1

DEFENDANTS

2

41. Defendant Elisabeth D. DeVos is Secretary of the United States Department of

3 Education and is sued in her official capacity pursuant to 5 U.S.C. § 702. Her principal address is

4 400 Maryland Avenue, S.W., Washington, D.C. 20202.

5

42. Defendant the United States Department of Education is an executive agency of the

6 United States of America pursuant to 5 U.S.C. § 101, and a federal agency within the meaning of

7 28 U.S.C. § 2671. As such, it engages in agency action and is named as a defendant in this action

8 pursuant to 5 U.S.C. § 702. Its principal address is 400 Maryland Avenue, S.W., Washington,

9 D.C. 20202.

10

43. Secretary DeVos is responsible for carrying out the duties of the Department of

11 Education under the Constitution of the United States of America and relevant statutes, including

12 the CARES Act and the ESEA.

13 14 I. 15

FACTUAL ALLEGATIONS COVID-19 PANDEMIC 44. COVID-19 is a public health emergency that has caused and continues to have

16 devastating impacts on countless individuals, families, communities, businesses, and

17 governments. Our Nation’s educational agencies and school systems have had to respond

18 urgently to the crisis and take drastic measures to protect the health and safety of their students

19 and staff.

20

45. Plaintiffs’ educational agencies and school districts have been forced to transition to

21 remote delivery of instruction, implement new health and safety guidelines, and meet the novel

22 and challenging needs of their students arising from the pandemic, including supports for their

23 vulnerable populations beyond the provision of core educational services. These efforts include,

24 but are not limited to, serving meals to qualifying students and families; providing special

25 education and related services to students with disabilities remotely; enabling English learners

26 and migrant students to access remote learning by providing accessible technology, online

27 instruction and translations; and offering computing devices and connectivity to low-income

28 students at no cost. 11
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1

46. Compounding the programmatic challenges in serving students during the pandemic

2 is the uncertainty and economic stress caused by COVID-19 on the Plaintiff States, their SEAs,

3 and LEAs. Public education largely depends on state funding. State budgets have been hit hard

4 by dramatic reductions in revenues from state sales and income taxes caused by the COVID-19

5 pandemic, as well as increased expenditures necessary for the public health response. This

6 revenue decline inevitably impacts the amount of state aid available to school districts. And yet,

7 school districts have incurred and will incur significant costs related to the pandemic, including

8 paying for deep-cleaning campuses, obtaining personal protective equipment for employees,

9 purchasing distance learning materials as well as new software and hardware, and preparing and

10 delivering meals to students and families.

11 II. THE CARES ACT

12

47. In late March 2020, the United States Congress acted to address the fiscal impact of

13 the COVID-19 outbreak. It passed legislation, signed by the President, including appropriations

14 to federal agencies with explicit direction for distributing the funding.

15

48. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Pub. L. No.

16 116–136, 134 Stat. 281, enacted on March 27, 2020, appropriated funds for K-12 and higher

17 education in response to the economic impact of the COVID-19 pandemic.

18

49. Specifically, Congress created the Education Stabilization Fund to help educational

19 entities across the country “prevent, prepare for, and respond to coronavirus,” and appropriated

20 $30.75 billion for the Fund. CARES Act § 18001.

21

50. Congress tasked the Department with allocating the moneys appropriated to the

22 Education Stabilization Fund through the CARES Act. The vast majority of the moneys in the

23 Education Stabilization Fund are divided into three separate funds, each with its own rules for

24 distribution and use: the Governor’s Emergency Education Relief Fund (GEER), the Elementary

25 and Secondary School Emergency Relief Fund (ESSER), and the Higher Education Emergency

26 Relief Fund. Id. §§ 18002-18004. The funds are allocated as follows: 9.8% for GEER; 43.9% for

27 ESSER; and 46.3% for the Higher Education Emergency Relief Fund. Id. § 18001(b)(1)-(3).

28 12
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1

51. According to the Department’s website, $2,953,230,000 was allocated for the GEER

2 Fund and $13,229,265,000 for the ESSER Fund.3

3

A. The Governor’s Emergency Education Relief (GEER) Fund

4

52. The CARES Act directs the Department to provide emergency grants from the GEER

5 Fund to state governors. CARES Act § 18002(a).

6

53. The Department must allocate the GEER Fund moneys to governors as follows: (1)

7 60% based on the “relative population of individuals aged 5 through 24” in each state, and (2)

8 40% based on the state’s “relative number of children counted under section 1124(c) of the

9 [ESEA].” Id. § 18002(b). Section 1124(c) of the ESEA describes the children to be counted for

10 purposes of distributing funds under Part A, Title I of the ESEA, commonly referred to as Title I-

11 A funds. Children to be counted in this section include children 5 to 17 who are “from families

12 below the poverty level,” “in institutions for neglected and delinquent children . . . or being

13 supported in foster homes with public funds,” and “from families above the poverty level” but

14 who receive payments under the Social Security Act, Title IV, Part A (Temporary Assistance for

15 Needy Families). 20 U.S.C. § 6333(c)(1)(A)-(C), (c)(4)(A).

16

54. Governors, along with SEAs, may use GEER funds for three purposes:

17

(1) To provide emergency support through grants to local educational agencies

that the State educational agency deems have been most significantly impacted by

18

coronavirus to support the ability of such local educational agencies to continue to

provide educational services to their students and to support the on-going

19

functionality of the local educational agency;

20

(2) To provide emergency support through grants to institutions of higher

education serving students within the State that the Governor determines have been

21

most significantly impacted by coronavirus to support the ability of such institutions

to continue to provide educational services and support the ongoing functionality of

22

the institution; and

23

(3) To provide support to any other institution of higher education, local

educational agency, or education-related entity within the State that the Governor

24

deems essential for carrying out emergency educational services to students for

authorized activities . . . the provision of child care and early childhood education,

25

social and emotional support, and the protection of education-related jobs.

26

3 U.S. Dep’t of Educ., Governor’s Emergency Education Relief Fund, State Allocation

27

Table, available at https://oese.ed.gov/files/2020/04/GEER-Fund-State-Allocations-Table.pdf; U.S. Dep’t of Educ., Elementary and Secondary School Emergency Relief Fund, State Allocation

28 Table, available at https://oese.ed.gov/files/2020/04/ESSER-Fund-State-Allocations-Table.pdf.

13

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1 CARES Act § 18002(c)(1)-(3).

2

55. While they are directed per the above criteria to focus the GEER funds on the most

3 significantly impacted districts, governors may allocate moneys from the GEER Fund to any

4 LEA, regardless of whether the LEA or its public schools receive Title I-A funds. Moreover,

5 there are no federal restrictions on the use of funds by the LEAs and any other restrictions on the

6 use of funds is left to the discretion of each state. The CARES Act provides broad flexibility to

7 the LEAs to use the moneys “to provide educational services to their students and to support the

8 on-going functionality of the local educational agency.” Id. § 18002(c)(1), (3).

9

56. Plaintiffs expect to receive the following amounts from the GEER Fund:4

10

a. Michigan: $89,432,673;

11

b. California: $355,227,235;

12

c. District of Columbia: $5,807,678;

13

d. Hawaii: $9,993,387;

14

e. Maine: $9,273,552;

15

f. Maryland: $45,657,990;

16

g. Pennsylvania: $104,418,240;

17

h. New Mexico: $22,262,663;

18

i. Wisconsin: $46,550,411;

19

j. New York City: $98,000,000; and

20

k. San Francisco: $3,300,000 (estimated).

21 At this time, it is unclear the amount of GEER funds, if any, that Chicago or Cleveland will

22 receive.

23

B. Elementary and Secondary School Emergency Relief (ESSER) Fund

24

57. Through the CARES Act, Congress also directed the Department to provide

25 emergency grants from the ESSER Fund to SEAs. CARES Act § 18003(a).

26

27

28

4 GEER State Allocation Table, supra note 3.

14

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1

58. The Department is required to allocate the ESSER Fund moneys to SEAs “in the

2 same proportion as each State received under [Title I-A] in the most recent fiscal year.” Id. §

3 18003(b). Allocation of Title I-A funds to States is governed by the formulas included in 20

4 U.S.C. §§ 6332-39, and is based primarily on the numbers of children from low-income families

5 and foster children in each state’s LEAs.

6

59. The CARES Act requires at least 90 percent of the moneys received by the SEAs

7 from the ESSER Fund to be sub-granted to LEAs within the state. Id. § 18003(c). Like the

8 Department’s allocation to the states, the SEAs are to sub-grant the funds to LEAs “in proportion

9 to the amount of funds such local educational agencies and charter schools that are local

10 educational agencies received under [Title I-A] in the most recent fiscal year.” Id.

11

60. The Department issued guidance on May 8, 2020 discussing the ESSER allocations

12 and LEAs’ eligibility, which acknowledged that LEAs are only eligible for the ESSER funding to

13 the extent they participate in the Title I-A program.5 In other words, moneys from the ESSER

14 Fund are designated, through the SEAs, for LEAs that receive Title I-A funds, which in turn

15 support those public schools with populations of economically-disadvantaged children in each

16 state. LEAs that do not receive Title I-A funds (generally, LEAs without significant numbers of

17 low-income students) are not eligible for the ESSER Funds.

18

61. LEAs may use the moneys from the ESSER Fund for twelve broad purposes, as

19 described in the CARES Act. See CARES Act § 18003(d). Like the GEER Fund, there are no

20 restrictions in the statutory language on which schools within the eligible LEAs may receive the

21 funds, regardless of whether the public school receives Title I-A funds. These funds can be used

22 for expressly broad purposes, including “[o]ther activities that are necessary to maintain the

23 operation of and continuity of services in [LEAs] and continuing to employ existing staff of the

24 [LEA],” i.e., to support any operation, service, or staff existing prior to the pandemic. Id. §

25 18003(d)(12).

26

5 U.S. Dep’t of Educ., Frequently Asked Questions about the Elementary and Secondary

27

School Emergency Relief Fund (ESSER) (May 5, 2020), available at https://oese.ed.gov/files/2020/05/ESSER-Fund-Frequently-Asked-Questions.pdf.

28

15

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1

62. For the SEAs to receive the ESSER funds from the Department, the Plaintiff States’

2 SEAs were required to complete and submit a Certification and Agreement form.6

3

63. Within the Certification and Agreement form, the Plaintiff SEAs are required to:

4

[A]cknowledge and agree that the failure to comply with all Assurances and

5

Certifications in this Agreement, all relevant provisions and requirements of the CARES Act, Pub. L. No. 116-136 (March 27, 2020), or any other applicable law or

6

regulation may result in liability under the False Claims Act, 31 U.S.C. § 3729, et

seq.; OMB Guidelines to Agencies on Governmentwide Debarment and Suspension

7

(Nonprocurement) in 2 CFR part 180, as adopted and amended as regulations of the

8

Department in 2 CFR part 3485; and 18 USC § 1001, as appropriate.

Certification and Agreement at 1.

9

64. Within the specific assurances and certifications, the SEAs are required to ensure

10

that:

11

12

[] LEAs receiving ESSER funds will provide equitable services to students and teachers in non-public schools as required under 18005 of Division B of the CARES

13

Act.

14

[] [A]n LEA receiving ESSER funds will provide equitable services to students and teachers in non-public schools located within the LEA in the same manner as

15

provided under section 1117 of the ESEA, as determined through timely and meaningful consultation with representatives of non-public schools.

16 Id. at 2.

17

65. Each of the Plaintiff States’ SEAs submitted a Certification and Agreement to the

18 Department to secure the ESSER Funds for their states.

19

66. The Department also requires SEAs to submit quarterly reporting regarding how the

20 SEA and the LEAs used the ESSER funds. Id. at 3; see also CARES Act § 15011(b)(2).

21

67. From the ESSER Fund, Plaintiffs each received or expect to receive the following

22 amounts:7

23

a. Michigan: $389,796,984;

24

b. California: $1,647,306,127;

25

6 U.S. Dep’t of Educ., Certification and Agreement for Funding under the Education 26 Stabilization Fund Program Elementary and Secondary School Emergency Relief Fund (ESSER

27

Fund), CFDA Number 84.425D (Apr. 24, 2020), available at https://oese.ed.gov/files/2020/04/ESSERF-Certification-and-Agreement-2.pdf.

28

7 ESSER State Allocation Table, supra note 3.

16

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1

c. District of Columbia: $42,006,354;

2

d. Hawaii: $43,385,229;

3

e. Maine: $43,793,319;

4

f. Maryland: $187,050,652;

5

g. New Mexico: $108,574,786;

6

h. Pennsylvania: $523,807,198;

7

i. Wisconsin: $174,777,774;

8

j. New York City: $619,000,000;

9

k. Chicago: $206,000,000 (estimated);

10

l. Cleveland: $31,200,000; and

11

m. San Francisco: $10,511,000 (estimated).

12

C. Equitable Services for Private-School Students and Teachers Required by

the CARES Act. 13

14

68. The CARES Act requires that LEAs that receive moneys from the GEER Fund and/or

15 ESSER Fund must allocate some of the moneys to provide “equitable services” to students and

16 teachers at private schools. CARES Act § 18005(a). Crucial to this action, the CARES Act

17 specifies that each LEA “shall provide equitable services in the same manner as provided under

18 Section 1117 of the ESEA of 1965 to students and teachers in non-public schools.” Id. (emphasis

19 added).

20

69. Section 1117 of the ESEA, 20 U.S.C. § 6320, requires LEAs to allocate a portion of

21 their Title I-A funds to provide equitable services to eligible students and teachers at private

22 schools. Section 1117 calculates the proportionate share of funds to be used for equitable

23 services “based on the number of children from low-income families who attend private schools”

24 and reside in the “participating school attendance areas” (i.e., the geographic area in which

25 children are normally served by a Title I-A school). 20 U.S.C. § 6320(a)(4)(A); see also 20

26 U.S.C. § 6313(a)(2) (defining “school attendance area”). Services are then provided to those

27 private-school students identified “as failing, or most at risk of failing, to meet State academic

28 standards.” 20 U.S.C. § 6320(a) (incorporating the definition of “eligible children” from 20 17
First Amended Complaint for Declaratory and Injunctive Relief

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1 U.S.C. § 6315(c)). In other words, the LEAs must provide equitable services only to low-

2 achieving children who attend private schools and reside in a Title I-A school attendance area.

3 Id. §§ 6315(c), 6320(a).

4

70. The Department’s Title I-A guidance for providing equitable services under Section

5 1117 to private-school students—issued under the current administration less than a year ago—

6 confirms that equitable services should only be provided to at-risk students who reside in Title I

7 public school attendance areas. As stated in that document: “to be eligible for Title I services, a

8 private school child must reside in a participating Title I public school attendance area and must

9 be identified by the LEA as low achieving on the basis of multiple, educationally related,

10 objective criteria.”8

11

71. While services are based on low-achievement and residence in a Title I-A school

12 attendance area, the amount of money LEAs are required to set aside under Section 1117 of the

13 ESEA is based on the number of economically disadvantaged students attending private schools

14 who reside in the LEA’s attendance area. 20 U.S.C. § 6320(c).

15

72. Again, it has been the Department’s own position that, under Section 1117 of the

16 ESEA, funding for equitable services should be based on the number of children in private

17 schools who are economically disadvantaged or in foster care—the LEAs should “determine an

18 accurate count of children from low-income families who attend public and private schools and

19 reside in participating Title I public school attendance areas in order to allocate the proportional

20 share.”9

21

73. Notably, the CARES Act does not require that LEAs provide equitable services in the

22 same manner as Section 8501 of the ESEA, a general provision that measures equitable services

23 based on proportional total enrollments. 20 U.S.C. § 7881(b). Rather, the CARES Act

24 specifically references Section 1117. By referencing Section 1117, Congress explicitly and

25

8 U.S. Dep’t of Educ., Title I, Part A of the Elementary and Secondary Education Act of

1965, as amended by the Every Student Succeeds Act: Providing Equitable Services to Eligible

26 Private School Children, Teachers, and Families Updated Non-Regulatory Guidance (Oct. 7,

27

2019), p. 30, available at https://www2.ed.gov/about/inits/ed/non-publiceducation/files/equitable-services-guidance-100419.pdf.

28

9 Id. at 19.

18

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1 clearly directed LEAs to provide equitable services only based on the number of low-income

2 private-school students, not all private-school students, as would have been required had the

3 CARES Act instead referenced Section 8501.

4 III. THE DEPARTMENT’S APRIL 30, 2020 GUIDANCE DOCUMENT

5

74. On April 30, 2020, the Department issued the Guidance Document, titled Providing

6 Equitable Services to Students and Teachers in Non-Public Schools Under the CARES Act

7 Programs. See Guidance Document, Ex. A.

8

75. The Guidance Document advises LEAs to (i) determine the allocation of funds for

9 equitable services based on all students enrolled in non-public schools, rather than only

10 economically disadvantaged students, and (ii) ignore Section 1117’s eligibility requirements for

11 private-school students to receive services, including residence in a Title I-A school attendance

12 area and low achievement.

13

A. Determining the Proportional Share of Funds to Be Reserved for Equitable

Services 14

15

76. In section 10 of the Guidance Document, the Department incorrectly states that an

16 LEA must calculate the proportional share available for equitable services from the comparative

17 enrollments of all students in public and private schools in the district, rather than the

18 comparative enrollments of low-income students, as required by Section 1117(a)(4)(A)(i).

19 Guidance Document, Ex. A at 6-7; see also 20 U.S.C. § 6320(a)(4)(A)(i).

20

77. Essentially, the guidance rejects the calculation of the proportionate share under

21 Section 1117 that Congress specified in the CARES Act and instead adopts the calculation in

22 Section 8501, which drastically inflates the amount of CARES Act funds required to be allocated

23 for services for private-school students and decreases the amount of CARES Act funds available

24 for public-school students.

25

78. Under the Department’s Guidance Document, the share of funds diverted from public

26 schools to private schools in many LEAs is substantial.

27

28 19
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1

B. Eligibility Requirements for Private-School Students to Receive CARES

Act Equitable Services

2

3

79. In section 9 of the Guidance Document, the Department erroneously interprets the

4 CARES Act as requiring that “[a]ll students and teachers in a non-public school are eligible for

5 equitable services under the CARES Act programs.” Guidance Document, Ex. A at 5.

6

80. The Department cites no section of the CARES Act that requires—or even suggests—

7 that all students and teachers at non-public schools are eligible for equitable services.

8

81. The plain language of the CARES Act makes clear that LEAs that receive GEER or

9 ESSER funds must provide equitable services “in the same manner as provided under section

10 1117 of the ESEA.” CARES Act § 18005(a) (emphasis added). And Section 1117 of the ESEA

11 requires LEAs to provide equitable services for eligible, at-risk children enrolled in non-public

12 schools who reside in attendance areas where public schools qualify for Title I-A funding, rather

13 than all students enrolled. 20 U.S.C. § 6320(a)(1).

14

82. Section 7 of the Guidance Document misinterprets the requirement under § 18005(a)

15 of the CARES Act that equitable services be provided “in the same manner as provided under

16 section 1117 of the ESEA.” See Guidance Document, Ex. A at 3-5. Contrary to the Act, this

17 section of the Guidance Document states that this requirement in the CARES Act “necessitates

18 that the Department interpret how the requirements of section 1117 apply to the CARES Act

19 programs” because “an LEA under the CARES Act programs may serve all non-public-school

20 students and teachers without regard to family income, residency, or eligibility based on low

21 achievement.” Id. at 3. But Section 18005(a) of the CARES Act does not necessitate any

22 interpretation by the Department. Instead, the plain language of the Act makes clear that, while

23 LEAs have discretion in spending money for public schools, Congress intended that the LEAs

24 should provide equitable services to private schools under the CARES Act “in the same manner”

25 as they do for at-risk students under Title I-A.

26

83. Also, in section 7 of the Guidance Document, the Department purports to

27 “reconcile[]” various subsections of Section 1117 of the ESEA using an erroneous and

28 incongruous interpretation of the Act. Guidance Document, Ex. A at 3. For example, after noting 20

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1 that Section 1117(a)(1) of the ESEA requires LEAs to “provide equitable services to low-

2 achieving students,” the Department nevertheless states that “an LEA may provide equitable

3 services . . . to any students and teachers in non-public schools.” Id. The Department provides no

4 explanation or basis for this distinction.

5

84. The Guidance Document’s conclusion that the non-public proportion must be

6 calculated based on total enrollments, rather than enrollment of low-income students, and its

7 interpretation of the requirements for equitable services under § 18005(a) of the CARES Act are

8 arbitrary and capricious, misstate and misapply the law as written, and exceed the Department’s

9 authority.

10

C. Reaction to the Department’s Guidance Document

11

85. The Guidance Document faced immediate backlash by Congressional leaders, SEAs,

12 and national education groups due to its incorrect interpretation of the CARES Act.

13

86. On May 5, 2020, the Council of Chief State School Officers (CCSSO), a nationwide

14 organization of public officials who head SEAs, wrote a letter to urge Secretary DeVos to clarify

15 the Guidance Document to align it with the CARES Act’s requirements for equitable services.10

16 The CCSSO’s letter specifically requested that the Department issue new guidance to “advise

17 LEAs to look at the percentage of FY2019 Title I-A funds they set aside for equitable services

18 and apply that percentage to ESSER Funds.”11 Secretary DeVos responded to CCSSO’s letter on

19 May 22, 2020, rejecting its request to clarify the Guidance Document in accordance with the plain

20 text of the CARES Act.12 Secretary DeVos stated that if LEAs “insist on acting contrary to the

21 Department’s stated position, they should, at a minimum, put into an escrow account the

22 difference between the amount generated by the proportional-student enrollment formula and the

23

24

10 Letter from Carissa Moffat Miller, CCSSO, to Betsy DeVos, U.S. Sec’y of Educ. (May 5, 2020), available at https://ccsso.org/sites/default/files/2020-05/DeVosESLetter050520.pdf.

25

11 Id.

26

12 Letter from Betsy DeVos, U.S. Sec’y of Educ., to Carissa Moffat Miller, CCSSO (May 22, 2020), available at https://ccsso.org/sites/default/files/2020-

27

06/Secretary%20DeVos%20Response%20to%20Carrisa%20Moffat%20Miller%205%2022%202 0.pdf.

28

21

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1 Title I, Part A formula.”13 The instruction to put funds in escrow is nonsensical given the crisis,

2 and clearly inconsistent with the intent of the CARES Act, which is to provide funding

3 expeditiously to LEAs to address their immediate needs in light of the COVID-19 pandemic.

4

87. Additionally, multiple SEAs published memoranda and guidance to their LEAs

5 instructing the LEAs to follow the plain text of the CARES Act and not the Department’s

6 Guidance Document.14 For example, on May 12, 2020, the Indiana Department of Education

7 published a memorandum for its LEAs, instructing the LEAs to disregard the Department’s

8 Guidance Document and “enact[] the CARES Act as written in the law . . . including the

9 provision to administer equitable services according to Sec. 1117 of the [ESEA].”15 The

10 memorandum described its decision as “ensur[ing] the funds are distributed according to

11 Congressional intent and a plain reading of the law, which prioritizes communities and schools

12 with high-poverty who are at most risk and in need of additional funds.”16

13

88. On May 20, 2020, Chairman Bobby Scott of the House Committee on Education and

14 Labor; Chairwoman Rosa DeLauro of the House Subcommittee on Labor, Health, Human

15 Services, and Related Agencies; and Ranking Member Patty Murray of the Senate Committee on

16 Health, Education, Labor, and Pensions wrote to Secretary DeVos, to urge the Department to

17

13 Id.

18

14 See, e.g., Penn. Dep’t of Educ., Letter from Pedro Rivera, Sec’y of Educ., to Frank Brogan, Asst. Sec’y for Elementary and Secondary Educ. (May 7, 2020), available at

19

https://www.education.pa.gov/Documents/K12/Safe%20Schools/COVID/CARESAct/Letter%20to%20Secretary%20Brogan.pdf; Mem. from

20

N.M. Pub. Educ. Dep’t, Funds available under Coronavirus Aid, Relief and Economic Security (CARES) Act through the Elementary and Secondary School Education Relief Fund (ESSER),

21

Index 24301 (May 14, 2020), available at https://webnew.ped.state.nm.us/wpcontent/uploads/2020/05/CARES-Act-memo-ESSER-Funds-2020-05-14-Final.pdf; Miss. Dep’t

22

of Educ., CARES Act Equitable Services, EdUpdate (May 21, 2020), available at https://msachieves.mdek12.org/cares-act-equitable-services/; Maine Dep’t of Educ., Priority

23

Notice, CARES Act: Frequently Asked Questions (May 27, 2020), available at https://mailchi.mp/maine/cu5lemq6y0-1321452; Mem. from Ill. St. Board of Educ. (Mar. 31,

24

2020), available at https://www.isbe.net/Documents/CARES-Act-District-Info-3-31-20.pdf; Mem. from Conn. St. Board of Educ., (June 8, 2020), available at https://portal.ct.gov/-

25 /media/SDE/Digest/2019-20/Equitable-services-under-ESSERF-CARES-Act-06082020.pdf.

15 Mem. from Ind. Dep’t of Educ., Final Language for Equitable Share of CARES Act

26 Funds (May 12, 2020), available at https://www.doe.in.gov/sites/default/files/news/final-

language-equitable-share-cares-act-funds.pdf.

27

16 Id.

28

22

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1 “immediately revise your April 30 guidance, including Question 10 of the guidance document to

2 come into compliance with the CARES Act and section 1117 of ESEA.”17 The bicameral letter

3 also requested the Department’s internal records related to the development of “its interpretation

4 of the equitable services provision and its inconsistency with long-standing requirements related

5 to equitable services.”18

6

89. On May 21, 2020, Senator Lamar Alexander, Chair of the Senate Committee on

7 Health, Education, Labor, and Pensions, was quoted as disagreeing with the Department’s

8 Guidance Document: “My sense was that the money should have been distributed in the same

9 way we distributed Title I money. . . . I think that’s what most of Congress was expecting.”19

10

90. On June 4, 2020, fifty national education organizations, including the CCSSO, wrote

11 to United States Senate and House leaders, asking for Congress to “pass[] legislation rescinding

12 the equitable services [G]uidance [Document], preempting any future notice from [the

13 Department] that is contrary to the legislation, and further clarifying the allocation requirements

14 for equitable services for nonpublic schools consistent with Title I.”20

15 IV. THE RULE

16

91. On June 25, 2020, the Department published an unofficial version of the Rule on its

17 website. The Rule was officially published in the Federal Register on July 1, 2020. 85 Fed. Reg.

18 39,479.

19

92. The Rule was published as an interim final rule and became effective when published.

20

21

22

17 Letter from Robert C. “Bobby” Scott, Chair, Comm. on Educ. and Labor, U.S. H.

23

Reps., et al., to Betsy DeVos, U.S. Sec’y of Educ. (May 20, 2020), available at https://edlabor.house.gov/imo/media/doc/2020-5-

20%20Ltr%20to%20DeVos%20re%20Equitable%20Services.pdf.

24

18 Id.

25

19 Nicole Gaudiano, Alexander, DeVos split on stimulus support for private school kids,

26

Politico (May 22, 2020), available at https://www.politico.com/newsletters/morningeducation/2020/05/22/alexander-devos-split-on-stimulus-support-for-private-school-kids-787837.

27

20 Letter from national education organizations to congressional leadership (June 4, 2020), available at https://ccsso.org/sites/default/files/2020-

28 06/Equitable%20Services%20Funding%20Letter%20-%20FINAL.pdf.

23

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1

A. The Rule Conflicts with the Plain Language of the CARES Act.

2

93. Like the Department’s Guidance Document, the Rule effectively rewrites both (1) the

3 proportional share calculation that Congress established for LEAs to determine the amount of

4 funds to be used for equitable services for private-school students, and (2) the eligibility criteria

5 that Congress mandated to determine which private-school students are entitled to equitable

6 services under the CARES Act.

7

94. Neither the proportional share nor eligibility mandates in the Rule comport with the

8 plain text of the CARES Act.

9

95. The Rule will divert millions of dollars to private schools and away from public

10 schools in direct contradiction of Congress’s intent.

11

96. For the proportional share calculation, the Rule provides two options to LEAs:

12

Option #1 (Title I-Only Schools Option):

13

An LEA using all its funds under a CARES Act program to serve only students and

teachers in public schools participating under Title I, Part A of the ESEA may

14

calculate the proportional share in accordance with paragraph (c)(1)(ii) of this section

or by using—

15

(A) The proportional share of Title I, Part A funds it calculated under section

16

1117(a)(4)(A) of the ESEA for the 2019-2020 school year; or

17

(B) The number of children, ages 5 through 17, who attend each non-public school in

the LEA that will participate under a CARES Act program and are from low-income

18

families compared to the total number of children, ages 5 through 17, who are from

low-income families in both Title I schools and participating non-public elementary

19

and secondary schools in the LEA.

20 34 C.F.R. § 76.665(c)(1)(i).

21

97. Functionally, this option is most similar to the ESEA, Section 1117 proportional share

22 calculation. See 20 U.S.C. § 6320(a)(4)(A); see also id. § 6320(c)(1). The two sub-options allow

23 the LEA to use the proportional share figures used for the 2019-2020 Title I-A distribution (34

24 C.F.R. § 76.665(c)(1)(i)(A)) or updated figures based on the current proportion of low-income

25 students who attend private schools in the LEA (34 C.F.R. § 76.665(c)(1)(i)(B)). By adopting the

26 ESEA, Section 1117 proportional share calculation, Option #1 similarly adopts the proportional

27 share calculation required by the CARES Act, as the funds would then be apportioned “in the

28 24
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1 same manner” as Section 1117. See CARES Act § 18005(a). However, this option includes two

2 unsupported “poison pill” limitations on LEAs who choose this option, as discussed below.

3

Option #2 (Private School Enrollment Option):

4

Any other LEA must calculate the proportional share based on enrollment in

participating non-public elementary and secondary schools in the LEA compared to

5

the total enrollment in both public and participating non-public elementary and

secondary schools in the LEA. 6

34 C.F.R. § 76.665(c)(1)(ii).

7

8

98. This option incorporates the Department’s erroneous proportional share calculation

9 set forth in the Guidance Document, requiring LEAs to consider all private-school students when

10 they apportion funds, similar to the calculation used to determine funds for equitable services

11 under Section 8501 of the ESEA, which Congress did not adopt for CARES Act funds. See 34

12 C.F.R. § 76.665(c)(1)(ii). This option has no basis in the CARES Act and would allow the

13 Department to divert hundreds of millions of dollars of CARES Act funds intended for public

14 schools to private schools.

15

99. As mentioned above, the Department included two poison pill requirements for using

16 Option #1 (Title I-Only Schools Option) to calculate the proportional share, with the obvious

17 effect of pushing LEAs to use Option #2.

18

100. The poison pill restrictions would force the LEAs using Option #1 to calculate the

19 proportional share to (1) use the CARES Act funds reserved for public schools for Title I schools

20 only, and (2) use the CARES Act only for limited, supplemental costs to avoid a Title I

21 supplanting violation. 34 C.F.R. § 76.665(c)(1), (c)(3); 20 U.S.C. § 6321(b)(1) (Section 1118 of

22 ESEA). This would effectively prohibit many LEAs from using CARES Act funds, for example,

23 to retain existing staff in Title I schools while using state and local dollars for the same purpose in

24 non-Title I schools. This requires LEAs to treat CARES Act funds not as stimulus monies but as

25 additional funds, forcing them to choose between a less beneficial methodology or a requirement

26 that limits their ability to spend CARES Act dollars to most effectively meet their needs.

27

101. Neither of these restrictions is found anywhere in the CARES Act. Rather, they are

28 both contrivances of the Department, seemingly intended to force LEAs to use Option #2 for 25
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1 apportioning the CARES Act funds. The restrictions effectively punish LEAs that attempt to

2 apportion the CARES Act funds as Congress intended.

3

102. The Department has acknowledged “Congress . . . intended that grantees have

4 substantial flexibility in the use of these [CARES Act] dollars.”21 Yet, the Department arbitrarily

5 imposes these restrictions on LEAs, significantly limiting their flexibility to use the funds.

6

103. These poison pill requirements are contradicted by the plain language of the CARES

7 Act, which specifies how the public schools’ share of the funds should be used.

8

104. The CARES Act grants LEAs that receive CARES Act funds flexibility to use the

9 funds for all schools in the district, not only Title I schools. See CARES Act §§ 18002(c)(1), (3),

10 18003(d)(1)-(12).

11

105. For the ESSER funds, the CARES Act specifies the twelve “[u]ses of [f]unds” for the

12 LEAs, including such broad uses as “[p]roviding principals and other school leaders with the

13 resources necessary to address the needs of their individual schools” and “[o]ther activities that

14 are necessary to maintain the operation of and continuity of services in [LEAs] and continuing to

15 employ existing staff of the [LEA].” CARES Act § 18003(d)(3), (12); see also id. § 18003(d)(1)-

16 (12). Likewise, LEAs can broadly use the GEER funds granted to LEAs at the Governor’s

17 discretion “to continue to provide educational services to their students and support on-going

18 functionality of the [LEA].” Id. § 18002(c)(1); see also id. § 18002(c)(3). These broad uses of

19 the ESSER and GEER funds as specified by Congress explicitly allow the LEAs and public

20 schools to use the funds to “supplant” state and local funding that may have been lost due to the

21 pandemic. The Rule impermissibly exceeds the scope of the CARES Act by requiring LEAs to

22 choose between two options that are contrary to the CARES Act’s requirements and prohibiting

23 LEAs from using funds consistent with those purposes if they use Option #1.

24

25

26

21 Letter from Mitchell M. Zais, Ph.D., Deputy Sec’y, U.S. Dep’t of Educ. to Gene Dodaro, Comptroller Gen., U.S. Gov’t Accountability Off. (June 12, 2020), at p. 3 (available as

27

pp. 375-389 of the U.S. Gov’t Accountability Off., COVID-19 Opportunities to Improve Federal Response and Recovery Efforts, GAO-20-625 (June 2020), available at

28 https://www.gao.gov/products/GAO-20-659T).

26

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1

106. Whether calculated under Option #1 (Title I-only schools Option) or Option #2

2 (Private school enrollment Option), CARES Act funds will be diverted from their intended

3 recipients.

4

107. Under Option #1, due to the poison pill restrictions, public-school students at non-

5 Title I schools (many of whom are low-income or otherwise at-risk) will receive no funding

6 whatsoever. The ESSER funds and part of the GEER funds were specifically designed to assist

7 all public schools in LEAs that receive CARES Act funds—not just the Title I schools within

8 these LEAs. And, even for the public-school students at Title I schools, the funds could only be

9 used for supplemental costs or else risk a Title I supplanting violation. Thus, the LEA would be

10 prohibited from using the CARES Act funds for general educational expenses in Title I schools,

11 such as teacher salaries, books, or general sanitation, among other uses, unless these services

12 were supplemental to those provided by state and local funds. This erroneous restriction is

13 directly contradicted by many of the listed “Uses of Funds” for moneys from the ESSER Fund in

14 the CARES Act. See CARES Act § 18003(d)(2)-(11). In addition, at-risk private-school

15 students, who are eligible for equitable services under Section 1117, will receive fewer funds per

16 student, and the funds reserved for private-school students will be used to provide services for all

17 private-school students (both at-risk and not at-risk), diluting funding that Congress intended for

18 vulnerable students.

19

108. Under Option #2, private-school students will receive a significantly greater

20 proportion of the funds than they are entitled to under the CARES Act, as all private-school

21 students will be considered when apportioning the funds. In turn, public schools will lose funding

22 diverted to the private schools. In addition, the money set aside for private-school students will

23 be used to provide services to all private-school students, reducing the amount of money per

24 student for the at-risk private-school students who are eligible for services under Section 1117.

25

109. Under either proportional share option, the Rule—like the Guidance Document—

26 requires LEAs to provide equitable services to all private-school students. 34 C.F.R. §

27 76.665(d)(2). This requirement does not comport with the plain text of the CARES Act, which

28 adopts the Section 1117 eligibility requirements, limiting equitable services to at-risk private27
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1 school students. See CARES Act § 18005(a); 20 U.S.C. § 6320(a) (incorporating the definition of

2 “eligible children” from 20 U.S.C. § 6315(c)).

3

B. The Department Lacks Authority to Issue the Rule and Failed to Follow

the Procedural Requirements of the APA. 4

5

110. The Rule cites 20 U.S.C. § 1221e-3 and 20 U.S.C. § 3474 as authority for rulemaking

6 related to the CARES Act. Neither of these statutes authorizes the Department to issue the Rule.

7

111. Congress gave no authority to the Department to issue rules interpreting the CARES

8 Act either generally, with regard to the GEER and ESSER Funds, or in particular to the

9 distribution of appropriated funds for equitable services for private-school students.

10

112. Nor did Congress authorize the Department to issue rules related to the provision of

11 equitable services for private-school students without compliance with the notice and comment

12 procedures of the APA.

13

113. The Department issued the Rule as an interim final rule without demonstrating good

14 cause that the notice and public procedures were impracticable, unnecessary, or contrary to the

15 public interest.

16

114. Because the Department cannot satisfy the requirements for issuing the Rule as an

17 interim final rule, the Rule does not comply with the Administrative Procedure Act’s procedural

18 requirements.

19 V. THE RULE WILL CAUSE IMMEDIATE AND IRREPARABLE HARM TO PLAINTIFFS,

20

SCHOOLS, AND STUDENTS.

21

115. The Rule and Guidance Document will cause immediate, irreparable harm to the

22 interests of the Plaintiff States, Plaintiff LEAs, and the vulnerable students whom Congress meant

23 to assist through the CARES Act.

24

A. Immediate and Irreparable Harm to the Plaintiff States

25

116. Plaintiff States, themselves and through their publicly administered educational

26 institutions, are directly regulated by the Rule and will suffer direct harm because of the Rule.

27

117. Each of the Plaintiff States is constitutionally required to administer a system of K-12

28 public education funded primarily by state moneys: 28
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1

a. Michigan: The Michigan Constitution charges the Michigan Legislature with

2

“maintain[ing] and support[ing] a system of free public elementary and

3

secondary schools as defined by law.” Mich. Const. art. VIII, § 2. The State

4

Board of Education is vested with “[l]eadership and general supervision over

5

all public education . . . .” Id. § 3. The State Board of Education further

6

“serve[s] as the general planning and coordinating body for all public

7

education . . . and shall advise the legislature as to the financial requirements

8

in connection therewith.” Id. Separate from any federal funding, Michigan

9

provides more than $13 billion each year to its approximately 831 LEAs and

10

56 intermediate school districts. The 3,400 school buildings in these districts

11

educate almost 1.5 million students each year. While the school districts

12

exercise primary responsibility over budgetary and other decisions within

13

their respective districts, the Michigan Department of Education (MDE)

14

implements federal and state legislative mandates in education and carries out

15

the policies of the State Board of Education. See Mich. Comp. Laws §

16

388.1009.

17

b. California: The State of California is the legal and political entity with plenary

18

responsibility for educating all California public-school students. California

19

has the constitutional responsibility to establish and maintain the system of

20

common schools and a free education. Cal. Const. art. IX, § 5. California

21

funds and oversees the operation of the largest common system of public

22

schools in the nation, which serves nearly 6.8 million children in more than

23

10,500 schools. In 2018–2019, California provided about $56.1 billion in

24

General Funds to its 1,037 school districts and over 1,200 charter schools.

25

Under the California Constitution, “[t]he State itself has broad responsibility

26

to ensure basic educational equality.” Butt v. State of California, 4 Cal. 4th

27

668, 681 (1992). Emergency conditions causing inequitable conditions may

28

create a duty for the State to intervene and provide supplementary support.

29

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1

See id. at 688. The California State Board of Education makes education

2

policy determinations, and adopts rules and regulations for the government of

3

elementary and secondary schools. Cal. Educ. Code §§ 33000, 33030-33031.

4

The California State Board of Education is responsible for applying for

5

federal funds made available to state education agencies under federal law, is

6

responsible for directing the allocation and apportionment of those federal

7

funds to public schools, and is responsible for adopting implementing rules

8

and regulations governing those federal funds. Cal. Educ. Code §§ 12000-

9

12001. The California Superintendent of Public Instruction oversees the

10

schools within the state and is the executive officer of the California State

11

Board of Education and the California Department of Education. Cal. Educ.

12

Code §§ 33112, 33301(b), 33302-33303. The California Department of

13

Education is a state administrative agency responsible for administering and

14

enforcing laws related to education throughout California. Cal. Educ. Code

15

§§ 33300, 33301, 33306, 33308.

16

c. District of Columbia: The Office of the State Superintendent of Education

17

(OSSE) is the state education agency for the District of Columbia charged

18

with raising the quality of education for all DC residents. OSSE serves as the

19

District’s liaison to the Department and works closely with the District’s

20

traditional and public charter schools to achieve its key functions. D.C. Code

21

§ 38-2601. District of Columbia public schools received more than $902

22

million in state funding last year while charter schools in the District received

23

more than $904 million. 95,820 students attend either a public or charter

24

school in the District.

25

d. Hawaii: The Hawaii Constitution provides for the “establishment, support

26

and control of a statewide system of public schools.” Haw. Const. art. X, § 1.

27

The Hawaii Department of Education (HIDOE) is the state education agency

28

for Hawaii charged with administering programs of education and public

30

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1

instruction throughout the State. As a single state system of education,

2

HIDOE also assumes the responsibilities of a local education agency.

3

Separate from any federal funding, HIDOE received approximately $1.7

4

billion, or 82 percent of its total budget, in State General Funds for the 2019-

5

2020 fiscal year to be distributed amongst 256 public schools and 37 charter

6

schools. Approximately 180,000 students in Hawaii attend either a public or

7

charter school.

8

e. Maine: Maine’s state policy on public education is that “[i]t is the intent of the

9

Legislature that every person within the age limitations prescribed by state

10

statute shall be provided an opportunity to receive the benefits of a free public

11

education.” Me. Rev. Stat. tit, 20-A, § 2(1). The Maine Department of

12

Education is charged with “[s]upervis[ing], guid[ing] and plan[ning] for a

13

coordinated system of public education for all citizens of the State . . . .” Me.

14

Rev. Stat., tit. 20-A, § 201(1). The Commissioner of Education is responsible

15

for “[p]roviding educational public leadership for the State” and “[e]nforcing

16

applicable regulatory requirements for school administrative units.” Me. Rev.

17

Stat., tit. 20-A, § 251-A(1), (3). The Commissioner determines the amount of

18

state funding for Maine’s school administrative units through the Essential

19

Programs and Services Funding Act, Me. Rev. Stat., tit. 20-A, § 15670 et seq.

20

The Commissioner is responsible for the distribution of funds and the

21

oversight of the federal grants that the Department receives. Separate from

22

any federal funding, Maine provides more than $1.2 billion each year to its

23

265 school administrative units (including public charter schools) and two

24

state magnet schools. The 599 school buildings in these school administrative

25

units educate approximately 175,600 students each year.

26

f. Maryland: The Maryland Constitution requires the Maryland Legislature to

27

“establish throughout the State a thorough and efficient System of Free Public

28

Schools” and “provide by taxation, or otherwise, for their maintenance.” Md.

31

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1

Const. art. VIII, § 1. By statute, the State Board of Education is vested with

2

the general care and supervision of public education. Md. Code Ann.,

3

Education §§ 2-201 and 2-205. The State Board determines the educational

4

policies of the State and enacts regulations for the administration of the

5

public-school system. The totality of statutory provisions gives the State

6

Board the last word on any matter concerning educational policy or the

7

administration of the system of public education. Separate from any federal

8

funding, Maryland provided its 24 LEAs with more than $7 billion in

9

operating and capital funds for fiscal year 2020-21. The 1,582 school

10

buildings in these districts educate 900,000 students each year. While the

11

school districts exercise primary responsibility over budgetary and other

12

decisions within their respective districts, the Maryland State Department of

13

Education (MSDE) implements federal and state legislative mandates in

14

education and carries out the policies of the State Board of Education. See

15

Md. Code Ann., Education, Title 2.

16

g. New Mexico: The New Mexico Constitution promises to establish and

17

maintain a uniform, free public-school system “sufficient for the education of,

18

and open to, all the children of school age.” N.M. Const. Art. 12, § 1. In

19

2020, legislators appropriated $3.468 billion in state funds for public

20

education from prekindergarten through secondary schools, or 45.5 percent of

21

total recurring appropriations. In 2019, the definition of “school-age” was

22

revised to include students through age 22. The Fiscal Year 2021 budget

23

increased recurring appropriations by $216 million, or 6.6 percent, with

24

significant additional funding to increase educator compensation, provide

25

additional services to at-risk students, and provide professional development

26

and mentorship support for early career teachers.

27

h. Pennsylvania: The Pennsylvania Constitution charges the Pennsylvania

28

General Assembly with “provid[ing] for the maintenance and support of a

32

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1

thorough and efficient system of public education to serve the needs of the

2

Commonwealth.” Pa. Const. Art. III § 14. The Commonwealth provides

3

more than $12 billion each year to its 500 public school districts, which

4

educate more than 1.72 million students each year in 2,865 schools.

5

i. Wisconsin: The Wisconsin Constitution requires the Wisconsin Legislature to

6

establish district schools which are to be “as nearly uniform as practicable”

7

and “free and without charge for tuition to all children.” Wis. Const. art. X, §

8

3. The supervision of public instruction is vested in the Superintendent of

9

Public Instruction (State Superintendent). The State Superintendent is

10

charged with the general supervision of public instruction and leads the

11

Department of Public Instruction (DPI) in implementing policies and

12

promulgating administrative rules. Wis. Stat. § 15.37; see also, e.g., Wis.

13

Stat. § 115.28(1), (3), (7). Her responsibilities also include accepting and

14

administering federal funds. Wis. Stat. § 115.28(9) and (19). Wisconsin

15

school district funding comes from state and federal aids, property taxes, and

16

local revenue. Wisconsin provides state aids to 443 LEAs, with a combined

17

total student enrollment of 854,959. In the 2019-2020 school year, DPI

18

administered approximately $6.1 billion in state support for K-12 public

19

schools.

20

118. The CARES Act appropriates funds for the Plaintiffs to support public K-12 schools

21 through the COVID-19 pandemic. Plaintiffs are facing severe budgetary cuts due to the

22 economic impact of the pandemic—cuts that the ESSER and GEER Fund moneys were designed

23 to mitigate. Under the Department’s Rule and the Guidance Document, public schools in the

24 Plaintiff States will lose a significant portion of the ESSER and GEER moneys that will be

25 diverted to private schools. This result is inconsistent with the clear language of the CARES Act,

26 and inequitable because public schools do not qualify for other CARES Act funding available to

27 private schools. Accordingly, LEAs will look to States to bridge the gaps in their respective

28 public-school budgets that the ESSER and GEER moneys were intended to fill. 33
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1

119. If LEAs in the Plaintiff States follow the Rule’s Option #1 (Title I-schools only

2 Option) when apportioning CARES Act funds, non-Title I schools across the Plaintiff States

3 stand to lose significant emergency funding to support their schools, and LEAs stand to lose the

4 ability to use the funds to maintain operations that are funded on an LEA-wide basis. In addition,

5 while Title I schools in the Plaintiff States will receive some CARES Act funds under Option #1,

6 the Rule improperly limits how they can use the funds by effectively prohibiting them from using

7 such funds for existing costs. Thus, for both Title I and non-Title I schools in the LEAs that

8 receive CARES Act funds, the effect of the Rule is to stymie the States and LEAs from using the

9 funds for their intended purpose—to “support and prevent, prepare for, and respond to

10 coronavirus.” CARES Act § 18001. As a result, the Plaintiffs will be required to allocate

11 moneys to help these schools weather the budgetary storm created by the pandemic.

12

120. If LEAs in the Plaintiff States follow the Rule’s Option #2 (Private school enrollment

13 Option) when apportioning CARES Act funds, the Plaintiff States’ LEAs and public schools will

14 lose out on significant amounts of ESSER and GEER moneys, which will be diverted to private

15 schools for students who would not otherwise qualify for Title I-A equitable services.

16

a. Michigan: If Michigan’s LEAs are forced to follow Option #2 in the Rule for

17

apportioning CARES Act funds, an estimated $21,604,649 in ESSER moneys

18

would be diverted from public schools in order to provide equitable services

19

to all private-school students. If Michigan LEAs distribute the ESSER

20

moneys in the same manner that Title I-A funds are usually distributed for

21

equitable services based on low-income private-school students, as the plain

22

language of the CARES Act requires, then only an estimated $5,107,921 will

23

be distributed for equitable services to eligible private-school students. Thus,

24

if the Department’s Rule stands and LEAs used Option #2 to apportion their

25

CARES Act funds, an estimated total of $16,496,728 in ESSER moneys will

26

be diverted from low-income public schools to private-school students who

27

are not qualified for Title I-A funds—7% of the total ESSER moneys that

28

Michigan received. This would amount to $2,251,131 less for Detroit Public

34

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1

School Community District students; $2,643,214 less for Grand Rapids Public

2

Schools students, and $1,474,676 less for Flint Community Schools students.

3

b. California: If California’s LEAs are forced to follow Option #2 in the Rule for

4

apportioning CARES Act funds, an estimated $60,249,538 in ESSER and

5

GEER moneys would be diverted from public schools in order to provide

6

equitable services to all private-school students. If California’s LEAs

7

distribute the ESSER and GEER moneys in the same manner that Title I-A

8

funds are usually distributed for equitable services based on low-income

9

private-school students, as the plain language of the CARES Act requires,

10

then only an estimated $5,449,992 of the ESSER and GEER moneys will be

11

distributed for equitable services to eligible private-school students. Thus, if

12

the Department’s Rule stands and LEAs used Option #2 to apportion their

13

CARES Act funds, an estimated $54,799,545 in ESSER and GEER moneys

14

will be diverted from low-income public schools to private-school students

15

who are not qualified for Title I-A funds.

16

c. District of Columbia: If the District of Columbia Public Schools (DCPS) is

17

forced to follow Option #2 in the Rule for apportioning CARES Act funds,

18

approximately $5,002,441 in ESSER and GEER moneys would be diverted

19

from public school funds in order to provide equitable services to all private-

20

school students. If DCPS distributes the ESSER and GEER moneys in the

21

same manner that Title I-A funds are usually distributed for equitable services

22

based on low-income private-school students, as the plain language of the

23

CARES Act requires, then only $1,435,483 will be distributed for equitable

24

services to eligible private-school students. Thus, if the Department’s Rule

25

stands and LEAs used Option #2 to proportion their CARES Act funds, a total

26

of $3,566,958 in ESSER and GEER moneys will be diverted from low-

27

income public schools to private-school students that are not qualified for

28

Title I-A funds—12% of the total ESSER/GEER moneys that DC received.

35

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1

d. Hawaii: If HIDOE is forced to follow Option #2 in the Rule for apportioning

2

CARES Act funds, approximately $2,003,428 in ESSER moneys would be

3

diverted from public school funds in order to provide equitable services to all

4

private-school students. If HIDOE distributes the ESSER moneys in the same

5

manner that Title I-A funds are usually distributed for equitable services based

6

on low-income private school students, as the plain language of the CARES

7

Act requires, then only $1,555,931 will be distributed for equitable services to

8

eligible private-school students. Thus, if the Department’s Rule stands, a total

9

of $447,497 in ESSER money will potentially be diverted from low-income

10

public schools to private-school students that are not qualified for Title I-A

11

funds—1.03% of the total ESSER money that Hawaii received.

12

e. Maine: If Maine’s LEAs are forced to follow the Department’s Rule and

13

Guidance, the Maine Department of Education (MDOE) estimates that $2.1

14

million in ESSER money would be apportioned to provide equitable services

15

to private-school students. If Maine’s LEAs distribute the ESSER money in

16

the same manner that Title I-A funds are usually distributed for equitable

17

services based on low-income private-school students, as the plain language

18

of the CARES Act requires, then only $248,000 will be distributed for

19

equitable services to eligible private-school students. Thus, if the

20

Department’s Rule stands, a total of $1,852,000 in ESSER money will

21

potentially be diverted from low-income public schools to private-school

22

students that are not qualified for Title I-A funds—4.25% of the total ESSER

23

money that Maine received.

24

f. Maryland: If Maryland’s LEAs follow Option #2 in the Rule for apportioning

25

CARES Act funds, they would reserve an estimated $18,143,913 in ESSER

26

funds to provide equitable services to private school students. If Maryland

27

LEAs distribute the ESSER moneys in the same manner that Title I-A funds

28

are usually distributed for equitable services based on low-income private-

36

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1

school students, as the plain language of the CARES Act requires, then only

2

an estimated $2,508,760 will be distributed for equitable services to eligible

3

private-school students. Thus, if the Department’s Rule stands and LEAs use

4

Option #2 to apportion their CARES Act funds, approximately $15,000,000 in

5

ESSER moneys will be diverted from low-income public schools to private-

6

school students who are not qualified for Title I-A funds.

7

g. New Mexico: If New Mexico’s LEAs are forced to follow Option #2 in the

8

Rule for apportioning CARES Act funds, millions in ESSER and GEER

9

moneys would be diverted from public school funds in order to provide

10

equitable services to all private-school students. If New Mexico’s LEAs

11

distribute the ESSER and GEER moneys in the same manner that Title I-A

12

funds are usually distributed for equitable services based on low-income

13

private-school students, as the plain language of the CARES Act requires,

14

then a considerably smaller portion of the ESSER and GEER moneys will be

15

distributed for equitable services to eligible private-school students. Thus, if

16

the Department’s Rule stands and LEAs used Option #2 to apportion their

17

CARES Act funds, millions in ESSER and GEER moneys will be diverted

18

from low-income public schools to private-school students that are not

19

qualified for Title I-A funds.

20

h. Pennsylvania: If Pennsylvania’s LEAs are forced to follow Option #2 in the

21

Rule for apportioning CARES Act funds, millions in ESSER and GEER

22

funding would be diverted from public schools in order to provide equitable

23

services to all private-school students. If Pennsylvania’s LEAs distribute the

24

ESSER and GEER funds in the same manner that Title I-A funds are usually

25

distributed for equitable services based on low-income private-school

26

students, as the plain language of the CARES Act requires, then a

27

considerably smaller portion of the ESSER and GEER moneys will be

28

distributed for equitable services to eligible private-school students. Thus, if

37

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1

the Department’s Rule stands and LEAs used Option #2 to apportion their

2

CARES Act funds, millions in ESSER and GEER moneys will be diverted

3

from low-income public schools to private-school students who are not

4

qualified for Title I-A funds.

5

i. Wisconsin: If Wisconsin’s LEAs are forced to follow Option #2 in the Rule

6

for apportioning CARES Act funds, $28,429,917 in ESSER and GEER

7

moneys would be diverted from public school funds in order to provide

8

equitable services to all private-school students. If Wisconsin LEAs distribute

9

the ESSER and GEER moneys in the same manner that Title I-A funds are

10

usually distributed for equitable services based on low-income private-school

11

students, as the plain language of the CARES Act requires, then only

12

$24,245,401 will be distributed for equitable services to eligible private-

13

school students. Thus, if the Department’s Rule stands and LEAs used Option

14

#2 to apportion their CARES Act funds, a total of $4,184,516 in ESSER and

15

GEER moneys will be diverted from low-income public schools to private-

16

school students that are not qualified for Title I-A funds—approximately 2%

17

of the total ESSER/GEER moneys that Wisconsin will distribute to LEAs.

18

121. In total, if every LEA receiving CARES Act funds in the Plaintiff States uses Option

19 #2 to apportion CARES Act funds, the Plaintiff States will be required to divert tens of millions

20 of dollars in CARES Act funding to provide services to private-school students. The States’

21 public schools were expecting to receive these ESSER and/or GEER moneys.

22

122. Many LEAs may also have to rework their methodologies for allocating State and

23 local funds to public schools to accommodate the new funds and ensure that CARES Act dollars

24 do not result in a violation of the Title I-A supplement, not supplant requirement. This is a result

25 that was not contemplated by Congress and an administrative cost not taken into account in the

26 Rule.

27

123. On top of the additional funding that each Plaintiff State will be required to expend in

28 lieu of the CARES Act funds diverted to private school services, the Department’s Guidance 38
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1 Document and Rule impose significant administrative burdens on SEAs, which have fielded and

2 will continue to field numerous questions from LEAs about how ESSER and/or GEER Fund

3 moneys should be apportioned in light of the Department’s Rule, which is particularly confusing

4 given its clear inconsistency with the CARES Act.

5

124. The confusion caused by the Department has required the SEAs to divert resources to

6 drafting and issuing memoranda, letters, and other technical assistance to assist LEAs in

7 apportioning the moneys.

8

125. While facing numerous remote learning-related challenges in the throes of the

9 pandemic, the SEAs are now forced to redirect resources to assist LEAs in addressing the

10 conflicting requirements generated by the Department’s Rule that misinterprets the Act.

11

126. In addition, the Department’s Rule imposes strict restrictions on LEAs using Option

12 #1 to apportion the funds, which will increase costs incurred by the SEAs and LEAs to administer

13 equitable services and provide necessary oversight and control over funding, as required under

14 CARES Act Section 18005(b).

15

127. The additional time and work caused by the Department’s confusing and erroneous

16 interpretation of Section 18005 of the CARES Act will create a substantial burden on the SEAs.

17 Since the COVID-19 pandemic enveloped the Nation, SEAs, LEAs, and schools in the Plaintiff

18 States have been working tirelessly to transition to remote learning; secure computers and other

19 electronic devices to facilitate students’ continued learning; create health and safety plans for

20 returning to school; and plan for the 2020-2021 school year. The time, money, and effort SEAs

21 have diverted to assisting LEAs with how to apportion ESSER/GEER moneys for equitable

22 services for private-school students are directly caused by the Department’s Guidance Document

23 and the Rule. The Department’s estimate of administrative burden does not adequately capture

24 the amount of administrative time that will be needed to implement this new Rule.

25

128. The Department’s inconsistent interpretations in the Guidance Document and the

26 Rule have also caused a delay in distributing funds to students and teachers—the intended

27 beneficiaries of these funds—which is contrary to the purpose of the CARES Act funding.

28 39
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1

129. Moreover, the Plaintiff States’ SEAs are required to certify in their ESSER Fund

2 applications that the SEAs and the LEAs will comply with the equitable service provision of the

3 CARES Act (§ 18005) and “any other applicable law or regulation.”22

4

130. Because the Department’s Rule contradicts the CARES Act’s requirements, SEAs

5 (and LEAs) cannot certify that they will comply both with the CARES Act and the Rule.

6

131. The Department’s Rule places the SEAs in a position where they would be in breach

7 of the certification in the Certification and Agreement, subjecting the SEAs to “liability under the

8 False Claims Act . . . [and the] OMB Guidelines to Agencies on Governmentwide Debarment and

9 Suspension (Non-procurement).”23 Accordingly, SEAs may face potential legal consequences as

10 a direct result of the Department’s Rule.

11

132. The Plaintiff States incurred, and will continue to incur, these financial, legal, and

12 other harms vis-a-vis their SEAs, and the other state-supported K-12 educational institutions in

13 the Plaintiff States.

14

B. Immediate and Irreparable Harm to the Plaintiff LEAs

15

133. The Rule’s “Options,” found nowhere in the CARES Act, either significantly

16 decrease the amount of CARES Act emergency relief funds allocated to the Plaintiff LEAs or

17 limit the use of those funds through restrictions. Plaintiff LEAs will suffer direct harm because of

18 the Rule.

19

134. Each of the Plaintiff LEAs administers K-12 public education in their jurisdiction and

20 was expecting to receive and use the CARES Act funds as set forth in the Act:

21

a. New York City: The NYCDOE is the LEA of the City School District of the

22

City of New York, except that for Title I-A purposes, each borough of the

23

City is considered an LEA and receives a distinct allocation of Title I funding

24

administered by the New York State Education Department. The NYCDOE is

25

the largest school district in the nation, with approximately 1,600 public

26

schools that serve approximately 1.1 million students, of whom approximately

27

22 Certification and Agreement for ESSER Fund, supra note 6.

28

23 Id.

40

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1

820,093 (72.8%) are economically disadvantaged, 927,110 (82.3%) are

2

minorities, 227,553 (20.2%) have a disability, and 148,696 (13.2%) are

3

English-Language Learners. For many of these at-risk students, the City’s

4

public schools are essential sources not only of education, but of food,

5

transportation, medical care, and emotional support. Economically

6

disadvantaged students are at greater risk to the ravages of the COVID-19

7

pandemic. These children are the intended recipients of the CARES Act

8

emergency funds.

9

b. Chicago: The CBOE is the LEA for the City of Chicago school district. It is

10

the third-largest school district in the nation with over 600 public schools,

11

serving approximately 360,000 K-12 students in the 2019-2020 school year.

12

Of those students, about 76% qualify as economically disadvantaged, almost

13

19% are English Learners, and about 15% have Individualized Education

14

Plans (i.e., have learning-related disabilities). Over 46% of the district’s

15

student body is Latino, 36% is African American, 11% is White, 4% is Asian,

16

and 1.3% is mixed race. The foregoing at-risk groups served by CBOE are

17

the most vulnerable to the impact of the COVID-19 pandemic and are clearly

18

the intended recipients of the CARES Act emergency funds. For many of

19

those students, the City’s public schools are essential sources of education,

20

food, transportation, medical care, and other vital services.

21

c. Cleveland: CMSD is the LEA for the City of Cleveland, including for

22

purposes of Title I under the ESEA. CMSD has 103 public schools, serving

23

approximately 37,700 students. All of CMSD’s students are considered

24

economically disadvantaged. Around 8.3% of those children are homeless;

25

84.6% are minorities; 23.5% have a disability; and 9.7% are English-

26

Language Learners. These at-risk groups are the most vulnerable to the

27

impact of the COVID-19 pandemic and are clearly the intended recipients of

28

the CARES Act emergency funds. For many of those students, the CMSD’s

41

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schools are essential sources of education, food, transportation, medical care,

2

and other vital services.

3

d. San Francisco: SFUSD is a LEA and is one of the largest school districts in

4

California, operating pursuant to the laws of the state of California. SFUSD’s

5

offices are located on Franklin Street in San Francisco, California. SFUSD

6

serves approximately 52,468 students, of whom 28,556 are socioeconomically

7

disadvantaged, 15,028 are English Learners, 2,064 are homeless, 6,275 are

8

students with disabilities, and 254 are foster youth.24 These at-risk groups are

9

the most vulnerable to the impact of the COVID-19 pandemic and are the

10

intended recipients of the CARES Act emergency funds. For many of those

11

students, the SFUSD’s public schools are essential sources of education, food,

12

transportation, medical care, and other vital services. SFUSD receives a

13

distinct allocation of Title I funding, which the California Department of

14

Education (CDE) administers. SFUSD oversees approximately 133 schools of

15

which about 53 qualify as Title I schools.

16

135. Pursuant to Title I, the Plaintiff LEAs designate schools eligible for Title I funds

17 based on poverty percentages, as follows:

18

a. New York City: The NYCDOE designates schools eligible for Title I funding

19

based on the poverty percentages of each borough. In the Bronx, Brooklyn,

20

Manhattan, or Queens, Title I-school status is reached when no less than 60%

21

of a school’s students are from low-income families; the percentage is 52.13%

22

in Staten Island. Although the statutory threshold for Title I-school status is

23

set far lower, at a floor of 35%, see 20 U.S.C. 6313(b)(1), the NYCDOE

24

exercises the discretion permitted by Title I to set a higher poverty threshold,

25

ensuring that Title I funding adequately provides programs and services to

26

schools with the greatest needs. Even with that far higher threshold, in the

27

24 California School Dashboard, San Francisco Unified School District, available at

28 https://www.caschooldashboard.org/reports/38684780000000/2019.

42

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1

2019-2020 school year, the NYC school district was comprised of 1,314 Title

2

I schools and 269 non-Title I schools.

3

b. Chicago: CBOE uses the same methodology for calculating Title-I eligibility

4

for the entire district. Every school with a poverty index of 40 or above

5

receives Title I funding, with a few other schools qualifying for Title I status

6

based on waivers. Overall, about 89 percent of CPS schools qualify for Title I

7

discretionary funding.

8

c. Cleveland: In the 2019-2020 school year, 100 percent of CMSD’s schools

9

were Title I schools.

10

d. San Francisco: SFUSD designates schools eligible for Title I funding based

11

on poverty percentages using the grade-span ranking option. SFUSD’s

12

allocation understates actual eligibility, in that entitlements are calculated

13

based on county poverty rates, and students attending SFUSD are not

14

representative of the county’s poverty rate, which is three times less. To

15

maximize the impact of a proportionally smaller entitlement to other

16

similarly-sized counties, SFUSD chooses not to fund high schools (below the

17

obligatory 75 percentile threshold). High schools receive supplemental

18

funding based on poverty percentages from other funding sources. To be

19

eligible for Title I funding, schools in the elementary or middle school span

20

must be at or above the poverty calculation for that grade span. For the 2020-

21

2021 school year, SFUSD has about 53 Title I-eligible schools.

22

136. Plaintiff LEAs fund their schools through a variety of means and methods, as follows:

23

a. New York City: In the NYCDOE, the Fair Student Funding formula (“FSF”) is

24

the primary funding source for schools and consists of unrestricted state and

25

local funding that affords school leaders with the freedom to best determine

26

expenditures for their schools. FSF covers basic instructional needs and is

27

allocated based on the number and particular needs of students enrolled in

28

each school. After allocating a fixed amount for each student, the FSF

43

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1

funding formula ascribes weights to each student to allocate greater funding

2

for particular needs, such as grade level, academic intervention for at-risk

3

students, and special programs for English Language Learners and students

4

with disabilities. FSF provides funds for about two-thirds of each school’s

5

budget; the remaining approximately one-third is comprised of funding

6

restricted to specific purposes, including federal grants like Title I. The

7

NYCDOE also has a central budget that covers central administration costs

8

and support services that are provided on a city-wide basis for all schools in

9

the City, including, but not limited to, school facilities services, meals, school

10

safety, pupil transportation, and energy and leases. A significant portion of

11

the NYCDOE’s budget derives from New York State’s allocation of school

12

aid, known as Foundation Aid. Faced with deep economic losses from the

13

COVID-19 pandemic, New York State instituted a “pandemic adjustment” for

14

fiscal year 2021, reducing the NYCDOE’s Foundation Aid by $716,903,289,

15

and purporting to offset this budget cut dollar-for-dollar by backfilling it with

16

federal CARES Act funding, which itself is reduced by the Department’s

17

misinterpretation of the CARES Act.

18

b. Chicago: The CBOE annual budget for the 2020 school year is $6.9 billion.

19

The CBOE derives about $3.8 billion of its funding through local sources,

20

while the State of Illinois contributes almost $2.3 billion, and the federal

21

government provides about $767 million. CBOE estimates that it will receive

22

about $245 million in Title I funding for the 2020 school year. CBOE uses

23

Student Based Budgeting (SBB) to fund schools. SBB allocates funds to

24

individual schools based on the total student population. For fiscal year 2020,

25

the SBB rate is about $4,500 per pupil. Schools with low-income households

26

also rely upon other funding sources, such as Supplemental Aid, Equity

27

Grants, and federal funds provided according to Title I, Title II, Title III, Title

28

IV, and Title VII.

44

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c. Cleveland: CMSD receives funding from the State of Ohio and local property

2

taxes, as well as through federal programs targeting specific student

3

populations. State funding and local property taxes cover basic instructional

4

needs and are allocated based on the number of students enrolled at each

5

school and the needs of those students, weighted for various categories such

6

as grade level, academic intervention for at-risk students, and special

7

programs for English Language learners and students with disabilities. State

8

support accounts for 55% of CMSD’s revenues; local funding accounts for

9

approximately 27%; and federal funds are approximately 14%. The largest

10

category of the CMSD’s funding is Foundation Funding, which CMSD

11

receives from the State of Ohio. Faced with deep budgetary cuts because of

12

the economic impact of the COVID-19 pandemic, Ohio reduced CMSD’s

13

Foundation Funding by more than $5.6 million. CMSD has been notified to

14

prepare for similar cuts in Fiscal Year 2021 and also anticipates a drop in local

15

property tax collections.

16

d. San Francisco: In SFUSD the Weighted Student Formula (“WSF”) is the

17

primary funding source for schools and consists of state funding with limited

18

spending restrictions, excepting stipulations per the CDE. WSF covers basic

19

instructional needs and is allocated based on the number of students enrolled

20

at each school and the needs of those students, weighted for various

21

characteristics such as academic proficiency of incoming students, at-risk

22

factors such as Free-and-Reduced-Price Lunch (“FRL”) eligibility and

23

housing stability, English Learner status, and students with disabilities.

24

Though variable across school sites, WSF accounts for about 80% of each

25

school’s budget; approximately 20% are funding allocations with spending

26

restrictions, such as funds provided pursuant to Title I or local funds with

27

stipulated uses. Sites may be allocated staffing supports funded by the central

28

office, including academic and social emotional interventions for school

45

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1

turnaround and specific programmatic offerings. SFUSD also has a central

2

budget that covers central administration and services for all schools,

3

including school facilities, food, safety, pupil transportation, and energy and

4

leases. The largest category of SFUSD’s school aid is Local Control Funding

5

Formula (“LCFF”), which SFUSD receives from the state of California.

6

Faced with deep budgetary cuts because of the economic impact of the

7

COVID-19 pandemic, California reduced the SFUSD’s LCFF aid by

8

approximately $12,000,000. Additionally, SFUSD is losing local revenues

9

necessary to support operations while also incurring new costs associated with

10

providing services (i.e., digital learning (computers/WiFi), hand sanitizers)

11

related to COVID-19.

12

137. As described above, the CARES Act requires the Plaintiff LEAs receiving monies

13 from the GEER and/or the ESSER Funds to allocate a portion of those funds to provide

14 “equitable services” to students and teachers at nonpublic schools “in the same manner as

15 provided under Section 1117 of the ESEA . . . .” CARES Act § 18005(a). If Plaintiff LEAs were

16 to distribute these funds as mandated by the CARES Act, “in the same manner” as required by the

17 equitable services provision in Section 1117 of the ESEA (i.e., based on the number of low-

18 income private school students residing in a Title I school attendance area in the school district in

19 relation to the total number of low-income private and public school students residing in a Title I

20 school attendance area in the school district), then the proportional share to be provided for

21 equitable services to students in nonpublic schools would be based on the number of low-income

22 nonpublic school students residing in a Title I school attendance area.

23

138. By contrast, the allocation of funds contemplated by the Rule effectively penalizes

24 Plaintiff LEAs. If the funds are allocated according to the Rule’s Option #1 (Title I Only Schools

25 Option) formula, the Rule imposes two additional requirements—found nowhere in the CARES

26 Act—that restrict the use of CARES Act funds. The restrictions are in effect a “poison pill”

27 making Option #1 onerous, infeasible, and not a viable choice, and resulting in immediate and

28 irreparable harm to the Plaintiff LEAs. 46
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139. The Rule’s first “poison pill” for LEAs using the Option #1 calculation method

2 prohibits the Plaintiff LEAs from using CARES Act funds for any purpose other than funding for

3 a Title I school. Non-Title I schools deprived of CARES Act funds will not be able to provide

4 essential educational services to their students.25

5

a. New York City: NYCDOE’s 269 non-Title I schools will be deprived of

6

CARES Act funds. The estimated impact on non-Title I schools would be a

7

loss of approximately $100 million in desperately needed funds.

8

b. Chicago: The approximately 60 non-Title I schools within CBOE would be

9

deprived of any CARES Act funds.

10

c. San Francisco: SFUSD’s approximately 80 non-Title I schools will be

11

deprived of thousands in desperately needed funds.

12

140. The second “poison pill” for LEAs using Option #1 calculation method is that the

13 Rule demands the funds be used only to supplement, not supplant, funding in the Title I schools’

14 budgets, improperly importing Title I’s “supplement-not-supplant” provision into the CARES

15 Act—a restriction not found in the CARES Act. Thus, the Rule purports to prohibit the Plaintiff

16 LEAs from using CARES Act funds in place of state and local funds, permitting only that the

17 CARES Act funds be used to supplements those funds. This restriction contradicts the purpose of

18 the CARES Act, which is to provide funding to address issues caused by the pandemic, such as

19 maintaining continuity of services and continuing to employ existing staff, and to supplant city

20 and local funds that have been eliminated due to fiscal constraints.

21

141. Because the Rule precludes the Plaintiff LEAs from using CARES Act funds except

22 in Title I schools, the funds are restricted from use to pay for essential central services, common

23 to all public schools within the Plaintiff LEAs, such as transportation costs, facilities maintenance

24 and improvements, school safety, food services (including staff to serve meals), technology

25 platforms for remote learning, and custodial and cleaning supplies. In many of the Plaintiff

26 LEAs, these expenditures are made on a City/District-wide basis, and the additional

27

28

25 All public schools within the CMSD are Title I schools.

47

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1 administrative and financial burdens imposed by handling these expenditures on a per-school

2 basis in the context of the Plaintiff LEAs’ highly complex budget processes makes it overly

3 burdensome and/or impossible to fund central services in the face of a restriction of CARES Act

4 funds to Title I schools alone.

5

142. The USDOE’s obvious intent is to force LEAs to follow the Rule’s Option #2

6 (Private School Enrollment Option), knowing LEAs seek to use their share of CARES Act funds

7 to serve students and teachers in all of their public schools. But, if the Plaintiff LEAs are forced

8 to use Option #2, their public schools stand to lose significant funding, as follows:

9

a. New York City: If the NYCDOE were to use the Rule’s Option #2

10

methodology for calculating the proportional share of equitable services to

11

nonpublic schools, the effect of including all private-school students in the

12

calculation of the proportional share for equitable services would be an 8%

13

increase in funding for nonpublic schools, which amounts to approximately

14

$53 million, and a concurrent decrease in that amount to NYC public schools

15

and students. Instead of an allocation of $626 million to public schools and

16

$91 million to nonpublic schools, only $573 million would be available to

17

allocate to public schools, and $144 million would be allocated to nonpublic

18

schools.

19

b. Chicago: If the CBOE were to use the Rule’s Option #2 methodology for

20

calculating the proportional share of equitable services to nonpublic schools,

21

the CBOE would need to use the total enrollment of private school students.

22

The effect of including all nonpublic school students in the calculation of

23

proportional share is a 55% increase in funding ($18.5 to $28.5 million)

24

directed toward nonpublic schools to the detriment of Chicago public schools

25

and the students most vulnerable to the ravages of the pandemic. Under this

26

“Option,” the CBOE would lose over $10 million in emergency relief funds.

27

c. Cleveland: If CMSD were to use the Rule’s Option #2 methodology for

28

calculating the proportional share of equitable services to nonpublic schools,

48

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CMSD would need to use the total enrollment of private school students. The

2

effect of including all nonpublic school students in the calculation of

3

proportional share is a 19.1 percent increase in the nonpublic schools’

4

allocation to the detriment of CMSD public schools and the students most

5

vulnerable to the ravages of the pandemic. Under this “Option,” based on

6

currently available information CMSD would lose $822,045 in emergency

7

relief funds.

8

d. San Francisco: If SFUSD were to use the Rule’s Option #2 methodology for

9

calculating the proportional share of equitable services to nonpublic/private

10

schools, then SFUSD would need to use the total enrollment of private school

11

students. The effect of including all nonpublic/private school students in the

12

calculation of proportional share is an almost 17% increase in funding

13

directed toward nonpublic schools/private schools to the detriment of SFUSD

14

and the students most vulnerable to the ravages of the pandemic. Under this

15

“Option,” the SFUSD’s public schools would lose about $1,736,417 in

16

emergency relief funds.

17

143. The “Options” under the Rule deny the Plaintiff LEAs and their public schools the

18 allocation they are entitled to under the statute and, as a result, deny them the full use of CARES

19 Act funds as intended by Congress. Private schools, on the other hand, would reap a windfall, as

20 their students would receive a far larger share of CARES Act funding for “equitable services” and

21 would be able to use the funds without restriction. The Plaintiff LEAs’ public schools would face

22 a shortfall, an inequitable result wholly at odds with congressional intent.

23

144. Compounding the losses described above, for some of the Plaintiff LEAs, their state

24 governments have already modified or signaled they would modify their state budgets for the

25 coming fiscal years, incorporating the CARES Act Funds to fill the gaps in their public education

26 budgets created by the pandemic. As result of the Department’s Rule, these gaps will not be able

27 to be filled by state budgets, leaving holes in the Plaintiff LEAs’ budgets.

28 49
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1

a. New York City: The New York State Legislature enacted its Fiscal Year 2021

2

Budget and issued a “pandemic adjustment,” reducing the NYCDOE’s State

3

Foundation Aid by approximately $717 million and backfilling it with

4

CARES Act funding. The Rule reduces the amount or flexible uses of this

5

funding.

6

b. Cleveland: The Ohio Governor recently signaled the Fiscal Year 2021 Budget

7

will reduce State Foundation Funding support to schools at similar rates as the

8

state’s last-minute cuts in Fiscal Year 2020. The Governor made clear he

9

considered the amount of CARES Act funding CMSD would receive in

10

making cuts in state support, but that CARES Act funding cannot be relied

11

upon under the Rule. The result is a gap in funding for students and teachers

12

in public schools who are in dire need.

13

145. The Rule imposes significant burdens on the Plaintiff LEAs and greatly harms the

14 students and teachers in their public schools. The confusion arising from the Department’s

15 Guidance Document and the Rule has resulted in a delay in distribution of funds to students and

16 teachers in the Plaintiff LEAs’ public schools and has deprived them of the CARES Act funds to

17 which they are entitled, including for continuing essential services and payment of staff salaries

18 during the pandemic.

19

146. The Rule will have a long-term negative impact on the millions of public-school

20 students in the Plaintiff LEAs’ schools affected by the COVID-19 pandemic. If the amount of

21 CARES Act funds is decreased for all public schools, the educational services in those schools

22 will, of necessity, be curtailed.

23

147. These outcomes are contrary to the very purpose and intent of the CARES Act, which

24 Congress enacted to provide immediate services and support to school districts in response to the

25 COVID-19 pandemic—such as new technology for distance learning, meals to students and

26 families, increased sanitation and other facilities-related services—and assist with maintaining

27 school staff and programs during the public health crisis.

28 50
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1

C. Immediate and Irreparable Harms to Public Schools and Students

2

148. The Plaintiff States and Plaintiff LEAs also have an interest in protecting the health,

3 safety, education, and well-being of their residents and students. The Department’s interpretation

4 severely impacts the use of the emergency ESSER/GEER funds for public-school students

5 affected by the COVID-19 pandemic. It therefore jeopardizes the education of the Plaintiff

6 States’ and LEAs’ more than ten million public-school students.

7

149. Indeed, above and beyond their state constitutional obligations to educate school-aged

8 children, as set forth above, the States have made it a priority to ensure that vulnerable students

9 like those who are served by Title I-A receive robust educational opportunities. See, e.g., Cal.

10 Educ. Code §§ 8801 (Healthy Start Support Services for Children Act), 42920 (educational

11 services for foster youth); Wis. Stat. §§ 118.43-44 (Achievement Gap Reduction Program),

12 121.136 (state aid for high-poverty school districts), 115.28(23) & 115.43-44 (Wisconsin

13 Educational Opportunity Program); Md. Code Ann., Educ. §§ 5-216 (Maryland Early Literacy

14 Initiative for qualifying Title I schools), 7-101.2 (Prekindergarten Expansion Grant Program and

15 Fund), 7-602 (State Free Feeding Program); Md. Code Regs. 13A.01.06 (educational equity focus

16 on marginalized student groups), 13A.08.07 (School Stability for Foster Students); Haw. Rev.

17 Stat. § 302a-449 (Title I-Funded Prekindergarten). The Rule undermines and frustrates these

18 State policies.

19

150. Option #2 (Private school enrollment Option) of the Rule harms the States’ and

20 LEAs’ interest in providing educational opportunities for their most vulnerable students by

21 requiring LEAs to divert moneys away from their public schools to private-school students who

22 are not at-risk and therefore would not be eligible for equitable services under Title I-A.

23

151. Even if LEAs in Plaintiff States and Plaintiff LEAs calculate the proportional share of

24 CARES Act funds for private-school students under Option #1 in the Rule, public schools in the

25 Plaintiff States and LEAs that were intended to receive money under the CARES Act will lose

26 access to these funds. Non-Title I schools will receive no funds. And Title I schools will not be

27 able to use the CARES Acts to cover existing, ongoing costs, even if related to the pandemic, as

28 such allocation would lead to a violation of the LEA’s Title I-A supplanting prohibition. 51

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1

152. Public school systems depend on state moneys. The CARES Act education

2 stabilization funding is intended to assist public school systems, including both Title I and non-

3 Title I schools, to address the numerous issues created by the pandemic. Private-school interests

4 are addressed through eligibility for other stimulus funding within the CARES Act.

5

153. Protecting and maintaining public-school education in the Plaintiff States and

6 Plaintiff LEAs is imperative to ensuring the long-term success of students. The loss of federal

7 funding for public schools will have significant, adverse impacts on public-school students. The

8 States have an interest in ensuring that funds are not diverted from other vital state priorities and

9 programs providing long-term assistance to public-school students who would otherwise have had

10 access to a free and quality public education absent the Rule.

11

154. The Rule will injure the States’ interests by causing significant harm to their

12 residents, including children and other students who attend K-12 public-school educational

13 institutions within the States.

14

CAUSES OF ACTION

15

COUNT I

Violation of Separation of Powers Principles 16

17

155. Plaintiffs incorporate by reference the foregoing paragraphs of this Complaint as if set

18 forth herein.

19

156. Article I, Section 1 of the U.S. Constitution enumerates that “[a]ll legislative Powers

20 herein granted shall be vested in . . . Congress.”

21

157. Article I, Section 8 of the U.S. Constitution vests exclusively in Congress the

22 spending power to “provide for . . . the general Welfare of the United States.”

23

158. The executive branch’s authority to act “must stem either from an act of Congress or

24 from the Constitution itself.” Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 585

25 (1952); see also Clinton v. City of New York, 524 U.S. 417, 438 (1998) (“[N]o provision in the

26 Constitution . . . authorizes the President to enact, to amend, or to repeal statutes.”).

27

159. This principle is particularly strong in the spending context, because “[w]hen it comes

28 to spending, the President has none of his own constitutional powers to rely upon.” California v. 52
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1 Trump, No. 19-16299, 2020 WL 3480841, at *16 (9th Cir. June 26, 2020) (quoting San

2 Francisco, 897 F.3d at 1233–34). Thus, “[a]bsent congressional authorization, the

3 Administration may not redistribute or withhold properly appropriated funds in order to effectuate

4 its own policy goals.” See San Francisco, 897 F.3d at 1235. Nor may it impose conditions on

5 funds appropriated by Congress without congressional authorization. See id. at 1233–34.

6

160. The Department’s Rule and Guidance Document require LEAs to allocate or use

7 GEER and ESSER funds in a manner that is contrary to the plain language of Section 18005 of

8 the CARES Act, thereby violating constitutional separation of powers principles by requiring

9 distribution of funds based on conditions not provided for in the CARES Act. Defendants did not

10 have inherent authority to change the manner in which LEAs distribute the GEER and ESSER

11 funds. Nor did Congress afford Defendants any discretion or authority to issue rules governing

12 the LEAs’ allocation or use of these funds through the CARES Act.

13

161. By unilaterally imposing its interpretation of Section 18005 of the CARES Act, the

14 Department abrogated the significant discretion given to the SEAs and LEAs in the CARES Act

15 and usurped Congress’ power to legislate in violation of the principles of separation of powers.

16

162. Absent injunctive and declaratory relief suspending and vacating the Rule and the

17 Guidance Document, Plaintiffs and their residents will be immediately, continuously, and

18 irreparably harmed by Defendants’ illegal actions.

19

COUNT II

20

Ultra Vires Action

21

163. Plaintiffs incorporate by reference the foregoing paragraphs of this Complaint as if set

22 forth herein.

23

164. An agency acts ultra vires when it exceeds its statutory authority conferred by

24 Congress.

25

165. There is no provision in the CARES Act that imposes the proportional share

26 calculations, use restrictions, or eligibility requirements in the Rule for CARES Act funds.

27 Further, Congress has not delegated to Defendants the authority to impose such requirements.

28 53
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1

166. Nothing in the CARES Act requires LEAs to calculate the private-school student

2 share of CARES Act funds using the Section 8501 calculation; prohibits non-Title I schools from

3 receiving funds; prohibits Title I schools from using CARES Act funds on any of the permissible

4 uses in the statute; or requires LEAs to provide equitable services to all private-school students.

5 Moreover, Congress explicitly required that LEAs follow Section 1117 when apportioning

6 CARES Act funds for equitable services and determining which private students were eligible for

7 such services. Congress also explicitly listed permitted uses for the CARES Act funds and

8 permitted both Title I and non-Title I schools to receive and use CARES Act funds.

9

167. Through the CARES Act, Congress required the Department to issue ESSER funds to

10 Plaintiff States’ SEAs without conditioning the receipt of funds on Plaintiffs’ agreement to

11 require LEAs to calculate the proportional share for equitable services with the improper Section

12 8501 formula, prohibit non-Title I schools from receiving funds, prohibit Title I schools from

13 using CARES Acts on any of the permissible uses in the statute, or require LEAs to provide

14 equitable services to all private-school students.

15

168. Absent injunctive and declaratory relief suspending and vacating the Rule and the

16 Guidance Document, Plaintiffs and their residents will be immediately, continuously, and

17 irreparably harmed by Defendants’ illegal actions.

18

COUNT III

19

Spending Clause

20

169. Plaintiffs incorporate by reference the foregoing paragraphs of this Complaint as if set

21 forth herein.

22

170. Article I, Section 8, Clause 1 of the United States Constitution, also known as the

23 Spending Clause, states that “Congress shall have Power to lay and collect Taxes, Duties, Imposts

24 and Excises, to pay the Debts and provide for the common Defense and general Welfare of the

25 United States[.]”

26

171. Under the Spending Clause, conditions may not be placed on federal funds that are

27 (1) so coercive that they compel (rather than encourage) recipients to comply, (2) ambiguous, (3)

28 54
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1 retroactive, or (4) unrelated to the federal interest in a particular program. Nat’l Fed’n of Indep.

2 Bus. v. Sebelius (NFIB), 567 U.S. 519, 575–78 (2012); South Dakota, 483 U.S. at 206–08.

3

172. To the extent that Congress delegated its authority to the Department to impose its

4 own requirements on the allocation and use of GEER and ESSER funds (which it has not), the

5 Department’s Rule and Guidance Document violate the Spending Clause of the U.S. Constitution.

6

173. The Department’s interpretation of Section 18005 of the CARES Act in the Rule and

7 Guidance Document violates the relatedness requirement under the Spending Clause because it is

8 contrary to Congress’s plainly expressed intent in the CARES Act to require SEAs and LEAs to

9 follow Section 1117 when apportioning CARES Act funds for equitable services and determining

10 which private-school students were eligible for such services, and to permit specific uses for the

11 CARES Act funds by both Title I and non-Title I schools.

12

174. The Department’s Rule and Guidance Document also violate the “unambiguous”

13 requirement under the Spending Clause. Congress has not “unambiguously” imposed the

14 requirement that LEAs calculate and set aside their GEER and ESSER Funds for equitable

15 services to all private-school students and teachers, provide equitable services to all private-

16 school students, limit their uses of funds, and limit their distribution of funds to Title I schools

17 only. See Pennhurst, 451 U.S. at 17 (“[I]f Congress intends to impose a condition on the grant of

18 federal moneys, it must do so unambiguously.”).

19

175. In addition, the Department’s interpretation was an improper “post-acceptance”

20 restriction. Id. at 17, 25. States and LEAs “cannot knowingly accept conditions of which they

21 are ‘unaware’ or which they are ‘unable to ascertain.’” Arlington Cent. Sch. Dist. Bd. of Educ. v.

22 Murphy, 548 U.S. 291, 296 (2006) (quoting Pennhurst, 451 U.S. at 17). Accordingly, the

23 Spending Clause does not permit what the Department has improperly done here through

24 unauthorized rulemaking: “surprising participating States with post acceptance or ‘retroactive’

25 conditions” on congressionally appropriated funds. Pennhurst, 451 U.S. at 25; see also NFIB,

26 567 U.S. at 519.

27

176. Plaintiff States and Plaintiff LEAs did not know of the Department’s interpretation at

28 the time they applied for and received emergency financial aid grants from the GEER and ESSER 55
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1 funds. Therefore, they were unable to exercise their choice knowingly, cognizant of the

2 consequences of their participation, and they were surprised with post acceptance or retroactive

3 conditions.

4

177. Absent injunctive and declaratory relief suspending and vacating the Rule and the

5 Guidance Document, Plaintiffs and their residents will be immediately, continuously, and

6 irreparably harmed by Defendants’ illegal actions.

7

COUNT IV

8

Violation of the Administrative Procedure Act (Agency Action in Excess of Statutory Authority, Short of Statutory Right, or Not in

9

Accordance with Law)

10

178. Plaintiffs incorporate by reference the foregoing paragraphs of this Complaint as if set

11 forth herein.

12

179. The APA requires that a court hold unlawful and set aside agency action, findings,

13 and conclusions found to be in excess of statutory authority, short of statutory right, or not in

14 accordance with law. 5 U.S.C. § 706(2)(A), (C).

15

180. Congress did not grant the Department authority to interpret or make rules regarding

16 Section 18005 of the CARES Act. The Department’s Rule and the Guidance Document are

17 unauthorized by and contrary to Section 18005 of the CARES Act. They therefore are in excess

18 of statutory authority, short of statutory right, and not in accordance with law.

19

181. To the extent the Department claims that its Guidance Document is merely an

20 interpretation contained in a policy statement, agency manual, or enforcement guideline that lacks

21 the force of law, the Department’s interpretation is entitled to no or only limited deference. The

22 Guidance Document is not persuasive, nor does it reflect thorough consideration, and is contrary

23 to the plain language of the statute it purports to interpret. Congress’s intent in the CARES Act is

24 clear that equitable services are to be provided by LEAs to private-school students and teachers in

25 the same manner as required under Section 1117 of the ESEA.

26

27

28 56
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1

182. Absent injunctive and declaratory relief suspending and vacating the Rule and the

2 Guidance Document, Plaintiffs and their residents will be immediately, continuously, and

3 irreparably harmed by Defendants’ illegal actions.

4

COUNT V

5

Violation of the Administrative Procedure Act (Arbitrary and Capricious Agency Action)

6

183. Plaintiffs incorporate by reference the foregoing paragraphs of this Complaint as if set

7 forth herein.

8

184. The APA requires that a court hold unlawful and set aside agency action, findings,

9 and conclusions found to be arbitrary, capricious, or an abuse of discretion. 5 U.S.C.

10 § 706(2)(A).

11

185. A rule is arbitrary and capricious if the agency has “relied on factors which Congress

12 has not intended it to consider, entirely failed to consider an important aspect of the problem,

13 offered an explanation for its decision that runs counter to the evidence before the agency, or is so

14 implausible that it could not be ascribed to a difference in view or the product of agency

15 expertise.” State Farm, 463 U.S. at 43.

16

186. The Department’s interpretation of Section 18005 of the CARES Act in the Rule and

17 the Guidance Document is arbitrary and capricious agency action because, among other reasons,

18 the Department failed to articulate how its position comports with the plain text of Section 18005

19 of the CARES Act and why it was reversing its own guidance regarding how equitable services

20 under Section 1117 should be provided, generating an unexplained inconsistency in the

21 Department’s position of which it appears to be unaware. Further, the Department ignores

22 important aspects of the problem, and its decision to enact the Rule runs counter to the evidence

23 before the Department. The Department also took into account factors Congress did not intend it

24 to consider. Finally, the Department failed to take into account the reliance interests that its

25 former position generated.

26

27

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1

187. Absent injunctive and declaratory relief suspending and vacating the Rule and the

2 Guidance Document, Plaintiffs and their residents will be immediately, continuously, and

3 irreparably harmed by Defendants’ illegal actions.

4

COUNT VI

Violation of the Administrative Procedure Act

5

(Agency Action Without Observance of Procedure Required by Law)

6

188. Plaintiffs incorporate by reference the foregoing paragraphs of this Complaint as if set

7 forth herein.

8

189. The APA requires that a court hold unlawful and set aside agency action, findings,

9 and conclusions found to be without observance of procedure required by law. 5 U.S.C.

10 § 706(2)(D).

11

190. The agency must publish a “[g]eneral notice of proposed rulemaking” in the Federal

12 Register. 5 U.S.C. § 553(b). That notice must describe “either the terms or substance of the

13 proposed rule or a description of the subjects and issues involved.” 5 U.S.C. § 553(b)(3).

14

191. The agency must further provide “interested persons” an “opportunity to participate

15 in the rule making through submission of written data, views, or arguments with or without

16 opportunity for oral presentation.” 5 U.S.C. § 553(c).

17

192. The Rule is a legislative rule adopted without complying with the notice and

18 comment requirements of the APA.

19

193. The Rule was issued on an interim final basis without good cause.

20

194. The Department failed to establish good cause to waive the notice and public

21 procedures required under the APA due to these procedural requirements being impracticable,

22 unnecessary, or contrary to the public interest. 5 U.S.C. § 553(b).

23

195. Absent injunctive and declaratory relief suspending and vacating the Rule and the

24 Guidance Document, Plaintiffs and their residents will be immediately, continuously, and

25 irreparably harmed by Defendants’ illegal actions.

26

PRAYER FOR RELIEF

27

WHEREFORE, Plaintiffs request that this Court enter judgment in their favor and grant

28 the following relief: 58
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1

a. Declare the Rule and all versions of the Guidance Document unlawful within the

2 meaning of 5 U.S.C. § 706(2)(A), (C), & (D);

3

b. Preliminarily and permanently enjoin the Department and its officers, employees, and

4 agents from applying and enforcing the Rule or all versions of the Guidance Document;

5

c. Vacate and set aside the Rule and all versions of the Guidance Document;

6

d. Award Plaintiffs reasonable costs and expenses, including attorneys’ fees; and

7

e. Grant such other and further relief as the Court deems just and proper.

8 Dated: July 17, 2020

9

10

DANA NESSEL Attorney General of Michigan

11 /s/ Toni L. Harris

12 *FADWA A. HAMMOUD

13

Solicitor General *TONI L. HARRIS

14

*NEIL GIOVANATTI Assistant Attorneys General

15

Attorneys for Plaintiff State of Michigan *Appearing pro hac vice

16

17

Respectfully Submitted,
XAVIER BECERRA Attorney General of California MICHAEL NEWMAN Senior Assistant Attorney General SARAH E. BELTON Supervising Deputy Attorney General /s/ Garrett M. Lindsey GARRETT M. LINDSEY JAMES F. ZAHRADKA II REBEKAH A. FRETZ Deputy Attorneys General Attorneys for Plaintiff State of California

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28 59
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1 KARL A. RACINE

2 Attorney General of District of Columbia

3 /s/ Kathleen Konopka

KATHLEEN KONOPKA 4 Deputy Attorney General, Public Advocacy

Division 5 Attorneys for Plaintiff District of Columbia

6

Appearing pro hac vice (application forthcoming)

7 CLARE E. CONNORS
8 Attorney General of Hawaii

9 /s/ Kevin M. Richardson

10 HOLLY T. SHIKADA KEVIN M. RICHARDSON
11 Deputy Attorneys General

12

Attorneys for Plaintiff State of Hawaii Appearing pro hac vice (application

13 forthcoming)

14 AARON M. FREY

15 Attorney General of Maine

16 /s/ Sarah A. Forster SARAH A. FORSTER*
17 Assistant Attorney General

18

Attorneys for Plaintiff State of Maine *Appearing pro hac vice

19 BRIAN E. FROSH
20 Attorney General of Maryland

21 /s/ Steven M. Sullivan

22 STEVEN M. SULLIVAN

Solicitor General 23 Attorneys for Plaintiff State of Maryland

24

Appearing pro hac vice (application forthcoming)

25

26

HECTOR BALDERAS New Mexico Attorney General
/s/ Lisa Giandomenico
P. CHOLLA KHOURY LISA GIANDOMENICO* Assistant Attorneys General Attorneys for Plaintiff State of New Mexico *Appearing pro hac vice
JOSH SHAPIRO Attorney General of Pennsylvania
/s/ Michael J. Fischer
MICHAEL J. FISCHER Chief Deputy Attorney General Attorneys for Plaintiff Commonwealth of Pennsylvania Appearing pro hac vice (application forthcoming)
JOSHUA L. KAUL Attorney General of Wisconsin
/s/ Hannah S. Jurss
HANNAH S. JURSS Assistant Attorney General Attorneys for Plaintiff State of Wisconsin Appearing pro hac vice (application forthcoming)
JAMES E. JOHNSON Corporation Counsel of the City of New York
/s/ Eric Proshansky
ERIC PROSHANSKY HOPE LU GAIL RUBIN Assistant Corporation Counsel Attorneys for Plaintiff the Board of Education of the City School District of the City of New York Appearing pro hac vice (application forthcoming)

27

28 60
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1 BOARD OF EDUCATION, CITY OF CHICAGO DEPARTMENT OF LAW
2 /s/ Joseph Moriarty
3 JOSEPH MORIARTY
4 General Counsel J. ERNEST MINCY
5 Deputy General Counsel for Litigation Attorneys for Plaintiff Chicago Board of
6 Education (pro hac vice applications forthcoming)
7
8 SAN FRANCISCO UNIFIED SCHOOL DISTRICT
9 /s/ Danielle Houck

SQUIRE PATTON BOGGS (US) LLP
/s/ Gabriel Colwell
GABRIEL COLWELL (CABN 216783) COLIN R. JENNINGS (OHBN 0068704) W. MICHAEL HANNA (OHBN 0020149) EMILY R. SPIVACK (OHBN 0090777)
KEVIN J. BURTZLAFF (OHBN 0039648) Cleveland Municipal School District Board of Education Attorneys for Plaintiff Cleveland Municipal School District Appearing pro hac vice (application forthcoming)

10 DANIELLE HOUCK General Counsel
11 SUSANNE NAOMI STARECKI KIM Sr. Deputy General Counsel
12 Legal Department Attorneys for Plaintiff San Francisco Unified
13 School District

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1

ATTESTATION OF SIGNATURES

2

I, Garrett M. Lindsey, hereby attest, pursuant to Local Civil Rule 5-1(i)(3) of the Northern

3 District of California that concurrence in the filing of this document has been obtained from each

4 signatory hereto.

5 Dated: July 17, 2020 6 7 8

/s/ Garrett M. Lindsey
GARRETT M. LINDSEY Deputy Attorney General Attorney for State of California

9

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11

12

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Exhibit A

Case 3:20-cv-04478-SK Document 24 Filed 07/17/20 Page 67 of 88
PROVIDING EQUITABLE SERVICES TO STUDENTS AND TEACHERS IN NON-PUBLIC SCHOOLS
UNDER THE CARES ACT PROGRAMS
U.S. Department of Education Washington, D.C. 20202 April 30, 2020

Case 3:20-cv-04478-SK Document 24 Filed 07/17/20 Page 68 of 88
Purpose of this Document The purpose of this document is to provide information about equitable services for students and teachers in non-public schools under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Public Law 116-136, 134 Stat. 281 (Mar. 27, 2020). The CARES Act authorized the Education Stabilization Fund (ESF), which is a new appropriation of approximately $30.75 billion that creates funding streams for several distinct education programs that address the impact of the Novel Coronavirus Disease 2019 (COVID-19) on educational services across the Nation. Under these programs, the U.S. Department of Education (Department) will make awards to Governors, State educational agencies (SEAs), and institutions of higher education (IHEs) to help States to prevent, prepare for, and respond to the devastating effects of COVID-19. The provisions of the CARES Act relevant to the ESF and other Department programs are available on the Department’s website at https://oese.ed.gov/offices/education-stabilization-fund/. Two programs in the ESF require a local educational agency (LEA) that receives funds to provide equitable services to students and teachers in non-public schools:
x The Governor’s Emergency Education Relief Fund (GEER Fund) totaling $2,953,230,000 (Section 18002 of the CARES Act).
x The Elementary and Secondary School Emergency Relief Fund (ESSER Fund) totaling $13,229,265,000 (Section 18003 of the CARES Act).
Other than statutory and regulatory requirements included in the document, such as those pursuant to the authorizing statute and other applicable laws and regulations, the contents of the guidance do not have the force and effect of law and are not meant to bind the public in any way. This document is intended only to provide clarity to the public regarding existing requirements under the law or agency policies. In addition, it does not create or confer any rights for or on any person. The Department will provide additional or updated information as necessary on the Department’s COVID-19 webpage: https://www.ed.gov/coronavirus. If you have questions that are not answered in this document, please e-mail COVID-19@ed.gov.
ii

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Table of Contents
1. Does the requirement to provide equitable services to students and teachers in nonpublic schools apply to any programs under the CARES Act? .........................................1 2. What is a “non-public school” under the CARES Act programs?.................................1 3. Is a for-profit non-public school eligible to receive equitable services for its students and teachers under the CARES Act programs? .................................................................1 4. Which LEA is responsible for providing equitable services to non-public school students and teachers under the CARES Act programs? ...................................................1 5. Must an LEA or another public agency maintain control of CARES Act funds used to provide equitable services? ................................................................................................2 6. Who is responsible for initiating the consultation process and how should it begin? ...2 7. How does an LEA that receives funds under the CARES Act programs provide equitable services “in the same manner as provided under section 1117 of the ESEA”? .3 8. Must an LEA offer to provide equitable services under the CARES Act programs to students and teachers in all non-public schools located in the LEA, even if a non-public school has not previously participated in equitable services under Title I, Part A or Title VIII of the ESEA?..............................................................................................................5 9. Are all students and teachers in a non-public school eligible to receive equitable services under the CARES Act programs? ........................................................................5 10. How does an LEA determine the proportional share of funds that must be reserved to provide equitable services to non-public school students and teachers under the CARES Act programs? ....................................................................................................................6
A. What is the base amount on which the proportional share is determined? .............6 B. What data does an LEA use to determine the proportional share?..........................6 C. How does an LEA calculate the proportional share? ..............................................6 11. After an LEA has determined the proportional share of funds for equitable services under each CARES Act program, how does it then determine the amount of funds available for services to students and teachers in individual non-public schools? ............7 12. Do the requirements in 34 C.F.R. § 200.66 apply to equitable services under the CARES Act programs? ......................................................................................................7 13. Is a non-public school whose students and teachers receive equitable services under the CARES Act programs a “recipient of Federal financial assistance”?..........................8 14. What services and benefits under the CARES Act programs are available to nonpublic school students and teachers?..................................................................................8
iii

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Providing Equitable Services to Students and Teachers in Non-Public Schools under the CARES Act Programs
1. Does the requirement to provide equitable services to students and teachers in nonpublic schools apply to any programs under the CARES Act?
Yes. The CARES Act establishes two new funds to which equitable services requirements apply. Specifically, a local educational agency (LEA) that receives funds under either the Governor’s Emergency Education Relief Fund (GEER Fund) (section 18002 of the CARES Act) or the Elementary and Secondary School Emergency Relief Fund (ESSER Fund) (section 18003 of the CARES Act) (“CARES Act programs” for purposes of this document) to provide equitable services to students and teachers in non-public schools in the same manner as provided under section 1117 of the Elementary and Secondary Education Act of 1965 (ESEA). (Section 18005(a) of the CARES Act).
An institution of higher education or education-related entity that receives funds under the GEER Fund is not required to provide equitable services to students and teachers in nonpublic schools.
2. What is a “non-public school” under the CARES Act programs?
A “non-public school” means a non-public elementary or secondary school that (A) is accredited, licensed, or otherwise operates in accordance with State law; and (B) was in existence prior to the date of the qualifying emergency for the CARES Act programs. For purposes of this definition, the date of the qualifying emergency is March 13, 2020. (Section 18007(6) of the CARES Act).
3. Is a for-profit non-public school eligible to receive equitable services for its students and teachers under the CARES Act programs?
No. A for-profit non-public school is not eligible to receive equitable services for its students and teachers under the CARES Act programs. Section 18007(6) of the CARES Act defines a “non-public school” as a non-public elementary or secondary school. Section 18007(8) of the CARES Act incorporates the definitions in ESEA section 8101 for any terms not defined in the CARES Act. ESEA section 8101(19) and (45) defines “elementary school” and “secondary school,” respectively, and specifies that they must be non-profit.
4. Which LEA is responsible for providing equitable services to non-public school students and teachers under the CARES Act programs?
The Department has determined that, under the CARES Act programs, the LEA in which a non-public school is located is responsible for providing equitable services to students and teachers in the school, as it is under most ESEA programs that require an LEA to provide equitable services. Outside of Title I, Part A, the responsibility typically falls on the LEA in which a non-public school is located because equitable services are generally available
1

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to all students or teachers in the non-public school in the LEA and the LEA in which the school is located is closest and best able to meet the needs of students and teachers.
Title I, Part A of the ESEA is different; ESEA section 1117 sets forth a student residency requirement, rather than a school location requirement, for receipt of equitable services under Title I, Part A. Only low-achieving students who live in a participating Title I public school attendance area are eligible for services and, therefore, the LEA where students reside is responsible for providing equitable services. The CARES Act programs have no such residency requirement for eligibility for services. Rather, the CARES Act programs provide LEAs full discretion, unless funds are targeted for a specific purpose or population of public and non-public school students by the Governor under the GEER Fund or by an SEA through the SEA reserve under the ESSER Fund (see section 18003(e) of the CARES Act), to use CARES Act funds to provide educational services to students in public and non-public schools in the LEA through a broad range of allowable activities. Thus, providing equitable services with CARES Act funds is similar to other ESEA programs where equitable services are provided by the LEA in which a non-public school is located.
5. Must an LEA or another public agency maintain control of CARES Act funds used to provide equitable services?
Yes. Control of funds for services and assistance provided to non-public school students and teachers under the CARES Act programs, and title to materials, equipment and property purchased with such funds, must be in a public agency, and a public agency must administer such funds, materials, equipment, and property. In other words, no funds may go directly to a non-public school. In addition, services for non-public school students and teachers must be provided by a public agency directly or through contract with another public or private entity. (Section 18005(b) of the CARES Act).
6. Who is responsible for initiating the consultation process and how should it begin?
Similar to how an LEA provides equitable services under the ESEA, an LEA is responsible for initiating the consultation process. It must contact officials in all non-public schools in the LEA to notify them of the opportunity for their students and teachers to obtain equitable services under the CARES Act programs. Through this initial contact, the LEA can explain the services available under the CARES Act programs and how non-public school students and teachers can participate. If non-public school officials have not been contacted, they may contact the LEA or the State ombudsman to inquire about equitable services under the CARES Act programs.
If non-public school officials want equitable services for their students and teachers, the LEA must consult with those officials during the design and development of the LEA’s programs and before the LEA makes any decision that affects the opportunity of nonpublic school students and teachers to participate in the activities funded under the CARES Act programs. If a non-public school declines to participate in the CARES Act programs or does not respond to an LEA’s good-faith effort to make contact, the LEA has no further responsibility to provide equitable services to students or teachers in that school. The LEA, however, must be able to demonstrate that it made a good faith effort to contact all the nonpublic schools in the LEA.
2

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7. How does an LEA that receives funds under the CARES Act programs provide equitable services “in the same manner as provided under section 1117 of the ESEA”?
An LEA that receives funds under the CARES Act programs must provide equitable services to students and teachers in a non-public school in the same manner as provided under section 1117 of the ESEA, as determined in consultation with representatives of non-public schools. (Section 18005(a) of the CARES Act). This requirement, on its face, necessitates that the Department interpret how the requirements of section 1117 apply to the CARES Act programs, given that an LEA under the CARES Act programs may serve all non-public school students and teachers without regard to family income, residency, or eligibility based on low achievement. Unless the requirements of section 1117 would limit equitable services under the CARES Act programs, we conclude they apply as outlined below.
We have interpreted “in the same manner as under section 1117” in light of the significantly broader eligibility and uses of funds authorized under the CARES Act as compared to Title I, Part A, reasonably reconciling differences. In doing so, we gave meaning to section 1117(a)(3), which requires educational services and other benefits for students in non-public schools to be equitable in comparison to those for public school students. The services that an LEA may provide under the CARES Act programs are clearly available to all public school students and teachers, not only low-achieving students and their teachers as under Title I, Part A. Similarly, there is no limitation on residence in a participating Title I public school attendance area for services provided in public schools under the CARES Act programs. For CARES Act services to be equitable in comparison to public school students and teachers, it follows that the same principles must apply in providing equitable services to non-public school students and teachers.
The following describes how the provisions of ESEA section 1117 apply, reconciled, when necessary, to meet the purposes of the CARES Act programs:
x 1117(a)(1) – Under Title I, Part A, an LEA must provide equitable services to lowachieving students as defined in ESEA section 1115(c) who reside in a participating Title I public school attendance area and attend a non-public school and their teachers. Under the CARES Act programs, an LEA may provide equitable services with CARES Act funds to any students and teachers in non-public schools, unless limited by a Governor under section 18002 of the CARES Act or an SEA through the SEA’s reserve under section 18003(e) of the CARES Act. (See Questions #8 and #9).
x 1117(a)(2) – Under both Title I, Part A and the CARES Act programs, an LEA must provide equitable services and other benefits, including materials and equipment, that are secular, neutral, and nonideological.
x 1117(a)(3)(A) – Under both Title I, Part A and the CARES Act programs, an LEA must provide services and other benefits for non-public school students and teachers in a timely manner that are equitable in comparison to the services and benefits provided for public school students and teachers.
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x 1117(a)(3)(B) – Under Title I, Part A, an SEA must designate an ombudsman to monitor and enforce the equitable services requirements. An SEA must use the ombudsman also to monitor and enforce the requirements of the CARES Act programs that an LEA provide equitable services to students and teachers in nonpublic schools.
x 1117(a)(4)(A) – Under both Title I, Part A and the CARES Act programs, an LEA must determine the proportional share available to provide equitable services to students and teachers in non-public schools based on the total amount of funds an LEA receives prior to any allowable expenditures or transfers. Under the CARES Act programs, the LEA calculates the proportional share based on the number of children enrolled in each non-public school whose students or teachers participate in the CARES Act programs compared to the number of students enrolled in public schools in the LEA. The LEA makes this determination under each CARES Act program separately. (See Question #10).
x 1117(a)(4)(B) – Under Title I, Part A, an LEA must obligate funds available for equitable services in the fiscal year for which the funds are received by the LEA. An LEA must obligate CARES Act funds for equitable services in the fiscal years for which those funds are intended for services to address the impact of COVID-19.
x 1117(a)(4)(C) – Under both Title I, Part A and the CARES Act programs, an SEA must provide notice in a timely manner to appropriate non-public school officials in the State of the allocation of funds for educational services and other benefits that each LEA has determined are available for non-public school students and teachers.
x 1117(b)(1) – Under both Title I, Part A and the CARES Act programs, an LEA must consult with appropriate non-public school officials during the design and development of the LEA’s activities on relevant issues such as those contained in this section of Title I, Part A. The LEA and non-public school officials shall both have the goal of reaching agreement on how to provide equitable and effective services and the LEA must transmit the results of that agreement to the ombudsman.
x 1117(b)(2) – Under both Title I, Part A and the CARES Act programs, if an LEA disagrees with the views of non-public school officials during consultation, the LEA must provide in writing to the non-public school officials the reasons why the LEA disagrees.
x 1117(b)(3) – Under both Title I, Part A and the CARES Act programs, consultation must occur before an LEA makes any decision that affects the opportunities of nonpublic students and teachers to receive equitable services. Meetings between the LEA and non-public school officials need not occur in person if they cannot be conducted due to closed schools or social distancing rules. In this case, the Department recommends LEAs and non-public school officials consult remotely.
x 1117(b)(4) – Under both Title I, Part A and the CARES Act programs, consultation must include discussion of service delivery mechanisms an LEA may use to provide equitable services.
x 1117(b)(5) – Under both Title I, Part A and the CARES Act programs, an LEA must maintain and provide to the SEA written affirmation signed by non-public
4

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school officials that timely and meaningful consultation has occurred and, if nonpublic school officials do not provide such affirmation, the LEA must forward to the SEA the documentation that such consultation has, or attempts at such consultation have, taken place. x 1117(b)(6) – Under both Title I, Part A and the CARES Act programs, non-public school officials have a right to file a complaint with the SEA; the SEA must provide services directly or through contracts if requested to do so by non-public school officials and the SEA determines that the LEA did not meet applicable requirements. x 1117(c)(1) – Under Title I, Part A, to determine the proportional share, an LEA must calculate the number of children, ages 5 through 17, who are from lowincome families and reside in a participating Title I public school attendance area. Because an LEA determines the proportional share based on enrollment in public and non-public schools under the CARES Act programs, the LEA need not collect poverty data from non-public schools (see Question #10 for information on determining the proportional share of CARES Act funds the LEA must reserve to provide equitable services to non-public school students and teachers). x 1117(c)(2) – Under Title I, Part A, non-public school officials may file a complaint with the SEA if they dispute the count of children from low-income families. Because an LEA need not collect poverty data to determine the proportional share available for equitable services under the CARES Act programs, there would be no reason for non-public school officials to file a complaint regarding poverty data with the SEA. x 1117(d) – Under Title I, Part A, control of funds and title to materials, equipment, and property must be in public agency. With respect to the CARES Act programs, this provision is superseded by section 18005(b) of the CARES Act, which also requires public control of funds. (See Question #5).
8. Must an LEA offer to provide equitable services under the CARES Act programs to students and teachers in all non-public schools located in the LEA, even if a nonpublic school has not previously participated in equitable services under Title I, Part A or Title VIII of the ESEA?
Yes. An LEA must offer to provide equitable services under the CARES Act programs to students and teachers in all non-public schools located in the LEA, even if a non-public school has not previously participated under Title I, Part A or Title VIII of the ESEA.
9. Are all students and teachers in a non-public school eligible to receive equitable services under the CARES Act programs?
Yes. All students and teachers in a non-public school are eligible to receive equitable services under the CARES Act programs, unless a Governor (under the GEER Fund) or an SEA (through the SEA reserve under the ESSER Fund) targets funds for a specific purpose or population of public and non-public school students. Unlike Title I, Part A, equitable services under the CARES Act programs are not based on residence in a participating Title
5

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I public school attendance area and are also not limited only to low-achieving students and their teachers.
10. How does an LEA determine the proportional share of funds that must be reserved to provide equitable services to non-public school students and teachers under the CARES Act programs?
A. What is the base amount on which the proportional share is determined?
Under ESEA section 1117(a)(4)(A)(ii), an LEA must determine the proportional share available for equitable services from the total amount of Title I, Part A funds it receives prior to reserving funds for allowable expenditures such as administrative costs or districtwide expenditures, and before making allocations to participating public schools. Because section 18005(a) of the CARES Act requires an LEA to provide equitable services under the CARES Act programs “in the same manner as provided under section 1117,” an LEA must use the total allocation it receives under each CARES Act program to determine the proportional share available for equitable services before reserving funds for other purposes.
B. What data does an LEA use to determine the proportional share?
An LEA uses enrollment data in non-public schools whose students and teachers will participate under the CARES Act programs compared to enrollment in public schools in the LEA to determine the proportional share. Under the CARES Act programs, services are available for all students—public and non-public—without regard to poverty, low achievement, or residence in a participating Title I public school attendance area. An LEA that receives CARES Act funds uses those funds to provide educational services to students in both public and non-public schools through a broad range of allowable activities. Using enrollment to determine the proportional share from which to provide equitable services will contribute to the equitable treatment of children and teachers within the statutory universe of permissible uses for CARES Act dollars by allowing all students and teachers in a non-public school to receive services that are equitable compared to those available to all public school students and teachers. (See ESEA section 1117(a)(3)).
C. How does an LEA calculate the proportional share?
To calculate the proportional share for equitable services under the CARES Act programs, an LEA determines the overall number of children who are enrolled in public schools and non-public schools in the LEA that wish to participate under one or both CARES Act programs. Using the proportion of students who are enrolled in participating non-public schools, the LEA determines the amount of funds available for equitable services based on that proportional share of the LEA’s total allocation under each CARES Act program separately. For example, an LEA receiving $100,000 under the GEER Fund and $900,000 under the ESSER Fund, and with 1,350 public school students and 150 non-public school students, would determine the proportional share as follows:
6

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EXAMPLE – DETERMINING THE PROPORTIONAL SHARE

Public

Non-Public*

Total

Enrollment

1,350

150

1,500

Proportion

90%

10%

100%

Proportional Share

$90,000

$10,000

$100,000

GEER Fund

Proportional Share

$810,000

$90,000

$900,000

ESSER Fund

*Non-public schools participating under the CARES Act programs.

11. After an LEA has determined the proportional share of funds for equitable services under each CARES Act program, how does it then determine the amount of funds available for services to students and teachers in individual non-public schools?

For consultation purposes, in order to determine what equitable services to provide to students and teachers in a given non-public school, an LEA, after reserving funds that are reasonable and necessary for administering equitable services under the CARES Act programs, would divide the remainder of the proportional share of funds available for equitable services by the total enrollment in non-public schools whose students and teachers will participate in each of the CARES Act programs to obtain a per-pupil amount. The LEA would then multiply that per-pupil amount by the enrollment in an individual non-public school to determine the amount of services the LEA can provide to students and teachers in that school. With agreement between the LEA and appropriate non-public school officials, the LEA may pool funds among a group of non-public schools and provide equitable services to students and teachers in non-public schools within the pool based on need without regard to how the funds were generated. (See ESEA section 1117(b)(1)(J)(i)).

12. Do the requirements in 34 C.F.R. § 200.66 apply to equitable services under the CARES Act programs?

No. The requirements in 34 C.F.R. § 200.66 do not apply to equitable services under the CARES Act programs. 34 C.F.R. § 200.66 is a Title I, Part A regulation that requires an LEA to provide Title I, Part A services that (1) supplement, and in no case supplant, the services that would, in the absence of Title I, Part A services, be available to participating non-public school students; and (2) only meet the needs of participating non-public school students and not the needs of the non-public school or the general needs of children in the non-public school. These provisions are necessary in the Title I, Part A context because equitable services must be supplemental to what non-public students otherwise receive and may only be provided to low-achieving students who reside in a participating Title I public school attendance area and attend a non-public school.

Equitable services under the CARES Act programs are much broader than under Title I, Part A. Equitable services under the CARES Act programs, by definition, may benefit a non-public school, such as purchasing supplies to sanitize and clean the facility, or all students in a non-public school, such as any activity authorized under the ESEA. Unlike Title I, they are not based on residence in a participating Title I public school attendance

7

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area or limited only to low-achieving students. Moreover, the CARES Act does not have a supplement not supplant requirement.
13. Is a non-public school whose students and teachers receive equitable services under the CARES Act programs a “recipient of Federal financial assistance”?
No. A non-public school whose students and teachers receive equitable services under the CARES Act programs is not a “recipient of Federal financial assistance.” A public agency must control and administer the CARES Act funds; in other words, no funds may go directly to a non-public school. (See Question #5). Thus, a non-public school is not a recipient of Federal financial assistance by virtue of its students and teachers receiving equitable services from an LEA under a CARES Act program. As a result, certain Federal requirements that apply to a recipient of Federal financial assistance are not directly applicable to a non-public school whose students or teachers receive equitable services under the CARES Act programs, unless the school otherwise receives Federal financial assistance for other purposes.
14. What services and benefits under the CARES Act programs are available to nonpublic school students and teachers?
In general, the services and benefits available to non-public school students and teachers are the same as those available to public school students and teachers. Specifically, the ESSER funds that flow to LEAs by formula may be used for a broad range of allowable activities. (See section 18003(d) of the CARES Act). The ESSER funds that an SEA may reserve for State purposes may also be used for a broad range of activities to address issues responding to COVID-19, unless the SEA decides to target them for a specific purpose or population of public and non-public school students. For example, an SEA could target the SEA reserve to provide technology to support distance learning for public and non-public school students from low-income families. (See section 18003(e) of the CARES Act). Similarly, a Governor may target GEER funds that it makes available to an LEA for a specific purpose or population of public and non-public school students. (See section 18002(c)(1) or (3) of the CARES Act).
In sum, equitable services permitted under sections 18002(c)(1) or (3), as applicable, and 18003(d) of the CARES Act must be available to best meet the needs of non-public school students and teachers, as determined through timely and meaningful consultation and consistent with any specific purposes established by a Governor under the GEER Fund or SEA through the SEA reserve under the ESSER Fund, regardless of the specific uses determined by the LEA to meet its own students’ and teachers’ particular needs.
As noted in Question #5, the control of any services or assistance provided to students and teachers in a non-public school, and title to materials, equipment, and property purchased with CARES Act funds, must be in a public agency and a public agency must administer those funds, materials, equipment, and property. A public entity must provide those services either directly or through a contract with a public or private entity.
8

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Exhibit B

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 Case 3:20-cv-04478-SK Document 35 Filed 07/20/20 Page 1 of 72

1 XAVIER BECERRA Attorney General of California
2 MICHAEL NEWMAN Senior Assistant Attorney General
3 SARAH E. BELTON Supervising Deputy Attorney General
4 REBEKAH A. FRETZ JAMES F. ZAHRADKA II
5 GARRETT M. LINDSEY (SBN 293456) Deputy Attorneys General
6 300 South Spring Street, Suite 1702 Los Angeles, CA 90013
7 Telephone: (213) 269-6402 E-mail: Garrett.Lindsey@doj.ca.gov
8 Attorneys for Plaintiff State of California

9 IN THE UNITED STATES DISTRICT COURT
10 FOR THE NORTHERN DISTRICT OF CALIFORNIA
11 SAN FRANCISCO DIVISION
12

13 STATE OF MICHIGAN, STATE OF

Case No. 3:20-cv-04478-SK

CALIFORNIA, DISTRICT OF 14 COLUMBIA, STATE OF HAWAII, STATE PLAINTIFFS’ NOTICE OF MOTION

OF MAINE, STATE OF MARYLAND, 15 STATE OF NEW MEXICO,

AND MOTION FOR PRELIMINARY INJUNCTION; MEMORANDUM OF

COMMONWEALTH OF 16 PENNSYLVANIA, STATE OF

POINTS AND AUTHORITIES IN SUPPORT THEREOF

WISCONSIN, THE BOARD OF 17 EDUCATION FOR THE CITY SCHOOL Date:

August 24, 2020

DISTRICT OF THE CITY OF NEW YORK, Time: 18 BOARD OF EDUCATION FOR THE CITY Judge:

9:30 AM Hon. Sallie Kim

OF CHICAGO, CLEVELAND 19 MUNICIPAL SCHOOL DISTRICT

Trial Date: None set Action Filed: July 7, 2020

BOARD OF EDUCATION, and SAN 20 FRANCISCO UNIFIED SCHOOL

DISTRICT, 21

Plaintiffs, 22

v. 23

24 ELISABETH D. DEVOS, in her official capacity as the United States Secretary of
25 Education, and UNITED STATES DEPARTMENT OF EDUCATION,
26
Defendants. 27

28

Pls.’ Notice of Mot. and Mot. for Prelim. Inj. (3:20-cv-4478-SK)

Case 3:20-cv-04478-SK Document 35 Filed 07/20/20 Page 2 of 72

1

TABLE OF CONTENTS

2

Page

3 Introduction ..................................................................................................................................... 1

4 Background ..................................................................................................................................... 3

I. The Pandemic’s Effect on Public Elementary and Secondary Education............... 3

5

II. ESSER and GEER Funds to Assist Public Schools ................................................ 5

6

III. The Department’s Guidance and the Rule .............................................................. 6

7

IV. The Impact of the Department’s Actions on Plaintiffs ........................................... 9

Legal Standard ................................................................................................................................ 9

8 Argument ...................................................................................................................................... 10

9

I. Plaintiffs Are Likely to Succeed on their Claims that the Rule and the

Guidance Are Unlawful and Unconstitutional ...................................................... 10

10

A. The Rule and the Guidance Are Ultra Vires, Violate the Separation

11

of Powers, and Exceed ED’s Statutory Authority..................................... 10

1. ED Has No Rulemaking Authority under Sections 18002,

12

18003, and 18005 of the CARES Act ........................................... 10

13

2. ED Has No Authority to Attach a Supplement-Not-Supplant Condition to ESSER or GEER Funds ........................................... 11

14

3. ED Does Not Have Implicit Authority to Issue the Rule.............. 12

15

B. The Funding Conditions in the Rule and the Guidance Violate the Spending Clause........................................................................................ 16

16

C. ED’s Actions Are Arbitrary and Capricious in Violation of the APA...... 20

17

D. The Rule Is Procedurally Defective Under the APA as ED Did Not Have Good Cause to Issue the Rule as an Interim Final Rule. ................. 25

18

II. Plaintiffs Will Suffer Irreparable Harm ................................................................ 27

19

III. The Public Interest Weighs Heavily in Favor of Provisional Relief..................... 29

Conclusion .................................................................................................................................... 30

20

21

22

23

24

25

26

27

28
i Pls.’ Notice of Mot. and Mot. for Prelim. Inj. (3:20-cv-4478-SK)

Case 3:20-cv-04478-SK Document 35 Filed 07/20/20 Page 3 of 72

1

TABLE OF AUTHORITIES

2

Page

3

CASES 4

All. for the Wild Rockies v. Cottrell

5

632 F.3d 1127 (9th Cir. 2011).....................................................................................................9

6 Am. Trucking Ass’ns v. City of Los Angeles

7

559 F.3d 1046 (9th Cir. 2009)...................................................................................................29

8 Arlington Cent. Sch. Dist. Bd. of Educ. v. Murphy

548 U.S. 291 (2006) ..................................................................................................................17

9

Azar v. Allina Health Servs.

10

139 S. Ct. 1804 (2019) ..............................................................................................................11

11 California v. Azar

12

911 F.3d 558 (9th Cir. 2018).........................................................................................25, 26, 28

13 City & Cty. of San Francisco v. Sessions

349 F. Supp. 3d 924 (N.D. Cal. 2018) ......................................................................................20

14

City & Cty. of San Francisco v. Trump

15

897 F.3d 1225 (9th Cir. 2018).............................................................................................10, 30

16 City of Los Angeles v. Barr

17

941 F.3d 931 (9th Cir. 2019).....................................................................................................12

18 City of Los Angeles v. McLaughlin 865 F.2d 1084 (9th Cir. 1989)...................................................................................................12

19 Cty. of Santa Clara v. Trump

20

250 F. Supp. 3d 497 (N.D. Cal. 2017) ......................................................................................28

21 Cty. of Santa Clara v. Trump

22

275 F. Supp. 3d 1196 (N.D. Cal. 2017) ....................................................................................18

23 Dep’t of Homeland Sec. v. Regents of the Univ. of Cal. 140 S. Ct. 1891 (2020) ........................................................................................................21, 22

24 E. Bay Sanctuary Covenant v. Trump

25

950 F.3d 1242 (9th Cir. 2020)...................................................................................................24

26 FCC v. Fox Television Stations, Inc. 556 U.S. 502 (2009) ............................................................................................................21, 22
27

28
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Case 3:20-cv-04478-SK Document 35 Filed 07/20/20 Page 4 of 72

1

TABLE OF AUTHORITIES

(continued)

2

Page

3 Gonzales v. Oregon 546 U.S. 243 (2006) ..................................................................................................................12
4

5

In re Aiken Cty. 725 F.3d 255 (D.C. Cir. 2013) ..................................................................................................10

6 Kollaritsch v. Mich. State Univ. Bd. of Trs.

7

944 F.3d 613 (6th Cir. 2019).....................................................................................................16

8 La. Pub. Serv. Comm’n v. FCC

476 U.S. 355 (1986) ..................................................................................................................10 9

League of Wilderness Defenders/Blue Mountains Biodiversity Project v.

10

Connaughton

11

752 F.3d 755 (9th Cir. 2014).....................................................................................................29

12 Meyer v. Nebraska

262 U.S. 390 (1923) ..................................................................................................................30

13

Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co.

14

463 U.S. 29 (1983) ..............................................................................................................20, 22

15 Nat’l Fed’n of Indep. Bus. v. Sebelius

16

132 S. Ct. 2566 (2012) ........................................................................................................13, 18

17 New York v. HHS 414 F. Supp. 3d 475 (S.D.N.Y. 2019).......................................................................................18

18 Nken v. Holder

19

556 U.S. 418 (2009) ..................................................................................................................29

20 Paulsen v. Daniels

21

413 F.3d 999 (9th Cir. 2005).....................................................................................................25

22 Pennhurst State Sch. & Hosp. v. Halderman 451 U.S. 1 (1981) ..........................................................................................................10, 16, 17

23 Russello v. United States

24

464 U.S. 16 (1983) ....................................................................................................................11

25 Safe Air for Everyone v. EPA 488 F.3d 1088 (9th Cir. 2007).............................................................................................20, 21
26

27

SEC v. Chenery Corp. 318 U.S. 80 (1943) ....................................................................................................................21

28

iii

Pls.’ Notice of Mot. and Mot. for Prelim. Inj. (3:20-cv-4478-SK)

Case 3:20-cv-04478-SK Document 35 Filed 07/20/20 Page 5 of 72

1

TABLE OF AUTHORITIES

(continued)

2

Page

3 Sequoia Orange Co. v. Yeutter 973 F.2d 752 (9th Cir. 1992).....................................................................................................26
4

5

Sierra Club v. Trump No. 19-16102, 2020 WL 3478900 (9th Cir. June 26, 2020) .....................................................30

6 South Dakota v. Dole

7

483 U.S. 203 (1987) ..................................................................................................................16

8 Texas v. United States

809 F.3d 134 (5th Cir. 2015).....................................................................................................28 9

Trump v. Int’l Refugee Assistance Project

10

137 S. Ct. 2080 (2017) ................................................................................................................9

11 United States v. Timilty

12

148 F.3d 1 (1st Cir. 1998) .........................................................................................................14

13 United States v. Valverde

628 F.3d 1159 (9th Cir. 2010)...................................................................................................26 14

United States v. Youssef

15

547 F.3d 1090 (9th Cir. 2008)...................................................................................................11

16 Wilder’s S.S. Co. v. Low

17

112 F. 161 (9th Cir. 1901).........................................................................................................13

18 Winter v. NRDC 555 U.S. 7 (2008) ..................................................................................................................9, 29

19

FEDERAL STATUTES 20

5 United States Code

21

§ 553....................................................................................................................................25, 26

22

§ 706....................................................................................................................................20, 27

23 20 United States Code § 1232........................................................................................................................................26

24

§ 6313..........................................................................................................................................6

§ 6315..........................................................................................................................................6

25

§ 6320................................................................................................................................6, 7, 19

26

§ 6321..........................................................................................................................................8 §§ 6332-6339 ..............................................................................................................................5

27

§ 7881....................................................................................................................................7, 15

28 iv
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Case 3:20-cv-04478-SK Document 35 Filed 07/20/20 Page 6 of 72

1

TABLE OF AUTHORITIES

(continued)

2

Page

3 Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136, 134 Stat. 281 (attached as Appendix) ...................................................................................... passim
4

5

Further Consolidated Appropriations Act, 2020, Pub. L. No. 116-94, 133 Stat. 2534 ...........................................................................................................................................13

6 OTHER AUTHORITIES

7 34 Code of Federal Regulations

8

§ 76.665...........................................................................................................................8, 11, 19

9 166 Congressional Record

E340 (daily edition March 31, 2020) (statement of Representative Jayapal) ...........................24

10

H1856 (daily edition March 27, 2020) (statement of Representative

11

Underwood) ..............................................................................................................................23

12 CARES Act Programs; Equitable Services to Students and Teachers in Non-Public Schools, 85 Federal Register 39,479 (July 1, 2020) ......................................................... passim
13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 v
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Case 3:20-cv-04478-SK Document 35 Filed 07/20/20 Page 7 of 72

1

NOTICE OF MOTION AND MOTION FOR PRELIMINARY INJUNCTION

2

PLEASE TAKE NOTICE that on Aug. 24, 2020 at 9:30 AM Plaintiffs hereby move the Court

3 under Federal Rule of Civil Procedure 65 for entry of a preliminary injunction prohibiting

4 Defendants from imposing or enforcing an equitable services requirement under Section 18005 of

5 the Coronavirus Aid, Relief, and Economic Security Act (CARES Act or Act) in a manner not

6 wholly and explicitly described by Section 1117 of the Elementary and Secondary Education Act of

7 1965 (ESEA). Defendants have promulgated a guidance document and interim final rule in violation

8 of the U.S. Constitution and the Administrative Procedure Act. Plaintiffs seek an order from the

9 Court prohibiting Defendants from imposing or enforcing unlawful limitations or requirements on

10 the use of funds allocated under Sections 18002 and 18003 of the CARES Act. This motion is based

11 on this Notice of Motion and Motion, the Memorandum of Points and Authorities, the

12 accompanying declarations and Request for Judicial Notice (RJN), as well as the papers, evidence

13 and records on file, and any other written or oral evidence or arguments as may be presented.

14

MEMORANDUM OF POINTS AND AUTHORITIES

15

INTRODUCTION

16

Plaintiffs bring this motion to seek provisional relief to stop the U.S. Department of

17 Education’s (ED) unlawful attempt to divert hundreds of millions of dollars of emergency

18 assistance, intended by Congress to enable public schools to prepare for and respond to the

19 COVID-19 pandemic, for services to private-school students. In the CARES Act, H.R. 748, 116th

20 Cong. (2020), Congress appropriated approximately $16 billion for elementary and secondary

21 schools, funneling the money through well-established Title I allocation formulas—directing the

22 funding to local educational agencies (LEAs) (i.e., school districts) with significant populations of

23 students from low-income families. Congress directed that a portion of this funding be reserved

24 by recipient LEAs to provide “equitable services” to at-risk private-school students in their

25 districts, consistent with Title I’s requirements. Rather than follow Congress’s clear directive, ED

26 essentially rewrote this equitable services provision of the CARES Act through a guidance

27 document and, subsequently, an interim final rule, in a manner that favors private schools and

28 contradicts the statute’s plain language and congressional intent. 1
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1

ED’s guidance document directed LEAs to allocate CARES Act funds based on the total

2 number of all private-school students, rather than the total number of low-income private-school

3 students as provided under the Title I equitable services requirement that Congress referenced in

4 the CARES Act, and then to provide equitable services to all private school students, rather than

5 only those at risk as also required under the Title I equitable services requirement that Congress

6 referenced in the CARES Act. ED’s rewrite of the allocation method and eligibility of private-

7 school students shifts a significantly higher percent of LEAs’ CARES Act funding to private

8 schools, leaving the public schools with less funding to respond to the pandemic.

9

After significant push back from numerous stakeholders, including state educational

10 agencies, ED doubled down on its erroneous interpretation of the CARES Act with the

11 publication of an interim final rule. The rule—which was effective immediately and did not

12 provide for any notice and comment—followed ED’s original guidance, pushing LEAs to divert

13 their CARES Act funds away from public schools to fund services for all private school students.

14 The Rule offered LEAs an untenable choice: follow ED’s guidance or be subjected to punitive

15 restrictions on the use of the funds for public schools. Both options are unsupported by the plain

16 language of the statute, and the so-called “choice” appears to be an attempt to force LEAs to

17 follow ED’s original scheme and divert more funding to private schools.

18

The Department’s guidance and interim final rule are ultra vires and violate separation of

19 powers principles and the Spending Clause because the CARES Act neither requires LEAs to

20 divert funding from public schools to provide equitable services for all private-school students,

21 nor delegates authority to Defendants to impose any such allocation requirements. To the

22 contrary, the Department’s guidance and interim final rule directly conflict with the plain

23 language of the statute, which manifests Congress’s intent to: (a) allocate funding for equitable

24 services for private-school students based on the number of low-income private-school students

25 within the LEA, and (b) provide LEAs flexibility to use the CARES Act funding for their public

26 schools. The Department’s guidance and interim final rule violate the Administrative Procedure

27 Act (APA) because they are in excess of statutory authority, are arbitrary and capricious, and

28 were issued without complying with notice and comment requirements. 2
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1

ED’s guidance and rule will irreparably harm Plaintiffs and their public-school students

2 by diverting funding away from the public schools at a time when such emergency relief is

3 urgently needed and when state and local government budgets are stretched thin by the effects of

4 the pandemic. Congress appropriated these funds for the express purpose of quickly providing

5 emergency support for public-educational agencies’ response to the fallout from the COVID-19

6 pandemic. Plaintiffs require such funding not only to assist their public schools’ transition to

7 remote learning, obtain personal protective equipment (PPE) for students and staff, and deep-

8 clean their schools, among other emergency needs, but also to provide supports for their

9 vulnerable populations beyond the provision of core educational services. ED seeks to force

10 LEAs to divert hundreds of millions of dollars that Congress directed to these public schools and

11 targeted at vulnerable students, for services to all private-school students—regardless of need—

12 despite private schools having access to other funding sources in the CARES Act, which are

13 unavailable to traditional public schools. Immediate relief is required as Plaintiff States and LEAs

14 must have a clear understanding of how to allocate and use the emergency CARES Act funding

15 as they prepare for the start of the 2020-2021 school year.

16

Plaintiffs respectfully request that the Court grant their motion and enjoin ED’s erroneous

17 and unauthorized guidance and rule.

18 19 I. 20

BACKGROUND THE PANDEMIC’S EFFECT ON PUBLIC ELEMENTARY AND SECONDARY EDUCATION The effect of COVID-19 on elementary and secondary education has been swift,

21 multifaceted, and unsparing. Schools across the county were forced to suspend in-person

22 instruction to slow the spread of the virus and protect the health of students, staff, and their

23 families. See Guerrant Decl. ¶ 13; Constancio Decl. ¶ 11; Goldson Decl. ¶ 11; Gordon Decl. ¶ 13;

24 Hoffmann Decl. ¶ 10; Jackson Decl. ¶ 12; Jones Decl. ¶ 9; Kaneshiro-Erdmann Decl. ¶¶ 10, 12;

25 Salmon Decl. ¶ 8; Stem Decl. ¶ 10; Stewart Decl. ¶ 14; Wallace Decl. ¶ 10. Many schools then

26 transitioned quickly to remote learning. See Guerrant Decl. ¶¶ 13-14; Constancio Decl. ¶¶ 11-13;

27 Baca Decl. ¶ 10; Goldson Decl. ¶ 11; Gordon Decl. ¶ 13; Hoffmann Decl. ¶ 9; Jackson Decl. ¶

28 12; Jones Decl. ¶ 10; Makin Decl. ¶¶ 11-13; Salmon Decl. ¶ 8; Stewart Decl. ¶ 14; Wallace Decl. 3
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1 ¶ 11. This transition required significant expenditures on computer software, internet-connected

2 devices for students, and other technologies to ensure learning could continue remotely. See

3 Constancio Decl. ¶ 13; Goldson Decl. ¶ 11; Gordon Decl. ¶ 13; Hoffmann Decl. ¶¶ 10, 12;

4 Jackson Decl. ¶¶ 12-13, 17; Jones Decl. ¶ 14; Kaneshiro-Erdmann Decl. ¶¶ 10-11; Makin Decl. ¶

5 15; Oates Decl. ¶ 24; Salmon Decl. ¶ 9; Stewart Decl. ¶ 26; Wallace Decl. ¶ 11.

6

In addition to the ongoing costs associated with transitioning to remote learning, to prepare

7 for the 2020-2021 school year, LEAs and schools have sought to procure PPE, deep-clean

8 schools, and take other proactive measures to allow for safer in-person instruction. See Guerrant

9 Decl. ¶ 28; Gordon Decl. ¶ 24; Jackson Decl. ¶ 15; Jones Decl. ¶¶ 14, 29; Kaneshiro-Erdmann

10 Decl. ¶ 25; Makin Decl. ¶¶ 16-17, 29; Oates Decl. ¶ 24; Salmon Decl. ¶ 22; Stem Decl. ¶ 14;

11 Stewart Decl. ¶ 26. Most States and LEAs are still determining how and if in-person instruction

12 could restart for the 2020-2021 school year and what the additional costs would be if remote

13 learning continued. See Guerrant Decl. ¶ 13; Constancio Decl. ¶¶ 13-14; Goldson ¶ 11; Jackson

14 Decl. ¶ 18; Jones Decl. ¶ 11; Kaneshiro-Erdmann Decl. ¶ 10; Makin Decl. ¶ 13; Oates Decl. ¶ 24;

15 Stem Decl. ¶ 13; Stewart Decl. ¶ 15.

16

While ED emphasizes that “[t]he pandemic has harmed all our Nation’s students by

17 disrupting their education,” the health and economic impacts of the virus have been concentrated

18 among the Nation’s low-income families, especially families of color. RJN Ex. G; see Jones Decl.

19 ¶ 12. These are, in many cases, the same students who will need more assistance when school

20 returns, including remedial instruction, mental health services, free and reduced-price meals, and

21 other supports. States and LEAs must ensure that meals are served to qualifying students and

22 families; special education and related services are provided to students with disabilities; English

23 learners and migrant students have access to appropriate instruction and supports; and public

24 education is free and accessible to all students, including economically disadvantaged students.

25 Public schools are financially responsible for providing these supports; private schools are not.

26

As they take on the financial challenges of transitioning to remote learning and preparing

27 for the 2020-2021 school year, State Education Agencies’ (SEAs) and LEAs’ budgets have been

28 substantially impacted by the economic effects of the pandemic on state and local tax revenues. 4
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1 See Guerrant Decl. ¶¶ 12, 15, 26; Constancio Decl. ¶ 16; Goldson ¶¶ 10, 13; Gordon Decl. ¶ 12;

2 Hoffmann Decl. ¶ 13; Jackson Decl. ¶ 26; Jones Decl. ¶ 14; Kaneshiro-Erdmann Decl. ¶¶ 15, 25;

3 Oates Decl. ¶ 10; Salmon Decl. ¶ 11; Stem Decl. ¶ 27; Wallace Decl. ¶ 12. In short, the States and

4 their public schools are facing a perfect storm caused by COVID-19 and the economic impact of

5 efforts to combat it.

6 II. ESSER AND GEER FUNDS TO ASSIST PUBLIC SCHOOLS

7

To address the described needs in public schools, on March 27, Congress enacted the

8 CARES Act, under which it appropriated $30.75 billion to ED “to prevent, prepare for, and

9 respond to coronavirus, domestically or internationally.” Coronavirus Aid, Relief, and Economic

10 Security Act (CARES Act or Act), P.L. No. 116-136, 134 Stat. 281, 564. Within that amount,

11 relevant here, Congress created two programs, the Governor’s Emergency Education Relief Fund

12 (GEER) and the Elementary and Secondary School Emergency Relief Fund (ESSER), and

13 appropriated approximately $16 billion for public elementary and secondary education for these

14 programs. Id. §§ 18001(b)(1), (3), 18002-18003.

15

In the CARES Act, Congress directed ED to provide emergency grants from the GEER

16 fund to state governors; in turn, governors are to distribute the funds to LEAs and other

17 educational entities that “have been most significantly impacted by coronavirus.” Id. § 18002(a),

18 (c). The funds may then be used to support the LEAs “to continue to provide educational services

19 to their students and to support the on-going functionality of the [LEA].” Id. § 18002(c)(1).

20

Congress instructed ED to distribute the ESSER funds to SEAs “in the same proportion as

21 each State received under [Title I, Part A] in the most recent fiscal year.” Id. § 18003(b).

22 Allocation of Title I-A funds to states is based primarily on the numbers of children from low-

23 income families and foster children in each state’s LEAs. See 20 U.S.C. §§ 6332-6339. The SEAs

24 must then sub-grant 90 percent of the ESSER funds to LEAs in the state “in proportion to the

25 amount of funds such [LEAs] and charter schools that are local educational agencies received

26 under [Title I-A] in the most recent fiscal year.” CARES Act § 18003(c). Thus, only LEAs that

27 participate in the Title I-A program—because they have a high proportion of economically-

28 disadvantaged children—are eligible to receive ESSER local subgrants. See RJN Ex. A at 4. 5
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1

Through the CARES Act, Congress provided LEAs that receive ESSER funds wide latitude

2 to use the funds, listing twelve authorized uses in the Act, including for broad purposes such as

3 “activities that are necessary to maintain the operation of and continuity of services in [LEAs] and

4 continuing to employ existing staff of the [LEA],” i.e., to support any operation, service, or staff

5 existing prior to the pandemic. Id. § 18003(d)(12); see also id. § 18003(d)(1)-(12).

6

Congress required LEAs that receive GEER and/or ESSER funds to reserve a portion of

7 these funds to provide “equitable services” to private-school students “in the same manner as

8 provided under Section 1117 of the ESEA of 1965.” Id. § 18005(a) (emphasis added). Section

9 1117 of the ESEA, 20 U.S.C.§ 6320, which is part of Title I-A, sets both the method of

10 apportioning funds for equitable services and the eligibility for such services. For allocation, the

11 LEA calculates the “proportional share” of the funds for equitable services “based on the number

12 of children from low-income families who attend private schools” and reside in the “participating

13 school attendance areas” (i.e., the geographic area in which children are normally served by a

14 Title I-A school). 20 U.S.C. § 6320(a)(4)(A); see also 20 U.S.C. § 6313(a)(2) (defining “school

15 attendance area”). Once the LEA has calculated the proportional share for equitable services, it

16 uses those funds to provide services to at-risk private-school students after consultation with the

17 private schools. 20 U.S.C. § 6320(a) (incorporating definition of “eligible children” from 20

18 U.S.C. § 6315(c)). ED confirmed the Section 1117 proportional share calculation and the

19 eligibility for equitable services under Section 1117 in a guidance document issued in October

20 2019. See RJN Ex. B at 30.

21 III. THE DEPARTMENT’S GUIDANCE AND THE RULE

22

Despite ED reiterating the well-established proportional share calculation and eligibility

23 requirements for equitable services under Section 1117 just months ago, ED decided to modify

24 these requirements for CARES Act funds, contradicting Congress’s clear instruction in the

25 CARES Act that equitable services be provided “in the same manner as provided under Section

26 1117.” CARES Act § 18005(a) (emphasis added).

27

On April 30, 2020, the Department issued a guidance document, titled Providing

28 Equitable Services to Students and Teachers in Non-Public Schools Under the CARES Act 6
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1 Programs (Guidance), interpreting Section 18005 of the CARES Act. RJN Ex. C. In the

2 Guidance, ED instructs LEAs to calculate the proportional share of their CARES Funds for

3 equitable services by the comparative enrollments of all students in public and private schools in

4 the district, rather than the comparative enrollments of low-income students, as required by

5 Section 1117(a)(4)(A)(i). Compare RJN Ex. C at 6-7 with 20 U.S.C. § 6320(a)(4)(A)(i). In

6 essence, ED rejects the calculation of the proportionate share under Section 1117 that Congress

7 specified in the CARES Act and instead adopts the calculation under a different section of the

8 ESEA, Section 8501 (found at 20 U.S.C. § 7881). By changing the calculation method to

9 determine the proportional share of CARES Act funding for equitable services, the amount of

10 CARES Act funds allocated for private schools is drastically inflated because low-income

11 students generally comprise a relatively smaller share of their overall enrollment than at public

12 schools. See, e.g., Hoffmann Decl. ¶ 33. In addition to changing the proportional share

13 calculation, ED instructed LEAs to provide equitable services to all private-school students,

14 rather than only the at-risk private-school students in the participating school attendance area.

15 RJN Ex. C at 5. This aspect of the Guidance ignores Section 1117’s eligibility requirements

16 providing that only at-risk private-school students are entitled to services. 20 U.S.C. § 6320(a).

17

The Guidance generated significant push back from Congressional leaders and multiple

18 educational associations. See, e.g., RJN Ex. D. Secretary DeVos responded to a letter from an

19 organization representing chief state school officers nationwide with a letter of her own in which

20 she accused those who opposed the Guidance of seeking to “improperly discriminate against an

21 entire class of children,” and implied that LEAs have a “reflex to share as little as possible with

22 students and teachers outside of their control” and a lack of “concern[]” for private school

23 students “concentrated in low-income and middle-class communities.” RJN Ex. E.

24

ED published the interim final rule (the Rule) in the Federal Register on July 1, 2020. 85

25 Fed. Reg. 39,479. The Rule was published without notice and comment and was effective

26 immediately.

27

While the Rule reflects ED’s general position in the Guidance, ED added language under

28 which LEAs are ostensibly presented with two choices regarding how to calculate the 7
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1 proportional share of CARES Act funds for equitable services—neither of which comports with

2 the CARES Act requirements and each of which relies on an interpretation of the reference to

3 Section 1117 in the underlying statutory text that is irreconcilable with the other. Under Option

4 #1 (Title I-Only Schools Option), the LEA could use the Section 1117 proportional share

5 calculation; as directed by the plain language of Section 18005, however, they would then be

6 subject to two “poison pill” requirements, severely restricting the LEA’s use of the public-school

7 share of the funds. 34 C.F.R. § 76.665(c)(1)(i). Under Option #2 (Private School Enrollment

8 Option), the LEA would calculate the proportional share of CARES Act funds for equitable

9 services using the Guidance’s calculation, which apportions the funds between public and private

10 schools based on the total number of students in each group, contrary to Section 1117. 34 C.F.R.

11 § 76.665(c)(1)(ii).

12

For LEAs that calculate the proportional share of CARES Act funds for equitable services

13 using Option #1 (Title I-Only Schools Option), the LEA would incur two poison pills: (1) the

14 public-school share of the CARES Act funds must be used exclusively at Title I schools, thereby

15 excluding districts’ non-Title I schools; and (2) the public-school share of the CARES Act funds

16 could only be used for costs that were not previously covered by state and local funds to avoid a

17 violation of Title I’s “supplement not supplant” requirements for federal funding under Section

18 1118 of the ESEA. 34 C.F.R. § 76.665(c)(1), (c)(3); 20 U.S.C. § 6321(b)(1). Under Option #1,

19 the LEA’s hands are tied; it cannot use the funds as explicitly stated in the CARES Act to assist

20 all of its schools in responding to the pandemic nor address the severe diminution of state and

21 local funding.

22

Regardless of how the LEA calculates the proportional share of CARES Act funds, the

23 Rule still requires eligibility for all private-school students to receive equitable services, ignoring

24 the Section 1117 eligibility requirements that only at-risk private-school students are eligible for

25 services. 34 C.F.R. § 76.665(d)(2). This results in less equity even for private schools and their at-

26 risk students, as private schools that serve large numbers of at-risk students will receive a

27 diminished allocation of CARES Act funds and the services for at-risk students could be diluted.

28 See, e.g., Hoffmann Decl. ¶¶ 32, 43. 8
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1

The proportional share calculation methods, the poison pill requirements, and the

2 eligibility requirements in the Rule are all nowhere to be found in the CARES Act. ED, through

3 the Rule, has rewritten Section 18005 to drive emergency moneys away from public schools and

4 at-risk students when they need the money most.

5 IV. THE IMPACT OF THE DEPARTMENT’S ACTIONS ON PLAINTIFFS

6

Plaintiffs estimate that their LEAs will be forced to divert over $150 million in CARES Act

7 funds from public schools to provide equitable services to all private-school students if they

8 follow Option #2 (Private School Enrollment Option). See Guerrant Decl. ¶¶ 23, 37; Constancio

9 Decl. ¶¶ 27, 35; Goldson Decl. ¶¶ 18, 21; Gordon Decl. ¶¶ 19, 31; Hoffmann Decl. ¶¶ 22, 42;

10 Jackson Decl. ¶¶ 22, 26, 36; Jones Decl. ¶¶ 25, 27, 39; Kaneshiro-Erdmann Decl. ¶ 22; Makin

11 Decl. ¶¶ 26, 41; Oates Decl. ¶ 20; Salmon Decl. ¶ 18; Stem Decl. ¶¶ 25, 35; Stewart Decl. ¶ 24;

12 Wallace Decl. ¶¶ 16, 21. And, as described further below, many of the LEAs in the Plaintiff

13 States and the Plaintiff LEAs will be forced to follow Option #2, as Option #1 would impose too

14 strict a requirement on their usage of the funds to be practically effective. See Hoffmann Decl.

15 ¶ 29; Oates Decl. ¶¶ 15, 19. Put simply, if the Department’s Rule and Guidance are allowed to

16 stand, hundreds of millions of dollars will be diverted away from public schools to private

17 schools, seriously impeding public schools’ ability to respond to and prepare for education during

18 the pandemic. Additional impacts to the Plaintiffs are described below. See infra Argument, § II.

19

LEGAL STANDARD

20

A preliminary injunction is appropriate when the plaintiffs establish that they are likely to

21 succeed on the merits, they are likely to suffer irreparable harm in the absence of preliminary

22 relief, the balance of equities tips in their favor, and an injunction is in the public interest. Winter

23 v. NRDC, 555 U.S. 7, 20 (2008). A preliminary injunction is “often dependent as much on the

24 equities of [the] case as the substance of the legal issues it presents.” Trump v. Int’l Refugee

25 Assistance Project, 137 S. Ct. 2080, 2087 (2017). “[S]erious questions going to the merits and a

26 balance of hardships that tips sharply towards the plaintiff can support issuance of a preliminary

27 injunction,” so long as the other preliminary injunction factors are met. All. for the Wild Rockies

28 v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011) (internal quotations omitted). 9
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1

ARGUMENT

2 I. 3 4

PLAINTIFFS ARE LIKELY TO SUCCEED ON THEIR CLAIMS THAT THE RULE AND THE GUIDANCE ARE UNLAWFUL AND UNCONSTITUTIONAL A. The Rule and the Guidance Are Ultra Vires, Violate the Separation of
Powers, and Exceed ED’s Statutory Authority

5

The U.S. Constitution “exclusively grants the power of the purse to Congress, not the

6 President.” City & Cty. of San Francisco v. Trump, 897 F.3d 1225, 1231 (9th Cir. 2018).

7 “[B]ecause Congress has the exclusive power to spend,” if Congress “has not delegated authority

8 to the Executive to [impose funding] condition[s],” the executive branch lacks the authority to

9 impose the conditions. Id. at 1233. Also, when “Congress intends to impose a condition on the

10 grant of federal moneys, it must do so unambiguously.” Pennhurst State Sch. & Hosp. v.

11 Halderman, 451 U.S. 1, 17 (1981). The executive branch, thus, cannot coopt Congress’s spending

12 power by imposing a condition that Congress did not unambiguously impose or delegate authority

13 to impose. Cf. La. Pub. Serv. Comm’n v. FCC, 476 U.S. 355, 374 (1986) (“[A]n agency literally

14 has no power to act . . . unless and until Congress confers power upon it.”). Furthermore, the

15 executive branch “may not decline to follow a statutory mandate . . . simply because of policy

16 objections.” In re Aiken Cty., 725 F.3d 255, 259 (D.C. Cir. 2013). As discussed below, the Rule

17 and the Guidance cannot survive under these foundational constitutional principles.

18

1. ED Has No Rulemaking Authority under Sections 18002, 18003, and

18005 of the CARES Act

19

20

The absence of rulemaking authority in Sections 18002, 18003, and 18005 is in contrast to

21 other portions of the Act where Congress clearly delegated rulemaking authority to federal

22 agencies. For example, Congress: granted “emergency rulemaking authority” to the Small

23 Business Administration to carry out the Paycheck Protection Program, CARES Act § 1114, H.R.

24 748-32; directed the Bureau of Prisons to engage in rulemaking to provide for video visitations

25 for inmates (and exempted those rules from notice and comment requirements), CARES Act

26 § 12003(c), H.R. 748-236; and delegated authority to the ED Secretary to “waive the application

27 of . . . negotiated rulemaking” under the Higher Education Act of 1965 to suspend collection of

28 student loans, CARES Act § 3513(f), H.R. 748-124. 10
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1 “[W]here Congress includes particular language in one section of a statute but omits it in

2 another section of the same Act, it is generally presumed that Congress acts intentionally and

3 purposely in the disparate inclusion or exclusion.” Russello v. United States, 464 U.S. 16, 23

4 (1983); see also Azar v. Allina Health Servs., 139 S. Ct. 1804, 1813 (2019) (applying this

5 principle to grants of rulemaking authority). So too here. Congress expressly delegated

6 rulemaking authority in other sections of the Act, but did not include it with respect to the GEER

7 and ESSER funds. Accordingly, this Court should find that Congress did not delegate rulemaking

8 authority to ED to interpret Section 18005 of the Act, and that ED therefore lacks authority to

9 promulgate the Rule.

10

2. ED Has No Authority to Attach a Supplement-Not-Supplant

11

Condition to ESSER or GEER Funds

12

Elsewhere in the Act, Congress chose to expressly include supplement-not-supplant

13 requirements, similar to the supplement-not-supplant condition that ED attaches to ESSER and

14 GEER funds through the Guidance and Rule. The CARES Act requires that federal funds from

15 the “Payments to States for the Child Care Development Block Grant” “shall be used to

16 supplement, not supplant State . . . general revenue funds for child care assistance for low-income

17 families,” and that funds allocated for “carrying activities under the Runaway and Homeless

18 Youth Act . . . shall be used to supplement, not supplant, existing funds.” H.R. 748-277. Because

19 Congress expressly attached supplement-not-supplant conditions on other allocations in the

20 CARES Act, it can be presumed Congress intended to exclude ESSER and GEER funds from

21 such conditions, and ED exceeded its statutory authority in attaching such conditions in the Rule,

22 34 C.F.R. § 76.665(c)(3). See also United States v. Youssef, 547 F.3d 1090, 1094 (9th Cir. 2008)

23 (omission of a requirement in one statutory provision combined with the requirement’s inclusion

24 in a similar provision is “evidence of Congress’s expressed intent not to impose” the

25 requirement). Additionally, Congress expressly authorized uses of GEER and ESSER funds that

26 are incompatible with a supplement-not-supplant requirement, CARES Act § 18002(c)(1) (funds

27 “support the ability of such local educational agencies to continue to provide educational services

28

11

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1 to their students and to support the on-going functionality of the local educational agency”; id. §

2 18003(d)(12) (funds can be used “to maintain the operation of and continuity of services in local

3 educational agencies and continuing to employ existing staff of the local educational agency”),

4 further underscoring congressional intent not to create such a requirement that ED purports to

5 impose.

6

3. ED Does Not Have Implicit Authority to Issue the Rule

7

8

ED claims that it has implicit interpretive authority to impose restrictions and

9 requirements on the formula grants funds received by LEAs in the CARES Act. 85 Fed. Reg. at 10 39,481, 39,488. Courts have been skeptical of claims of implicit authority, as well as claims of 11 broad authority to impose conditions on formula grants and interpret general appropriation

12 statutes. The U.S. Supreme Court held the Attorney General lacked authority to issue a rule

13 interpreting the meaning of a law, even when Congress had delegated the authority to ensure

14 compliance with the law to the Attorney General. Gonzales v. Oregon, 546 U.S. 243, 263-64

15 (2006). Similarly, the Ninth Circuit held that an executive agency’s broad interpretation of its

16 authority to impose grant conditions without specific authority “would be antithetical to the

17 concept of a formula grant[.]” City of Los Angeles v. Barr, 941 F.3d 931, 942 (9th Cir. 2019); see

18 also City of Los Angeles v. McLaughlin, 865 F.2d 1084, 1088 (9th Cir. 1989) (“formula grants,”

19 unlike discretionary ones, “are not awarded at the discretion of a state or federal agency, but are

20 awarded pursuant to a statutory formula”). Thus, Plaintiffs are entitled to their share of the GEER 21 and ESSER funds, and ED is prohibited from redirecting these funds or placing additional

22 conditions on the grants.

23

In the CARES Act, Congress chose to adopt proportional allocation under Title I-A of the

24 ESEA, and the method and procedure of Section 1117 of the ESEA for equitable services, but

25 chose not to incorporate or involve the ESEA itself. See CARES Act § 18003(b)-(c). Instead of

26 simply making an additional appropriation under the existing Title I-A program of the ESEA with

27 conditions specific to address the COVID-19 pandemic, Congress instead directed the funds in

28 such a way that they are not a part of the Title I-A program and thus not subject to Title I-A

12

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1 restrictions. Therefore, because the CARES Act funds are not Title I-A funds, any authority ED
2 maintains to administer the Title I-A program does not provide authority to impose rules on
3 CARES Act funds.
4 Congress’ actions in this area contrast with how Congress made a number of other
5 CARES Act appropriations and reflect a deliberate policy choice. For example, to carry out
6 section 4631 of the ESEA, Congress simply made an additional appropriation for the established
7 “Safe Schools and Citizen Education” fund. Compare 133 Stat. 2534, 2589 (appropriating funds
8 for the “Safe Schools and Citizenship Education” program to carry out activities authorized by
9 Title IV-F of the ESEA) with CARES Act, H.R. 748-289 (appropriating an additional amount for
10 “Safe Schools and Citizenship Education” as part of the CARES Act). ED lacks authority to
11 override Congress’s decision that LEAs provide equitable services “in the same manner” as an
12 ESEA program, but not as part of an ESEA program, and similarly cannot override Congress’s
13 decision that ESSER and GEER funds be distributed outside an established ESEA program.
14 Nor did the language of the Act leave any interpretative gap for ED to fill. ED points to
15 the supposed facial ambiguity in the language “in the same manner as provided under Section
16 1117 of the ESEA.” 85 Fed. Reg. 39,481.1 However, “in the same manner” has a well-understood
17 meaning in the statutory context, and that meaning applies to the procedure or methods used to
18 effect the statutorily prescribed act. See, e.g., Wilder’s S.S. Co. v. Low, 112 F. 161, 164 (9th Cir.
19 1901) (“[T]he phrase ‘in the same manner’ has a well-understood meaning in legislation, and that
20 meaning is not one of restriction or limitation, but of procedure.”). The Supreme Court found a
21 legislative direction to collect a penalty “in the same manner” as under a set of statutes was “best
22 read” as a directive to an agency to use “the same ‘methodology and procedures’” as within the
23 referenced statutes. Nat’l Fed’n of Indep. Bus. v. Sebelius (NFIB), 132 S. Ct. 2566, 2583-84
24

25

1 ED promulgated a grant requirement that education systems in the outlying territories

provide equitable services “in the same manner as provided under section 8501 of the ESEA” in

26 order to receive CARES Act education funding grants. Section 8501 is referenced nowhere in the

Act. Thus, ED clearly does not regard the phrase “in the same manner as provided under” as

27 ambiguous, since it used this phrase itself. RJN Ex. F at 4. ED has not promulgated any guidance

or rules to clarify this grant requirement. ED’s position that this language is ambiguous in Section 28 18005(a) is fatally inconsistent with ED’s own actions.

13

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1 (2012); see also United States v. Timilty, 148 F.3d 1, 3, 5 (1st Cir. 1998) (federal law allowing

2 restitution order to be enforced “in the same manner as a judgment in a civil action,” meant the

3 judgment was enforced by same procedural mechanism as a judgment in civil action). Here,

4 Congress has used well-understood language to directly instruct LEAs receiving ESSER and

5 GEER funds to adopt the established methodology and procedures used to administer equitable

6 services as they would for services attached to Title I-A allocations, while unequivocally

7 declining to impose programmatic requirements of Title I-A, such as use of funds and

8 supplement-not-supplant restrictions. There is no ambiguity.2

9

The final clause of Section 18005(a) instructs LEAs to determine the provision of

10 equitable services “in consultation with representatives of [private] schools.” ED argues that

11 Congress did not intend to completely incorporate Section 1117 because Section 1117 requires

12 consultation with representatives of private schools, thus rendering the final clause of Section

13 18005(a) “superfluous.” 85 Fed. Reg. at 39,481. However, because Section 18005(a) only applies

14 to LEAs, the language to “determine[] in consultation with representatives of non-public schools”

15 is best read as excluding other parties from the consultation process. In particular, this reasonably

16 excludes SEAs from consultation procedure, as Section 18005(a)’s requirement to provide

17 equitable services only applies to LEAs but SEAs may be required to provide equitable services

18 under Section 1117(b)(6)(C) of the ESEA. Section 18005(b) requires that the control of funds and

19 property provided by equitable services be retained by a public agency, similar to the requirement

20 of Section 1117(d) of the ESEA. ED again claims that a reading which incorporates wholesale

21 Section 1117 renders Section 18005(b) surplusage. See 85 Fed. Reg. at 39,481. The well-

22 understood meaning of “in the same manner” incorporates methodology and procedure, so this

23 2 Leaving aside the threshold ambiguity question, ED’s proposed resolution to the
24 purported ambiguity of the phrase “in the same manner” is also flawed because it creates multiple “manners” from whole cloth, an interpretation at odds with Congress’ intent. ED provides no
25 reasoned analysis of how Congress’ instruction that LEAs are to provide equitable services “in the same manner” as under Section 1117 can be read to empower ED to create two entirely
26 different methods of doing so, still less how ED is justified in putting forth two methods that diverge so dramatically (a divergence caused in large part by the fact that they derive from two
27 distinct provisions of the ESEA). As a basic matter of statutory construction, it strains credulity for ED to interpret the singular term “manner” to mean two entirely distinct and divergent
28 “manners,” further underscoring the arbitrary and capricious nature of its action.
14
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1 reasserted non-procedural restraint is not surplusage. In any event, ED does not provide a

2 reasoned explanation as to how its reading does not render the final clause of Section 18005(a)

3 and all of Section 18005(b) surplusage.

4

Instead of adopting the well-understood meaning of “in the same manner”—and without

5 providing a reasoned or supportable alternative meaning for this phrase—ED has decided that

6 Congress did not intend Sections 1117(a)(1), (b)(1)(E), (J)(ii), and (c) to be applied to CARES

7 Act funds because “the CARES Act is a separate appropriation allowing separate permissible uses

8 of taxpayer funds” than a Title I-A appropriation. 85 Fed. Reg. 39,481. However, these

9 provisions—which describe methods or procedures to apportion funding for equitable services to

10 private schools based on the relative population of low-income children, or to consider the

11 proportion of low-income children when apportioning funding for equitable services—are

12 squarely within the accepted definition of “manner.” As a section of Title I, Part A of the ESEA,

13 Section 1117 only applies to a provision of equitable services proportioned on low-income

14 children; applying convoluted logic to somehow apply Section 1117 in a manner which ignores

15 these provisions aimed at ensuring that fundamental congressional purpose is carried out is

16 nonsensical. Without providing reasoning, ED argues that because Title I-A fund’s permissible

17 uses differ from those of ESSER or GEER funds, Section 1117’s funding and eligibility criteria

18 are “inapposite” of the CARES Act. However, Congress was aware of these broader uses when it

19 explicitly instructed the LEAs to provide equitable services in the same manner as provided by

20 Section 1117. CARES Act § 18003(d)(1)-(12) (allowing the use of ESSER funds for any activity

21 authorized by the ESEA and eleven other categories of activities).

22

Rather than follow the Congressional directive that LEAs provide equitable services in the

23 same manner as under Section 1117 of the ESEA, ED is attempting to substitute the agency’s

24 choice; namely, ED effectively requires LEAs to follow section 8501 from the ESEA. Section

25 8501 of the ESEA is the general rule for equitable services under the ESEA, and Section 1117 is

26 an exception only applicable to Title I-A. See 20 U.S.C. § 7881(a)(1), (b)(1) (stating that Section

27 8501 governs “[e]xcept as otherwise provided in this act” and is expressly applicable to Titles I-

28 C, II-A, III-A, IV-A, and IV). The key difference in the operation of the two statutes is that while 15
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1 Section 1117(a)(1) calculates the expenditures for equitable services based on the proportion of

2 private-school students from low-income families residing in the LEA’s public school attendance

3 area, Section 8501 calculates expenditures for equitable services based on the proportion of all

4 eligible children in the LEA’s area. RJN Ex. K at 34-35.

5

Congress decided that equitable services expenditures under ESSER and GEER funds

6 should be proportional and provided to typical Title I-A eligible private school students, and DOE

7 decided this was “inapposite.” An agency’s disagreement with Congress’s policy cannot be

8 permitted to serve as a source of ambiguity. ED should not be permitted to rely on an invented

9 ambiguity to override the will of Congress as reflected in the text of the Act.

10

B. The Funding Conditions in the Rule and the Guidance Violate the Spending Clause

11 Under the Spending Clause of the U.S. Constitution, funding conditions may only be
12 imposed if they are “unambiguous[]” and related “to the federal interest in particular . . .
13 programs.” South Dakota v. Dole, 483 U.S. 203, 207 (1987) (internal quotations omitted). The
14 funding conditions in the Rule violate both of these criteria.
15 The Rule violates the Spending Clause’s clear and settled requirements in three respects.
16 First, the Rule’s funding conditions were not “unambiguously” imposed by Congress. Pennhurst,
17 451 U.S. at 17 (“[I]f Congress intends to impose a condition on the grant of federal moneys, it
18 must do so unambiguously.”); see also Kollaritsch v. Mich. State Univ. Bd. of Trs., 944 F.3d 613,
19 629 (6th Cir. 2019) (“Congress ha[s] to identify any condition on its funding ‘unambiguously.’”).
20 The CARES Act “in no way suggests that the grant of . . . funds is ‘conditioned’” on the
21 requirement that LEAs calculate and set aside their GEER and ESSER Funds for equitable
22 services to all private-school students and teachers, provide equitable services to all private-
23 school students, limit LEAs’ uses of funds, or limit their distribution of funds to Title I schools
24 only. See Pennhurst, 451 U.S. at 23. Congress, therefore, did not in “clear terms” authorize the
25 Rule’s proportional share and eligibility requirements as required to satisfy the Spending Clause.
26 See id. at 17, 23 (Congress must “speak with a clear voice” to impose conditions under the
27 Spending Clause). To the contrary, Congress explicitly and clearly directed LEAs to follow
28

16

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1 Section 1117 of the ESEA when apportioning CARES Act funds for equitable services and
2 determining which private-school students were eligible for such services, and specified twelve
3 broad purposes for which ESSER funds can be used by both Title I and non-Title I schools.
4 CARES Act § 18003.
5 Second, the inconsistencies between the CARES Act and the Rule, as well as between the
6 2019 guidance, RJN Ex. B., and the Guidance (see infra at 6-7.), did not “enable the [Plaintiffs] to
7 exercise their choice knowingly, cognizant of the consequences of their participation” in CARES
8 Act funding. Pennhurst, 451 U.S. at 17. While the plain language of the CARES Act requires that
9 funds be apportioned in the same manner as Section 1117 of the ESEA, the Rule and Guidance
10 impose proportional share and eligibility conditions that are contrary to and irreconcilable with
11 the language of the CARES Act. These inconsistencies have created considerable confusion
12 among SEAs and LEAs in the Plaintiff States and unforeseen consequences. Gordon Decl. ¶ 28;
13 Hoffmann Decl. ¶¶ 35-37, Jackson Decl. ¶ 25; 40-41; Jones Decl. ¶¶ 28, 33, 36; Salmon Decl. ¶
14 25; Stewart Decl. ¶ 35. ED’s interpretation of Section 18005 of the CARES Act has created
15 unanticipated administrative and financial burdens on SEAs and LEAs, has delayed the
16 distribution of funds to students and teachers, and placed SEAs and LEAs in potential legal
17 jeopardy. Guerrant Decl. ¶¶ 29-34; Constancio Decl. ¶¶ 29-30; Baca Decl. ¶ 21; Gordon Decl. ¶¶
18 26-27; Hoffmann Decl. ¶¶ 30, 35-36, 40; Jackson Decl. ¶¶ 29-33; Jones Decl. ¶¶ 30-36;
19 Kaneshiro-Erdmann Decl. ¶¶ 27, Makin Decl. ¶¶ 30-34, 36, 38, 43; Oates Decl. ¶ 23; 31; Salmon
20 Decl. ¶¶ 23-25; Stem Decl. ¶¶ 28-30; Stewart Decl. ¶¶ 27-33, 35.
21 Third, the Rule’s funding conditions violate the Spending Clause’s prohibition on “post
22 acceptance” conditions. Pennhurst, 451 U.S. at 25 (1981). “[L]egislation enacted pursuant to the
23 spending power is much in the nature of a contract.” Id. at 17. Like with contracts, States “cannot
24 knowingly accept conditions of which they are ‘unaware’ or which they are ‘unable to
25 ascertain.’” Arlington Cent. Sch. Dist. Bd. of Educ. v. Murphy, 548 U.S. 291, 296 (2006) (quoting
26 Pennhurst, 451 U.S. at 17). As such, the federal government cannot “surpris[e]” states with
27 funding conditions after acceptance of congressionally appropriated funds. Pennhurst, 451 U.S. at
28
17
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1 25; see also NFIB, 567 U.S. at 584. That is exactly what ED has done here. Plaintiff States did
2 not know of ED’s interpretation of Section 18005 at the time they applied for grants from the
3 GEER and ESSER funds. Guerrant Decl. ¶ 18; Constancio Decl. ¶ 19; Baca Decl. ¶ 13; Gordon
4 Decl. ¶ 16; Jones Decl. ¶ 18; Jackson Decl. ¶ 20; Kaneshiro-Erdmann Decl. ¶ 18; Makin Decl. ¶
5 20; Salmon Decl. ¶ 14; Stewart Decl. ¶ 19. To receive CARES Act funds, the Plaintiff States’
6 SEAs and some LEAs were required to certify, and did certify, that they would comply with the
7 equitable service provision of the CARES Act and “any other applicable law or regulation,” and
8 ensure that LEAs receiving ESSER funds “will provide equitable services to students and
9 teachers in non-public schools located within the LEA in the same manner as provided under
10 section 1117 of the ESEA.” RJN Ex. H. Guerrant Decl. ¶¶ 16-17; Constancio Decl. ¶¶ 17-18;
11 Baca Decl. ¶¶ 11-12; Makin Decl. ¶¶ 18-19; Goldson Decl. ¶¶ 14-15; Gordon Decl. ¶¶ 14-15;
12 Jones Decl. ¶¶ 16-17; Kaneshiro-Erdmann Decl. ¶¶ 16-17; Salmon Decl. ¶¶ 12-13; Stem Decl. ¶¶
13 16-17; Stewart Decl. ¶¶ 17-18. The Rule’s post-application funding conditions effectively force
14 the Plaintiff States to violate Section 18005 of the CARES Act, placing them at risk of breaching
15 the certification. The States also relied on express assurances from ED that an LEA could use
16 CARES Act funds for any schools in the district or target funds based on poverty, school needs,
17 and other targeting measures without regard to Title I eligibility or funding, and without the funds
18 being subject to a supplanting prohibition. RJN Ex. A at 5; Jones Decl. ¶ 28; see Constancio Decl.
19 ¶ 34. The States “had no way to know at the time [they] accepted such funds” that ED would later
20 impose conditions on the use of those funds that were inconsistent with the CARES Act. See New
21 York v. HHS, 414 F. Supp. 3d 475, 568 (S.D.N.Y. 2019) appeal docketed, No. 20-32 (2nd Cir.
22 Jan. 3, 2020).
23 Separately, ED’s interpretation of Section 18005 of the CARES Act in the Rule and
24 Guidance violates the Spending Clause’s relatedness requirement because the Rule’s proportional
25 share and eligibility conditions do not have any “nexus” to the key purpose of Section 18005 of
26 the CARES Act—filling the gap created by reduced state and local funding due to the COVID-19
27 pandemic. See Cty. of Santa Clara v. Trump, 275 F. Supp. 3d 1196, 1214 (N.D. Cal. 2017), aff’d
28
18
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1 in part, vacated in part for unrelated reasons, remanded sub. nom. San Francisco, 897 F.3d 1225
2 (9th Cir. 2018). Instead, the Rule’s funding mandates are in direct contradiction to Congress’s
3 plainly expressed intent to require SEAs and LEAs to follow Section 1117, and the Title I-A
4 allocation formula generally, when apportioning CARES Act funds for equitable services, and
5 undermine the purpose of the CARES Act. Compare 20 U.S.C. § 6320(a)(4)(i) (determining
6 proportional share of expenditures for equitable services based on enrollment of children from
7 low-income families) with 34 C.F.R. § 76.665(c)(ii) (determining proportional share of funds for
8 equitable services based on enrollment of all children.). Under either proportional share option in
9 the Rule, public schools stand to lose out on substantial emergency funding, which is not only
10 unrelated to, but directly contrary to the central purpose of the Education Stabilization Fund. If
11 LEAs follow the Rule’s Title I-schools only option when apportioning CARES act funds, non-
12 Title I schools across the States will receive no emergency funding to support their schools, and
13 LEAs will lose the ability to use the funds to maintain operations that are funded on an LEA-wide
14 basis. Guerrant Decl. ¶ 36; Constancio Decl. ¶¶ 32-33; Baca Decl. ¶ 24; Gordon Decl. ¶ 30;
15 Hoffmann Decl. ¶¶ 30-31, 39; Jackson Decl. ¶¶ 27, 35; Jones Decl. ¶ 38; Kaneshiro-Erdmann
16 Decl. ¶ 28; Makin Decl. ¶ 40; Oates Decl. ¶¶ 16-17; Salmon Decl. ¶¶ 20-21; Stem Decl. ¶ 32;
17 Stewart Decl. ¶ 37; Wallace Decl. ¶ 20. If LEAs follow the second option to apportion funds
18 based on total private school enrollment, LEAs and public schools will lose out on significant
19 amounts of ESSER and GEER funds, which will be diverted to private schools for students who
20 would not otherwise qualify for Title I-A equitable services. Guerrant Decl. ¶¶ 23, 27; Constancio
21 Decl. ¶¶ 27, 35; Baca Decl. ¶ 20; Goldson Decl. ¶¶ 18, 21, 23; Gordon Decl. ¶¶ 19, 31; Hoffmann
22 Decl. ¶¶ 22, 31-33, 42, 49; Jackson Decl. ¶¶ 22, 36; Jones Decl. ¶¶ 25, 27, 39; Kaneshiro-
23 Erdmann Decl. ¶ 22; Makin Decl. ¶¶ 26, 41; Oates Decl. ¶¶ 20-21; Salmon Decl. ¶ 18; Stem Decl.
24 ¶¶ 24, 33; Stewart Decl. ¶¶ 24, 38; Wallace Decl. ¶¶ 16, 21. This loss of emergency funding will
25 have significant negative impacts on public schools, including to services for students and
26 potential loss of jobs for teachers and staff. Guerrant Decl. ¶¶ 38-39; Jones Decl, ¶ 40; Goldson
27 Decl. ¶¶ 24-25; Gordon Decl. ¶¶ 32-33; Oates Decl. ¶¶ 24-25; Stem Decl. ¶ 34; Wallace Decl. ¶¶
28
19
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1 22-23. The funding conditions imposed by the Rule thus undermine the key purpose of the

2 Education Stabilization Fund; a fortiori, they are unrelated to that purpose and are invalid under

3 the Spending Clause. See City & Cty. of San Francisco v. Sessions, 349 F. Supp. 3d 924, 959

4 (N.D. Cal. 2018) (immigration requirements were unrelated to grant’s purpose to provide

5 flexibility to the states through formula grants), aff’d in part, vacated in part for unrelated

6 reasons sub. nom. City & Cty. of San Francisco v. Barr, Nos. 18-17308, 18-17311 (9th Cir. July

7 13, 2020) (affirming requirements were unlawful but narrowing geographic scope of injunction).

8

C. ED’s Actions Are Arbitrary and Capricious in Violation of the APA

9 Even if Congress had somehow granted discretion to the Secretary to conduct rulemaking
10 as to the implementation of the GEER and ESSER Funds (it did not), ED’s actions are also
11 “arbitrary, capricious, [and] an abuse of discretion” and must be set aside under the APA. 5
12 U.S.C. § 706(2)(A).3 ED has failed to meet the APA’s requirements that an agency “examine the
13 relevant data and articulate a satisfactory explanation for its action.” Motor Vehicle Mfrs. Ass’n of
14 U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). It has offered a legally
15 erroneous rationalization for its misconduct, failed to articulate a reasoned explanation for its
16 reversal of its prior position, acted contrary to statutory language and congressional intent, and
17 failed to consider the reliance interests implicated by its actions and other important aspects of the
18 problem.
19 First, as discussed above, Defendants did not and cannot articulate how their position
20 comports with the plain text of Section 18005 of the CARES Act. Thus, their action must be set
21 aside as based on an incorrect legal premise. See Safe Air for Everyone v. EPA, 488 F.3d 1088,
22 1101 (9th Cir. 2007). ED’s basic argument for the Guidance and Rule—that “the phrase ‘provide
23 equitable services in the same manner as provided under section 1117 of the ESEA of 1965’”
24 should not be construed “as if Congress simply incorporated the entirety of section 1117 by
25

26

3 For the same reasons that their actions are ultra vires, violate separation of powers

principles, and exceed ED’s statutory authority, supra at 10-20, these requirements and

27 limitations also violate the APA’s prohibition on agency action “contrary to constitutional right,

power, privilege, or immunity” or “in excess of statutory jurisdiction, authority or limitations, or 28 short of statutory right.” 5 U.S.C. § 706(2)(B)-(C).

20

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1 reference,” 85 Fed. Reg. 39,479—is incorrect. Supra at 12-16. Because “that flawed premise is

2 fundamental” to ED’s agency action, the action must be set aside. Safe Air for Everyone, 488 F.3d

3 at 1101; see also SEC v. Chenery Corp., 318 U.S. 80, 94 (1943) (“an order may not stand” if

4 based on agency’s mistake of law).

5

Second, ED failed to adequately explain (or explain at all) why it was reversing its own

6 prior guidance and other instructions to SEAs and LEAs regarding how equitable services under

7 Section 1117 should be provided. See, e.g., FCC v. Fox Television Stations, Inc., 556 U.S. 502,

8 516 (2009) (where agency changes policy, “a reasoned explanation is needed for disregarding

9 facts and circumstances that underlay . . . the prior policy”); see also Dep’t of Homeland Sec. v.

10 Regents of the Univ. of Cal., 140 S. Ct. 1891, 1912 (2020) (requiring “reasoned analysis to

11 support” rescission of prior policy) (quoting State Farm, 463 U.S. at 52) (punctuation omitted).

12 As a predicate to fulfilling this requirement, an agency must “display awareness that it is

13 changing position” and “may not, for example, depart from a prior policy sub silentio.” Fox

14 Television, 556 U.S. at 515.

15

It is clear that Defendants have materially changed their position. First, ED’s Title I-A

16 guidance for providing equitable services under Section 1117 to private-school students—issued

17 under the current administration less than a year ago—confirmed that equitable services should

18 only be provided to at-risk students who reside in Title I public school attendance areas. As stated

19 in that document: “[T]o be eligible for Title I services, a private school child must reside in a

20 participating Title I public school attendance area and must be identified by the LEA as low

21 achieving on the basis of multiple, educationally related, objective criteria.” RJN Ex. B at 30. But

22 in the 2020 Guidance and the Rule, ED requires LEAs to provide equitable services to all private

23 school children, rather than only “low achieving” students in a Title I-A school attendance area.

24 Second, in the 2019 guidance, ED specified that, under Section 1117, funding for equitable

25 services should be based on the number of children in private schools who are economically

26 disadvantaged or in foster care. It instructed LEAs to “determine an accurate count of children

27 from low-income families who attend public and private schools and reside in participating Title I

28 public school attendance areas in order to allocate the proportional share.” RJN Ex. B at 30. But 21
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1 the 2020 Guidance and Rule instruct LEAs to ignore Section 1117’s proportional share

2 calculation based on the number of low-income students, and proportion the funds based on the

3 total number of students—regardless of income. Third, in May 2020, ED published a “Frequently

4 Asked Questions” document which explicitly stated that “supplement not supplant” rules did not

5 apply to CARES Act funds. RJN Ex. A at 5. But one of the poison pill restrictions on “Option #1”

6 would apply “supplement not supplant” restrictions to CARES Act funds. ED has failed to even

7 acknowledge its changed positions on these crucial issues regarding the equitable services

8 requirements, much less provide a “reasoned explanation” for them.

9

Relatedly, ED failed to take into account the reliance interests that its former position

10 generated on the part of the States and LEAs. “When an agency changes course . . . it must be

11 cognizant that longstanding policies may have engendered serious reliance interests that must be

12 taken into account. It would be arbitrary and capricious to ignore such matters.” Regents, 140

13 S. Ct. at 1913 (quoting Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117, 2126 (2016))

14 (punctuation omitted); see also Fox Television, 556 U.S. at 515-16 (requiring agencies to

15 “provide a more detailed justification than what would suffice for a new policy created on a blank

16 slate” under such circumstances). The “serious reliance interests” engendered by ED’s prior

17 policies include school districts’ reliance on the May 2020 FAQ document when they developed

18 their budgets; as discussed above, in that document, ED explicitly stated that “supplement and not

19 supplant” rules did not apply to CARES Act funds. RJN Ex. A at 5. The new “supplement not

20 supplant” requirement of Option #1 represents an unexplained about-face, which will require

21 school districts which choose (or, for LEAs with only Title I schools, are forced to use) this

22 option to revamp their budgets to reflect their significantly curtailed flexibility to use these funds

23 to address COVID-19. See Jones Decl. ¶ 28; Hoffmann Decl. ¶ 40.

24

ED’s rewrite of the equitable services requirements is also arbitrary and capricious because,

25 in imposing the Rule, ED “relied on factors which Congress has not intended it to consider,

26 entirely failed to consider an important aspect of the problem,” and “offered an explanation for its

27 decision that runs counter to the evidence before the agency.” State Farm, 463 U.S. at 43. ED

28 ignored “important aspect[s] of the problem,” including, among others, the myriad harms to 22
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1 students, States, and LEAs discussed herein. These harms include: (1) the impact on LEAs from

2 loss of ESSER and GEER moneys diverted to private schools, and the predictable adverse impact

3 on the States’ and LEAs’ fiscs as they fill the gap created by these diversions; (2) for LEAs that

4 choose Option #1 (Title I-schools only Option), (a) the loss of all CARES Act emergency funding

5 for LEAs’ non-Title I schools, (b) those LEAs’ inability to use the funds to maintain operations

6 that are funded on an LEA-wide basis, and (c) those LEAs’ Title I schools’ inability to use

7 CARES Act funds for existing costs (due to the application of “supplement not supplant”); (3) for

8 LEAs that choose Option #2 (Private-school enrollment Option) when apportioning CARES Act

9 funds, the LEAs’ and public schools’ loss of millions of ESSER and GEER moneys, which will

10 be diverted to private schools for students who would not otherwise qualify for Title I-A equitable

11 services; (4) significant added administrative burdens on LEAs and SEAs;4 (5) diversion of SEA

12 resources to provide technical assistance to LEAs regarding the Guidance and Rule; and (6) the

13 delay in distributing funds to students and teachers caused by Defendants’ inconsistent

14 interpretations, contrary to the core purpose of the CARES Act to quickly deploy these urgently

15 needed funds. See supra at 9, 17-19; infra at 27-29.

16

Further, the imposition of this burden runs contrary to Congress’s intent. Congress intended

17 SEAs and LEAs to have a great deal of flexibility in their uses of CARES Act funds. See, e.g.,

18 CARES Act §§ 18002(c)(1), 18003(d)(12) (setting forth broad set of permitted uses for CARES

19 Act funds, expressly including maintaining continuity of services and continuing to employ

20 existing LEA staff); Congress intended to deliver LEAs “need[ed] funding flexibility due to the

21 disruption in the academic year from COVID-19.” 166 Cong. Rec. H1856 (daily ed. Mar. 27,

22 2020) (statement of Rep. Underwood). ED’s awareness of Congress’s intent was made manifest

23 4 The Rule contains a brief discussion of “implementation costs,” 85 Fed. Reg. 39,485-86,
24 but this discussion focuses only on data collection and not the numerous other administrative burdens discussed herein. Indeed, in the Rule ED acknowledges that “[a]ffected LEAs will likely
25 face some administrative costs to implement these statutory requirements, but ED largely lacks data to quantify these costs,” 85 Fed. Reg. 39,485, demonstrating ED’s utter failure to gather and
26 examine the relevant data before enacting the Rule. (Such information may well have been supplied had ED followed the APA’s notice and comment requirements.) The Rule goes on to
27 assert, without any support: “However, ED expects that these entities will largely experience benefits exceeding these administrative costs.” Id.
28
23
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Case 3:20-cv-04478-SK Document 35 Filed 07/20/20 Page 30 of 72

1 in a letter sent on June 12, 2020, acknowledging that “Congress . . . intended that grantees have

2 substantial flexibility in the use of these [CARES Act] dollars.” RJN Ex. I at 3, as well as the

3 Rule itself, see 85 Fed. Reg. 39,480 (“the CARES Act affords LEAs . . . flexibility”). Defendants’

4 imposition of these restrictions on LEAs, significantly limiting their flexibility to use the funds, is

5 “contrary to plain congressional intent,” and thus arbitrary and capricious.5 E. Bay Sanctuary

6 Covenant v. Trump, 950 F.3d 1242, 1277 (9th Cir. 2020).

7

Another way in which the Rule is incompatible with congressional intent is its failure to

8 follow Congress’ unambiguously expressed directive that CARES Act funds should be used to

9 support the most vulnerable students. Congress made this clear by using the Title I-A allocation

10 method, which tracks low-income students; statements by members of Congress further support

11 this intent. See, e.g., 166 Cong. Rec. E340 (daily ed. Mar. 31, 2020) (statement of Rep. Jayapal)

12 (Congress intended that LEAs have this funding to “help alleviate the challenges educators,

13 students and families are struggling with in light of school closures” particularly those “students

14 with disabilities, English language learners, and students experiencing homelessness”). ED’s

15 repeated insistence that Congress actually intended to prioritize support for all private-school

16 students, see, e.g., 85 Fed. Reg. 39,479 (“The pandemic has harmed all our Nation’s students by

17 disrupting their education. Nothing in the CARES Act suggests Congress intended to differentiate

18 between students based upon the public or non-public nature of their school with respect to

19 eligibility for relief”), 39,480 (“services under the CARES Act programs can be available for all

20 students—public and non-public—without regard to poverty, low achievement, or residence in a

21 participating Title I public school attendance area”), 39,482 (“the CARES Act authorizes an LEA

22 to serve all students—public and non-public—who have been affected by COVID-19”), reflects

23 its erroneous premise that Congress intended to direct these funds to all private-school students—

24

25

5 Ironically, Defendants list “flexibility in administration of equitable services” as one of

the positive impacts of the Rule, 85 Fed. Reg. 39,486, and repeatedly claim that they are

26 providing LEAs with flexibility through the Rule. 85 Fed. Reg. 39,480 (“we are affording

flexibility to . . . LEA[s]”); 39,481 (“ED has resolved the ambiguity by permitting LEAs

27 flexibility to provide equitable services”); 39,484 (“This interim final rule is meant to provide

flexibility . . . for SEAs and LEAs”), (the Rule “offers appropriate flexibility”). 28

24

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Case 3:20-cv-04478-SK Document 35 Filed 07/20/20 Page 31 of 72

1 many of whom are affluent or at least economically secure6—on an equal basis with public

2 schools that educate large populations of at-risk and low-income students.7 Further, private

3 schools appear to have been able to receive significant financial support from the CARES Act’s

4 Paycheck Protection Program, CARES Act § 1102, H.R. 748-6, far exceeding what is guaranteed

5 to LEAs from the ESSER fund. See Hoffman Decl. ¶¶ 44-49.

6

D. The Rule Is Procedurally Defective Under the APA as ED Did Not Have

Good Cause to Issue the Rule As an Interim Final Rule. 7

“The APA requires that, prior to promulgating rules, an agency must issue a general notice

8

of proposed rulemaking.” California v. Azar, 911 F.3d 558, 575 (9th Cir. 2018); 5 U.S.C. §

9

553(b); see also Paulsen v. Daniels, 413 F.3d 999, 1005 (9th Cir. 2005) (“[I]t is antithetical to the

10

structure and purpose of the APA for an agency to implement a rule first, and then seek comment

11

later.”). Here, Defendants issued the Rule as an interim final rule, making the Rule effective

12

immediately and circumventing the notice and comment requirements of the APA. See 85 Fed.

13

Reg. 39,479.

14

Pursuant to 5 U.S.C. § 553(b)(B), an agency may publish a rule without prior notice and

15

comment only “for good cause” when the “notice and public procedure . . . are impracticable,

16

unnecessary, or contrary to the public interest.” This good cause exception is “usually invoked in

17

emergencies” and the agency “must overcome a high bar if it seeks to invoke the good cause

18

6 ED recognizes that some “financially well-resourced” private schools have “tuition and 19 fees comparable to those charged by the most highly selective postsecondary institutions,” and

“tend to serve families from the highest income brackets,” but dismisses these as small in number 20 and notes that such private schools are “not required to accept equitable services.” 85 Fed. Reg.

39,483. Further, ED says that it “particularly discourages” such schools from accepting CARES 21 Act funds, and proclaims its belief that “such non-public schools have ample resources to serve

their students and teachers during the COVID-19 national emergency and should not rely on 22 taxpayer funds to do so.” Id. First, it should be noted that according to the most recent Census

data, almost 600,000 students attend non-sectarian private schools, with an average annual tuition 23 of over $22,000. See RJN Ex. J. And ED’s “discourage[ment]” and “belie[f],” of course, do not

impact those schools’ eligibility for CARES Act funds under the Rule.

24

7 In the Rule, ED briefly discusses CCSSO’s position that Congress “‘intended to

concentrate ESSER funds in areas of the most need, where the educational and social impacts of 25 the COVID crisis will be most extreme and difficult to overcome with limited local funds,’” but

summarily dismisses this view as a “rigid” interpretation not supported by the text of the CARES 26 Act. 85 Fed. Reg. 39,480. ED points to its Option #1 (Title I-schools only Option) as a means to

address the needs of an “LEA that helps poor children by spending its CARES Act funds only in 27 its Title I schools,” ignoring the fact that ED then imposes draconian restrictions on the use of

funds under this option which are completely untethered from the CARES Act’s text. 28

25

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Case 3:20-cv-04478-SK Document 35 Filed 07/20/20 Page 32 of 72

1 exception to bypass the notice and comment requirement.” Azar, 911 F.3d at 575; United States v.

2 Valverde, 628 F.3d 1159, 1164 (9th Cir. 2010).8

3

In the Rule, ED states that there is good cause to waive these notice and comment

4 procedures because of “the immediate need for certainty regarding applicable requirements” for

5 “determining the amount of funds available for [equitable] services.” 85 Fed. Reg. at 39,483. This

6 rationale cannot satisfy good cause for multiple reasons.

7

First, remedying uncertainty in a statute “is not a reasonable justification for bypassing

8 notice and comment.” Valverde, 628 F.3d at 1166. As the Ninth Circuit has adopted, “if ‘good

9 cause’ could be satisfied by an Agency’s assertion that ‘normal procedures were not followed

10 because of the need to provide immediate guidance and information[,] . . . then an exception to

11 the notice requirement would be created that would swallow the rule.” Id. (quoting Zhang v.

12 Slattery, 55 F.3d 732, 746 (2d Cir. 1995)).

13

Further, the Rule allows for a 30-day post-promulgation comment period, see 85 Fed. Reg.

14 at 39,484, which “casts further doubt upon the authenticity and efficacy of the asserted need to

15 clear up potential uncertainty.” Valverde, 628 F.3d at 1166; see also Azar, 911 F.3d at 576.

16 “[A]llowing for post-promulgation comments implicitly suggests that the rules will be

17 reconsidered and that the ‘level of uncertainty is, at best, unchanged.’” Azar, 911 F.3d at 576

18 (quoting United States v. Reynolds, 710 F.3d 498, 510 (3d Cir. 2013)).

19

And, most damning here, the ostensible uncertainty regarding the calculation of the

20 proportional share of CARES Act funds for equitable shares is a phantom “problem” of ED’s

21 invention. The CARES Act clearly adopts the Section 1117 proportional share calculation as

22 discussed above—ED is the only entity that seems to dispute the plain language of the CARES

23 Act, and its indefensible position is what has created the uncertainty for SEAs and LEAs across

24 8 5 U.S.C. § 553(a)(2) exempts some regulatory actions from the requirements of 5 U.S.C.
25 § 553, but ED is generally prohibited from using this exemption for actions governing formula grants or existing grants. 20 U.S.C. § 1232(d) (restricting ED’s use of the 5 U.S.C. § 553(a)(2)
26 exemption only to regulatory actions “that govern the first grant competition under a new or substantially revised program authority”). Additionally, ED has stated in the notice it published
27 with the Rule in the federal register that it would comply with 5 USC § 553, 85 Fed. Reg. 39,483, and it is bound by that commitment. See Sequoia Orange Co. v. Yeutter, 973 F.2d 752, 757 (9th
28 Cir. 1992).
26
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Case 3:20-cv-04478-SK Document 35 Filed 07/20/20 Page 33 of 72

1 the Nation. ED should not be permitted to create uncertainty, and then leverage that uncertainty to

2 justify promulgating a rule without following notice and comment procedures.

3

The APA requires courts to hold unlawful and set aside agency actions that fail to comply

4 with the procedures required by law. 5 U.S.C. § 706(2)(D). Because Defendants promulgated the

5 Rule without following the APA’s notice and comment requirements and failed to demonstrate

6 good cause for dispensing with them, the Rule should be held unlawful.

7 II. PLAINTIFFS WILL SUFFER IRREPARABLE HARM

8

The Rule threatens imminent and irreparable harm to the States, LEAs, their public schools,

9 and the students they serve. The public schools will lose significant CARES Act funds to private

10 schools or be unable to use the funds for their response to the pandemic. With state and local

11 budgets stretched, students will lose out where sufficient resources are simply not available to

12 make up the shortfalls caused by the diversion of CARES Act funds caused by the Guidance and

13 Rule. As a result of ED’s rewriting of the requirements under Section 18005 of the CARES Act,

14 Plaintiffs also face adverse legal action against them no matter which option their LEAs choose.

15

The financial harm to the public schools and LEAs from the Guidance and the Rule is

16 enormous. In sum, for the Plaintiff States and Plaintiff LEAs, if their LEAs choose to utilize

17 Option #2 to calculate the proportional share of CARES Act funds for equitable services, the

18 LEAs and their public schools will lose over $150 million, compared to if the LEAs follow the

19 CARES Act’s explicit instruction to use the Section 1117 calculation method. See Guerrant Decl.

20 ¶¶ 23, 37; Constancio Decl. ¶¶ 27, 35; Goldson Decl. ¶¶ 18, 21; Gordon Decl. ¶¶ 19, 31;

21 Hoffmann Decl. ¶¶ 22, 42; Jackson Decl. ¶¶ 22, 26, 36; Jones Decl. ¶¶ 25, 27, 39; Kaneshiro-

22 Erdmann Decl. ¶ 22; Makin Decl. ¶¶ 26, 41; Oates Decl. ¶ 20; Salmon Decl. ¶ 18; Stewart Decl. ¶

23 24; Stem Decl. ¶¶ 25, 35; Wallace Decl. ¶¶ 16, 21. Plaintiff States and LEAs will be required to

24 backfill this lost funding for their public schools. See Guerrant Decl. ¶ 26; Jackson Decl. ¶ 26;

25 Jones Decl. ¶ 29; Kaneshiro-Erdmann Decl. ¶ 25; Makin Decl. ¶ 27; Oates Decl. ¶ 22; Stem Decl.

26 ¶ 27; Stewart Decl. ¶¶ 25-26. If the LEAs in the Plaintiff States and Plaintiff LEAs follow Option

27 #1 under the Rule to calculate the proportional share of CARES Act funds for equitable services,

28 the LEAs would only be able to use the funds to support their Title I schools. See Guerrant Decl. 27
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Case 3:20-cv-04478-SK Document 35 Filed 07/20/20 Page 34 of 72

1 ¶¶ 27, 36; Constancio Decl. ¶ 33; Baca Decl. ¶ 24; Hoffmann Decl. ¶¶ 29-30, 39; Jones Decl. ¶

2 38; Jackson Decl. ¶¶ 27, 35; Kaneshiro-Erdmann Decl. ¶¶ 26, 28; Makin Decl. ¶¶ 28, 40; Oates

3 Decl. ¶ 16; Salmon Decl. ¶ 20; Stem Decl. ¶¶ 28, 34; Stewart Decl. ¶¶ 25, 37; Wallace Decl. ¶ 20.

4 The thousands of non-Title I schools in LEAs that would otherwise receive CARES Act funds

5 will receive zero funding to address the many problems created by the pandemic. See Guerrant

6 Decl. ¶¶ 27, 36; Constancio Decl. ¶ 33; Baca Decl. ¶ 24; Hoffmann Decl. ¶¶ 29, 39; Jones Decl. ¶

7 38; Jackson Decl. ¶¶ 27, 35; Kaneshiro-Erdmann Decl. ¶¶ 26, 28; Makin Decl. ¶¶ 28, 40; Oates

8 Decl. ¶ 16; Salmon Decl. ¶ 20; Stem Decl. ¶¶ 28, 34; Stewart Decl. ¶¶ 25, 37; Wallace Decl. ¶ 20.

9 To make matters worse, the Title I public schools receiving funds will be unable to use the

10 CARES Act funds where they are needed most. See Guerrant Decl. ¶¶ 27, 36; Constancio Decl. ¶

11 33; Baca Decl. ¶ 24; Gordon Decl. ¶ 30; Hoffmann Decl. ¶¶ 29-31, 39-41; Jackson Decl. ¶¶ 27,

12 35; Jones Decl. ¶ 28; Kaneshiro-Erdmann Decl. ¶¶ 26, 28; Makin Decl. ¶¶ 28, 40; Oates Decl. ¶

13 18; Salmon Decl. ¶ 21; Stem Decl. ¶ 34; Stewart Decl. ¶¶ 25, 37; Wallace Decl. ¶ 20. Thus, even

14 if all LEAs utilize Option #1 in the Rule, the Plaintiff States and LEAs will need to allocate

15 hundreds of millions of dollars to the schools that will no longer be eligible to receive CARES

16 Act funds and to assist schools that cannot use the CARES Act funds for their intended purposes.

17

This significant monetary loss to the SEAs, LEAs, public schools, and public-school

18 students constitutes irreparable harm. Azar, 911 F.3d at 581 (states could establish irreparable

19 harm where they suffer economic harm and “will not be able to recover monetary damages

20 connected to the IFRs” (citing 5 U.S.C. § 702 (permitting relief “other than money damages”));

21 see also Cty. of Santa Clara v. Trump, 250 F. Supp. 3d 497, 537 (N.D. Cal. 2017) (federal

22 executive order interfering with counties’ ability to budget, plan for the future, and properly serve

23 their residents constituted a basis for irreparable harm); Texas v. United States, 809 F.3d 134, 186

24 (5th Cir. 2015), aff’d by an equally divided Court, 136 S. Ct. 2271 (2016) (impact on state’s

25 resources caused by federal program enabling certain immigrants to obtain drivers’ licenses

26 constituted irreparable harm)).

27

Alternatively, if LEAs—either unilaterally or with a State’s permission—calculate the

28 proportionate share of CARES Act funds for equitable services as required by the Act, i.e., using 28
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Case 3:20-cv-04478-SK Document 35 Filed 07/20/20 Page 35 of 72

1 the Section 1117 calculation and using the funds for the purposes expressly provided for in the

2 Act, both the Plaintiff States and Plaintiff LEAs will face legal jeopardy as they cannot comply

3 with certifications verifying that they will abide by both the CARES Act and ED’s regulations.

4 See Guerrant Decl. ¶ 33; Baca Decl. ¶ 21; Constancio Decl. ¶ 30; Gordon Decl. ¶ 26; Jackson

5 Decl. ¶ 32; Jones Decl. ¶ 34; Kaneshiro-Erdmann Decl. ¶ 27; Makin Decl. ¶ 36; Stem Decl. ¶ 31;

6 Stewart Decl. ¶ 33. This leaves Plaintiff States and LEA in an untenable position in which,

7 regardless of what their LEAs choose, they will be in violation of either the CARES Act’s

8 requirements or the Rule’s requirements. Whatever choice Plaintiffs make, they will be harmed.

9 See Am. Trucking Ass’ns v. City of Los Angeles, 559 F.3d 1046, 1057-58 (9th Cir. 2009) (a party

10 faces an irreparable injury when it is harmed no matter what choice it makes).

11

Finally, as the Guidance and Rule impinge on constitutional separation of powers principles

12 and the Spending Clause, Defendants’ “constitutional violation alone, coupled with the damages

13 incurred,” from loss of public-school funding “suffice to show irreparable harm.” Am. Trucking

14 Ass’ns, Inc., 559 F.3d at 1058-59.

15 III. THE PUBLIC INTEREST WEIGHS HEAVILY IN FAVOR OF PROVISIONAL RELIEF

16

The “balance of the equities” and “public interest” factors of the Winter test merge when

17 the government is a party. Nken v. Holder, 556 U.S. 418, 435 (2009). In assessing these factors,

18 courts consider the impacts of the injunction on nonparties as well. See League of Wilderness

19 Defenders/Blue Mountains Biodiversity Project v. Connaughton, 752 F.3d 755, 766 (9th Cir.

20 2014).

21

The public interest in allowing schools to respond to the myriad urgent challenges posed by

22 the COVID-19 pandemic weighs overwhelmingly in favor of an injunction here. As discussed

23 supra at 3-4, the challenges caused by the pandemic have contributed to heightened need for

24 public-school funding, particularly for schools with a high proportion of low-income and at-risk

25 children. Congress specifically responded to this crisis by making GEER and ESSER funds

26 available to public schools that needed assistance to respond to the pandemic and provided

27 flexibility to the SEAs and LEAs in using these funds to best serve students. An injunction is

28 needed to preserve this congressional intent, as the “public . . . has an interest in ensuring that 29
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Case 3:20-cv-04478-SK Document 35 Filed 07/20/20 Page 36 of 72

1 statutes enacted by their representatives are not imperiled by executive fiat.” Sierra Club v.

2 Trump, No. 19-16102, 2020 WL 3478900, at *16 (9th Cir. June 26, 2020) (quoting E. Bay

3 Sanctuary Covenant v. Trump, 932 F.3d 742, 779 (9th Cir. 2018)) (punctuation omitted); see also

4 San Francisco, 897 F.3d at 1244 (upholding injunction regarding federal grants because “the

5 public interest cannot be disserved by an injunction that brings clarity to all parties and to citizens

6 dependent on public services”).

7

Supporting public schools’ continued ability to provide their students with an education is

8 also in the public interest. See, e.g., Meyer v. Nebraska, 262 U.S. 390, 400 (1923) (“The

9 American people have always regarded education and acquisition of knowledge as matters of

10 supreme importance which should be diligently promoted.”). Diverting funding to private schools

11 and away from public schools, when private schools can access, and have accessed, other funding

12 sources under the CARES Act that are unavailable to public schools, leaves public schools

13 without the emergency relief funding Congress sought to provide them during the pandemic.

14

Conversely, Defendants “cannot suffer harm ‘from an injunction that merely ends an

15 unlawful practice’.” Sierra Club, 2020 WL 3478900, at *16 (quoting Rodriguez v. Robbins, 715

16 F.3d 1127, 1145 (9th Cir. 2013)). In fact, an injunction here would only require that the ESSER

17 and GEER funds be utilized in the manner that Congress intended—making assistance available

18 for public schools and at-risk private-school students, and providing flexibility to SEAs and LEAs

19 to use the funds. See id. (“[t]he public interest favors enforcing” Congress’s “calculated choice”).

20

COVID-19 has had particularly insidious effects on low-income communities, and

21 Congress recognized this effect by directing the majority of the ESSER and GEER funds to those

22 LEAs particularly harmed by the pandemic. Private schools have access to other avenues of

23 funding under the CARES Act. ED should not divert funding from public schools to private

24 schools contrary to the plain language of the CARES Act, Congress’ clear intent, and in the face

25 of this public health crisis’s crushing blow to public education.

26

CONCLUSION

27

For the foregoing reasons, Plaintiffs request this Court grant their Motion.

28 30

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Case 3:20-cv-04478-SK Document 35 Filed 07/20/20 Page 37 of 72

1 Dated: July 20, 2020

Respectfully Submitted,

2

XAVIER BECERRA

Attorney General of California

3

MICHAEL L. NEWMAN

Senior Assistant Attorney General

4

SARAH E. BELTON

Supervising Deputy Attorney General

5

/s/ Garrett Lindsey

6

GARRETT LINDSEY

7

JAMES F. ZAHRADKA II

REBEKAH A. FRETZ

8

Deputy Attorneys General

Attorneys for Plaintiff State of California

9

10

DANA NESSEL

Attorney General of Michigan

11

FADWA A. HAMMOUD

Solicitor General

12

TONI L. HARRIS*

NEIL GIOVANATTI*

13

Assistant Attorneys General

Attorneys for Plaintiff State of Michigan

14

*Appearing Pro Hac Vice

15

16

17

18

19

20

21

22

23

24

25

26

27

28 31
Pls.’ Notice of Mot. and Mot. for Prelim. Inj. (3:20-cv-4478-SK)

Case 3:20-cv-04478-SK Document 35 Filed 07/20/20 Page 38 of 72

1 KARL A. RACINE Attorney General of District of Columbia
2 KATHLEEN KONOPKA Deputy Attorney General, Public Advocacy
3 Division Attorneys for Plaintiff District of Columbia
4 Appearing pro hac vice (application forthcoming)
5 CLARE E. CONNORS
6 Attorney General of Hawaii HOLLY T. SHIKADA
7 KEVIN M. RICHARDSON Deputy Attorneys General
8 Attorneys for Plaintiff State of Hawaii Appearing pro hac vice (application
9 forthcoming)
10 AARON M. FREY Attorney General of Maine
11 SARAH A. FORSTER* Assistant Attorney General
12 Attorneys for Plaintiff State of Maine *Appearing pro hac vice
13 BRIAN E. FROSH
14 Attorney General of Maryland STEVEN M. SULLIVAN
15 Solicitor General Attorneys for Plaintiff State of Maryland
16 Appearing pro hac vice (application forthcoming)
17 HECTOR BALDERAS
18 New Mexico Attorney General P. CHOLLA KHOURY
19 LISA GIANDOMENICO* Assistant Attorneys General
20 Attorneys for Plaintiff State of New Mexico *Appearing pro hac vice
21 JOSH SHAPIRO
22 Attorney General of Pennsylvania MICHAEL J. FISCHER
23 Chief Deputy Attorney General Attorneys for Plaintiff Commonwealth of
24 Pennsylvania Appearing pro hac vice (application
25 forthcoming)
26
27

JOSHUA L. KAUL Attorney General of Wisconsin HANNAH S. JURSS Assistant Attorney General Attorneys for Plaintiff State of Wisconsin Appearing pro hac vice (application forthcoming)
JAMES E. JOHNSON Corporation Counsel of the City of New York ERIC PROSHANSKY HOPE LU GAIL RUBIN Assistant Corporation Counsel Attorneys for Plaintiff the Board of Education of the City School District of the City of New York Appearing pro hac vice (application forthcoming)
BOARD OF EDUCATION, CITY OF CHICAGO DEPARTMENT OF LAW JOSEPH MORIARTY General Counsel J. ERNEST MINCY Deputy General Counsel for Litigation Attorneys for Plaintiff Chicago Board of Education Appearing pro hac vice (application forthcoming)
SAN FRANCISCO UNIFIED SCHOOL DISTRICT DANIELLE HOUCK General Counsel SUSANNE NAOMI STARECKI KIM Sr. Deputy General Counsel Legal Department Attorneys for Plaintiff San Francisco Unified School District
SQUIRE PATTON BOGGS (US) LLP GABRIEL COLWELL (CABN 216783) COLIN R. JENNINGS (OHBN 0068704) W. MICHAEL HANNA (OHBN 0020149) EMILY R. SPIVACK (OHBN 0090777) KEVIN J. BURTZLAFF (OHBN 0039648) Cleveland Municipal School District Board of Education Attorneys for Plaintiff Cleveland Municipal School District Appearing pro hac vice (application forthcoming)

28 32
Pls.’ Notice of Mot. and Mot. for Prelim. Inj. (3:20-cv-4478-SK)

Case 3:20-cv-04478-SK Document 35 Filed 07/20/20 Page 39 of 72
&$5(6$FW$SSHQGL[

Case 3:20-cv-04478-SK Document 35 Filed 07/20/20 Page 40 of 72
H. R. 748
One Hundred Sixteenth Congress of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Friday, the third day of January, two thousand and twenty
An Act
To amend the Internal Revenue Code of 1986 to repeal the excise tax on high cost employer-sponsored health coverage.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Coronavirus Aid, Relief, and Economic Security Act’’ or the ‘‘CARES Act’’.
SEC. 2. TABLE OF CONTENTS.
The table of contents for this Act is as follows:
Sec. 1. Short title. Sec. 2. Table of contents. Sec. 3. References.
DIVISION A—KEEPING WORKERS PAID AND EMPLOYED, HEALTH CARE SYSTEM ENHANCEMENTS, AND ECONOMIC STABILIZATION
TITLE I—KEEPING AMERICAN WORKERS PAID AND EMPLOYED ACT Sec. 1101. Definitions. Sec. 1102. Paycheck protection program. Sec. 1103. Entrepreneurial development. Sec. 1104. State trade expansion program. Sec. 1105. Waiver of matching funds requirement under the women’s business cen-
ter program. Sec. 1106. Loan forgiveness. Sec. 1107. Direct appropriations. Sec. 1108. Minority business development agency. Sec. 1109. United States Treasury Program Management Authority. Sec. 1110. Emergency EIDL grants. Sec. 1111. Resources and services in languages other than English. Sec. 1112. Subsidy for certain loan payments. Sec. 1113. Bankruptcy. Sec. 1114. Emergency rulemaking authority.
TITLE II—ASSISTANCE FOR AMERICAN WORKERS, FAMILIES, AND BUSINESSES
Subtitle A—Unemployment Insurance Provisions Sec. 2101. Short title. Sec. 2102. Pandemic Unemployment Assistance. Sec. 2103. Emergency unemployment relief for governmental entities and nonprofit
organizations. Sec. 2104. Emergency increase in unemployment compensation benefits. Sec. 2105. Temporary full Federal funding of the first week of compensable regular
unemployment for States with no waiting week. Sec. 2106. Emergency State staffing flexibility. Sec. 2107. Pandemic emergency unemployment compensation. Sec. 2108. Temporary financing of short-time compensation payments in States
with programs in law. Sec. 2109. Temporary financing of short-time compensation agreements.

Case 3:20-cv-04478-SK Document 35 Filed 07/20/20 Page 41 of 72

H. R. 748—2

Sec. 2110. Grants for short-time compensation programs. Sec. 2111. Assistance and guidance in implementing programs. Sec. 2112. Waiver of the 7-day waiting period for benefits under the Railroad Un-
employment Insurance Act. Sec. 2113. Enhanced benefits under the Railroad Unemployment Insurance Act. Sec. 2114. Extended unemployment benefits under the Railroad Unemployment In-
surance Act. Sec. 2115. Funding for the DOL Office of Inspector General for oversight of unem-
ployment provisions. Sec. 2116. Implementation.

Subtitle B—Rebates and Other Individual Provisions
Sec. 2201. 2020 recovery rebates for individuals. Sec. 2202. Special rules for use of retirement funds. Sec. 2203. Temporary waiver of required minimum distribution rules for certain re-
tirement plans and accounts. Sec. 2204. Allowance of partial above the line deduction for charitable contribu-
tions. Sec. 2205. Modification of limitations on charitable contributions during 2020. Sec. 2206. Exclusion for certain employer payments of student loans.

Subtitle C—Business Provisions
Sec. 2301. Employee retention credit for employers subject to closure due to COVID–19.
Sec. 2302. Delay of payment of employer payroll taxes. Sec. 2303. Modifications for net operating losses. Sec. 2304. Modification of limitation on losses for taxpayers other than corpora-
tions. Sec. 2305. Modification of credit for prior year minimum tax liability of corpora-
tions. Sec. 2306. Modifications of limitation on business interest. Sec. 2307. Technical amendments regarding qualified improvement property. Sec. 2308. Temporary exception from excise tax for alcohol used to produce hand
sanitizer.

TITLE III—SUPPORTING AMERICA’S HEALTH CARE SYSTEM IN THE FIGHT AGAINST THE CORONAVIRUS

Sec. 3001. Short title.

Subtitle A—Health Provisions

PART I—ADDRESSING SUPPLY SHORTAGES

SUBPART A—MEDICAL PRODUCT SUPPLIES
Sec. 3101. National Academies report on America’s medical product supply chain security.
Sec. 3102. Requiring the strategic national stockpile to include certain types of medical supplies.
Sec. 3103. Treatment of respiratory protective devices as covered countermeasures.

SUBPART B—MITIGATING EMERGENCY DRUG SHORTAGES
Sec. 3111. Prioritize reviews of drug applications; incentives. Sec. 3112. Additional manufacturer reporting requirements in response to drug
shortages.

SUBPART C—PREVENTING MEDICAL DEVICE SHORTAGES Sec. 3121. Discontinuance or interruption in the production of medical devices.

PART II—ACCESS TO HEALTH CARE FOR COVID–19 PATIENTS

SUBPART A—COVERAGE OF TESTING AND PREVENTIVE SERVICES
Sec. 3201. Coverage of diagnostic testing for COVID–19. Sec. 3202. Pricing of diagnostic testing. Sec. 3203. Rapid coverage of preventive services and vaccines for coronavirus.

SUBPART B—SUPPORT FOR HEALTH CARE PROVIDERS
Sec. 3211. Supplemental awards for health centers. Sec. 3212. Telehealth network and telehealth resource centers grant programs. Sec. 3213. Rural health care services outreach, rural health network development,
and small health care provider quality improvement grant programs.

Case 3:20-cv-04478-SK Document 35 Filed 07/20/20 Page 42 of 72
H. R. 748—3
Sec. 3214. United States Public Health Service Modernization. Sec. 3215. Limitation on liability for volunteer health care professionals during
COVID–19 emergency response. Sec. 3216. Flexibility for members of National Health Service Corps during emer-
gency period.
SUBPART C—MISCELLANEOUS PROVISIONS Sec. 3221. Confidentiality and disclosure of records relating to substance use dis-
order. Sec. 3222. Nutrition services. Sec. 3223. Continuity of service and opportunities for participants in community
service activities under title V of the Older Americans Act of 1965. Sec. 3224. Guidance on protected health information. Sec. 3225. Reauthorization of healthy start program. Sec. 3226. Importance of the blood supply.
PART III—INNOVATION Sec. 3301. Removing the cap on OTA during public health emergencies. Sec. 3302. Priority zoonotic animal drugs.
PART IV—HEALTH CARE WORKFORCE Sec. 3401. Reauthorization of health professions workforce programs. Sec. 3402. Health workforce coordination. Sec. 3403. Education and training relating to geriatrics. Sec. 3404. Nursing workforce development.
Subtitle B—Education Provisions Sec. 3501. Short title. Sec. 3502. Definitions. Sec. 3503. Campus-based aid waivers. Sec. 3504. Use of supplemental educational opportunity grants for emergency aid. Sec. 3505. Federal work-study during a qualifying emergency. Sec. 3506. Adjustment of subsidized loan usage limits. Sec. 3507. Exclusion from Federal Pell Grant duration limit. Sec. 3508. Institutional refunds and Federal student loan flexibility. Sec. 3509. Satisfactory academic progress. Sec. 3510. Continuing education at affected foreign institutions. Sec. 3511. National emergency educational waivers. Sec. 3512. HBCU Capital financing. Sec. 3513. Temporary relief for federal student loan borrowers. Sec. 3514. Provisions related to the Corporation for National and Community Serv-
ice. Sec. 3515. Workforce response activities. Sec. 3516. Technical amendments. Sec. 3517. Waiver authority and reporting requirement for institutional aid. Sec. 3518. Authorized uses and other modifications for grants. Sec. 3519. Service obligations for teachers.
Subtitle C—Labor Provisions
Sec. 3601. Limitation on paid leave. Sec. 3602. Emergency Paid Sick Leave Act Limitation. Sec. 3603. Unemployment insurance. Sec. 3604. OMB Waiver of Paid Family and Paid Sick Leave. Sec. 3605. Paid leave for rehired employees. Sec. 3606. Advance refunding of credits. Sec. 3607. Expansion of DOL Authority to postpone certain deadlines. Sec. 3608. Single-employer plan funding rules. Sec. 3609. Application of cooperative and small employer charity pension plan rules
to certain charitable employers whose primary exempt purpose is providing services with respect to mothers and children. Sec. 3610. Federal contractor authority. Sec. 3611. Technical corrections.
Subtitle D—Finance Committee
Sec. 3701. Exemption for telehealth services. Sec. 3702. Inclusion of certain over-the-counter medical products as qualified med-
ical expenses. Sec. 3703. Increasing Medicare telehealth flexibilities during emergency period. Sec. 3704. Enhancing Medicare telehealth services for Federally qualified health
centers and rural health clinics during emergency period.

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Sec. 3705. Temporary waiver of requirement for face-to-face visits between home dialysis patients and physicians.
Sec. 3706. Use of telehealth to conduct face-to-face encounter prior to recertification of eligibility for hospice care during emergency period.
Sec. 3707. Encouraging use of telecommunications systems for home health services furnished during emergency period.
Sec. 3708. Improving care planning for Medicare home health services. Sec. 3709. Adjustment of sequestration. Sec. 3710. Medicare hospital inpatient prospective payment system add-on pay-
ment for COVID–19 patients during emergency period. Sec. 3711. Increasing access to post-acute care during emergency period. Sec. 3712. Revising payment rates for durable medical equipment under the Medi-
care program through duration of emergency period. Sec. 3713. Coverage of the COVID–19 vaccine under part B of the Medicare pro-
gram without any cost-sharing. Sec. 3714. Requiring Medicare prescription drug plans and MA–PD plans to allow
during the COVID–19 emergency period for fills and refills of covered part D drugs for up to a 3-month supply. Sec. 3715. Providing home and community-based services in acute care hospitals. Sec. 3716. Clarification regarding uninsured individuals. Sec. 3717. Clarification regarding coverage of COVID–19 testing products. Sec. 3718. Amendments relating to reporting requirements with respect to clinical diagnostic laboratory tests. Sec. 3719. Expansion of the Medicare hospital accelerated payment program during the COVID–19 public health emergency. Sec. 3720. Delaying requirements for enhanced FMAP to enable State legislation necessary for compliance.
Subtitle E—Health and Human Services Extenders
PART I—MEDICARE PROVISIONS Sec. 3801. Extension of the work geographic index floor under the Medicare pro-
gram. Sec. 3802. Extension of funding for quality measure endorsement, input, and selec-
tion. Sec. 3803. Extension of funding outreach and assistance for low-income programs.
PART II—MEDICAID PROVISIONS Sec. 3811. Extension of the Money Follows the Person rebalancing demonstration
program. Sec. 3812. Extension of spousal impoverishment protections. Sec. 3813. Delay of DSH reductions. Sec. 3814. Extension and expansion of Community Mental Health Services dem-
onstration program.
PART III—HUMAN SERVICES AND OTHER HEALTH PROGRAMS Sec. 3821. Extension of sexual risk avoidance education program. Sec. 3822. Extension of personal responsibility education program. Sec. 3823. Extension of demonstration projects to address health professions work-
force needs. Sec. 3824. Extension of the temporary assistance for needy families program and
related programs.
PART IV—PUBLIC HEALTH PROVISIONS Sec. 3831. Extension for community health centers, the National Health Service
Corps, and teaching health centers that operate GME programs. Sec. 3832. Diabetes programs.
PART V—MISCELLANEOUS PROVISIONS Sec. 3841. Prevention of duplicate appropriations for fiscal year 2020.
Subtitle F—Over-the-Counter Drugs
PART I—OTC DRUG REVIEW Sec. 3851. Regulation of certain nonprescription drugs that are marketed without
an approved drug application. Sec. 3852. Misbranding. Sec. 3853. Drugs excluded from the over-the-counter drug review. Sec. 3854. Treatment of Sunscreen Innovation Act. Sec. 3855. Annual update to Congress on appropriate pediatric indication for cer-
tain OTC cough and cold drugs.

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Sec. 3856. Technical corrections.
PART II—USER FEES Sec. 3861. Finding. Sec. 3862. Fees relating to over-the-counter drugs.
TITLE IV—ECONOMIC STABILIZATION AND ASSISTANCE TO SEVERELY DISTRESSED SECTORS OF THE UNITED STATES ECONOMY
Subtitle A—Coronavirus Economic Stabilization Act of 2020 Sec. 4001. Short title. Sec. 4002. Definitions. Sec. 4003. Emergency relief and taxpayer protections. Sec. 4004. Limitation on certain employee compensation. Sec. 4005. Continuation of certain air service. Sec. 4006. Coordination with Secretary of Transportation. Sec. 4007. Suspension of certain aviation excise taxes. Sec. 4008. Debt guarantee authority. Sec. 4009. Temporary Government in the Sunshine Act relief. Sec. 4010. Temporary hiring flexibility. Sec. 4011. Temporary lending limit waiver. Sec. 4012. Temporary relief for community banks. Sec. 4013. Temporary relief from troubled debt restructurings. Sec. 4014. Optional temporary relief from current expected credit losses. Sec. 4015. Non-applicability of restrictions on ESF during national emergency. Sec. 4016. Temporary credit union provisions. Sec. 4017. Increasing access to materials necessary for national security and pan-
demic recovery. Sec. 4018. Special Inspector General for Pandemic Recovery. Sec. 4019. Conflicts of interest. Sec. 4020. Congressional Oversight Commission. Sec. 4021. Credit protection during COVID–19. Sec. 4022. Foreclosure moratorium and consumer right to request forbearance. Sec. 4023. Forbearance of residential mortgage loan payments for multifamily prop-
erties with federally backed loans. Sec. 4024. Temporary moratorium on eviction filings. Sec. 4025. Protection of collective bargaining agreement. Sec. 4026. Reports. Sec. 4027. Direct appropriation. Sec. 4028. Rule of construction. Sec. 4029. Termination of authority.
Subtitle B—Air Carrier Worker Support Sec. 4111. Definitions. Sec. 4112. Pandemic relief for aviation workers. Sec. 4113. Procedures for providing payroll support. Sec. 4114. Required assurances. Sec. 4115. Protection of collective bargaining agreement. Sec. 4116. Limitation on certain employee compensation. Sec. 4117. Tax payer protection. Sec. 4118. Reports. Sec. 4119. Coordination. Sec. 4120. Direct appropriation.
TITLE V—CORONAVIRUS RELIEF FUNDS Sec. 5001. Coronavirus Relief Fund.
TITLE VI—MISCELLANEOUS PROVISIONS Sec. 6001. COVID–19 borrowing authority for the United States Postal Service. Sec. 6002. Emergency designation.
DIVISION B—EMERGENCY APPROPRIATIONS FOR CORONAVIRUS HEALTH RESPONSE AND AGENCY OPERATIONS
SEC. 3. REFERENCES.
Except as expressly provided otherwise, any reference to ‘‘this Act’’ contained in any division of this Act shall be treated as referring only to the provisions of that division.

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DIVISION A—KEEPING WORKERS PAID AND EMPLOYED, HEALTH CARE SYSTEM ENHANCEMENTS, AND ECONOMIC STABILIZATION
TITLE I—KEEPING AMERICAN WORKERS PAID AND EMPLOYED ACT
SEC. 1101. DEFINITIONS.
In this title— (1) the terms ‘‘Administration’’ and ‘‘Administrator’’ mean
the Small Business Administration and the Administrator thereof, respectively; and
(2) the term ‘‘small business concern’’ has the meaning given the term in section 3 of the Small Business Act (15 U.S.C. 636).
SEC. 1102. PAYCHECK PROTECTION PROGRAM.
(a) IN GENERAL.—Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is amended—
(1) in paragraph (2)— (A) in subparagraph (A), in the matter preceding clause
(i), by striking ‘‘and (E)’’ and inserting ‘‘(E), and (F)’’; and (B) by adding at the end the following: ‘‘(F) PARTICIPATION IN THE PAYCHECK PROTECTION PRO-
GRAM.—In an agreement to participate in a loan on a deferred basis under paragraph (36), the participation by the Administration shall be 100 percent.’’; and (2) by adding at the end the following: ‘‘(36) PAYCHECK PROTECTION PROGRAM.—
‘‘(A) DEFINITIONS.—In this paragraph— ‘‘(i) the terms ‘appropriate Federal banking agency’
and ‘insured depository institution’ have the meanings given those terms in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813);
‘‘(ii) the term ‘covered loan’ means a loan made under this paragraph during the covered period;
‘‘(iii) the term ‘covered period’ means the period beginning on February 15, 2020 and ending on June 30, 2020;
‘‘(iv) the term ‘eligible recipient’ means an individual or entity that is eligible to receive a covered loan;
‘‘(v) the term ‘eligible self-employed individual’ has the meaning given the term in section 7002(b) of the Families First Coronavirus Response Act (Public Law 116–127);
‘‘(vi) the term ‘insured credit union’ has the meaning given the term in section 101 of the Federal Credit Union Act (12 U.S.C. 1752);
‘‘(vii) the term ‘nonprofit organization’ means an organization that is described in section 501(c)(3) of the Internal Revenue Code of 1986 and that is exempt from taxation under section 501(a) of such Code;

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‘‘(viii) the term ‘payroll costs’— ‘‘(I) means— ‘‘(aa) the sum of payments of any compensation with respect to employees that is a— ‘‘(AA) salary, wage, commission, or similar compensation; ‘‘(BB) payment of cash tip or equivalent; ‘‘(CC) payment for vacation, parental, family, medical, or sick leave; ‘‘(DD) allowance for dismissal or separation; ‘‘(EE) payment required for the provisions of group health care benefits, including insurance premiums; ‘‘(FF) payment of any retirement benefit; or ‘‘(GG) payment of State or local tax assessed on the compensation of employees; and ‘‘(bb) the sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from selfemployment, or similar compensation and that is in an amount that is not more than $100,000 in 1 year, as prorated for the covered period; and ‘‘(II) shall not include— ‘‘(aa) the compensation of an individual employee in excess of an annual salary of $100,000, as prorated for the covered period; ‘‘(bb) taxes imposed or withheld under chapters 21, 22, or 24 of the Internal Revenue Code of 1986 during the covered period; ‘‘(cc) any compensation of an employee whose principal place of residence is outside of the United States; ‘‘(dd) qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (Public Law 116–127); or ‘‘(ee) qualified family leave wages for which a credit is allowed under section 7003 of the Families First Coronavirus Response Act (Public Law 116–127); and
‘‘(ix) the term ‘veterans organization’ means an organization that is described in section 501(c)(19) of the Internal Revenue Code that is exempt from taxation under section 501(a) of such Code. ‘‘(B) PAYCHECK PROTECTION LOANS.—Except as otherwise provided in this paragraph, the Administrator may guarantee covered loans under the same terms, conditions, and processes as a loan made under this subsection.

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‘‘(C) REGISTRATION OF LOANS.—Not later than 15 days after the date on which a loan is made under this paragraph, the Administration shall register the loan using the TIN (as defined in section 7701 of the Internal Revenue Code of 1986) assigned to the borrower.
‘‘(D) INCREASED ELIGIBILITY FOR CERTAIN SMALL BUSINESSES AND ORGANIZATIONS.—
‘‘(i) IN GENERAL.—During the covered period, in addition to small business concerns, any business concern, nonprofit organization, veterans organization, or Tribal business concern described in section 31(b)(2)(C) shall be eligible to receive a covered loan if the business concern, nonprofit organization, veterans organization, or Tribal business concern employs not more than the greater of—
‘‘(I) 500 employees; or ‘‘(II) if applicable, the size standard in number of employees established by the Administration for the industry in which the business concern, nonprofit organization, veterans organization, or Tribal business concern operates. ‘‘(ii) INCLUSION OF SOLE PROPRIETORS, INDEPENDENT CONTRACTORS, AND ELIGIBLE SELF-EMPLOYED INDIVIDUALS.— ‘‘(I) IN GENERAL.—During the covered period, individuals who operate under a sole proprietorship or as an independent contractor and eligible self-employed individuals shall be eligible to receive a covered loan. ‘‘(II) DOCUMENTATION.—An eligible selfemployed individual, independent contractor, or sole proprietorship seeking a covered loan shall submit such documentation as is necessary to establish such individual as eligible, including payroll tax filings reported to the Internal Revenue Service, Forms 1099–MISC, and income and expenses from the sole proprietorship, as determined by the Administrator and the Secretary. ‘‘(iii) BUSINESS CONCERNS WITH MORE THAN 1 PHYSICAL LOCATION.—During the covered period, any business concern that employs not more than 500 employees per physical location of the business concern and that is assigned a North American Industry Classification System code beginning with 72 at the time of disbursal shall be eligible to receive a covered loan. ‘‘(iv) WAIVER OF AFFILIATION RULES.—During the covered period, the provisions applicable to affiliations under section 121.103 of title 13, Code of Federal Regulations, or any successor regulation, are waived with respect to eligibility for a covered loan for— ‘‘(I) any business concern with not more than 500 employees that, as of the date on which the covered loan is disbursed, is assigned a North American Industry Classification System code beginning with 72;

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‘‘(II) any business concern operating as a franchise that is assigned a franchise identifier code by the Administration; and
‘‘(III) any business concern that receives financial assistance from a company licensed under section 301 of the Small Business Investment Act of 1958 (15 U.S.C. 681). ‘‘(v) EMPLOYEE.—For purposes of determining whether a business concern, nonprofit organization, veterans organization, or Tribal business concern described in section 31(b)(2)(C) employs not more than 500 employees under clause (i)(I), the term ‘employee’ includes individuals employed on a full-time, part-time, or other basis. ‘‘(vi) AFFILIATION.—The provisions applicable to affiliations under section 121.103 of title 13, Code of Federal Regulations, or any successor thereto, shall apply with respect to a nonprofit organization and a veterans organization in the same manner as with respect to a small business concern. ‘‘(E) MAXIMUM LOAN AMOUNT.—During the covered period, with respect to a covered loan, the maximum loan amount shall be the lesser of— ‘‘(i)(I) the sum of—
‘‘(aa) the product obtained by multiplying— ‘‘(AA) the average total monthly payments
by the applicant for payroll costs incurred during the 1-year period before the date on which the loan is made, except that, in the case of an applicant that is seasonal employer, as determined by the Administrator, the average total monthly payments for payroll shall be for the 12-week period beginning February 15, 2019, or at the election of the eligible recipient, March 1, 2019, and ending June 30, 2019; by
‘‘(BB) 2.5; and ‘‘(bb) the outstanding amount of a loan under subsection (b)(2) that was made during the period beginning on January 31, 2020 and ending on the date on which covered loans are made available to be refinanced under the covered loan; or ‘‘(II) if requested by an otherwise eligible recipient that was not in business during the period beginning on February 15, 2019 and ending on June 30, 2019, the sum of— ‘‘(aa) the product obtained by multiplying—
‘‘(AA) the average total monthly payments by the applicant for payroll costs incurred during the period beginning on January 1, 2020 and ending on February 29, 2020; by
‘‘(BB) 2.5; and ‘‘(bb) the outstanding amount of a loan under subsection (b)(2) that was made during the period beginning on January 31, 2020 and ending on the date on which covered loans are made available to be refinanced under the covered loan; or

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‘‘(ii) $10,000,000. ‘‘(F) ALLOWABLE USES OF COVERED LOANS.—
‘‘(i) IN GENERAL.—During the covered period, an eligible recipient may, in addition to the allowable uses of a loan made under this subsection, use the proceeds of the covered loan for—
‘‘(I) payroll costs; ‘‘(II) costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums; ‘‘(III) employee salaries, commissions, or similar compensations; ‘‘(IV) payments of interest on any mortgage obligation (which shall not include any prepayment of or payment of principal on a mortgage obligation); ‘‘(V) rent (including rent under a lease agreement); ‘‘(VI) utilities; and ‘‘(VII) interest on any other debt obligations that were incurred before the covered period. ‘‘(ii) DELEGATED AUTHORITY.— ‘‘(I) IN GENERAL.—For purposes of making covered loans for the purposes described in clause (i), a lender approved to make loans under this subsection shall be deemed to have been delegated authority by the Administrator to make and approve covered loans, subject to the provisions of this paragraph. ‘‘(II) CONSIDERATIONS.—In evaluating the eligibility of a borrower for a covered loan with the terms described in this paragraph, a lender shall consider whether the borrower—
‘‘(aa) was in operation on February 15, 2020; and
‘‘(bb)(AA) had employees for whom the borrower paid salaries and payroll taxes; or
‘‘(BB) paid independent contractors, as reported on a Form 1099–MISC. ‘‘(iii) ADDITIONAL LENDERS.—The authority to make loans under this paragraph shall be extended to additional lenders determined by the Administrator and the Secretary of the Treasury to have the necessary qualifications to process, close, disburse and service loans made with the guarantee of the Administration. ‘‘(iv) REFINANCE.—A loan made under subsection (b)(2) during the period beginning on January 31, 2020 and ending on the date on which covered loans are made available may be refinanced as part of a covered loan. ‘‘(v) NONRECOURSE.—Notwithstanding the waiver of the personal guarantee requirement or collateral under subparagraph (J), the Administrator shall have no recourse against any individual shareholder, member, or partner of an eligible recipient of a covered loan for nonpayment of any covered loan, except to

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the extent that such shareholder, member, or partner uses the covered loan proceeds for a purpose not authorized under clause (i). ‘‘(G) BORROWER REQUIREMENTS.—
‘‘(i) CERTIFICATION.—An eligible recipient applying for a covered loan shall make a good faith certification—
‘‘(I) that the uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations of the eligible recipient;
‘‘(II) acknowledging that funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments;
‘‘(III) that the eligible recipient does not have an application pending for a loan under this subsection for the same purpose and duplicative of amounts applied for or received under a covered loan; and
‘‘(IV) during the period beginning on February 15, 2020 and ending on December 31, 2020, that the eligible recipient has not received amounts under this subsection for the same purpose and duplicative of amounts applied for or received under a covered loan. ‘‘(H) FEE WAIVER.—During the covered period, with respect to a covered loan— ‘‘(i) in lieu of the fee otherwise applicable under paragraph (23)(A), the Administrator shall collect no fee; and ‘‘(ii) in lieu of the fee otherwise applicable under paragraph (18)(A), the Administrator shall collect no fee. ‘‘(I) CREDIT ELSEWHERE.—During the covered period, the requirement that a small business concern is unable to obtain credit elsewhere, as defined in section 3(h), shall not apply to a covered loan. ‘‘(J) WAIVER OF PERSONAL GUARANTEE REQUIREMENT.— During the covered period, with respect to a covered loan— ‘‘(i) no personal guarantee shall be required for the covered loan; and ‘‘(ii) no collateral shall be required for the covered loan. ‘‘(K) MATURITY FOR LOANS WITH REMAINING BALANCE AFTER APPLICATION OF FORGIVENESS.—With respect to a covered loan that has a remaining balance after reduction based on the loan forgiveness amount under section 1106 of the CARES Act— ‘‘(i) the remaining balance shall continue to be guaranteed by the Administration under this subsection; and ‘‘(ii) the covered loan shall have a maximum maturity of 10 years from the date on which the borrower applies for loan forgiveness under that section. ‘‘(L) INTEREST RATE REQUIREMENTS.—A covered loan shall bear an interest rate not to exceed 4 percent.

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‘‘(M) LOAN DEFERMENT.— ‘‘(i) DEFINITION OF IMPACTED BORROWER.— ‘‘(I) IN GENERAL.—In this subparagraph, the term ‘impacted borrower’ means an eligible recipient that— ‘‘(aa) is in operation on February 15, 2020; and ‘‘(bb) has an application for a covered loan that is approved or pending approval on or after the date of enactment of this paragraph. ‘‘(II) PRESUMPTION.—For purposes of this subparagraph, an impacted borrower is presumed to have been adversely impacted by COVID–19. ‘‘(ii) DEFERRAL.—During the covered period, the
Administrator shall— ‘‘(I) consider each eligible recipient that applies
for a covered loan to be an impacted borrower; and
‘‘(II) require lenders under this subsection to provide complete payment deferment relief for impacted borrowers with covered loans for a period of not less than 6 months, including payment of principal, interest, and fees, and not more than 1 year. ‘‘(iii) SECONDARY MARKET.—During the covered period, with respect to a covered loan that is sold on the secondary market, if an investor declines to approve a deferral requested by a lender under clause (ii), the Administrator shall exercise the authority to purchase the loan so that the impacted borrower may receive a deferral for a period of not less than 6 months, including payment of principal, interest, and fees, and not more than 1 year. ‘‘(iv) GUIDANCE.—Not later than 30 days after the date of enactment of this paragraph, the Administrator shall provide guidance to lenders under this paragraph on the deferment process described in this subparagraph. ‘‘(N) SECONDARY MARKET SALES.—A covered loan shall be eligible to be sold in the secondary market consistent with this subsection. The Administrator may not collect any fee for any guarantee sold into the secondary market under this subparagraph. ‘‘(O) REGULATORY CAPITAL REQUIREMENTS.— ‘‘(i) RISK WEIGHT.—With respect to the appropriate Federal banking agencies or the National Credit Union Administration Board applying capital requirements under their respective risk-based capital requirements, a covered loan shall receive a risk weight of zero percent. ‘‘(ii) TEMPORARY RELIEF FROM TDR DISCLOSURES.— Notwithstanding any other provision of law, an insured depository institution or an insured credit union that modifies a covered loan in relation to COVID–19related difficulties in a troubled debt restructuring on or after March 13, 2020, shall not be required to comply with the Financial Accounting Standards Board

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Accounting Standards Codification Subtopic 310–40 (‘Receivables – Troubled Debt Restructurings by Creditors’) for purposes of compliance with the requirements of the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.), until such time and under such circumstances as the appropriate Federal banking agency or the National Credit Union Administration Board, as applicable, determines appropriate. ‘‘(P) REIMBURSEMENT FOR PROCESSING.—
‘‘(i) IN GENERAL.—The Administrator shall reimburse a lender authorized to make a covered loan at a rate, based on the balance of the financing outstanding at the time of disbursement of the covered loan, of—
‘‘(I) 5 percent for loans of not more than $350,000;
‘‘(II) 3 percent for loans of more than $350,000 and less than $2,000,000; and
‘‘(III) 1 percent for loans of not less than $2,000,000. ‘‘(ii) FEE LIMITS.—An agent that assists an eligible recipient to prepare an application for a covered loan may not collect a fee in excess of the limits established by the Administrator. ‘‘(iii) TIMING.—A reimbursement described in clause (i) shall be made not later than 5 days after the disbursement of the covered loan. ‘‘(iv) SENSE OF THE SENATE.—It is the sense of the Senate that the Administrator should issue guidance to lenders and agents to ensure that the processing and disbursement of covered loans prioritizes small business concerns and entities in underserved and rural markets, including veterans and members of the military community, small business concerns owned and controlled by socially and economically disadvantaged individuals (as defined in section 8(d)(3)(C)), women, and businesses in operation for less than 2 years. ‘‘(Q) DUPLICATION.—Nothing in this paragraph shall prohibit a recipient of an economic injury disaster loan made under subsection (b)(2) during the period beginning on January 31, 2020 and ending on the date on which covered loans are made available that is for a purpose other than paying payroll costs and other obligations described in subparagraph (F) from receiving assistance under this paragraph. ‘‘(R) WAIVER OF PREPAYMENT PENALTY.—Notwithstanding any other provision of law, there shall be no prepayment penalty for any payment made on a covered loan.’’. (b) COMMITMENTS FOR 7(A) LOANS.—During the period beginning on February 15, 2020 and ending on June 30, 2020— (1) the amount authorized for commitments for general business loans authorized under section 7(a) of the Small Business Act (15 U.S.C. 636(a)), including loans made under paragraph (36) of such section, as added by subsection (a), shall be $349,000,000,000; and

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(2) the amount authorized for commitments for such loans under the heading ‘‘BUSINESS LOANS PROGRAM ACCOUNT’’ under the heading ‘‘SMALL BUSINESS ADMINISTRATION’’ under title V of the Consolidated Appropriations Act, 2020 (Public Law 116–93; 133 Stat. 2475) shall not apply. (c) EXPRESS LOANS.—
(1) IN GENERAL.—Section 7(a)(31)(D) of the Small Business Act (15 U.S.C. 636(a)(31)(D)) is amended by striking ‘‘$350,000’’ and inserting ‘‘$1,000,000’’.
(2) PROSPECTIVE REPEAL.—Effective on January 1, 2021, section 7(a)(31)(D) of the Small Business Act (15 U.S.C. 636(a)(31)(D)) is amended by striking ‘‘$1,000,000’’ and inserting ‘‘$350,000’’. (d) EXCEPTION TO GUARANTEE FEE WAIVER FOR VETERANS.— Section 7(a)(31)(G) of the Small Business Act (15 U.S.C. 636(a)(31)(G)) is amended—
(1) by striking clause (ii); and (2) by redesignating clause (iii) as clause (ii). (e) INTERIM RULE.—On and after the date of enactment of this Act, the interim final rule published by the Administrator entitled ‘‘Express Loan Programs: Affiliation Standards’’ (85 Fed. Reg. 7622 (February 10, 2020)) is permanently rescinded and shall have no force or effect.
SEC. 1103. ENTREPRENEURIAL DEVELOPMENT.
(a) DEFINITIONS.—In this section— (1) the term ‘‘covered small business concern’’ means a
small business concern that has experienced, as a result of COVID–19—
(A) supply chain disruptions, including changes in— (i) quantity and lead time, including the number
of shipments of components and delays in shipments; (ii) quality, including shortages in supply for
quality control reasons; and (iii) technology, including a compromised payment
network; (B) staffing challenges; (C) a decrease in gross receipts or customers; or (D) a closure; (2) the term ‘‘resource partner’’ means— (A) a small business development center; and (B) a women’s business center; (3) the term ‘‘small business development center’’ has the meaning given the term in section 3 of the Small Business Act (15 U.S.C. 632); and (4) the term ‘‘women’s business center’’ means a women’s business center described in section 29 of the Small Business Act (15 U.S.C. 656). (b) EDUCATION, TRAINING, AND ADVISING GRANTS.— (1) IN GENERAL.—The Administration may provide financial assistance in the form of grants to resource partners to provide education, training, and advising to covered small business concerns. (2) USE OF FUNDS.—Grants under this subsection shall be used for the education, training, and advising of covered small business concerns and their employees on—

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and unsecured debts in an amount greater than $7,500,000 (excluding debt owed to 1 or more affiliates or insiders);
‘‘(ii) any debtor that is a corporation subject to the reporting requirements under section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m, 78o(d)); or
‘‘(iii) any debtor that is an affiliate of an issuer, as defined in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c).’’. (2) APPLICABILITY OF CHAPTERS.—Section 103(i) of title 11, United States Code, is amended by striking ‘‘small business debtor’’ and inserting ‘‘debtor (as defined in section 1182)’’. (3) APPLICATION OF AMENDMENT.—The amendment made by paragraph (1) shall apply only with respect to cases commenced under title 11, United States Code, on or after the date of enactment of this Act. (4) TECHNICAL CORRECTIONS.— (A) DEFINITION OF SMALL BUSINESS DEBTOR.—Section 101(51D)(B)(iii) of title 11, United States Code, is amended to read as follows:
‘‘(iii) any debtor that is an affiliate of an issuer (as defined in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c)).’’. (B) UNCLAIMED PROPERTY.—Section 347(b) of title 11, United States Code, is amended by striking ‘‘1194’’ and inserting ‘‘1191’’. (5) SUNSET.—On the date that is 1 year after the date of enactment of this Act, section 1182(1) of title 11, United States Code, is amended to read as follows: ‘‘(1) DEBTOR.—The term ‘debtor’ means a small business debtor.’’. (b) BANKRUPTCY RELIEF.— (1) IN GENERAL.— (A) EXCLUSION FROM CURRENT MONTHLY INCOME.—Section 101(10A)(B)(ii) of title 11, United States Code, is amended—
(i) in subclause (III), by striking ‘‘; and’’ and inserting a semicolon;
(ii) in subclause (IV), by striking the period at the end and inserting ‘‘; and’’; and
(iii) by adding at the end the following: ‘‘(V) Payments made under Federal law
relating to the national emergency declared by the President under the National Emergencies Act (50 U.S.C. 1601 et seq.) with respect to the coronavirus disease 2019 (COVID–19).’’. (B) CONFIRMATION OF PLAN.—Section 1325(b)(2) of title 11, United States Code, is amended by inserting ‘‘payments made under Federal law relating to the national emergency declared by the President under the National Emergencies Act (50 U.S.C. 1601 et seq.) with respect to the coronavirus disease 2019 (COVID–19),’’ after ‘‘other than’’. (C) MODIFICATION OF PLAN AFTER CONFIRMATION.—Section 1329 of title 11, United States Code, is amended by adding at end the following:

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‘‘(d)(1) Subject to paragraph (3), for a plan confirmed prior to the date of enactment of this subsection, the plan may be modified upon the request of the debtor if—
‘‘(A) the debtor is experiencing or has experienced a material financial hardship due, directly or indirectly, to the coronavirus disease 2019 (COVID–19) pandemic; and
‘‘(B) the modification is approved after notice and a hearing. ‘‘(2) A plan modified under paragraph (1) may not provide for payments over a period that expires more than 7 years after the time that the first payment under the original confirmed plan was due. ‘‘(3) Sections 1322(a), 1322(b), 1323(c), and the requirements of section 1325(a) shall apply to any modification under paragraph (1).’’.
(D) APPLICABILITY.— (i) The amendments made by subparagraphs (A)
and (B) shall apply to any case commenced before, on, or after the date of enactment of this Act.
(ii) The amendment made by subparagraph (C) shall apply to any case for which a plan has been confirmed under section 1325 of title 11, United States Code, before the date of enactment of this Act. (2) SUNSET.— (A) IN GENERAL.—
(i) EXCLUSION FROM CURRENT MONTHLY INCOME.— Section 101(10A)(B)(ii) of title 11, United States Code, is amended—
(I) in subclause (III), by striking the semicolon at the end and inserting ‘‘; and’’;
(II) in subclause (IV), by striking ‘‘; and’’ and inserting a period; and
(III) by striking subclause (V). (ii) CONFIRMATION OF PLAN.—Section 1325(b)(2) of title 11, United States Code, is amended by striking ‘‘payments made under Federal law relating to the national emergency declared by the President under the National Emergencies Act (50 U.S.C. 1601 et seq.) with respect to the coronavirus disease 2019 (COVID– 19),’’. (iii) MODIFICATION OF PLAN AFTER CONFIRMATION.—Section 1329 of title 11, United States Code, is amended by striking subsection (d). (B) EFFECTIVE DATE.—The amendments made by subparagraph (A) shall take effect on the date that is 1 year after the date of enactment of this Act.
SEC. 1114. EMERGENCY RULEMAKING AUTHORITY.
Not later than 15 days after the date of enactment of this Act, the Administrator shall issue regulations to carry out this title and the amendments made by this title without regard to the notice requirements under section 553(b) of title 5, United States Code.

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TITLE II—ASSISTANCE FOR AMERICAN WORKERS, FAMILIES, AND BUSINESSES
Subtitle A—Unemployment Insurance Provisions
SEC. 2101. SHORT TITLE.
This subtitle may be cited as the ‘‘Relief for Workers Affected by Coronavirus Act’’.
SEC. 2102. PANDEMIC UNEMPLOYMENT ASSISTANCE.
(a) DEFINITIONS.—In this section: (1) COVID–19.—The term ‘‘COVID–19’’ means the 2019
Novel Coronavirus or 2019-nCoV. (2) COVID–19 PUBLIC HEALTH EMERGENCY.—The term
‘‘COVID–19 public health emergency’’ means the public health emergency declared by the Secretary of Health and Human Services on January 27, 2020, with respect to the 2019 Novel Coronavirus.
(3) COVERED INDIVIDUAL.—The term ‘‘covered individual’’— (A) means an individual who— (i) is not eligible for regular compensation or extended benefits under State or Federal law or pandemic emergency unemployment compensation under section 2107, including an individual who has exhausted all rights to regular unemployment or extended benefits under State or Federal law or pandemic emergency unemployment compensation under section 2107; and (ii) provides self-certification that the individual— (I) is otherwise able to work and available for work within the meaning of applicable State law, except the individual is unemployed, partially unemployed, or unable or unavailable to work because— (aa) the individual has been diagnosed with COVID–19 or is experiencing symptoms of COVID–19 and seeking a medical diagnosis; (bb) a member of the individual’s household has been diagnosed with COVID–19; (cc) the individual is providing care for a family member or a member of the individual’s household who has been diagnosed with COVID–19; (dd) a child or other person in the household for which the individual has primary caregiving responsibility is unable to attend school or another facility that is closed as a direct result of the COVID–19 public health emergency and such school or facility care is required for the individual to work; (ee) the individual is unable to reach the place of employment because of a quarantine imposed as a direct result of the COVID–19 public health emergency;

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the Committee on Education and Labor of the House of Representatives, and the Committee on Appropriations of the House of Representatives of such waiver.
(3) PUBLICATION.—Not later than 30 days after granting a waiver under this section, the Secretary shall publish a notice of the Secretary’s decision (including which waiver was granted and the reason for granting the waiver) in the Federal Register and on the website of the Department of Education.
(4) REPORT.—Not later than 30 days after the date of enactment of this Act, the Secretary shall prepare and submit a report to the Committee on Health, Education, Labor, and Pensions and the Committee on Appropriations of the Senate, and the Committee on Education and Labor and the Committee on Appropriations of the House of Representatives, with recommendations on any additional waivers under the Individuals with Disabilities Education Act (20 U.S.C. 1401 et seq.), the Rehabilitation Act of 1973 (29 U.S.C. 701 et seq.), the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6301 et seq.), and the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.) the Secretary believes are necessary to be enacted into law to provide limited flexibility to States and local educational agencies to meet the needs of students during the emergency involving Federal primary responsibility determined to exist by the President under section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5191(b)) with respect to the Coronavirus Disease 2019 (COVID–19). (e) TERMS.—In this section, the term ‘‘State educational agency’’ includes the Bureau of Indian Education, and the term ‘‘local educational agency’’ includes Bureau of Indian Education funded schools operated pursuant to a grant under the Tribally Controlled Schools Act of 1988 (25 U.S.C. 2501 et seq.), or a contract under the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5301 et seq.).
SEC. 3512. HBCU CAPITAL FINANCING.
(a) DEFERMENT PERIOD.— (1) IN GENERAL.—Notwithstanding any provision of title
III of the Higher Education Act of 1965 (20 U.S.C. 1051 et seq.), or any regulation promulgated under such title, the Secretary may grant a deferment, for the duration of a qualifying emergency, to an institution that has received a loan under part D of title III of such Act (20 U.S.C. 1066 et seq.).
(2) TERMS.—During the deferment period granted under this subsection—
(A) the institution shall not be required to pay any periodic installment of principal or interest required under the loan agreement for such loan; and
(B) the Secretary shall make principal and interest payments otherwise due under the loan agreement. (3) CLOSING.—At the closing of a loan deferred under this subsection, terms shall be set under which the institution shall be required to repay the Secretary for the payments of principal and interest made by the Secretary during the deferment, on a schedule that begins upon repayment to the lender in full on the loan agreement, except in no case shall repayment

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be required to begin before the date that is 1 full fiscal year after the date that is the end of the qualifying emergency. (b) TERMINATION DATE.—
(1) IN GENERAL.—The authority provided under this section to grant a loan deferment under subsection (a) shall terminate on the date on which the qualifying emergency is no longer in effect.
(2) DURATION.—Any provision of a loan agreement or insurance agreement modified by the authority under this section shall remain so modified for the duration of the period covered by the loan agreement or insurance agreement. (c) REPORT.—Not later than 180 days after the date of enactment of this Act, and every 180 days thereafter during the period beginning on the first day of the qualifying emergency and ending on September 30 of the fiscal year following the end of the qualifying emergency, the Secretary shall submit to the authorizing committees (as defined in section 103 of the Higher Education Act of 1965 (20 U.S.C. 1003)) a report that identifies each institution that received assistance under this section. (d) FUNDING.—There is hereby appropriated, out of any money in the Treasury not otherwise appropriated, $62,000,000 to carry out this section.
SEC. 3513. TEMPORARY RELIEF FOR FEDERAL STUDENT LOAN BORROWERS.
(a) IN GENERAL.—The Secretary shall suspend all payments due for loans made under part D and part B (that are held by the Department of Education) of title IV of the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.; 1071 et seq.) through September 30, 2020.
(b) NO ACCRUAL OF INTEREST.—Notwithstanding any other provision of the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.), interest shall not accrue on a loan described under subsection (a) for which payment was suspended for the period of the suspension.
(c) CONSIDERATION OF PAYMENTS.—Notwithstanding any other provision of the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.), the Secretary shall deem each month for which a loan payment was suspended under this section as if the borrower of the loan had made a payment for the purpose of any loan forgiveness program or loan rehabilitation program authorized under part D or B of title IV of the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.; 1071 et seq.) for which the borrower would have otherwise qualified.
(d) REPORTING TO CONSUMER REPORTING AGENCIES.—During the period in which the Secretary suspends payments on a loan under subsection (a), the Secretary shall ensure that, for the purpose of reporting information about the loan to a consumer reporting agency, any payment that has been suspended is treated as if it were a regularly scheduled payment made by a borrower.
(e) SUSPENDING INVOLUNTARY COLLECTION.—During the period in which the Secretary suspends payments on a loan under subsection (a), the Secretary shall suspend all involuntary collection related to the loan, including—
(1) a wage garnishment authorized under section 488A of the Higher Education Act of 1965 (20 U.S.C. 1095a) or section 3720D of title 31, United States Code;

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(2) a reduction of tax refund by amount of debt authorized under section 3720A of title 31, United States Code, or section 6402(d) of the Internal Revenue Code of 1986;
(3) a reduction of any other Federal benefit payment by administrative offset authorized under section 3716 of title 31, United States Code (including a benefit payment due to an individual under the Social Security Act or any other provision described in subsection (c)(3)(A)(i) of such section); and
(4) any other involuntary collection activity by the Secretary. (f) WAIVERS.—In carrying out this section, the Secretary may waive the application of—
(1) subchapter I of chapter 35 of title 44, United States Code (commonly known as the ‘‘Paperwork Reduction Act’’);
(2) the master calendar requirements under section 482 of the Higher Education Act of 1965 (20 U.S.C. 1089);
(3) negotiated rulemaking under section 492 of the Higher Education Act of 1965 (20 U.S.C. 1098a); and
(4) the requirement to publish the notices related to the system of records of the agency before implementation required under paragraphs (4) and (11) of section 552a(e) of title 5, United States Code (commonly known as the ‘‘Privacy Act of 1974’’), except that the notices shall be published not later than 180 days after the date of enactment of this Act. (g) NOTICE TO BORROWERS AND TRANSITION PERIOD.—To inform borrowers of the actions taken in accordance with this section and ensure an effective transition, the Secretary shall—
(1) not later than 15 days after the date of enactment of this Act, notify borrowers—
(A) of the actions taken in accordance with subsections (a) and (b) for whom payments have been suspended and interest waived;
(B) of the actions taken in accordance with subsection (e) for whom collections have been suspended;
(C) of the option to continue making payments toward principal; and
(D) that the program under this section is a temporary program. (2) beginning on August 1, 2020, carry out a program to provide not less than 6 notices by postal mail, telephone, or electronic communication to borrowers indicating—
(A) when the borrower’s normal payment obligations will resume; and
(B) that the borrower has the option to enroll in income-driven repayment, including a brief description of such options.
SEC. 3514. PROVISIONS RELATED TO THE CORPORATION FOR NATIONAL AND COMMUNITY SERVICE.
(a) ACCRUAL OF SERVICE HOURS.— (1) ACCRUAL THROUGH OTHER SERVICE HOURS.— (A) IN GENERAL.—Notwithstanding any other provision of the Domestic Volunteer Service Act of 1973 (42 U.S.C. 4950 et seq.) or the National and Community Service Act of 1990 (42 U.S.C. 12501 et seq.), the Corporation for National and Community Service shall allow an individual described in subparagraph (B) to accrue other service hours

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RELATED AGENCIES
LEGAL SERVICES CORPORATION
PAYMENT TO THE LEGAL SERVICES CORPORATION
For an additional amount for ‘‘Payment to the Legal Services Corporation’’, $50,000,000, to prevent, prepare for, and respond to coronavirus, domestically or internationally: Provided, That none of the funds appropriated under this heading in this Act to the Legal Services Corporation shall be expended for any purpose prohibited or limited by, or contrary to any of the provisions of, sections 501, 502, 503, 504, 505, and 506 of Public Law 105– 119, and all funds appropriated in this Act to the Legal Services Corporation shall be subject to the same terms and conditions set forth in such sections, except that all references in sections 502 and 503 to 1997 and 1998 shall be deemed to refer instead to 2019 and 2020, respectively, and except that sections 501 and 503 of Public Law 104–134 (referenced by Public Law 105–119) shall not apply to the amount made available under this heading: Provided further, That for the purposes of this Act, the Legal Services Corporation shall be considered an agency of the United States Government: Provided further, That such amount is designated by the Congress as being for an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985.
GENERAL PROVISIONS—THIS TITLE
SEC. 12001. Amounts provided by the Consolidated Appropriations Act, 2020, (Public Law 116–93) for the Hollings Manufacturing Extension Partnership under the heading ‘‘National Institute of Standards and Technology—Industrial Technology Services’’ shall not be subject to cost share requirements under 15 U.S.C. 278k(e)(2): Provided, That the authority made available pursuant to this section shall be elective for any Manufacturing Extension Partnership Center that also receives funding from a State that is conditioned upon the application of a Federal cost sharing requirement.
SEC. 12002. (a) Funds appropriated in this title for the National Science Foundation may be made available to restore amounts, either directly or through reimbursement, for obligations incurred by the National Science Foundation for research grants and other necessary expenses to prevent, prepare for, and respond to coronavirus, domestically or internationally, prior to the date of enactment of this Act.
(b) Grants or cooperative agreements made by the National Science Foundation under this title, to carry out research grants and other necessary expenses to prevent, prepare for, and respond to coronavirus, domestically or internationally, shall include amounts to reimburse costs for these purposes incurred between January 20, 2020, and the date of issuance of such grants or agreements.
BUREAU OF PRISONS
SEC. 12003. (a) DEFINITIONS.—In this section— (1) the term ‘‘Bureau’’ means the Bureau of Prisons;

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(2) the term ‘‘covered emergency period’’ means the period beginning on the date on which the President declared a national emergency under the National Emergencies Act (50 U.S.C. 1601 et seq.) with respect to the Coronavirus Disease 2019 (COVID–19) and ending on the date that is 30 days after the date on which the national emergency declaration terminates; and
(3) the term ‘‘Secretary’’ means the Secretary of Health and Human Services. (b) SUPPLY OF PERSONAL PROTECTIVE EQUIPMENT AND TEST KITS TO BUREAU OF PRISONS; HOME CONFINEMENT AUTHORITY.—
(1) PERSONAL PROTECTIVE EQUIPMENT AND TEST KITS.— (A) FINDINGS.—Congress finds the following: (i) There is an urgent need for personal protective equipment and test kits to the Bureau based on the density of the inmate population, the high traffic, the high volume of inmates, the high rate of turnover of inmates and personnel, and the number of highsecurity areas, within the facilities of the Bureau. (ii) The inability of the Bureau to secure the purchase of infectious disease personal protective equipment and related supplies now and in the future is a vulnerability. (iii) The Bureau is currently competing in and engaging the same landscape of vendors as all other Federal agencies and private entities. (iv) The ability of the Bureau to purchase needed equipment and supplies is currently subject to an individual manufacturer’s specific recognition of the Bureau as a priority and subsequent allocation of the inventory of the manufacturer to the Bureau. (B) CONSIDERATION.—The Secretary shall appro-
priately consider, relative to other priorities of the Department of Health and Human Services for high-risk and high-need populations, the distribution of infectious disease personal protective equipment and COVID–19 test kits to the Bureau for use by inmates and personnel of the Bureau. (2) HOME CONFINEMENT AUTHORITY.—During the covered emergency period, if the Attorney General finds that emergency conditions will materially affect the functioning of the Bureau, the Director of the Bureau may lengthen the maximum amount of time for which the Director is authorized to place a prisoner in home confinement under the first sentence of section 3624(c)(2) of title 18, United States Code, as the Director determines appropriate. (c) VIDEO VISITATION.— (1) IN GENERAL.—During the covered emergency period, if the Attorney General finds that emergency conditions will materially affect the functioning of the Bureau, the Director of the Bureau shall promulgate rules regarding the ability of inmates to conduct visitation through video teleconferencing and telephonically, free of charge to inmates, during the covered emergency period. (2) EXEMPTION FROM NOTICE-AND-COMMENT RULEMAKING REQUIREMENTS.—Section 553 of title 5, United States Code, shall not apply to the promulgation of rules under paragraph (1) of this subsection.

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(d) EMERGENCY REQUIREMENT.—The amount provided by this section is designated by the Congress as being for an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985.
TEMPORARY AUTHORITY OF DIRECTOR OF THE USPTO DURING THE
COVID–19 EMERGENCY.
SEC. 12004. (a) IN GENERAL.—During the emergency period described in subsection (e), the Director may toll, waive, adjust, or modify, any timing deadline established by title 35, United States Code, the Trademark Act, section 18 of the Leahy-Smith America Invents Act (35 U.S.C. 321 note), or regulations promulgated thereunder, in effect during such period, if the Director determines that the emergency related to such period—
(1) materially affects the functioning of the Patent and Trademark Office;
(2) prejudices the rights of applicants, registrants, patent owners, or others appearing before the Office; or
(3) prevents applicants, registrants, patent owners, or others appearing before the Office from filing a document or fee with the Office. (b) PUBLIC NOTICE.—If the Director determines that tolling, waiving, adjusting, or modifying a timing deadline under subsection (a) is appropriate, the Director shall publish publicly a notice to such effect. (c) STATEMENT REQUIRED.—Not later than 20 days after the Director tolls, waives, adjusts, or modifies a timing deadline under subsection (a) and such toll, waiver, adjustment, or modification is in effect for a consecutive or cumulative period exceeding 120 days, the Director shall submit to Congress a statement describing the action taken, relevant background, and rationale for the period of tolling, waiver, adjustment, or modification. (d) OTHER LAWS.—Notwithstanding section 301 of the National Emergencies Act (50 U.S.C. 1631), the authority of the Director under subsection (a) is not contingent on a specification made by the President under such section or any other requirement under that Act (other than the emergency declaration under section 201(a) of such Act (50 U.S.C. 1621(a))). The authority described in this section supersedes the authority of title II of the National Emergencies Act (50 U.S.C. 1621 et seq.). (e) EMERGENCY PERIOD.—The emergency period described in this subsection includes the duration of the portion of the emergency declared by the President pursuant to the National Emergencies Act on March 13, 2020, as a result of the COVID–19 outbreak (and any renewal thereof) beginning on or after the date of the enactment of this section and the 60 day period following such duration. (f) RULE OF CONSTRUCTION.—Nothing in this section may be construed as limiting other statutory authorities the Director may have to grant relief regarding filings or deadlines. (g) SUNSET.—Notwithstanding subsection (a), the authorities provided under this section shall expire upon the expiration of the 2-year period after the date of the enactment of this section. (h) DEFINITIONS.—In this section:

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that CCDBG State plans do not need to be amended prior to utilizing existing authorities in the CCDBG Act for the purposes provided herein: Provided further, That States, Territories, and Tribes are authorized to use funds appropriated under this heading in this Act to provide child care assistance to health care sector employees, emergency responders, sanitation workers, and other workers deemed essential during the response to coronavirus by public officials, without regard to the income eligibility requirements of section 658P(4) of such Act: Provided further, That funds appropriated under this heading in this Act shall be available to eligible child care providers under section 658P(6) of the CCDBG Act, even if such providers were not receiving CCDBG assistance prior to the public health emergency as a result of the coronavirus, for the purposes of cleaning and sanitation, and other activities necessary to maintain or resume the operation of programs: Provided further, That payments made under this heading in this Act may be obligated in this fiscal year or the succeeding two fiscal years: Provided further, That funds appropriated under this heading in this Act may be made available to restore amounts, either directly or through reimbursement, for obligations incurred to prevent, prepare for, and respond to coronavirus, domestically or internationally, prior to the date of enactment of this Act: Provided further, That such amount is designated by the Congress as being for an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985.
CHILDREN AND FAMILIES SERVICES PROGRAMS
For an additional amount for ‘‘Children and Families Services Programs’’, $1,874,000,000, to remain available through September 30, 2021, to prevent, prepare for, and respond to coronavirus, domestically or internationally, which shall be used as follows: (1) $1,000,000,000 for carrying out activities under sections 674 through 679 of the Community Services Block Grant Act, including for federal administrative expenses, and of which no part shall be subject to section 674(b)(3) of such Act: Provided, That to the extent Community Services Block Grant funds are distributed as grant funds by a State to an eligible entity as provided under such Act, and have not been expended by such entity, they shall remain with such entity for carryover into the next two fiscal years for expenditure by such entity consistent with program purpose: Provided further, That for services furnished under such Act during fiscal years 2020 and 2021, States may apply the last sentence of section 673(2) of such Act by substituting ‘‘200 percent’’ for ‘‘125 percent’’; (2) $750,000,000 for making payments under the Head Start Act, including for Federal administrative expenses, and allocated in an amount that bears the same ratio to such portion as the number of enrolled children served by the agency involved bears to the number of enrolled children by all Head Start agencies: Provided further, That none of the funds appropriated in this paragraph shall be included in the calculation of the ‘‘base grant’’ in subsequent fiscal years, as such term is defined in sections 640(a)(7)(A), 641A(h)(1)(B), or 645(d)(3) of the Head Start Act: Provided further, That funds appropriated in this paragraph are not subject to the allocation requirements of section 640(a) of the Head Start Act: Provided further, That up to

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$500,000,000 shall be available for the purpose of operating supplemental summer programs through non-competitive grant supplements to existing grantees determined to be most ready to operate those programs by the Office of Head Start; (3) $2,000,000 for the National Domestic Violence Hotline as authorized by section 303(b) of the Family Violence Prevention and Services Act: Provided further, That the Secretary may make such funds available for providing hotline services remotely; (4) $45,000,000 for Family Violence Prevention and Services formula grants as authorized by section 303(a) of the Family Violence and Prevention and Services Act with such funds available to grantees without regard to matching requirements under section 306(c)(4) of such Act: Provided further, That the Secretary may make such funds available for providing temporary housing and assistance to victims of family, domestic, and dating violence; (5) $25,000,000 for carrying out activities under the Runaway and Homeless Youth Act: Provided further, That such amounts shall be used to supplement, not supplant, existing funds and shall be available without regard to matching requirements; (6) $45,000,000 shall be used for child welfare services as authorized by subpart 1 of part B of title IV of the Social Security Act (other than sections 426, 427, and 429 of such subpart), with such funds available to grantees without regard to matching requirements under section 424(a) of that Act or any applicable reductions in federal financial participation under section 424(f) of that Act; and (7) $7,000,000 for Federal administrative expenses: Provided further, That funds appropriated under this heading in this Act may be made available to restore amounts, either directly or through reimbursement, for obligations incurred to prevent, prepare for, and respond to coronavirus, domestically or internationally, prior to the date of enactment of this Act: Provided further, That such amount is designated by the Congress as being for an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985.
ADMINISTRATION FOR COMMUNITY LIVING
AGING AND DISABILITY SERVICES PROGRAMS
For an additional amount for ‘‘Aging and Disability Services Programs’’, $955,000,000, to remain available until September 30, 2021, to prevent, prepare for, and respond to coronavirus, domestically or internationally: Provided, That of the amount made available under this heading in this Act to prevent, prepare for, and respond to coronavirus, $820,000,000 shall be for activities authorized under the Older Americans Act of 1965 (‘‘OAA’’), including $200,000,000 for supportive services under part B of title III; $480,000,000 for nutrition services under subparts 1 and 2 of part C of title III; $20,000,000 for nutrition services under title VI; $100,000,000 for support services for family caregivers under part E of title III; and $20,000,000 for elder rights protection activities, including the long-term ombudsman program under title VII of such Act: Provided further, That of the amount made available under this heading in this Act, $50,000,000 shall be for aging and disability resource centers authorized in sections 202(b) and 411 of the OAA to prevent, prepare for, and respond to coronavirus: Provided further, That of the amount made available under this

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heading in this Act to prevent, prepare for, and respond to coronavirus, $85,000,000 shall be available for centers for independent living that have received grants funded under part C of chapter I of title VII of the Rehabilitation Act of 1973: Provided further, That to facilitate State use of funds provided under this heading in this Act, matching requirements under sections 304(d)(1)(D) and 373(g)(2) of the OAA shall not apply to funds made available under this heading in this Act: Provided further, That the transfer authority under section 308(b)(4)(A) of the OAA shall apply to funds made available under this heading in this Act by substituting ‘‘100 percent’’ for ‘‘40 percent’’: Provided further, That the State Long-Term Care Ombudsman shall have continuing direct access (or other access through the use of technology) to residents of long-term care facilities during any portion of the public health emergency relating to coronavirus beginning on the date of enactment of this Act and ending on September 30, 2020, to provide services described in section 712(a)(3)(B) of the OAA: Provided further, That such amount is designated by the Congress as being for an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985.
OFFICE OF THE SECRETARY
PUBLIC HEALTH AND SOCIAL SERVICES EMERGENCY FUND
(INCLUDING TRANSFER OF FUNDS)
For an additional amount for ‘‘Public Health and Social Services Emergency Fund’’, $27,014,500,000, to remain available until September 30, 2024, to prevent, prepare for, and respond to coronavirus, domestically or internationally, including the development of necessary countermeasures and vaccines, prioritizing platform-based technologies with U.S.-based manufacturing capabilities, the purchase of vaccines, therapeutics, diagnostics, necessary medical supplies, as well as medical surge capacity, addressing blood supply chain, workforce modernization, telehealth access and infrastructure, initial advanced manufacturing, novel dispensing, enhancements to the U.S. Commissioned Corps, and other preparedness and response activities: Provided, That funds appropriated under this paragraph in this Act may be used to develop and demonstrate innovations and enhancements to manufacturing platforms to support such capabilities: Provided further, That the Secretary of Health and Human Services shall purchase vaccines developed using funds made available under this paragraph in this Act to respond to an outbreak or pandemic related to coronavirus in quantities determined by the Secretary to be adequate to address the public health need: Provided further, That products purchased by the Federal government with funds made available under this paragraph in this Act, including vaccines, therapeutics, and diagnostics, shall be purchased in accordance with Federal Acquisition Regulation guidance on fair and reasonable pricing: Provided further, That the Secretary may take such measures authorized under current law to ensure that vaccines, therapeutics, and diagnostics developed from funds provided in this Act will be affordable in the commercial market: Provided further, That in carrying out the previous proviso, the Secretary shall not take actions that

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H. R. 748—284
to the Committees on Appropriations of the House of Representatives and the Senate on obligation of funds, including obligations to such eligible health care providers summarized by State of the payment receipt: Provided further, That such reports shall be updated and submitted to such Committees every 60 days until funds are expended: Provided further, That such amount is designated by the Congress as being for an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985.
DEPARTMENT OF EDUCATION
EDUCATION STABILIZATION FUND
For an additional amount for ‘‘Education Stabilization Fund’’, $30,750,000,000, to remain available through September 30, 2021, to prevent, prepare for, and respond to coronavirus, domestically or internationally: Provided, That such amount is designated by the Congress as being for an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985.
GENERAL PROVISIONS
EDUCATION STABILIZATION FUND
SEC. 18001. (a) ALLOCATIONS.—From the amount made available under this heading in this Act to carry out the Education Stabilization Fund, the Secretary shall first allocate—
(1) not more than 1/2 of 1 percent to the outlying areas on the basis of their respective needs, as determined by the Secretary, in consultation with the Secretary of the Interior;
(2) one-half of 1 percent for the Secretary of Interior, in consultation with the Secretary of Education, for programs operated or funded by the Bureau of Indian Education; and
(3) 1 percent for grants to States with the highest coronavirus burden to support activities under this heading in this Act, for which the Secretary shall issue a notice inviting applications not later than 30 days of enactment of this Act and approve or deny applications not later than 30 days after receipt. (b) RESERVATIONS.—After carrying out subsection (a), the Secretary shall reserve the remaining funds made available as follows:
(1) 9.8 percent to carry out section 18002 of this title. (2) 43.9 percent to carry out section 18003 of this title. (3) 46.3 percent to carry out section 18004 of this title.
GOVERNOR’S EMERGENCY EDUCATION RELIEF FUND
SEC. 18002. (a) GRANTS.—From funds reserved under section 18001(b)(1) of this title, the Secretary shall make Emergency Education Relief grants to the Governor of each State with an approved application. The Secretary shall issue a notice inviting applications not later than 30 days of enactment of this Act and shall approve or deny applications not later than 30 days after receipt.
(b) ALLOCATIONS.—The amount of each grant under subsection (a) shall be allocated by the Secretary to each State as follows:

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H. R. 748—285
(1) 60 percent on the basis of their relative population of individuals aged 5 through 24.
(2) 40 percent on the basis of their relative number of children counted under section 1124(c) of the Elementary and Secondary Education Act of 1965 (referred to under this heading as ‘‘ESEA’’). (c) USES OF FUNDS.—Grant funds awarded under subsection (b) may be used to—
(1) provide emergency support through grants to local educational agencies that the State educational agency deems have been most significantly impacted by coronavirus to support the ability of such local educational agencies to continue to provide educational services to their students and to support the on-going functionality of the local educational agency;
(2) provide emergency support through grants to institutions of higher education serving students within the State that the Governor determines have been most significantly impacted by coronavirus to support the ability of such institutions to continue to provide educational services and support the on-going functionality of the institution; and
(3) provide support to any other institution of higher education, local educational agency, or education related entity within the State that the Governor deems essential for carrying out emergency educational services to students for authorized activities described in section 18003(d)(1) of this title or the Higher Education Act, the provision of child care and early childhood education, social and emotional support, and the protection of education-related jobs. (d) REALLOCATION.—Each Governor shall return to the Secretary any funds received under this section that the Governor does not award within one year of receiving such funds and the Secretary shall reallocate such funds to the remaining States in accordance with subsection (b).
ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND
SEC. 18003. (a) GRANTS.—From funds reserved under section 18001(b)(2) of this title, the Secretary shall make elementary and secondary school emergency relief grants to each State educational agency with an approved application. The Secretary shall issue a notice inviting applications not later than 30 days of enactment of this Act and approve or deny applications not later than 30 days after receipt.
(b) ALLOCATIONS TO STATES.—The amount of each grant under subsection (a) shall be allocated by the Secretary to each State in the same proportion as each State received under part A of title I of the ESEA of 1965 in the most recent fiscal year.
(c) SUBGRANTS TO LOCAL EDUCATIONAL AGENCIES.—Each State shall allocate not less than 90 percent of the grant funds awarded to the State under this section as subgrants to local educational agencies (including charter schools that are local educational agencies) in the State in proportion to the amount of funds such local educational agencies and charter schools that are local educational agencies received under part A of title I of the ESEA of 1965 in the most recent fiscal year.
(d) USES OF FUNDS.—A local educational agency that receives funds under this title may use the funds for any of the following:

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H. R. 748—286
(1) Any activity authorized by the ESEA of 1965, including the Native Hawaiian Education Act and the Alaska Native Educational Equity, Support, and Assistance Act (20 U.S.C. 6301 et seq.), the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) (‘‘IDEA’’), the Adult Education and Family Literacy Act (20 U.S.C. 1400 et seq.), the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.) (‘‘the Perkins Act’’), or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.).
(2) Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus.
(3) Providing principals and others school leaders with the resources necessary to address the needs of their individual schools.
(4) Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population.
(5) Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies.
(6) Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases.
(7) Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency.
(8) Planning for and coordinating during long-term closures, including for how to provide meals to eligible students, how to provide technology for online learning to all students, how to provide guidance for carrying out requirements under the Individuals with Disabilities Education Act (20 U.S.C. 1401 et seq.) and how to ensure other educational services can continue to be provided consistent with all Federal, State, and local requirements.
(9) Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and students with disabilities, which may include assistive technology or adaptive equipment.
(10) Providing mental health services and supports. (11) Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of lowincome students, students with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care. (12) Other activities that are necessary to maintain the operation of and continuity of services in local educational

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H. R. 748—287
agencies and continuing to employ existing staff of the local educational agency. (e) STATE FUNDING.—With funds not otherwise allocated under subsection (c), a State may reserve not more than 1/2 of 1 percent for administrative costs and the remainder for emergency needs as determined by the state educational agency to address issues responding to coronavirus, which may be addressed through the use of grants or contracts. (f) REALLOCATION.—A State shall return to the Secretary any funds received under this section that the State does not award within 1 year of receiving such funds and the Secretary shall reallocate such funds to the remaining States in accordance with subsection (b).
HIGHER EDUCATION EMERGENCY RELIEF FUND
SEC. 18004. (a) IN GENERAL.—The Secretary shall allocate funding under this section as follows:
(1) 90 percent to each institution of higher education to prevent, prepare for, and respond to coronavirus, by apportioning it—
(A) 75 percent according to the relative share of fulltime equivalent enrollment of Federal Pell Grant recipients who are not exclusively enrolled in distance education courses prior to the coronavirus emergency; and
(B) 25 percent according to the relative share of fulltime equivalent enrollment of students who were not Federal Pell Grant recipients who are not exclusively enrolled in distance education courses prior to the coronavirus emergency. (2) 7.5 percent for additional awards under parts A and B of title III, parts A and B of title V, and subpart 4 of part A of title VII of the Higher Education Act to address needs directly related to coronavirus, that shall be in addition to awards made in section 18004(a)(1) of this title, and allocated by the Secretary proportionally to such programs based on the relative share of funding appropriated to such programs in the Further Consolidated Appropriations Act, 2020 (Public Law 116–94) and which may be used to defray expenses (including lost revenue, reimbursement for expenses already incurred, technology costs associated with a transition to distance education, faculty and staff trainings, payroll) incurred by institutions of higher education and for grants to students for any component of the student’s cost of attendance (as defined under section 472 of the Higher Education Act), including food, housing, course materials, technology, health care, and child care. (3) 2.5 percent for part B of title VII of the Higher Education Act for institutions of higher education that the Secretary determines have the greatest unmet needs related to coronavirus, which may be used to defray expenses (including lost revenue, reimbursement for expenses already incurred, technology costs associated with a transition to distance education, faculty and staff trainings, payroll) incurred by institutions of higher education and for grants to students for any component of the student’s cost of attendance (as defined under section 472 of the Higher Education Act), including food,

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H. R. 748—288
housing, course materials, technology, health care, and child care. (b) DISTRIBUTION.—The funds made available to each institution under subsection (a)(1) shall be distributed by the Secretary using the same systems as the Secretary otherwise distributes funding to each institution under title IV of the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.). (c) USES OF FUNDS.—Except as otherwise specified in subsection (a), an institution of higher education receiving funds under this section may use the funds received to cover any costs associated with significant changes to the delivery of instruction due to the coronavirus, so long as such costs do not include payment to contractors for the provision of pre-enrollment recruitment activities; endowments; or capital outlays associated with facilities related to athletics, sectarian instruction, or religious worship. Institutions of higher education shall use no less than 50 percent of such funds to provide emergency financial aid grants to students for expenses related to the disruption of campus operations due to coronavirus (including eligible expenses under a student’s cost of attendance, such as food, housing, course materials, technology, health care, and child care). (d) SPECIAL PROVISIONS.—(1) In awarding grants under section 18004(a)(3) of this title, the Secretary shall give priority to any institution of higher education that is not otherwise eligible for funding under paragraphs (1) and (2) of section 18004(a) of this title of at least $500,000 and demonstrates significant unmet needs related to expenses associated with coronavirus. (2) A Historically Black College and University or a Minority Serving Institution may use prior awards provided under titles III, V, and VII of the Higher Education Act to prevent, prepare for, and respond to coronavirus. (e) REPORT.—An institution receiving funds under this section shall submit a report to the Secretary, at such time and in such manner as the Secretary may require, that describes the use of funds provided under this section.
ASSISTANCE TO NON-PUBLIC SCHOOLS
SEC. 18005. (a) IN GENERAL.—A local educational agency receiving funds under sections 18002 or 18003 of this title shall provide equitable services in the same manner as provided under section 1117 of the ESEA of 1965 to students and teachers in non-public schools, as determined in consultation with representatives of non-public schools.
(b) PUBLIC CONTROL OF FUNDS.—The control of funds for the services and assistance provided to a non-public school under subsection (a), and title to materials, equipment, and property purchased with such funds, shall be in a public agency, and a public agency shall administer such funds, materials, equipment, and property and shall provide such services (or may contract for the provision of such services with a public or private entity).
CONTINUED PAYMENT TO EMPLOYEES
SEC. 18006. A local educational agency, State, institution of higher education, or other entity that receives funds under ‘‘Education Stabilization Fund’’, shall to the greatest extent practicable,

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H. R. 748—289
continue to pay its employees and contractors during the period of any disruptions or closures related to coronavirus.
DEFINITIONS
SEC. 18007. Except as otherwise provided in sections 18001– 18006 of this title, as used in such sections—
(1) the terms ‘‘elementary education’’ and ‘‘secondary education’’ have the meaning given such terms under State law;
(2) the term ‘‘institution of higher education’’ has the meaning given such term in title I of the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.);
(3) the term ‘‘Secretary’’ means the Secretary of Education; (4) the term ‘‘State’’ means each of the 50 States, the District of Columbia, and the Commonwealth of Puerto Rico; (5) the term ‘‘cost of attendance’’ has the meaning given such term in section 472 of the Higher Education Act of 1965. (6) the term ‘‘Non-public school’’ means a non-public elementary and secondary school that (A) is accredited, licensed, or otherwise operates in accordance with State law; and (B) was in existence prior to the date of the qualifying emergency for which grants are awarded under this section; (7) the term ‘‘public school’’ means a public elementary or secondary school; and (8) any other term used that is defined in section 8101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7801) shall have the meaning given the term in such section.
MAINTENANCE OF EFFORT
SEC. 18008. (a) A State’s application for funds to carry out sections 18002 or 18003 of this title shall include assurances that the State will maintain support for elementary and secondary education, and State support for higher education (which shall include State funding to institutions of higher education and state needbased financial aid, and shall not include support for capital projects or for research and development or tuition and fees paid by students) in fiscal years 2020 and 2021 at least at the levels of such support that is the average of such State’s support for elementary and secondary education and for higher education provided in the 3 fiscal years preceding the date of enactment of this Act.
(b) The secretary may waive the requirement in subsection (a) for the purpose of relieving fiscal burdens on States that have experienced a precipitous decline in financial resources.
SAFE SCHOOLS AND CITIZENSHIP EDUCATION
For an additional amount for ‘‘Safe Schools and Citizenship Education’’, $100,000,000, to remain available through September 30, 2021, to prevent, prepare for, and respond to coronavirus, domestically or internationally, to supplement funds otherwise available for ‘‘Project SERV’’, including to help elementary, secondary and postsecondary schools clean and disinfect affected schools, and assist in counseling and distance learning and associated costs: Provided, That such amount is designated by the Congress as being for

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H. R. 748—290
an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985.
GALLAUDET UNIVERSITY
For an additional amount for ‘‘Gallaudet University’’, $7,000,000, to remain available through September 30, 2021, to prevent, prepare for, and respond to coronavirus, domestically or internationally, including to help defray the expenses directly caused by coronavirus and to enable grants to students for expenses directly related to coronavirus and the disruption of university operations: Provided, That such amount is designated by the Congress as being for an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985.
STUDENT AID ADMINISTRATION
For an additional amount for ‘‘Student Aid Administration’’, $40,000,000, to remain available through September 30, 2021, to prevent, prepare for, and respond to coronavirus, domestically or internationally, for carrying out part D of title I, and subparts 1, 3, 9 and 10 of part A, and parts B, C, D, and E of title IV of the HEA, and subpart 1 of part A of title VII of the Public Health Service Act: Provided, That such amount is designated by the Congress as being for an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985.
HOWARD UNIVERSITY
For an additional amount for ‘‘Howard University’’, $13,000,000, to remain available through September 30, 2021, to prevent, prepare for, and respond to coronavirus, domestically or internationally, including to help defray the expenses directly caused by coronavirus and to enable grants to students for expenses directly related to coronavirus and the disruption of university operations: Provided, That such amount is designated by the Congress as being for an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985.
DEPARTMENTAL MANAGEMENT
PROGRAM ADMINISTRATION
For an additional amount for ‘‘Program Administration’’, $8,000,000, to remain available through September 30, 2021 to prevent, prepare for, and respond to coronavirus, domestically or internationally: Provided, That such amount is designated by the Congress as being for an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985.
OFFICE OF THE INSPECTOR GENERAL
For an additional amount for ‘‘Office of the Inspector General’’, $7,000,000, to remain available through September 30, 2022, to prevent, prepare for, and respond to coronavirus, domestically or

 
 Case 3:20-cv-04478-JD Document 68 Filed 07/30/20 Page 1 of 20

1

ETHAN P. DAVIS Acting Assistant Attorney General

2 DAVID MORRELL Deputy Assistant Attorney General
3 JENNIFER RICKETTS

4

Director, Federal Programs Branch WILLIAM K. LANE III

5 Counsel

6 Attorneys for Defendants

7

IN THE UNITED STATES DISTRICT COURT

8

FOR THE NORTHERN DISTRICT OF CALIFORNIA

9

10 MICHIGAN, et al.,

11 Plaintiffs,

12

v.

13 BETSY DEVOS, and 14 U.S. DEPARTMENT OF EDUCATION,

15

Defendants.

16

17

Case No. 3:20-cv-4478-JD

DEFENDANTS’ MEMORANDUM IN OPPOSITION TO PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION

Date:

September 3, 2020

Time:

10:00 a.m.

Judge:

Hon. James Donato

Trial Date: None Set

Action Filed: July 7, 2020

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DEFENDANTS’ OPPOSITION TO MOTION FOR PRELIMINARY INJUNCTION Case No. 3:20-cv-4478-JD

Case 3:20-cv-04478-JD Document 68 Filed 07/30/20 Page 2 of 20

1

TABLE OF CONTENTS

2 BACKGROUND ............................................................................................................................ 1

3 I. STATUTORY BACKGROUND .......................................................................................... 1

4

A. The Elementary and Secondary Education Act of 1965 .................................................. 1

5 B. The CARES Act............................................................................................................... 2
6

7 II. REGULATORY BACKGROUND ....................................................................................... 4

8 ARGUMENT .................................................................................................................................. 6

9 I. PLAINTIFFS ARE UNLIKELY TO SUCCEED ON THE MERITS...................................................... 7

10 III. PLAINTIFFS HAVE NOT ESTABLISHED THAT THE PUBLIC INTEREST SUPPORTS AN

11

INJUNCTION .......................................................................................................................... 14

12 CONCLUSION............................................................................................................................. 15
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DEFENDANTS’ OPPOSITION TO MOTION FOR PRELIMINARY INJUNCTION Case No. 3:20-cv-4478-JD
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1 2 Cases

TABLE OF AUTHORITIES

3 Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127 (9th Cir. 2011) ............................................................................................. 13, 14
4

5

Barber v. Ohana Military Comm., LLC, 694 Fed. App’x 583 (9th Cir. 2017) .......................................................................................... 13

6 Boardman v. Pac. Seafood Grp.,
7 822 F.3d 1011 (9th Cir. 2016) ................................................................................................... 13

8 California v. Azar, 9 911 F.3d 558 (9th Cir. 2018)…………………………………………………………………..14
10 Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984)............................................................................................................... 9, 10
11 Dalton v. Specter,
12 511 U.S. 462 (1994)................................................................................................................... 12
13 Dep’t of Homeland Sec. v. Regents of the Univ. of Cal., 14 140 S. Ct. 1891 (2020)…………………………………………………………………………12
15 Drakes Bay Oyster Co. v. Jewell, 747 F.3d 1073 (9th Cir. 2014) ................................................................................................... 14
16 FCC v. Fox Television Stations, Inc.,
17 556 U.S. 502 (2009)................................................................................................................... 11
18 Graham Cty. Soil and& Water Conservation Dist. v. United States ex rel. Wilson, 19 559 U.S. 280 (2010)..................................................................................................................... 9

20 Karnoski v. Trump, 21 926 F.3d 1180 (9th Cir. 2019) ..................................................................................................... 7
22 King v. Burwell, 135 S. Ct. 2480 (2015) ........................................................................................................... 8, 11
23 Lopez v. Brewer,
24 680 F.3d 1068 (9th Cir. 2012) ..................................................................................................... 6
25 Morton v. Ruiz, 26 415 U.S. 199 (1974)..................................................................................................................... 9

27 Munaf v. Geren, 553 U.S. 674 (2008)..................................................................................................................... 7
28
DEFENDANTS’ OPPOSITION TO MOTION FOR PRELIMINARY INJUNCTION Case No. 3:20-cv-4478-JD
iii

Case 3:20-cv-04478-JD Document 68 Filed 07/30/20 Page 4 of 20

1

New York State Dep’t of Soc. Servs. v. Dublino, 413 U.S. 405 (1973)................................................................................................................... 11

2 Rent–A–Ctr., Inc. v. Canyon Tele. & Appliance Rental, Inc.,
3 944 F.2d 597 (9th Cir. 1991) ..................................................................................................... 13

4 Sierra Club v. Trump, 5 379 F. Supp. 3d 883 (N.D. Cal. 2019) ....................................................................................... 13

6 Winter v. Nat. Res. Def. Council, 555 U.S. 7 (2008)....................................................................................................... 7, 10, 13, 14
7
Statutes 8
9 20 U.S.C. § 1221e-3........................................................................................................................ 9

10 20 U.S.C. § 6313(a) ........................................................................................................................ 1

11 20 U.S.C. § 6314(a) ........................................................................................................................ 1

12 20 U.S.C. § 6315(c) .................................................................................................................... 1, 2

13 20 U.S.C. § 6320.................................................................................................................... passim
14 20 U.S.C. § 6333(c) ........................................................................................................................ 3
15 20 U.S.C. § 7881........................................................................................................................... 10
16
17 20 U.S.C. §§ 6301-02 ..................................................................................................................... 1

18 Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136, 134 Stat. 281 (2020).................................................................................. 1
19
Elementary and Secondary Education Act of 1965, 20 Pub. L. No. 89-10, 79 Stat. 27 (1965).......................................................................................... 1

21 Regulation

22 34 C.F.R. § 76.665 .......................................................................................................................... 6
23
Legislative Material 24

25

HEROS Act, H.R. 6800, 116th Cong. § 10604 (2020).............................................................................. 10, 14

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DEFENDANTS’ OPPOSITION TO MOTION FOR PRELIMINARY INJUNCTION Case No. 3:20-cv-4478-JD
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1 Administrative and Executive Material 2 CARES Act Programs; Equitable Servs. to Students & Teachers in Non-Public Schs.,
85 Fed. Reg. 39,479 (July 1, 2020)..................................................................................... passim 3
Other Authority 4 5 American Heritage Dict. 763 (2d College ed. 1985) ...................................................................... 9 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
DEFENDANTS’ OPPOSITION TO MOTION FOR PRELIMINARY INJUNCTION Case No. 3:20-cv-4478-JD
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1

BACKGROUND

2

3 I. STATUTORY BACKGROUND

4

This case arises from an interim final rule issued by the Department of Education to

5 implement the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Pub. L. No.

6 116-136, 134 Stat. 281 (2020). The CARES Act—which Congress enacted to help many sectors

7 of society respond to the coronavirus pandemic—appropriates more than $16 billion into two

8 relief funds, and charges the Department of Education with allocating those funds to the Nation’s

9 public schools. CARES Act §§ 18002-03. Public school districts that receive CARES Act funds

10 must then “provide equitable services” to private-school students “in the same manner as

11 provided under” a different statute: Section 1117 of the Elementary and Secondary Education

12 Act of 1965 (ESEA), Pub. L. No. 89-10 (1965) (codified at 20 U.S.C. § 6320). CARES Act

13 § 18005. Plaintiffs argue that, because the rule allegedly apportions CARES Act funds to private

14 schools in a manner inconsistent with § 1117 of the ESEA, the rule is unlawful on a variety of

15 theories.

16 A. The Elementary and Secondary Education Act of 1965
17 The ESEA is a comprehensive statutory scheme that supports students in the Nation’s
18 elementary and secondary schools. Title I-A of the ESEA is designed to “improv[e] the
19 academic achievement of” students who are failing (or are at risk of failing) to meet academic
20 standards. 20 U.S.C. § 6314(a). Title I-A accomplishes this by providing federal funding to
21 States and to local school districts (referred to as Local Educational Agencies, or LEAs) based on
22 the number of economically disadvantaged children that they serve. Id. §§ 6313(a), 6314(a),
23 (b)(6), 6315(c); see id. § 6333(c) (establishing the parameters for allocating Title I-A funds
24 among States and their constituent public school districts).
25 The goal of Title I-A is to provide “all children significant opportunity to receive a fair,
26 equitable, and high-quality education,” regardless of whether those children attend a public or
27 private school. See 20 U.S.C. §§ 6301-02. To that end, Section 1117 of the ESEA (codified at
28

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Case 3:20-cv-04478-JD Document 68 Filed 07/30/20 Page 7 of 20

1 20 U.S.C. § 6320) requires local school districts to supply academic services—such as special-

2 education services, counseling, mentoring, and tutoring—to certain children enrolled in private

3 schools. Id. § 6320(a)(1)(A). Such services must “be equitable in comparison to services and

4 other benefits for public school children” who benefit from Title I-A funds. Id. § 6320(a)(3)(A).

5 Accordingly, Section 1117 instructs local school districts to set aside funds for private schools

6 “equal to the proportion of funds allocated to participating school attendance areas based on the

7 number of children from low-income families who attend private schools.” Id.

8 § 6320(a)(4)(A)(i). These funds are then used to provide services to private-school students who

9 are eligible to receive them. A private-school student’s eligibility for these services does not turn

10 on his or her socioeconomic standing, despite the fact that the amount of money a school district

11 must reserve to pay for such services is calculated by reference to the number of low-income

12 private-school students who live within the district’s borders. Instead, a student’s eligibility

13 depends on the extent to which he or she is “failing, or . . . at risk of failing, to meet” applicable

14 academic standards. Id. § 6315(c)(1)(B).

15

Section 1117 separately requires local school districts to “timely and meaningful[ly]

16 consult[] with appropriate private school officials.” 20 U.S.C. § 6320(a)(1)(A). The statute sets

17 forth a detailed consultation procedure that specifies the issues that must be discussed, id.

18 § 6320(b)(1)(A)-(L), (4); the way disagreements must be raised, id. § 6320(b)(2), (6); and the

19 timeframe in which consultation must occur, id. § 6320(b)(3). The statute also requires that

20 “[t]he control of funds provided under” Title I-A of the ESEA “shall be in a public agency.” Id.

21 § 6320(d)(1).

22 B. The CARES Act
23

24

The CARES Act appropriated over $16 billion in financial assistance that can be used to

25 support elementary and secondary schools, and instructed the Secretary of Education to

26 administer and allocate that money through two separate funds.

27

The Governor’s Emergency Education Relief (GEER) Fund provides emergency grants

28 to state governors. CARES Act § 18002. Governors may use GEER funds to “support . . . any

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1 . . . education related entity within the State that the Governor deems essential for carrying out

2 emergency educational services to students.” Id. § 18002(c). Governors may also use GEER

3 funds to give “emergency support . . . grants to local education agencies that the State

4 educational agency deems have been most significantly impacted by coronavirus.” Id. The

5 Department of Education must allocate GEER funds among States using a specified statutory

6 formula. Id. § 18002(b) (directing the Secretary to allocate funds based 60 percent on a State’s

7 “relative population of individuals aged 5 through 24,” and 40 percent on the amount of Title I-A

8 funds that State would receive under the ESEA, 20 U.S.C. § 6333(c)).

9

The Elementary and Secondary School Emergency Relief (ESSER) Fund provides

10 emergency grants for elementary and secondary schools. CARES Act § 18003. The Department

11 of Education must allocate ESSER funds among States “in the same proportion as each State

12 received under [Title I-A] of the ESEA . . . in the most recent fiscal year.” Id. § 18003(b).

13 Similarly, States must allocate ESSER funds to their school districts “in proportion to the amount

14 of funds such local educational agencies and charter schools that are local educational agencies

15 received under [Title I-A] of the ESEA . . . in the most recent fiscal year.” Id. § 18003(c). A

16 school district may use ESSER funds to pay for services that fall within twelve broad categories

17 of expenditures, including emergency preparedness; cleaning supplies; distance-learning

18 technology; meal services; mental health; “[a]ny activity authorized by the ESEA” or several

19 other education-related statutes; and any “[o]ther activities that are necessary to maintain the

20 operation of and continuity of services in [LEAs] and continuing to employ existing staff.” Id.

21 § 18003(d).

22

The CARES Act authorizes the Department of Education to distribute GEER and ESSER

23 funds only to public school districts. But because the coronavirus pandemic has affected both

24 public and private institutions, Section 18005 of the CARES Act instructs school districts that

25 receive GEER or ESSER funds to “assist[] . . . non-public schools” using the CARES Act funds

26 they have been allocated. CARES Act § 18005 (casing fixed). Specifically, local districts “shall

27 provide equitable services in the same manner as provided under section 1117 [20 U.S.C.

28 § 6320] of the ESEA of 1965 to students and teachers in non-public schools.” Id. § 18005(a)

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1 (referencing 20 U.S.C. § 6320). Section 18005 further requires that these equitable services must

2 be “determined in consultation with representatives of non-public schools.” Id. Finally, § 18005

3 requires that “[t]he control of funds for” equitable services provided to private schools “shall be

4 in a public agency.” Id. § 18005(b).

5 II. REGULATORY BACKGROUND
6

7

In April 2020, the Department issued guidance to help public school districts implement

their § 18005 obligation to provide equitable services to students and teachers at private schools. 8

9 Pls.’ Request for Jud. Notice [“RJN”] at Ex. C, ECF No. 35-3. The Department’s guidance

10 noted that the CARES Act—unlike Title I-A of the ESEA—places no restrictions on the

11 eligibility of private-school students and teachers to receive “equitable services” under § 18005.

12 The guidance thus advised that GEER and ESSER funds may be used to “serve all non-public

13 school students and teachers without regard to family income, residency, or eligibility based on

14 low achievement. Id. at 3. The guidance also noted that the CARES Act permits public school

15 districts that receive GEER or ESSER funds to spend that money to help all schools within the

16 district, and not merely schools with a sufficient number of low-income students to qualify for

17 funding under Title I-A of the ESEA. The guidance thus advised that, when calculating the share

18 of “equitable services” that public school districts must give private schools under § 18005,

19 public school districts must account for the private schools’ total enrollment—not merely for the

number of low-income students. Id. at 6-7. 20

21

In July 2020, the Department formalized its guidance in an interim final rule. CARES

22 Act Programs; Equitable Services to Students and Teachers in Non-public Schools, 85 Fed. Reg.

23 39,479. The Department issued the rule without prior notice and comment because of the

24 significant educational disruptions caused by the coronavirus pandemic. Specifically, § 18005 of

25 the CARES Act forbids public school districts that receive GEER or ESSER funds from using

26 those funds without consulting with the private schools within their boundaries, which in turn

27 requires districts to “determin[e] the amount of funds available for [equitable] services.” Id. at

28 39,483. The Department provided a 30-day comment period, however, and committed to

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1 considering the views of interested parties in determining whether to undertake additional

2 rulemaking. Id. at 39,484.

3

The Department explained that the rule was necessary to “resolve[] a critical ambiguity

4 . . . with respect to the equitable services obligation owed by LEAs that receive CARES Act

5 funds to students and teachers in non-public schools.” 85 Fed. Reg. at 39,479. The Department

6 noted that, apart from requiring equitable services to be provided “in the same manner as

7 provided under section 1117” of the ESEA, § 18005 did not specify how to ensure that the

8 services provided are in fact “equitable.” Id. at 39,479-81. The Department further noted that

9 § 1117 of the ESEA is inconsistent with the CARES Act in several crucial respects. For

10 example, § 1117 forbids private-school students from benefiting from equitable services

11 provided under the ESEA unless they are failing (or in danger of failing) to satisfy certain

12 curricular standards. 20 U.S.C. § 6320. But both GEER and ESSER funds may plainly be used

13 for the benefit all students, not merely those students in academic jeopardy. The Department

14 therefore concluded that rulemaking was necessary to resolve these ambiguities. See 85 Fed.

15 Reg. at 39,479 (recognizing that the Department was obliged to “construe the CARES Act based

16 on plain meaning, context, and coherence within the overall statutory structure . . . and fit, if

17 possible, all its parts into a harmonious whole”).

18

The Department then explained that a “mechanistic application” of § 1117 to § 18005’s

19 equitable-services requirement would “disadvantage” private-school students and contravene

20 congressional intent. 85 Fed. Reg. at 39,479. The Department noted that, if § 1117’s

21 proportional-allocation provisions were applied to CARES Act funds, public school districts

22 would only be required to reserve funds for private schools commensurate to the number of

23 low-income students at each private school—while remaining free to spend their portion of the

24 funds on projects benefiting all public-school students. Id. at 39,482. As the Department

25 explained, “the CARES Act does not limit services based on residence and poverty,” so “it

26 stands to reason that an LEA should not use residence and poverty to determine the proportional

27 share of available funds for equitable services to non-public school students.” Id. at 39,482-83.

28

The rule’s interpretation of § 18005 differs from the Department’s prior guidance only in

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1 that it accords public school districts more choice about how to satisfy the equitable-service

2 requirement. The Department sought to broaden the number of options available to such districts

3 in response to criticism from certain States that its guidance was too inflexible. 85 Fed. Reg. at

4 39,480. Under the rule, school districts have two pathways to compliance. First, a school

5 district can commit to using its CARES Act funds exclusively on schools eligible for funds under

6 Title I-A of the ESEA—that is, on schools with high instances of poverty. Id. at 39,482. If so,

7 that district need only reserve funds for equitable services as specified by § 1117’s proportional-

8 allocation provisions—that is, based on the number of low-income students enrolled at private

9 schools. 34 C.F.R. § 76.665(c)(1)(i). Second, a school district may instead commit to using

10 CARES Act funds to benefit all schools, not merely schools with high instances of poverty. Id.

11 at 39,482. To maintain equity, that district must then reserve funds for equitable services using

12 the same measure—that is, the number of all students enrolled at private schools. 34 C.F.R.

13 § 76.665(c)(1)(ii).

14

The Department determined that its interpretation was the appropriate way to ensure that

15 “[e]ducational services and other benefits for students and teachers in non-public elementary and

16 secondary schools [] be equitable in comparison to services and other benefits for public school 17 students and teachers participating in CARES Act programs.” 34 C.F.R. § 76.665(d).1

18

ARGUMENT

19

A preliminary injunction is “an extraordinary and drastic remedy” that should not be

20 granted “unless the movant, by a clear showing, carries the burden of persuasion.” Lopez v.

21 Brewer, 680 F.3d 1068, 1072 (9th Cir. 2012). “A plaintiff seeking a preliminary injunction must

22 establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in

23 the absence of preliminary relief, that the balance of equities tips in his favor, and that an

24 1 On May 15, 2020, the House of Representatives passed legislation, referred to as the “HEROES 25 Act,” that would amend the CARES Act to require that “equitable services shall be provided by
the local educational agency in which the students reside, and the amount of funds available for 26 such equitable services shall be based on the number of nonpublic school students who were
identified in the calculation under section 1117(c)(1) of the ESEA for purposes of Title I-A 27 during the 2019-2020 school year relative to the sum of such students in public schools” that 28 same year. See HEROES Act, H.R. 6800, 116th Cong. § 10604 (2020).

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1 injunction is in the public interest.” Karnoski v. Trump, 926 F.3d 1180, 1198 (9th Cir. 2019)

2 (quoting Winter v. Nat. Res. Def. Council, 555 U.S. 7, 20 (2008)); see Munaf v. Geren, 553 U.S.

3 674, 690 (2008) (likelihood of success requires far more than identifying “serious, substantial,

4 difficult[,] and doubtful” questions). Plaintiffs fail to meet any of these requirements.

5

6
I. PLAINTIFFS ARE UNLIKELY TO SUCCEED ON THE MERITS
7

8

A. Plaintiffs’ principal argument is that the Department’s rule violates the

9 Administrative Procedure Act because it cannot be reconciled with § 18005 of the CARES Act, and because the CARES Act did not give the Department authority to interpret § 18005.2 See
10

11 ECF No. 24, Am. Compl., at ¶¶ 163-68, 178-82. This argument lacks merit.

12

Section 18005 of the CARES Act requires public school districts to provide equitable

13 services to private schools “in the same manner” as that specified in § 1117 of the ESEA.

CARES Act, § 18005. Section 1117 applies to certain equitable services provided within the 14

ambit of Title I-A of the ESEA, and includes a proportional-apportionment formula based on 15

the number of low-income students enrolled at each private school within a public school 16

district’s borders. 20 U.S.C. § 6320(a)(4)(A). But as the Department explained, § 1117—and 17

the ESEA more broadly—cannot be imported into the CARES Act scheme in “mechanistic” 18

fashion. 85 Fed. Reg. 39,479, 39, 479. 19

Two examples illustrate the point. First, § 1117 prohibits private-school students from 20

receiving “equitable services” using Title I-A funds unless they are at risk of failing out of 21

school. 20 U.S.C. § 6320(a)(1)(A) (restricting eligibility for services to “eligible children”); id. 22

§ 6315(c)(1)(B) (defining “eligible children” as “children identified by the school as failing, or 23

most at risk of failing, to meet . . . State academic standards”). But the plain text of the CARES 24

Act makes clear that GEER and ESSER funds may be used to pay for a broad range of services 25

that benefit all students—such as disaster-preparedness planning, sanitation supplies, distance26

27 2 Although Plaintiffs purport to challenge both the IFR and the April guidance, the guidance has 28 been superseded by the Rule, lacks the force and effect of law, does not constitute final agency
action, and is thus not subject to legal challenge.
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1 learning technology, and pandemic-response plans developed in coordination with authorities at

2 every level of government. CARES Act §§ 18002(c), 18003(d); see 85 Fed. Reg. at 39,480.

3 Incorporating § 1117’s “eligible children” restriction into the CARES Act would contravene

4 those other CARES Act provisions by forcing private schools to restrict these services to the

5 academically challenged—for instance, by implementing a pandemic-response plan that applies

6 only to that subset of students, or by purchasing sanitation supplies that can be used only to

7 clean certain classrooms.

8

Second, two of § 18005’s provisions are substantively identical to two provisions in

9 § 1117. See 85 Fed. Reg. at 39,481. Section 18005(a) requires public school districts to consult

10 with private schools in deciding how equitable services should be provided, just like § 1117(b).

11 Compare CARES Act § 18005(a) with 20 U.S.C. § 6320(b). And § 18005(b) requires public

12 schools to maintain control over all CARES Act funds, using language nearly identical to that in

13 § 1117(d). Compare CARES Act § 18005(b) with 20 U.S.C. § 6320(d). If the CARES Act’s

14 use of the phrase “in the same manner” incorporated every jot and tittle of § 1117, both the

15 consultation and the public-control provisions of § 18005 would be superfluous.

16

For these reasons, the Department concluded, the phrase “in the same manner” must

17 mean that § 18005 incorporates something less than every provision of § 1117.

18

B. In light of the disparate purposes of the CARES Act (to provide emergency relief

19 to all students and schools) and Title I-A (to provide services for low-income or disadvantaged

20 students), the Department reasonably concluded that “in the same manner” does not incorporate

21 § 1117’s proportional-apportionment provisions. Those provisions—developed in the wholly

22 separate context of equitable services provided under Title I-A—require public school districts

23 to reserve funds in proportion to the number of low-income students enrolled in private schools.

24 20 U.S.C. § 6320(a)(4)(A). As noted, however, Congress designed both the GEER and the

25 ESSER programs to permit expenditures across a wide swath of areas that clearly benefit all

26 students. See CARES Act §§ 18002(c), 18003(d). Given this tension, the Department properly

27 declined to interpret the phrase “in the same manner” to import § 1117’s proportional-

28 apportionment provisions into the CARES Act. See King v. Burwell, 135 S. Ct. 2480, 2489

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1 (2015) (“[O]ftentimes the meaning—or ambiguity—of certain words or phrases may only

2 become evident when placed in context.”) (citation and internal quotation marks omitted);

3 Graham Cty. Soil & Water Conservation Dist. v. United States ex rel. Wilson, 559 U.S. 280,

4 290 (2010) (holding that courts “construe statutes, not isolated provisions”). Indeed, the word

5 “manner” suggests that § 18005 refers to the way in which services are provided under § 1117,

6 and not how the money to pay for those services is apportioned. See American Heritage Dict.

7 763 (2d College ed. 1985) (defining “manner” as “[a] way of doing something or the way in

8 which a thing is done or happens”).

9

In any event, “[t]he power of an administrative agency to administer a congressionally

10 created . . . program necessarily requires the formulation of policy and the making of rules to fill

11 any gap left, implicitly or explicitly, by Congress.” Morton v. Ruiz, 415 U.S. 199, 231 (1974)

12 (emphasis added). The phrase “in the same manner” is at a minimum ambiguous with regard to

13 the question whether Congress intended § 1117’s proportional-apportionment provisions to

14 apply to “equitable services” provided with CARES Act funds. To the extent the text of

15 § 18005 does not supply a clear answer to that question, the Department may use rulemaking to

16 “develop a harmonious construction faithful” to Congress’s directive that billions of dollars in

17 emergency appropriations be used equitably. 85 Fed. Reg. at 39,479. Indeed, the Secretary of

18 Education has broad authority to “make, promulgate, [and] issue, . . . rules and regulations

19 governing the manner of operation of, and governing the applicable programs administered by,

20 the Department.” 20 U.S.C. § 1221e-3; accord id. § 3474 (“The Secretary is authorized to

21 prescribe such rules and regulations as the Secretary determines necessary or appropriate to

22 administer and manage the functions of the Secretary or the Department.”). And it is well

23 settled that, “whenever decision as to the meaning or reach of a statute has involved reconciling

24 conflicting policies, and a full understanding of the force of the statutory policy in the given

25 situation has depended upon more than ordinary knowledge respecting the matter subjected to

26 agency regulations,” an agency’s resolution of a statutory ambiguity warrants deference.

27 Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 844 (1984) (citation

28 omitted).

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1

Deference is appropriate where, as here, the agency’s interpretation of an ambiguous

2 statute is reasonable. The Department of Education resolved the tension between the CARES

3 Act and the provisions of § 1117 by reference to Congress’s command that the services

4 provided to private schools be “equitable.” CARES Act § 18005(a). The Department

5 determined that it is inequitable to apportion expenditures for private schools on the basis of

6 low-income students when public school districts may use their share of CARES Act funds to

7 benefit all schools and students. 85 Fed. Reg. at 39,483. In the Department’s expert judgment,

8 equity in this context instead demands either that: (1) public school districts that spend CARES

9 Act funds to benefit all schools and students apportion private-school funds based on total

10 enrollment; or (2) public school districts that choose to apportion private-school funds based on

11 low-income enrollment then limit their own spending to low-income schools. Id. at 39,482.

12 Those, of course, are the same two pathways to § 18005 compliance that the challenged rule

13 sets forth. Id.

14

Plaintiffs dispute (Pls.’ for Prelim. Inj. (“Mot.”) 15-16, ECF No. 35) that § 18005 is

15 ambiguous. In their view, if Congress intended that CARES Act funds be apportioned to

16 private schools based on total enrollment, Congress would have written § 18005 to cross-

17 reference § 8501 of the ESEA, which is codified at 20 U.S.C. § 7881. That statute governs

18 equitable services rendered under a different portion of the ESEA, and it is functionally

19 identical to § 1117 in all but one respect:

unlike § 1117,

20 § 8501 requires public school districts to reserve funds for private schools in proportion to their

21 total enrollment. Id. § 7881(a)(4)(A). But even if Congress had enacted this hypothetical

22 version of § 18005, ambiguity would remain. Like § 1117, § 8501 also includes consultation

23 and public-control provisions indistinguishable from those present in § 18005. Id. § 7881(c)

24 (consultation); id. § 7881(d) (public control). Thus, had Congress required CARES Act funds

25 to be apportioned “in the same manner as that specified in § 8501,” questions would remain

26 about which provisions of § 8501 Congress meant to incorporate—since incorporating all of

27 § 8501’s provisions would create the very same superfluity whose existence illustrates the

28 ambiguity that the Department intended the rule to resolve.

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1

Plaintiffs respond (Mot. 20-25) that the challenged rule is arbitrary or capricious. But the

2 rule reflects the Department’s considered resolution of the tension that it perceived between the

3 purposes of the GEER and ESSER programs and § 18005’s ambiguous reference to § 1117. And

4 the rule offers public school districts the choice of two equitable paths, to fulfill the statutory

5 command in the CARES Act that the services provided by public school districts be “equitable.”

6 Cf. King, 135 S. Ct. at 2493 (“We cannot interpret federal statutes to negate their own stated

7 purposes.”) (quoting New York State Dep’t of Soc. Servs. v. Dublino, 413 U.S. 405, 419-20

8 (1973)). This Court should decline plaintiffs’ invitation to second-guess the Department’s policy

9 judgment on that score. See FCC v. Fox Television Stations, Inc., 556 U.S. 502, 530 (2009).

10 Plaintiffs further contend (Mot. 22) that the IFR is arbitrary and capricious because the agency

11 “relied on factors which Congress has not intended it to consider, entirely failed to consider an

12 important aspect of the problem,” and “offered an explanation for its decision that runs counter

13 to the evidence before the agency.” But plaintiffs’ one-sided assessment of harms ignores those

14 suffered by private school students and teachers during the pandemic, and overlooks that

15 Congress directed that use of CARES Act funds be equitable. The Department’s decision to

16 require parity between the students benefiting from CARES Act services and the private-school

17 students counted in apportioning CARES Act funds is a policy choice not susceptible to judicial

18 second-guessing either.

19

C. Plaintiffs next assert that the challenged rule was procedurally defective. Their

20 arguments miss the mark.

21

Plaintiffs contend (Mot. 21) that the agency’s decision must be set aside for failure to

22 explain “why it was reversing its own prior guidance and other instructions to SEAs and LEAs

23 regarding how equitable services under Section 1117 should be provided.” But the agency has

24 not reversed course or rescinded prior policy. The Department’s general interpretation of Section

25 1117’s equitable-services mandate, issued in October 2019, see RJN Exh. B, ECF No. 35-3,

26 remains unaltered—as does its interpretation of the provision of equitable services using Title I

27 funds. In contrast, the challenged rule relates to equitable services provided using CARES Act

28 funds—a question the Department could not possibly have had any position or policy on

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1 previously. As the rule explains, the Department’s interpretation rests on the fact that CARES

2 Act funds can be used more broadly than Title I-A funds, and that the national emergency

3 prompting its passage “has harmed all our Nation’s students by disrupting their education.” 85

4 Fed. Reg. at 39,479.3

5

Plaintiffs also contend (Mot. 25) that the Department lacked good cause to issue the rule

6 as an interim final rule. This argument is belied by plaintiffs’ request for the extraordinary

7 remedy of an injunction, which they claim is necessitated by the same exigent circumstances

8 underlying the Department’s decision. Plaintiffs cannot meaningfully dispute that the

9 coronavirus pandemic constitutes an emergency of unprecedented scale; indeed, the harms to

10 schools engendered by that emergency form the basis of their preliminary-injunction motion.

11 And as the Department recognized, “in light of the current national emergency[’s] . . . disruption

12 on education in both public and non-public schools, and the immediate need for certainty,” good

13 cause existed to waive ordinary rulemaking procedures. 85 Fed. Reg. at 39,483.

14

D. Plaintiffs’ constitutional claims should fail for the same reasons that their APA

15 claims should be rejected. Each such claim rests on the premise that the Department of

16 Education lacked statutory authority to issue the challenged rule. But as the Supreme Court has

17 held, “in cases in which the [government] concedes, either implicitly or explicitly, that the only

18 source of [its] authority is statutory, no constitutional question whatever is raised,” “only issues

19 of statutory interpretation.” Dalton v. Specter, 511 U.S. 462, 474 n.6 (1994). Plaintiffs’ contrary

20 view would have the sweeping implication that every challenge to an agency regulation could be

21 recharacterized as a “constitutional” claim, given the general absence of any background

22 constitutional authority for agencies to take action in the absence of congressional authorization.

23 Because the challenged rule is a permissible construction of § 18005, there is no freestanding

24 constitutional impediment to the Department’s actions.

25

26 3 Plaintiffs’ argument that “longstanding policies may have engendered serious reliance
27 interests,” Mot. 22 (quoting Dep’t of Homeland Sec. v. Regents of the Univ. of Cal., 140 S. Ct. 28 1891, 1913 (2020)), fails for the same reason: There was no “longstanding policy” on which to
reasonably rely.
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1 II. PLAINTIFFS HAVE NOT ESTABLISHED THAT IRREPARABLE HARM IS LIKELY IN THE ABSENCE OF AN INJUNCTION
2 Plaintiffs seeking a preliminary injunction bear the burden of demonstrating that they are
3 “likely to suffer irreparable harm in the absence of preliminary relief.” Winter, 555 U.S. at 20;
4 see also Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011)
5 (plaintiffs must show irreparable harm is likely, not just possible). To establish a likelihood of
6 irreparable harm, plaintiffs “must do more than merely allege imminent harm sufficient to
7 establish standing; [they] must demonstrate immediate threatened injury.” Boardman v. Pac.
8 Seafood Grp., 822 F.3d 1011, 1022 (9th Cir. 2016). Plaintiffs must also show that the
9 threatened harm would not occur if an injunction were granted. See Winter, 555 U.S. at 20;
10 Sierra Club v. Trump, 379 F. Supp. 3d 883, 925-26 (N.D. Cal. 2019) (preliminary injunction
11 warranted only if it “will prevent some irreparable injury that is likely to occur before the Court
12 has time to decide the case on the merits”) (emphasis added), appeal filed, No. 19-16102 (9th
13 Cir. May 29, 2019).
14 Here, plaintiffs seek an injunction to allow public school districts to apportion CARES
15 Act money as they see fit. It is well established that, ordinarily, economic injury does not
16 qualify as irreparable harm. See Rent–A–Ctr., Inc. v. Canyon Tele. & Appliance Rental, Inc.,
17 944 F.2d 597, 603 (9th Cir. 1991); see also Barber v. Ohana Military Comm., LLC, 694 Fed.
18 App’x 583, 584 (9th Cir. 2017) (“Economic injury alone cannot support a finding of irreparable
19 harm”). Even putting that aside, plaintiffs’ claimed injuries are not irreparable because, if they
20 were ultimately to prevail in their challenge to the rule, public school districts could at that point
21 reapportion unobligated GEER and ESSER funds to provide equitable services under plaintiffs’
22 interpretation of § 18005. This conclusion is not altered by the fact that public school districts
23 must consult with private school officials regarding the provision of equitable services before
24 expenditures are made. Plaintiffs do not suggest that such districts must, or even desire to,
25 spend all their GEER and ESSER funds in the immediate future, or even before the start of the
26 school year. Accordingly, nothing prevents plaintiffs from reapportioning funds and altering
27
28
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1 the provision of equitable services for private-school students in the event plaintiffs prevail.4

2

Plaintiffs attempt (Mot. 29) to ground their irreparable-harm argument on purported

3 “legal jeopardy” caused by an inability to “comply with certifications verifying that they will

4 abide by both the CARES Act and [the Department’s] regulations.” This allegation rests on the

5 mistaken premise that the rule at issue is fundamentally incompatible with the CARES Act. But

6 even accepting that premise, plaintiffs have failed to demonstrate that the Department—the

7 agency charged with administering the GEER and ESSER programs, and the agency to whom

8 plaintiffs must make the relevant certifications—would mount a legal challenge to the use of

9 funds in a manner consistent with the Department’s own regulation.

10 III.
11
12

PLAINTIFFS HAVE NOT ESTABLISHED THAT THE PUBLIC INTEREST SUPPORTS AN INJUNCTION

Plaintiffs must also establish both that the balance of equities tips in their favor and that 13

the public interest favors an injunction. Alliance for the Wild Rockies, 632 F.3d at 1135. These 14

factors merge when the federal government is a party. Drakes Bay Oyster Co. v. Jewell, 747 15

F.3d 1073, 1092 (9th Cir. 2014). Plaintiffs fail to support an injunction on either ground. 16

Plaintiffs assert (Mot. 29) that “the challenges caused by the pandemic have contributed 17

to heightened need for public-school funding,” and that “Congress specifically responded to this 18

crisis by making GEER and ESSER funds available to public schools that needed assistance to 19

respond to the pandemic.” Those statements present only half the picture. In arguing that an 20

injunction is needed to “[s]upport[] public schools’ continued ability to provide their students 21

with an education,” id. at 30 (emphasis added), plaintiffs overlook (1) that Congress also 22

directed that equitable services be provided to private-school students, who also have had their 23

educations interrupted by the pandemic, and (2) that the Department reasonably determined that 24

25 4 Plaintiffs rely on California v. Azar, 911 F.3d 558, 581 (9th Cir. 2018), for the proposition that economic injury can support a finding of irreparable harm in the APA context because damages

26 are not available to compensate for losses. But that case is distinguishable because the rule at

issue was found likely to cause the state to expend its own money to compensate for the effect of 27 the rule, whereas here the rule concerns only the amount of emergency relief funds available to a

28 public school district. Moreover, plaintiffs do not claim to need to spend all of their CARES Act funds immediately in a manner that would make later reapportionment impossible.
DEFENDANTS’ OPPOSITION TO MOTION FOR PRELIMINARY INJUNCTION Case No. 3:20-cv-4478-JD

14

Case 3:20-cv-04478-JD Document 68 Filed 07/30/20 Page 20 of 20

1 private-school services would not be equitable unless funded by reference to the students whom

2 a public school chooses to serve under the CARES Act, i.e., students in Title I schools or in all

3 schools. In other words, the harms articulated by plaintiffs as a result of the pandemic are

4 common to many throughout the country and do not justify preliminary relief to thwart the

5 Department’s determination of how best to align § 1117 with the broad purposes of the CARES

6 Act and the equity mandate imposed by Congress. The public interest here is in allowing the

7 Department to continue implementing the sections of the CARES Act that Congress assigned it

8 to administer, and to ensuring that all students benefit from CARES Act funds in an equitable

9 manner.

10

CONCLUSION

11 For the foregoing reasons, Plaintiffs’ motion for preliminary injunction should be denied.

12 DATED: July 30, 2020
13

Respectfully submitted,

ETHAN P. DAVIS

14

Acting Assistant Attorney General

15 DAVID MORRELL

16

Deputy Assistant Attorney General

17

JENNIFER RICKETTS

18

Director, Federal Programs Branch

19

/s/ William K. Lane III

WILLIAM K. LANE III

20

(D.C. Bar # 1034955)

21

Counsel

Civil Division

22

U.S. Department of Justice

23

950 Pennsylvania Ave., N.W. Washington, D.C. 20530

24

(202) 305-7920

william.lane2@usdoj.gov

25

26 Attorneys for Defendants
27

28

DEFENDANTS’ OPPOSITION TO MOTION FOR PRELIMINARY INJUNCTION Case No. 3:20-cv-4478-JD
15

 
 Case 3:20-cv-04478-JD Document 73 Filed 08/05/20 Page 1 of 19

1 XAVIER BECERRA Attorney General of California
2 MICHAEL NEWMAN Senior Assistant Attorney General
3 SARAH E. BELTON Supervising Deputy Attorney General
4 REBEKAH A. FRETZ JAMES F. ZAHRADKA II
5 GARRETT M. LINDSEY (SBN 293456) Deputy Attorneys General
6 300 South Spring Street, Suite 1702 Los Angeles, CA 90013
7 Telephone: (213) 269-6402 E-mail: Garrett.Lindsey@doj.ca.gov
8 Attorneys for Plaintiff State of California

DANA NESSEL Attorney General of Michigan FADWA A. HAMMOUD* Solicitor General TONI L. HARRIS* NEIL GIOVANATTI* Assistant Attorneys General P.O. Box 30758 Lansing, MI 48909 Telephone: (517) 335-7603 E-mail: GiovanattiN@michigan.gov Attorneys for Plaintiff State of Michigan *Appearing Pro Hac Vice

9 IN THE UNITED STATES DISTRICT COURT
10 FOR THE NORTHERN DISTRICT OF CALIFORNIA
11 SAN FRANCISCO DIVISION
12

13 STATE OF MICHIGAN, STATE OF

Case No. 3:20-cv-04478-JD

CALIFORNIA, et al., 14

PLAINTIFFS’ REPLY IN SUPPORT OF

Plaintiffs, MOTION FOR PRELIMINARY

15

INJUNCTION

v. 16

Date:

August 18, 2020

17 ELISABETH D. DEVOS, in her official

Time: Judge:

11:30 AM Hon. James Donato

capacity as the United States Secretary of 18 Education, and UNITED STATES

Trial Date: None set Action Filed: July 7, 2020

DEPARTMENT OF EDUCATION, 19

Defendants. 20

21

22

23

24

25

26

27

28

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Case 3:20-cv-04478-JD Document 73 Filed 08/05/20 Page 2 of 19

1

TABLE OF CONTENTS

2

Page

3 INTRODUCTION .......................................................................................................................... 1

4 ARGUMENT .................................................................................................................................. 2

I. Plaintiffs Are Likely to Succeed on Their Claims that the Rule and the

5

Guidance Are Unlawful and Unconstitutional........................................................ 2

6

A. The Equitable Services Requirement in Section 18005 of the CARES Act Is Not Ambiguous .................................................................. 2

7

1. Section 18005 of the CARES Act Is Not Ambiguous .................... 2

8

2. The Rule Is Not Entitled to Deference............................................ 5

B. Defendants Fail to Offer Any Viable Argument Contesting

9

Plaintiffs’ Constitutional Claims................................................................. 7

10

C. ED’s Actions Are Arbitrary and Capricious in Violation of the APA........ 7

D. ED Did Not Have Good Cause to Issue the Rule as an Interim Final

11

Rule ............................................................................................................. 9

12

II. Plaintiffs Will Suffer Irreparable Harm ................................................................ 10

III. The Public Interest Weighs Heavily in Favor of Provisional Relief..................... 12

13 CONCLUSION ............................................................................................................................. 13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28
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Case 3:20-cv-04478-JD Document 73 Filed 08/05/20 Page 3 of 19

1

TABLE OF AUTHORITIES

2

Page

3

CASES 4

Am. Trucking Ass’ns v. City of Los Angeles

5

559 F.3d 1046 (9th Cir. 2009)...................................................................................................12

6 California v. Azar

7

911 F.3d 558 (2018) ..................................................................................................................10

8 Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc.

467 U.S. 837 (1984) ................................................................................................................5, 6

9

Citizens to Preserve Overton Park, Inc. v. Volpe

10

401 U.S. 402 (1971) ....................................................................................................................8

11 Confederated Tribes of the Chehalis Reservation v. Mnuchin

12

No. 20-cv-01002, 2020 WL 1984297 (D.D.C. Apr. 27, 2020) .................................................10

13 Dalton v. Specter 511 U.S. 462 (1994) ....................................................................................................................7

14

Dep’t of Homeland Sec. v. Regents of the Univ. of Cal.

15

140 S. Ct. 1891 (2020) ............................................................................................................8, 9

16 FCC v. Fox Television Stations, Inc.

17

556 U.S. 502 (2009) ....................................................................................................................9

18 Gonzales v. Oregon 546 U.S. 243 (2006) ................................................................................................................5, 6

19 Morales v. Trans World Airlines, Inc.

20

504 U.S. 374 (1992) ..................................................................................................................11

21 Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co.

22

463 U.S. 29 (1983) ......................................................................................................................8

23 Nat’l Fed’n of Indep. Bus. v. Sebelius 567 U.S. 519 (2012) ................................................................................................................2, 3

24 Sierra Club v. Trump

25

929 F.3d 670 (9th Cir. 2019).................................................................................................6, 13

26 Sierra Club v. Trump 963 F.3d 874 (9th Cir. 2020).......................................................................................................7
27

28
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1

TABLE OF AUTHORITIES

(continued)

2

Page

3 Skidmore v. Swift & Co. 323 U.S. 134 (1944) ................................................................................................................6, 7
4

5

United States v. Timilty 148 F.3d 1 (1st Cir. 1998) ...........................................................................................................2

6 United States v. Valverde

7

628 F.3d 1159 (9th Cir. 2010)...................................................................................................10

8 Washington v. DeVos

No. 2:20-CV-0182-TOR, 2020 WL 3125916 (E.D. Wash. June 12, 2020)................................6 9

Washington v. Trump

10

441 F. Supp. 3d 1101 (W.D. Wash. 2020) ................................................................................10

11 Whitman v. Am. Trucking Ass’ns

12

531 U.S. 457 (2001) ....................................................................................................................6

13 Wilder’s S.S. Co. v. Low 112 F. 161 (9th Cir. 1901).......................................................................................................2, 3
14
STATUTES 15

5 United States Code

16

§ 706..........................................................................................................................................10

17 20 United States Code

18

§ 6320..........................................................................................................................................3

19 OTHER AUTHORITIES

20 34 C.F.R. § 76.665 (2020)...............................................................................................................11

21 H.R. 748, 116th Cong.

22

§ 1102........................................................................................................................................13 § 18002....................................................................................................................................2, 3

23

§ 18003..............................................................................................................................3, 4, 12

§ 18005.............................................................................................................................. passim

24

H.R. 6800, 116th Cong.

25

title IV .......................................................................................................................................11

26 Phyllis W. Jordan, What Congressional Covid Funding Means for K-12 Schools,

27

Future Ed (July 29, 2020), https://www.future-ed.org/what-congressionalcovid-funding-means-for-k-12-schools/ ...................................................................................11

28

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1

INTRODUCTION

2

Plaintiffs’ motion for preliminary injunction and the 15 declarations from education

3 agencies across the country demonstrate that injunctive relief from the U.S. Department of

4 Education’s (ED) unlawful rewrite of Section 18005 of the CARES Act is necessary to avoid

5 diverting more than $150 million in CARES Act funds intended for public schools to private

6 schools. ED fails to produce any evidence rebutting Plaintiffs’ motion or the corresponding

7 declarations. See generally Defs.’ Mem. in Opp’n to Pls.’ Mot. for Prelim. Inj., ECF No. 68

8 (Opp.). Defendants also fail to address, let alone refute, many of the arguments asserted by

9 Plaintiffs in support of their claims. Most pointedly, Defendants do not even reference their

10 improper addition of a supplement-not-supplant restriction, despite the utter lack of evidence of

11 congressional intent to impose such a restriction. Defendants also fail to refute the substance of

12 Plaintiffs’ constitutional claims; the lack of rulemaking authority in Sections 18002, 18003, and

13 18005 of the CARES Act; the lack of any implicit rulemaking authority; and ED’s inexplicable

14 change in policy from that announced in its initial Guidance to the new two-pronged approach

15 published in the Rule, including the addition of two oppressive “poison pill” restrictions on

16 LEAs’ use of the funds if the LEAs choose to allocate the funds using the proportional-share

17 calculation in Section 1117 of the ESEA.

18

Instead, ED erroneously claims that Section 18005 is ambiguous and therefore gives ED

19 authority to interpret the statute through emergency rulemaking. As addressed in both Plaintiffs’

20 principal brief and further below, ED’s faulty interpretation of Section 18005 is contrary to the

21 plain language of the CARES Act. ED’s claim that the relevant statutory language is ambiguous

22 is inconsistent with controlling Supreme Court and Ninth Circuit precedent. Further, Defendants’

23 unsupported attempt to minimize the significant harms caused by ED’s Rule to public education

24 falls flat. Plaintiffs have demonstrated significant and irreparable harm due to the Rule.

25

In short, Defendants’ arguments fail to rebut Plaintiffs’ likelihood of success on their

26 claims, the irreparable harm they face, and the balance of equities weighing heavily in favor of an

27 injunction. This Court should grant Plaintiffs’ motion and enjoin ED from imposing or enforcing

28 its Guidance or Rule on Plaintiffs during the pendency of this action. 1

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1

ARGUMENT

2 I. 3 4

PLAINTIFFS ARE LIKELY TO SUCCEED ON THEIR CLAIMS THAT THE RULE AND THE GUIDANCE ARE UNLAWFUL AND UNCONSTITUTIONAL
A. The Equitable Services Requirement in Section 18005 of the CARES Act Is Not Ambiguous

5

Defendants’ principal argument is that Section 18005 is ambiguous, thereby requiring ED

6 to exercise interpretative rulemaking authority to resolve the purported ambiguity. Opp. 5, 7-10.

7 Section 18005 is unambiguous. ED’s attempt to read ambiguity into the statute so that ED can

8 pursue its policy objective of redirecting funds to support private schools neither validates its

9 exercise of rulemaking authority nor entitles its interpretation to any degree of deference.

10

1. Section 18005 of the CARES Act Is Not Ambiguous

11

The pertinent phrase in Section 18005—“in the same manner”—“has a settled and well-

12 understood meaning in legislation.” Wilder’s S.S. Co. v. Low, 112 F. 161, 164 (9th Cir. 1901); see

13 also Nat’l Fed’n of Indep. Bus. v. Sebelius (NFIB), 567 U.S. 519, 545-46 (2012); United States v.

14 Timilty, 148 F.3d 1, 3, 5 (1st Cir. 1998). Defendants offer nothing to counter this long-established

15 precedent, under which “in the same manner” means “to use the same methodology and

16 procedures.” NFIB, 567 U.S. at 545; Wilder’s S.S. Co., 112 F. at 164 (“[i]t means by similar

17 proceedings”).1 Employing this well-understood construction of Section 18005, LEAs are

18 required to adopt the procedures and methodologies of Section 1117, including the proportional-

19 share calculation and eligibility requirements. This plain reading directly cuts against ED’s

20 flawed interpretation and is alone sufficient for the Court to deem the phrase unambiguous.

21

Disregarding this binding legal precedent, Defendants argue that Section 18005 is

22 ambiguous for two reasons. First, Defendants claim the permitted uses for GEER and ESSER

23 funds in Sections 18002(c) and 18003(d) allow “for a broad range of services that benefit all

24 students” and are purportedly in “tension” with the eligibility requirements in Section 1117,

25 which, by their nature, limit the private-school students who receive equitable services. Opp. 7-8

26 1 Defendants apparently attempt to avoid this binding precedent by picking one word in
27 the phrase (“manner”), pointing to a dictionary definition of that term, and ignoring the other words in the phrase. Opp. 9. But the phrase is well-understood, as confirmed in NFIB and the
28 other cases cites above, rendering Defendants’ efforts to chop the phrase apart meritless. 2
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1 (emphasis in original). Second, Defendants assert that, if Section 18005 fully incorporates Section

2 1117, two provisions in Section 18005 are purportedly rendered superfluous because they are

3 similar to provisions in Section 1117. Opp. 8. Neither of these arguments has merit.

4

For their first argument, Defendants incorrectly conflate the permitted uses of CARES Act

5 funds set forth in Sections 18002(c) and 18003(d) with the eligibility requirements for equitable

6 services under Section 1117. Section 1117’s eligibility requirements and proportional-share

7 calculation are unrelated to the use of the funds under both the CARES Act and Title I-A. These

8 requirements from Section 1117 are incorporated into Section 18005 as they are the procedures

9 for determining the amount of funding for equitable services and who is eligible. See NFIB, 567

10 U.S. at 545; Wilder’s S.S. Co., 112 F. at 164. Only after the funds are allocated between public

11 schools and equitable services for private schools, and eligibility for services is determined, do

12 the permitted uses described in Sections 18002(c) and 18003(d) come into play.

13

While some of the permitted uses described in Sections 18002(c) and 18003(d) are only

14 available to LEAs by their nature, see, e.g., H.R. 748, 116th Cong. (CARES Act) § 18002(c)

15 (“support the ability of such [LEAs] to continue to provide educational services to their students

16 and to support the on-going functionality of the [LEA]”); § 18003(d)(5) (“[d]eveloping and

17 implementing procedures and systems to improve the preparedness and response efforts of

18 [LEAs]”), (d)(12) (“[o]ther activities that are necessary to maintain the operation of and

19 continuity of services in [LEAs] and continuing to employ existing staff of the [LEA]”), other

20 permitted uses mirror the available services described in Section 1117. Compare 20 U.S.C. §

21 6320(a)(1)(A) with CARES Act § 18003(d)(1), (4), (10), (11). As the eligibility requirements

22 incorporated into Section 18005 are unrelated to the permitted uses described in Sections

23 18002(c) and 18003(d), the latter create no ambiguity in Section 18005.

24

Second, the inclusion of a consultation provision and public-maintenance provision in

25 Section 18005 does not render the comparable provisions in Section 1117 superfluous. As

26 explained in Plaintiffs’ principal brief, the consultation provision is not the same in the two

27 statutes, as Section 18005 limits the parties involved in consultation. Pls.’ Mot. for Prelim. Inj.,

28 ECF No. 35 (Mot.) 14. The public-maintenance provision is not necessarily a procedure or 3
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1 methodology that would be incorporated into Section 18005 under a plain reading of the statute

2 consistent with the Supreme Court and Ninth Circuit’s understanding of “in the same manner.”

3 Id. at 15. Thus, these provisions do not create ambiguity.

4

In addition, Defendants’ contention that the term “equitable” in and of itself means all

5 students should have access to services using the CARES Act funds mischaracterizes the broader

6 context of the statute and ignores that “equitable services” is a well-understood term of art. See

7 Opp. 10; see also Amici Private School Associations’ and Advocacy Groups’ Amicus Br. in

8 Supp. of Defs. and in Opp. to Prelim. Inj., ECF No. 60-1 at 8-9. The ESSER funds are provided

9 to the states, then the LEAs, through well-established Title I formulas that are based on the

10 number of low-income students in the states and LEAs. See CARES Act § 18003(c). If an LEA

11 did not receive Title I-A funds in the previous fiscal year, it will not necessarily receive ESSER

12 funds. Thus, Defendants’ argument that Congress’s use of the term “equitable” means that all

13 students should benefit from CARES Act funds does not comport with Congress’ choice to direct

14 funds to low-income students or the fact that not all LEAs will receive CARES Act funds for

15 public- or private-school students. Congress’s vision of what an “equitable” funding allocation

16 consists of—not ED’s vision—controls.

17

Defendants further fail to explain why ED incorporates the proportional-share calculation

18 described in Section 8501 of the ESEA (based on total enrollment of students), and not Section

19 1117 (based on enrollment of low-income students). Instead, Defendants deflect, arguing that if

20 Congress had referenced Section 8501, rather than Section 1117, the same allegedly superfluous

21 provisions described above would still render Section 18005 ambiguous. But Defendants miss the

22 point: the Guidance and Rule incorporate the proportional-share calculation from Section 8501,

23 despite the CARES Act specifically referencing Section 1117. No rationale supports this

24 interpretation and, again, Congress’s policy choice governs here.2

25

Moreover, Defendants’ argument that Section 18005 is ambiguous and that all students

26 should receive services using CARES Act funds does not square with ED’s Rule. For example,

27

2 Further evidencing that ED’s Rule departs from congressional intent, at least 100

members of Congress submitted comments to the Rule expressing their disagreement with ED’s 28 interpretation of Section 18005. See Suppl. Req. for Judicial Notice Exs. 1-21.

4

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1 ED’s theory that Section 18005 requires all private-school students be counted for purposes of

2 allocating funds is negated by Option #1 of the Rule, which permits LEAs to calculate the

3 proportional share based on the number of low-income students only. ED provides no explanation

4 for this discrepancy. Likewise, in the phrase ED seeks to interpret, “manner” is singular, so no

5 support exists for the Rule’s two options (“manners”) for proportioning the funds. Further, the

6 supplement-not-supplant restriction that ED includes with Option #1 under the Rule is not

7 referenced or included in any relevant section of the CARES Act, while Congress expressly

8 incorporated supplement-not-supplant requirements for uses of other CARES Act funding outside

9 K-12 education. ED invented this restriction, which has no basis in the statute, and seems

10 designed to push LEAs to proportion funds under Option #2, the only option ED offered in its

11 Guidance.

12

Section 18005 is clear: LEAs should follow the procedures and methodologies set forth in

13 Section 1117 for providing equitable services to private-school students. ED’s attempt to sow

14 discord and confusion about Section 18005 is unsupported, and its Guidance and Rule make no

15 sense under its own interpretation of Section 18005.

16

2. The Rule is Not Entitled to Deference.

17

Assuming arguendo that Section 18005 is ambiguous (it is not), ED’s interpretation is not

18 entitled to deference. Chevron deference “is warranted only ‘when it appears that Congress

19 delegated authority to the agency generally to make rules carrying the force of law, and that the

20 agency interpretation claiming deference was promulgated in the exercise of that authority.’”

21 Gonzales v. Oregon, 546 U.S. 243, 255-56 (2006) (quoting United States v. Mead Corp., 533

22 U.S. 218, 226-27 (2001)) (emphasis added). Defendants cannot meet either requirement here.

23

To support its claim that Congress has delegated its authority here, ED points to two

24 provisions in its organic act, 20 U.S.C. Ch. 31, to justify its rulemaking. First, ED cites provisions

25 allowing the Secretary to “make, promulgate, [and] issue . . . rules and regulations governing the

26 manner of operation of, and governing the applicable programs administered by, the

27 Department.” Opp. 9 (quoting 20 U.S.C. § 1221e-3). However, a court in this Circuit has

28 expressly rejected ED’s efforts to apply this provision in the context of the CARES Act. See 5
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1 Washington v. DeVos, No. 2:20-CV-0182-TOR, 2020 WL 3125916, at *9 (E.D. Wash. June 12,

2 2020). That decision correctly noted that “courts have expressed skepticism where an agency

3 attempts to impose special conditions on grants absent express authority to do so, as such a broad

4 interpretation would be antithetical to the concept of a formula grant.” Id. (quoting City of Los

5 Angeles v. Barr, 941 F.3d 931, 942 (9th Cir. 2019) (punctuation omitted).

6

Second, ED cites its general administrative delegation to promulgate rules “necessary or

7 appropriate to manage the functions of the Secretary or the Department.” Opp. 9 (quoting 20

8 U.S.C. § 3474). This delegation is limited, restricted to the functions of the Secretary or ED. See

9 Gonzales, 546 U.S. at 264-65 (“When Congress chooses to delegate a power [to interpret a

10 statute], it does so not by referring back to the administrator’s functions, but by giving authority

11 over the provisions of the statute [the administrator] is to interpret”). The activities of LEAs are

12 not “the functions of the Secretary or the Department.” Lacking congressional authority to

13 interpret Section 18005, Chevron deference is not warranted.

14

Even if Congress had provided authority to ED to interpret the CARES Act, courts must

15 still use the “traditional tools of statutory construction” to determine whether “the intent of

16 Congress is clear” and “give effect to the unambiguously expressed intent of Congress.” Chevron

17 U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 842-43 & n.9 (1984). When a statute is

18 ambiguous to some extent and the agency has authority to interpret the statute, an agency cannot

19 offer an interpretation that contradicts the portion of the statute that is unambiguous. See Whitman

20 v. Am. Trucking Ass’ns, 531 U.S. 457, 481 (2001). As discussed above and in Plaintiffs’ motion,

21 see Mot. 12-15, even if some aspects of Section 18005 are ambiguous (they are not), in directing

22 LEAs to provide equitable services “in the same manner as” provided under Section 1117, when

23 it could have instead referenced Section 8501, Congress unambiguously demonstrated its intent

24 that equitable services be provided using the proportions provided by Section 1117 of the ESEA.

25

Finally, although not argued by Defendants, their interpretation could theoretically be

26 entitled to more limited Skidmore deference, which courts may grant to agency interpretations to

27 the extent that their reasoning is persuasive. See Sierra Club v. Trump, 929 F.3d 670, 692 (9th

28 Cir. 2019) (citing Skidmore v. Swift & Co., 323 U.S. 134 (1944)). Under Skidmore, courts afford 6
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1 deference “depend[ing] upon the thoroughness evident in [the agency’s] consideration, the

2 validity of its reasoning, its consistency with earlier and later pronouncements, and all those

3 factors which give it power to persuade.” 323 U.S. at 140. As discussed throughout Plaintiffs’

4 principal brief and herein, ED’s interpretation and Rule lack any indicia of thoroughness or valid

5 reasoning, and are inconsistent not only with Section 18005 itself, but with ED’s own prior

6 interpretations. The Rule is thus not entitled to Skidmore deference.

7

B. Defendants Fail to Offer Any Viable Argument Contesting Plaintiffs’

Constitutional Claims 8

Defendants fail to provide any substantive response to Plaintiffs’ multiple constitutional

9

claims. Rather, Defendants cite Dalton v. Specter, 511 U.S. 462 (1994), for the sweeping

10

proposition that if a plaintiff makes a constitutional challenge to an action by the federal

11

government which also implicates a lack of statutory authority, the constitutional challenge is

12

barred. See Opp. 12. The Ninth Circuit recently rejected this exact argument. See Sierra Club v.

13

Trump, 963 F.3d 874, 889-90 (9th Cir. 2020).

14

As the Ninth Circuit explained, Dalton is limited to instances in which plaintiffs’ claim is

15

one “simply alleging that the [executive branch] has exceeded [its] statutory authority.” Id. at 890

16

(quoting Dalton, 511 U.S. at 473) (quotation marks omitted). But Plaintiffs’ constitutional

17

challenge here is “address[ing a] situation[] in which the [executive branch] exceeds [its]

18

statutory authority, and in doing so, also violates a specific constitutional prohibition,” id.;

19

namely, the Spending Clause and separation of powers. See Mot. 10, 16-20. Dalton is accordingly

20

inapplicable.

21

C. ED’s Actions Are Arbitrary and Capricious in Violation of the APA 22
Defendants barely address Plaintiffs’ arguments that their actions are arbitrary and 23
capricious for numerous reasons in addition to their inconsistency with the CARES Act. Compare 24
Opp. 11-12 with Mot. 21-23. To the extent they even discuss those issues, Defendants’ skeletal 25
arguments fail. 26
First, Defendants repeatedly urge this Court not to “second guess” ED’s “policy judgment” 27
under the APA’s arbitrary and capricious standard. Opp. 11 (citing FCC v. Fox Television 28

7

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1 Stations, Inc., 556 U.S. 502, 530 (2009)). To be sure, under that standard “a court is not to

2 substitute its judgment for that of the agency.” Dep’t of Homeland Sec. v. Regents of the Univ. of

3 Cal. (Regents), 140 S. Ct. 1891, 1905 (2020) (quoting Fox Television Stations, 556 U.S. at 513)

4 (internal quotation marks omitted). However, courts are obligated to make a “searching and

5 careful” inquiry, Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971), into

6 “whether the decision was based on a consideration of the relevant factors and whether there has

7 been a clear error of judgment,” Regents, 140 S. Ct. at 1905 (quoting Citizens to Preserve

8 Overton Park, 401 U.S. at 416) (internal quotation marks omitted). That review includes whether

9 the agency “failed to consider important aspects of the problem,” Regents, 140 S. Ct. at 1910

10 (internal punctuation omitted), and “whether there was legitimate reliance” on ED’s prior

11 policies; on the latter point, if those policies “have engendered serious reliance interests,” they

12 “must be taken into account.” Id. at 1913 (citing, inter alia, Fox Television Stations, 556 U.S. at

13 515) (internal quotation marks omitted).

14 Defendants refute none of these legal principles, nor dispute that they failed to consider the

15 myriad issues that Plaintiffs set forth in their motion, supported by declarations from multiple

16 LEAs and SEAs. See Mot. 9, 17-19, 21-23, 27-29. Instead, Defendants argue only that Plaintiffs’

17 assessment of harms is “one-sided,” in that it “ignores [harms] suffered by private school students

18 and teachers during the pandemic.” Opp. 11. In stark contrast to Plaintiffs’ robust evidentiary

19 presentation, Defendants provide not a shred of evidence of these ostensible harms, nor cite to

20 any evidence that such harms drove Congress’s passage of the CARES Act. Even leaving this

21 failure aside, the fact that private school students and teachers’ interests may also be a relevant

22 factor for ED to take into account when it promulgated the Guidance and Rule does not excuse

23 ED’s failure to take into account the serious and uncontested harms that its actions cause to public

24 school students, teachers, and schools.3 Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm

25

3 Nor does Defendants’ sweeping statement that “Congress directed that use of CARES 26 Act funds be equitable,” Opp. 11, undermine Plaintiffs’ arguments on this score. As discussed

above, Defendants point to nothing in the CARES Act’s text or legislative history to support their 27 interpretation. Supra at 4. Further, the equitable services provisions themselves manifest

Congress’s intent that federal education funds are equitably distributed for services to appropriate

28

(continued…)

8

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Case 3:20-cv-04478-JD Document 73 Filed 08/05/20 Page 13 of 19
1 Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (if an agency fails to consider “an important aspect of
2 the problem” in issuing a rule, that rule is arbitrary and capricious).
3 Defendants’ claim that they have not changed their prior policies, Opp. 11-12, also falls
4 flat. Most critically, Defendants completely ignore and have no response to the fact that they are
5 reversing course on their earlier explicit statement that supplement-not-supplant restrictions
6 would not apply to CARES Act funds, see Mot. 22 (citing Req. for Judicial Notice, ECF No. 35-3
7 (RJN) Ex. A at 5), apparently conceding this point. This alone renders their actions arbitrary and
8 capricious.
9 Further, Defendants’ argument that they neither formally altered their general interpretation
10 of Section 1117’s equitable services provisions nor their interpretation of the use of Title I funds
11 for those services, Opp. 11, is a non sequitur, as Plaintiffs are not contending that they did so.
12 Rather, as Plaintiffs demonstrated in their motion and discuss further herein, supra at 2-5, via the
13 Guidance and Rule Defendants seek to enact a sub silentio change to those interpretations (i.e.,
14 that LEAs are only required to provide equitable services to private school students who are (1) at
15 risk, and (2) reside in Title I public school attendance areas) based on a mistaken view that, in the
16 CARES Act, Congress created a massive exception to the general statutory requirements. Indeed,
17 Defendants’ arguments only reinforce that ED has failed to “display awareness that it is changing
18 position,” Fox Television Stations, 556 U.S. at 515, a hallmark of arbitrary and capricious action.
19 Tellingly, Defendants do not even contest Plaintiffs’ evidence—supported by multiple
20 declarations—that LEAs and SEAs justifiably took budgetary actions in reliance on ED’s extant
21 policies. See Mot. 22. Defendants failed to take this reliance into account when they took their
22 actions, and it was “arbitrary and capricious to ignore such matters.” Regents, 140 S. Ct. at 1913
23 (quoting Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117, 2126 (2016)).
24 D. ED Did Not Have Good Cause to Issue the Rule as an Interim Final Rule
25 Defendants claim the same emergency requiring the issuance of an injunction here was the
26 basis for issuing the Rule as an interim final rule. Opp. 12. However, the COVID pandemic and
27 private-school students. Defendants make no showing that Congress empowered them to adopt
28 additional measures that in Defendants’ view somehow enhance “equity.” 9
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1 its unprecedented economic effects on public education did not necessitate the Rule, unlike the

2 need for an injunction. ED’s creation of uncertainty regarding the allocation of ESSER and GEER

3 funds through the issuance of the Guidance and the Rule does not support the issuance of the Rule

4 absent notice-and-comment procedures. Uncertainty is not sufficient good cause normally, let

5 alone when the uncertainty is solely created by ED, as it is here. United States v. Valverde, 628

6 F.3d 1159, 1166 (9th Cir. 2010) (uncertainty “is not a reasonable justification for bypassing

7 notice and comment”). Having no good cause to issue the Rule without notice-and-comment, the

8 Rule is unlawful. 5 U.S.C. § 706(2)(D).

9 II. PLAINTIFFS WILL SUFFER IRREPARABLE HARM

10

Defendants do not contest that Plaintiffs are subject to significant harm as a result of the

11 Rule. Rather, Defendants argue that these harms—caused by significant diversions of funding

12 away from the public schools—are not irreparable. Opp. 13-14. Defendants’ argument is

13 unsupported by any evidence and conflicts with legal precedent.

14

The loss of more than $150 million in emergency funding is irreparable harm as Plaintiffs

15 will not be able to recover damages from ED or funds improperly diverted to private schools.

16 California v. Azar, 911 F.3d 558, 581 (2018) (“harm is irreparable here because the states will not

17 be able to recover monetary damages connected to the IFRs”)4; see also, e.g., Washington v.

18 Trump, 441 F. Supp. 3d 1101, 1126 (W.D. Wash. 2020) (loss of tax revenue and federal

19 government funding of a local project constituted irreparable harm). Defendants’ characterization

20 of this diversion of these funds as merely an “economic injury,” Opp. 13, is “terribly misguided”

21 as these “are not funds appropriated to carry out secondary or residual government functions” but

22 “are monies that Congress appropriated on an emergency basis to assist [] governments in

23 providing core public services” in response to the pandemic. Confederated Tribes of the Chehalis

24 Reservation v. Mnuchin, No. 20-cv-01002, 2020 WL 1984297, at *8 (D.D.C. Apr. 27, 2020)

25 (holding tribes suffered irreparable harm due to an agency’s action reducing their share of

26

4 Defendants’ attempt to distinguish Azar lacks merit. Opp. 14 n.4. Just like the plaintiffs

in Azar, Plaintiffs here are unable to recover economic damages and will be required to expend 27 their own resources to compensate for the loss of funds driven by the Guidance and Rule. See

Guerrant Decl. ¶ 26; Jackson Decl. ¶ 26; Jones Decl. ¶ 29; Kaneshiro-Erdmann Decl. ¶ 25; Makin 28 Decl. ¶ 27; Oates Decl. ¶ 22; Stem Decl. ¶ 27; Stewart Decl. ¶¶ 25-26.

10

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Case 3:20-cv-04478-JD Document 73 Filed 08/05/20 Page 15 of 19

1 CARES Act funding). This loss of funding is immediate: Plaintiffs and their public schools must

2 make immediate decisions to address the pandemic’s effects on education, particularly with the

3 imminent start of the school year. With the steep drop in funding available for public education

4 available at the state and local level, see Guerrant Decl. ¶¶ 12, 15, 26; Constancio Decl. ¶ 16;

5 Goldson Decl. ¶¶ 10, 13; Gordon Decl. ¶ 12; Hoffmann Decl. ¶ 13; Jackson Decl. ¶ 26; Jones

6 Decl. ¶ 14; Kaneshiro-Erdmann Decl. ¶¶ 15, 25; Oates Decl. ¶ 10; Salmon Decl. ¶ 11; Stem Decl.

7 ¶ 27; Wallace Decl. ¶ 12, LEAs must use all available resources including ESSER and GEER

8 funds to meet the current and unprecedented demands, see Guerrant Decl. ¶ 28; Gordon Decl.

9 ¶ 24; Jackson Decl. ¶ 15; Jones Decl. ¶¶ 14, 29; Kaneshiro-Erdmann Decl. ¶ 25; Makin Decl.

10 ¶¶ 16-17, 29; Oates Decl. ¶ 24; Salmon Decl. ¶ 22; Stem Decl. ¶ 14; Stewart Decl. ¶ 26. While

11 Defendants suggest that the LEAs could “reapportion unobligated GEER and ESSER funds” at

12 the conclusion of the litigation, LEAs do not have the luxury of waiting or “unobligat[ing]” funds.

13 Opp. 13. The need for funds is desperate and immediate.5 Guerrant Decl. ¶ 26; Jackson Decl.

14 ¶ 26; Jones Decl. ¶ 29; Kaneshiro-Erdmann Decl. ¶ 25; Makin Decl. ¶ 27; Oates Decl. ¶ 22; Stem

15 Decl. ¶ 27; Stewart Decl. ¶¶ 25-26.

16

Separate from the irreparable economic harm the Rule will cause, Defendants fail to

17 address the irreparable harm caused by the imposition of the supplement-not-supplant restriction

18 on LEAs who choose Option #1 for appropriating the CARES Act funds. See 34 C.F.R.

19 § 76.665(c)(3). This restriction threatens the loss of future Title I funding if the LEAs use the

20 CARES Act funds for non-Title I schools, including for district-wide expenditures like purchases

21 of remote learning equipment, transportation, and facility sanitation. See, e.g., Oates Decl. ¶ 17;

22 Hoffmann Decl. ¶¶ 41-42; Jones Decl. ¶ 38; Jackson Decl. ¶ 35; Constancio Decl. ¶ 34. Such a

23 Hobson’s choice constitutes irreparable harm where the threat of civil enforcement and loss of

24 future funding looms large. See Morales v. Trans World Airlines, Inc., 504 U.S. 374, 381 (1992);

25 5 Congress continues to recognize the immediate need for additional funding for public
26 education, as shown by the stimulus package proposals currently under consideration; both versions proposed by the parties include tens of billions of dollars for education. See HEROES
27 Act, H.R. 6800, 116th Cong., title IV (2020); see also Phyllis W. Jordan, What Congressional Covid Funding Means for K-12 Schools, Future Ed (July 29, 2020), https://www.future-
28 ed.org/what-congressional-covid-funding-means-for-k-12-schools/. 11
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Case 3:20-cv-04478-JD Document 73 Filed 08/05/20 Page 16 of 19

1 Am. Trucking Ass’ns v. City of Los Angeles, 559 F.3d 1046, 1057 (9th Cir. 2009).

2

Finally, as discussed in Plaintiffs’ principal brief, the Rule places Plaintiffs in legal

3 jeopardy because they cannot comply with both the Rule and Section 18005. Defendants assert

4 that Plaintiffs cannot demonstrate ED would “mount a legal challenge” if a plaintiff did not

5 comply with the Rule. Opp. 14. But Defendants do not categorically renounce ED’s ability to

6 enforce the Rule against Plaintiffs during the pendency of this litigation, and the certifications that

7 Plaintiffs executed remain legally binding on Plaintiffs. Guerrant Decl. Ex. A; Constancio Decl.

8 Ex. A; Stewart Decl. Ex. A; Kaneshiro-Erdmann Decl. Ex. A; Makin Decl. Ex. A; Salmon Decl.

9 Ex. A; Goldson Decl. Ex. A; Baca Decl. Ex. A; Stem Decl. Ex. A; Jones Decl. Ex. A; Jackson

10 Decl. Ex. A; Gordon Decl. Ex. A. In fact, ED asks the Court to deny granting the preliminary

11 injunction so that Defendants may “continue implementing” the CARES Act in order to “ensure[]

12 that all students benefit from the CARES Act funds.”6 Opp. 15. Thus, Plaintiffs remain stuck,

13 unable to comply with the Rule and Section 18005 while the threat of ED’s potential enforcement

14 remains looming.

15

Plaintiffs’ 15 declarations make clear that the Rule has caused and continues to cause

16 irreparable harm. Defendants submit no evidence to counter these declarations and fail to show

17 how the significant loss of funds for Plaintiffs’ public-school students does not amount to

18 irreparable harm.

19 III. THE PUBLIC INTEREST WEIGHS HEAVILY IN FAVOR OF PROVISIONAL RELIEF

20

For the equity elements, Defendants’ arguments rely heavily on their contention that

21 private schools, like public schools, are also adversely impacted by the COVID-19 pandemic. See

22 Opp. 14-15. Plaintiffs do not contest that private schools are likely impacted by the pandemic—

23 however, the low-income students targeted to receive Title I and CARES Act funds have faced

24 significantly greater health and economic impacts from the virus than many private school

25 students. See RJN Exs. G, J; Jones Decl. ¶ 12. Defendants disregard that Congress provided

26

6 As discussed above, Defendants’ implementation of the CARES Act does not ensure that

“all” students benefit from the CARES Act funds at issue. Because only LEAs that received Title 27 I-A funding in the previous school year were allocated ESSER funds, see CARES Act §

18003(c), students who reside in an LEA that did not receive Title I-A funds (whether they attend 28 public or private schools) will not necessarily receive a benefit under the Rule.

12

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Case 3:20-cv-04478-JD Document 73 Filed 08/05/20 Page 17 of 19

1 private schools with access to other emergency funds in the CARES Act, which are not available

2 to public schools. Specifically, Congress authorized the Paycheck Protection Program (PPP),

3 which numerous private schools are eligible for and have taken advantage of. CARES Act

4 § 1102; see also The Council of The Great City Schools Amicus Curiae Br. in Supp. of Pls.’ Mot.

5 for Prelim. Inj., ECF No. 47-1 at 9-10 & Ex. B; Hoffmann Decl. ¶¶ 47-48. PPP is not available to

6 public schools. Since private schools have access to PPP funding that public schools do not, it is

7 not equitable for private schools to receive ESSER and GEER funds on an equal basis as public

8 schools.

9

Finally, the public interest is served by having Congress’s intended appropriations

10 implemented and not thwarted by ED’s efforts to meet its own policy goals. Cf. Sierra Club, 929

11 F.3d at 707 (“The public interest in ensuring protection of this separation of powers is

12 foundational and requires little elaboration.”). The equitable factors weigh heavily in favor of

13 Plaintiffs.

14

CONCLUSION

15

For the foregoing reasons, and those addressed in Plaintiffs’ principal brief, Plaintiffs

16 request this Court grant their motion.

17

18

19

20

21

22

23

24

25

26

27

28 13
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Case 3:20-cv-04478-JD Document 73 Filed 08/05/20 Page 18 of 19

1 Dated: August 5, 2020

Respectfully Submitted,

2

DANA NESSEL

Attorney General of Michigan

3

FADWA A. HAMMOUD*

Solicitor General

4

/s/ Neil Giovanatti

5

NEIL GIOVANATTI*

6

TONI L. HARRIS*

Assistant Attorneys General

7

Attorneys for Plaintiff State of Michigan

*Appearing Pro Hac Vice

8

9

XAVIER BECERRA

Attorney General of California

10

MICHAEL L. NEWMAN

Senior Assistant Attorney General

11

SARAH E. BELTON

Supervising Deputy Attorney General

12

REBEKAH A. FRETZ

GARRETT M. LINDSEY

13

JAMES F. ZAHRADKA II

Deputy Attorneys General

14

Attorneys for Plaintiff State of California

15

16

17

18

19

20

21

22

23

24

25

26

27

28 14
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Case 3:20-cv-04478-JD Document 73 Filed 08/05/20 Page 19 of 19

1 KARL A. RACINE Attorney General of District of Columbia
2 KATHLEEN KONOPKA Deputy Attorney General, Public Advocacy
3 Division Attorneys for Plaintiff District of Columbia
4 Appearing pro hac vice (application forthcoming)
5
CLARE E. CONNORS 6 Attorney General of Hawaii
HOLLY T. SHIKADA 7 KEVIN M. RICHARDSON*
Deputy Attorneys General 8 Attorneys for Plaintiff State of Hawaii
*Appearing pro hac vice 9
AARON M. FREY 10 Attorney General of Maine
SARAH A. FORSTER* 11 Assistant Attorney General
Attorneys for Plaintiff State of Maine 12 *Appearing pro hac vice
13 BRIAN E. FROSH Attorney General of Maryland
14 STEVEN M. SULLIVAN* Solicitor General
15 Attorneys for Plaintiff State of Maryland *Appearing pro hac vice
16
HECTOR BALDERAS 17 New Mexico Attorney General
P. CHOLLA KHOURY 18 LISA GIANDOMENICO*
Assistant Attorneys General 19 Attorneys for Plaintiff State of New Mexico
*Appearing pro hac vice 20
JOSH SHAPIRO 21 Attorney General of Pennsylvania
MICHAEL J. FISCHER 22 Chief Deputy Attorney General
Attorneys for Plaintiff Commonwealth of 23 Pennsylvania
Appearing pro hac vice (application 24 forthcoming)

JAMES E. JOHNSON Corporation Counsel of the City of New York ERIC PROSHANSKY HOPE LU GAIL RUBIN Assistant Corporation Counsel Attorneys for Plaintiff the Board of Education of the City School District of the City of New York Appearing pro hac vice (application forthcoming)
BOARD OF EDUCATION, CITY OF CHICAGO DEPARTMENT OF LAW JOSEPH MORIARTY General Counsel J. ERNEST MINCY* Deputy General Counsel for Litigation Attorneys for Plaintiff Chicago Board of Education *Appearing pro hac vice
SAN FRANCISCO UNIFIED SCHOOL DISTRICT DANIELLE HOUCK General Counsel SUSANNE NAOMI STARECKI KIM Sr. Deputy General Counsel Legal Department Attorneys for Plaintiff San Francisco Unified School District
SQUIRE PATTON BOGGS (US) LLP GABRIEL COLWELL (CABN 216783)* COLIN R. JENNINGS (OHBN 0068704)* W. MICHAEL HANNA (OHBN 0020149)* EMILY R. SPIVACK (OHBN 0090777)* KEVIN J. BURTZLAFF (OHBN 0039648)* Cleveland Municipal School District Board of Education Attorneys for Plaintiff Cleveland Municipal School District *Appearing pro hac vic

25 JOSHUA L. KAUL Attorney General of Wisconsin
26 HANNAH S. JURSS* Assistant Attorney General
27 Attorneys for Plaintiff State of Wisconsin *Appearing pro hac vice
28
15
Pls.’ Reply ISO Mot. for Prelim. Inj. (3:20-cv-04478-JD)

 
 Case 3:20-cv-04478-JD Document 82 Filed 08/26/20 Page 1 of 15

United States District Court Northern District of California

1

2

3

4

UNITED STATES DISTRICT COURT

5

NORTHERN DISTRICT OF CALIFORNIA

6

7

STATE OF MICHIGAN, et al.,

8

Plaintiffs,

9

v.

10

BETSY DEVOS, et al.,

11

Defendants.

Case No. 3:20-cv-04478-JD
ORDER RE PRELIMINARY INJUNCTION Re: Dkt. No. 35

12

This case arises out of the funding provisions for elementary and secondary schools in the

13 Coronavirus Aid, Relief, and Economic Security Act (CARES Act) of 2020. Plaintiffs, who are

14 eight states, the District of Columbia, and four municipal school districts, have sued under the

15 United States Constitution and the Administrative Procedure Act to block an interim final rule

16 promulgated by defendants, the Secretary of Education and the United States Department of

17 Education (the Department), that imposed a variety of conditions on how the CARES Act funds

18 should be shared by public and private schools. Dkt. No. 24. Plaintiffs also moved for a

19 preliminary injunction prohibiting enforcement of the interim final rule pending a full disposition

20 of the case on the merits. Dkt. No. 35. The injunction is granted.

21

BACKGROUND

22

The salient facts are undisputed. The CARES Act was enacted on March 27, 2020, to

23 provide trillions of dollars in financial relief, and other assistance, to Americans suffering from the

24 coronavirus pandemic and its economic fallout. Dkt. No. 24 ¶ 2, Dkt. No. 68 at 1. The CARES

25 Act earmarked approximately $16 billion to help elementary and secondary schools maintain their

26 operations and provide effective education during the pandemic. Dkt. No. 35 at 1, Dkt. No. 68

27 at 2.

28

Case 3:20-cv-04478-JD Document 82 Filed 08/26/20 Page 2 of 15

United States District Court Northern District of California

1

The CARES Act channeled the distribution of this funding through two programs. The

2 Governor’s Emergency Education Relief (GEER) Fund provides state governors with funding to

3 distribute in their discretion to the local educational agencies most severely impacted by the

4 coronavirus. Coronavirus Aid, Relief, and Economic Security Act, P.L. No. 116-136 (Mar. 27,

5 2020), § 18002. The Elementary and Secondary School Emergency Relief (ESSER) Fund

6 allocates funds to each state “in the same proportion as each State received under part A of title I

7 of the [Elementary and Secondary Education Act] of 1965 in the most recent fiscal year.” Id.

8 § 18003(b).

9

Section 18005 of the CARES Act directs local educational agencies (LEAs) to share a

10 portion of GEER and ESSER funds with private schools. The allocation of public funds to private

11 schools has long been a feature of the Elementary and Secondary Education Act of 1965 (ESEA),

12 20 U.S.C. § 6301 et seq. (2015). LEAs have historically used a formula in Section 1117 of the

13 ESEA to calculate the funding to be shared with private schools. The formula in Section 1117

14 states that a private school located within a Title I-eligible area may receive a portion of the LEA’s

15 Title I funds “based on the number of children from low-income families who attend” the private

16 school. Id. § 6320(a)(4)(A)(i). In effect, the share of Title I funds awarded to private schools is

17 determined by the number of low-income children attending private schools in Title I-eligible

18 areas.

19

The CARES Act expressly incorporated Section 1117 in connection with the distribution

20 of the GEER and ESSER funding. Section 18005(a) of the CARES Act instructs LEAs receiving

21 GEER or ESSER funds to “provide equitable services in the same manner as provided under

22 section 1117 of the ESEA of 1965 to students and teachers in non-public schools, as determined in

23 consultation with representatives of non-public schools.”

24

The parties’ dispute is largely grounded in their disagreement over Congress’s intent in

25 incorporating Section 1117. The lawsuit and the injunction motion turn on the meaning of the

26 phrase “in the same manner as provided under section 1117.”

27

In response to Section 18005(a), LEAs began to formulate GEER and ESSER allocations

28 to private schools based on Section 1117. See, e.g., Dkt. No. 35-2 at 9, 59, 132. This work 2

Case 3:20-cv-04478-JD Document 82 Filed 08/26/20 Page 3 of 15

United States District Court Northern District of California

1 became uncertain when the Department indicated that the interpretation of Section 18005(a)

2 required additional “clarity.” Dkt. No. 35-3 at 66. On April 30, 2020, the Department published

3 its views on Section 18005(a) in a non-binding guidance document entitled “Providing Equitable

4 Services to Students and Teachers in Non-Public Schools Under the CARES Act Programs” (the

5 Guidance). Dkt. No. 35-3 at 65. The Guidance instructed LEAs to calculate the funds to be

6 shared with private schools on the basis of “the overall number of children who are enrolled in

7 public schools and non-public schools in the LEA that wish to participate under one or both

8 CARES Act programs.” Providing Equitable Services at 6. Put more plainly, the Department

9 directed that private schools should get a share based on their overall student population, and not

10 just their number of low-income students.

11

The Guidance prompted a torrent of responses. The Chairs of the United States House of

12 Representatives Committee on Education and Labor, and Committee on Appropriations, and the

13 Ranking Member of the United States Senate Committee on Health, Education, Labor and

14 Pensions, voiced concerns to the Department that it was implementing a share formula at odds

15 with Section 18005(a) and Section 1117. See Dkt. No. 35-3 at 79. A number of state and local

16 public education officials represented by the Council of Chief State School Officers expressed the

17 same concerns, and advised the Department that the Guidance would cause significant adverse

18 financial and operational impacts on public schools. See Dkt. No. 35-3 at 82.

19

On July 1, 2020, the Department issued an interim final rule (the Rule) that adopted and to

20 a degree expanded the directives in the Guidance. See “CARES Act Programs; Equitable Services

21 to Students and Teachers in Non-Public Schools,” 85 Fed. Reg. 39479 (July 1, 2020) (to be

22 codified at 34 C.F.R. pt. 76). As an interim final rule, the Rule went into immediate effect without

23 a notice-and-comment period. Id.

24

The Department stated that the Rule was intended to resolve “a critical ambiguity” in

25 Section 18005(a). 85 Fed Reg. at 39479. In the Department’s view, the “context” of the CARES

26 Act was the harm inflicted on “all of our Nation’s students” by the pandemic. Id. (emphasis in

27 original). A “mechanistic application” of the share formula in Section 1117 would award funds to

28 private schools based only on their low-income students, and not all of their students. Id. Because 3

Case 3:20-cv-04478-JD Document 82 Filed 08/26/20 Page 4 of 15

United States District Court Northern District of California

1 the Department believed that the use of the formula in Section 1117 would be inconsistent with

2 the concern for all students implicit in the CARES Act, it concluded that “the phrase ‘in the same

3 manner as provided under section 1117’ does not simply mean ‘as provided under section 1117.’”

4 Id. The Department also noted certain consultation and funding control terms overlapped in

5 Section 18005(a) and Section 1117, which it saw as another indication that “in the same manner”

6 meant something other than what those words would ordinarily denote. Id. at 39481.

7

The Department invoked “our interpretive authority under Chevron U.S.A., Inc., v. Natural

8 Res. Def. Council, Inc., 467 U.S. 837, 844 (1984),” to implement a different share formula to

9 govern the distribution of funds to private schools. Id. at 39479. The Rule presented LEAs with

10 two options. Under the first option, LEAs could use the low-income student formula in Section

11 1117, but only if they limited CARES Act funding to public and private schools that were already

12 participating in Title I funding. 85 Fed Reg. at 39488. School districts could not use CARES Act

13 funding for district-wide measures that would also benefit schools not participating in Title I

14 funding. Dkt. No. 35 at 23. LEAs would also have to comply with “supplement-not-supplant”

15 requirements, meaning they could not use CARES Act funding to replace or exceed state and local

16 funding allocations. 85 Fed Reg. at 39488.

17

The second option would allow LEAs to avoid these limitations but only if they followed

18 the method in the Department’s Guidance and shared funds with private schools based on the total

19 number of students enrolled, and not on the total number of low-income students attending private

20 schools. Id.

21

In response to the Rule, over 100 members of the House and Senate again stated concerns

22 that the Department was not adhering to the text of Section 18005(a). See, e.g., Dkt. No. 73-1 at

23 1-4. They noted that public schools in their home states would lose millions of dollars they would

24 otherwise be entitled to if the Rule were enforced. See, e.g., Dkt. No. 73-1 at 31. A report by the

25 nonpartisan Congressional Research Service observed that “a straightforward reading of section

26 18005(a) based on its text and context suggests that the CARES Act requires LEAs to follow

27 section 1117’s method for determining the proportional share, and thus to allocate funding for

28 services for private school students and teachers based on the number of low-income children 4

Case 3:20-cv-04478-JD Document 82 Filed 08/26/20 Page 5 of 15

United States District Court Northern District of California

1 attending private schools.” Cong. Research Serv., 7-5700, Analysis of the CARES Act’s Equitable

2 Services Provision 2 (July 1, 2020). The Department indicated it is considering these and other

3 responses to the Rule, and plans to release a final rule at some point in the future. Dkt. No. 81

4 (August 18, 2020 hearing transcript (Hrg. Tr.)) at 34:3.

5

Plaintiffs are the States of Michigan, California, Hawaii, Maine, Maryland, New Mexico,

6 Pennsylvania, and Wisconsin; the District of Columbia; and the New York City Department of

7 Education, Chicago Public Schools, the Cleveland Municipal School District Board of Education,

8 and the San Francisco Unified School District. Dkt. No. 24 ¶¶ 27-39. They assert six legal claims

9 against the Department and Secretary of Education Betsy DeVos, for violation of separation of

10 powers principles; ultra vires action; violation of the Spending Clause, Article I, Section 8, Clause

11 1 of the United States Constitution; and three separate violations of the Administrative Procedure

12 Act, 5 U.S.C. § 706 (2012). Id. ¶¶ 155-195.

13

On July 20, 2020, plaintiffs moved for a preliminary injunction barring enforcement of the

14 Rule. Dkt. No. 35. The Department opposed the injunction request. Dkt. No. 68. The Court

15 heard oral argument on the motion on August 18, 2020. Dkt. No. 77.1

16

DISCUSSION

17 I. LEGAL STANDARDS

18

Preliminary injunctions are “an extraordinary remedy never awarded as of right.” Winter

19 v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). “A plaintiff seeking a preliminary

20 injunction must establish that he [or she] is likely to succeed on the merits, that he [or she] is

21 likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities

22 tips in his [or her] favor, and that an injunction is in the public interest.” Id. at 20; see also Garcia

23 v. Google, Inc., 786 F.3d 733, 740 (9th Cir. 2015) (same). In our circuit, a plaintiff may also

24 obtain a preliminary injunction under a “sliding scale” approach by raising “serious questions”

25 going to the merits of plaintiff’s claims and showing that the balance of hardships tips “sharply” in

26 his or her favor. A Woman’s Friend Pregnancy Res. Clinic v. Becerra, 901 F.3d 1166, 1167 (9th

27

28

1 Non-parties The Council of the Great City Schools, and 38 private school associations and advocacy groups, have asked to file amicus briefs. Dkt. Nos. 47, 60. The requests are granted.

5

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1 Cir. 2018); Vanguard Outdoor, LLC v. City of Los Angeles, 648 F.3d 737, 740 (9th Cir. 2011). At

2 “an irreducible minimum,” the party seeking the injunction “must demonstrate a fair chance of

3 success on the merits, or questions serious enough to require litigation.” Airbnb, Inc. v. City and

4 Cnty. of San Francisco, 217 F. Supp. 3d 1066, 1072 (N.D. Cal. 2016) (citation omitted); see also

5 Garcia, 786 F.3d at 740.

6 II. THE INJUNCTION FACTORS

7

A. Likelihood of Success on the Merits

8

The parties agree that the merits inquiry turns on whether the Rule was a permissible

9 interpretation of the phrase “in the same manner as provided for in section 1117 of the ESEA of

10 1965” in CARES Act Section 18005(a). See Dkt. No. 35 at 12-13, Dkt. No. 68 at 7. The

11 Department does not dispute the ripeness or justiciability of plaintiffs’ claims, as it has in other

12 CARES Act cases. See, e.g., State of Washington v. DeVos, ___ F. Supp. 3d ___, No. 2:20-cv-

13 0182-TOR, 2020 WL 3125916, at *4-8 (E.D. Wash. June 12, 2020).

14

Plaintiffs may show a likelihood of success on the merits by demonstrating that the Rule is

15 likely to be held an unlawful administrative action under the APA. As the APA provides in

16 pertinent part, the Court shall:

17

(2) hold unlawful and set aside agency action, findings, and

conclusions found to be -18

(A) arbitrary, capricious, an abuse of discretion, or otherwise

19

not in accordance with law; [or]

20

. . .

21

(C) in excess of statutory jurisdiction, authority, or

limitations, or short of statutory right. 22

23 5 U.S.C. § 706(2). Plaintiffs contend that the Rule is substantively unlawful under Sections

24 706(2)(A) and (C) because it is “not in accordance with” Congress’s mandate to allocate GEER

25 and ESSER funds to non-public schools “in the same manner” as in Section 1117 of the ESEA,

26 and so is necessarily “in excess of statutory jurisdiction, authority, or limitations.” Dkt. No. 24

27 at 56.

28 6

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1

The point is well taken. As in all contested questions of statutory interpretation, “[o]ur

2 analysis begins and ends with the text.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572

3 U.S. 545, 553 (2014). We give Congress’s words their ordinary and everyday meaning, and may

4 consult dictionary definitions to ensure a plain interpretation. City of Los Angeles v. Barr, 941

5 F.3d 931, 940 (9th Cir. 2019). When construing a statute, a virtuoso feat of analysis is neither

6 required nor particularly useful. “[T]he plain, obvious, and rational meaning of a statute is always

7 to be preferred” to interpretations that only “an acute and powerful intellect would discover.”

8 Lynch v. Alworth-Stephens Co., 267 U.S. 364, 370 (1925). The ultimate goal of construction is to

9 give effect to Congress’s purpose in enacting the statute. “In every case, ‘it is the intent of

10 Congress that is the ultimate touchstone.’” Barr, 941 F.3d at 940 (quoting Arizona v. United

11 States, 567 U.S. 387, 453 (2012) (Alito, J., concurring and dissenting in part)).

12

The words Congress used in Section 18005(a) of the CARES Act are familiar and

13 uncomplicated, to say the least. In everyday usage, “same” means “corresponding so closely as to

14 be indistinguishable,” and “conforming in every respect,” particularly when used in a sentence

15 with “as.” See Merriam-Webster Dictionary, https://www.merriam-webster.com/dictionary/same

16 (last viewed Aug. 26, 2020). “Manner” means “a mode of procedure or way of acting.” Merriam-

17 Webster Dictionary, https://www.merriam-webster.com/dictionary/manner (last viewed Aug. 26,

18 2020). Taken together, to do something “in the same manner” is to perform an action using a

19 method or procedure that is identical to that used in another action. This straightforward

20 construction has been adopted in other statutory interpretation contexts. See, e.g., Nat’l Fed’n of

21 Indep. Bus. v. Sebelius, 567 U.S. 519, 545-46 (2012) (“in the same manner” means “to use the

22 same methodology and procedures”) (internal quotation omitted).

23

Consequently, Congress’s intent in Section 18005(a) is plain as day. Congress expressly

24 directed local educational entities such as plaintiffs “to provide equitable services in the same

25 manner as provided under section 1117 of the ESEA of 1965 to students and teachers in non-

26

27

28 7

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1 public schools.”2 This command unambiguously requires plaintiffs to calculate the non-public

2 school portion of the GEER and ESSER funds they receive under Section 18005(a) according to

3 the formula in Section 1117 of the ESEA, which is “based on the number of children from low-

4 income families who attend private schools.” 20 U.S.C. § 6320(a)(4)(A)(i). The statute’s

5 quintessentially plain language, and the “surgical precision” with which Congress incorporated

6 Section 1117 into Section 18005(a), leave no room for any other reading. See Navajo Nation v.

7 Dep’t of Health & Human Servs., 325 F.3d 1133, 1139-40 (9th Cir. 2003).

8

In light of these factors, one might wonder, as Justice Scalia did in similar circumstances,

9 how “[c]ould anyone maintain with a straight face that [Section 18005(a)] is unclear?” King v.

10 Burwell, 576 U.S. 473, 510 (2015) (Scalia, J., dissenting). The Department does not argue that the

11 words in Section 18005(a) are themselves ambiguous or unclear in any way. To the contrary,

12 counsel for the Department acknowledged during the hearing that such a contention would be hard

13 to support. Hrg. Tr. at 29:15-18. Instead, the Department said that the Rule was necessary to

14 resolve “a critical ambiguity in section 18005(a),” namely an alleged tension between the focus on

15 low-income students in Section 1117 and the fact that the pandemic has affected “all our Nation’s

16 students.” 85 Fed. Reg. at 39479 (emphasis in original).

17

The Department relies entirely on “context,” as opposed to anything inherent in the words

18 Congress used, for this contention. In the Department’s view, the CARES Act was intended to

19 benefit all students; given that context, “it is inequitable to apportion expenditures for private

20 schools on the basis of low-income students, when public school districts may use their share of

21 CARES Act funds to benefit all schools and students.” Dkt. No. 68 at 10. On this basis, and

22 virtually nothing else, the Department concluded that “the phrase ‘in the same manner as provided

23 under section 1117’ does not simply mean ‘as provided under section 1117.’” 85 Fed. Reg. at

24 39479.

25

26

27

2 Although eight of the plaintiffs are states, their LEAs make the final apportionment and distribution of funds to private schools in their area. See Dkt. No. 24 at 34-38. The states have

28

filed this complaint both on behalf of their LEAs, and based on the risk of state-wide harm to their students. Id.

8

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1

This is “interpretive jiggery-pokery” in the extreme. King, 576 U.S. at 506 (Scalia, J.,

2 dissenting). The Department’s conclusion that “in the same manner” does not mean “in the same

3 manner” invites immediate doubts. Why did Congress go out of its way to incorporate Section

4 1117 if it did not intend for its formula to be used in Section 18005(a)? If Congress did not mean

5 to use the formula in Section 1117, wouldn’t it simply have omitted any reference to it in the first

6 place? But since Congress expressly referred to Section 1117, what exactly does the Department

7 think that means?

8

These and other material questions are left unanswered by the Department. Instead, the

9 Department simply demands that the Court defer to the Rule under the Chevron doctrine. See Dkt.

10 No. 68 at 9-10; 85 Fed. Reg. at 39479. The courts “often apply the two-step framework

11 announced in Chevron” to determine the validity of an agency’s interpretation of a statute. King,

12 576 U.S. at 485 (citing Chevron, U.S.A. v. Nat. Res. Def. Council, 467 U.S. 837 (1984)). “This

13 approach ‘is premised on the theory that a statute’s ambiguity constitutes an implicit delegation

14 from Congress to the agency to fill in the statutory gaps.’” Id. (quoting FDA v. Brown &

15 Williamson Tobacco Corp., 529 U.S. 120, 159 (2000)). When those circumstances are in

16 evidence, the courts will defer to the agency’s interpretation of the statute. Chevron, 467 U.S. at

17 843.

18

The problem for the Department is that it cannot make it past step one, which asks whether

19 the statute is ambiguous. When Congress has spoken clearly, as it did in Section 18005(a), “that is

20 the end of the matter.” Chevron, 467 U.S. at 843. An executive agency like the Department has

21 no authority to rewrite Congress’s plain and unambiguous commands under the guise of

22 interpretation, and no deference is owed when an agency acts in contravention of a statute. Id. at

23 842-43; see also Utility Air Regulatory Grp. v. EPA, 573 U.S. 302, 327 (2014) (agency may not

24 promulgate rules or guidelines that are inconsistent with an unambiguous statute). To hold

25 otherwise “would deal a severe blow to the Constitution’s separation of powers,” which provides

26 that Congress makes the laws and the President, through executive agencies like the Department,

27 “‘faithfully execute[s]’ them.” Utility Air, 573 U.S. at 327 (quoting U.S. Const., Art. II, § 3); see

28 9

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1 also Clinton v. City of New York, 524 U.S. 417, 438 (1998) (the Executive Branch is not

2 authorized “to enact, to amend, or to repeal statutes.”).

3

The Department’s main response to these well-established principles is to rely heavily on

4 the Supreme Court’s opinion in King. See Dkt. No. 68 at 8-9. The Department embraces King for

5 the proposition that “the meaning -- or ambiguity -- of certain words or phrases may only become

6 evident when placed in context.” King, 576 U.S. at 486 (internal quotation omitted); Dkt. No. 68

7 at 8-9. That is the ostensible legal grounds for the Department’s contention that the “context” of

8 the CARES Act trumps Congress’s instruction to use the share formula in Section 1117 to

9 apportion GEER and ESSER funds to private schools.

10

This is not a tenable theory. The Department misreads King as granting agencies the

11 freedom to disregard Congress’s words based on the gestalt of a statute. Nothing in King supports

12 such a radical revision of administrative law. King was a case about Congress’s plan for tax

13 credits under the Affordable Care Act. After conducting a deep and thorough analysis of the ACA

14 as a whole, the Supreme Court concluded that Congress intended a broader scope for the tax credit

15 provision than a “natural” reading of the words might initially suggest. King, 576 U.S. at 486-92.

16 In reaching this holding, the majority opinion took pains to underscore that it reviewed the ACA

17 as a whole to effectuate Congress’s intent, and not “undo what it has done.” Id. at 498. That is

18 because “[i]n a democracy, the power to make the law rests with those chosen by the people.” Id.

19

The Department’s argument departs from King at virtually every turn. The Department did

20 not present a detailed analysis of the overall structure of the CARES Act to support its conclusion

21 about Congress’s intent. It merely declared that Section 1117 “is inconsistent with the CARES

22 Act in several crucial respects,” without identifying a section or other provision in the CARES Act

23 that might evidence a conflict. Dkt. No. 68 at 5. The Department posited an inconsistency, but 24 did not prove one. That is lightyears away from the analysis done in King.3

25

26

27

3 It appears that the Department made much more of an effort at statutory analysis in a related case, Washington v. DeVos, Case No. 2:20-cv-1119-BJR (W.D. Wash.). Even so, the district court

28

there had no trouble rejecting its discussion. See State of Washington, ___ F. Supp. 3d ___, No. 2:20-cv-1119-BJR, 2020 WL 4922256 (W.D. Wash. Aug. 21, 2020).

10

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1

The Department’s overall approach is also wholly at odds with King’s teaching about

2 effectuating Congress’s intent. The Department highlights “context” not to further Congress’s

3 mandate in Section 18005(a) but to cancel it altogether. The Supreme Court expressly cautioned

4 against this kind of activism. “Reliance on context and structure in statutory interpretation is a

5 ‘subtle business, calling for great wariness lest what professes to be mere rendering becomes

6 creation and attempted interpretation of legislation becomes legislation itself.’” King, 576 U.S. at

7 497-98 (quoting Palmer v. Massachusetts, 308 U.S. 79, 83 (1939)). The Department may prefer

8 to give CARES Act funds to private schools more generously than Congress provided, but it is

9 Congress who makes the law, and an “agency has no power to ‘tailor’ legislation to bureaucratic

10 policy goals by rewriting unambiguous statutory terms.” Utility Air, 573 U.S. at 325; see also

11 Wisconsin Cent. Ltd. v. United States, 138 S.Ct. 2067, 2073 (2018) (the Department cannot rewrite

12 a statute “‘under the banner of speculation about Congress might have’ intended.”).

13

The Department’s other arguments in defense of the Rule are equally unavailing. Its

14 contention about “superfluity” is not persuasive. It is true that Section 18005(a) and Section 1117

15 use virtually identical language to require school districts to consult with private schools on how

16 equitable services should be provided, and for public schools to maintain control over funding.

17 See Dkt. No. 68 at 8. But it is not at all apparent why this overlap indicates that “the phrase ‘in the

18 same manner’ must mean that § 18005 incorporates something less than every provision of

19 § 1117,” as the Departments says. Id. The canon advising that interpretations should avoid

20 surplusage and superfluity is a “preference” that “is not absolute.” King, 576 U.S. at 475 (internal

21 quotation omitted). Even if there were a few instances of inartful drafting in Section 18005(a),

22 that by no means creates an ambiguity which might justify a wholesale rewriting of the share

23 formula. That is all the more true because the overlapping provisions are external to the formula

24 itself.

25

The Department’s reliance on a general delegation of discretion to implement the

26 Education Code also is misplaced. See Dkt. No. 68 at 9. It would be “anomalous” indeed to

27 conclude that Congress specified the allocation formula with surgical precision in Section

28 11

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United States District Court Northern District of California

1 18005(a) only to allow the Department to change or even depart from it as a matter of general

2 administrative authority. See Gonzales v. Oregon, 546 U.S. 243, 262 (2006).

3

In addition, the Department overlooks the fact that Section 18005(a) is a formula grant that

4 does not allow for agency modifications. See Hrg. Tr. at 8:6-7 (agreeing at the hearing that

5 Section 18005(a) is a formula grant). A formula grant awards funds based on a statutory formula

6 that specifies how they will be allocated among eligible participants. See Barr, 941 F.3d at 935;

7 City of Los Angeles v. McLaughlin, 865 F.2d 1084, 1088 (9th Cir. 1989). It is the opposite of a

8 discretionary grant, which might allow an agency to impose conditions and guidelines of its own.

9 See Barr, 941 F.3d at 942. Because Congress set the exact formula for the expenditures on non-

10 public schools by incorporating Section 1117, the Department had no authority to impose its own

11 conditions. Id. (agency-created conditions are “antithetical to the concept of a formula grant.”).

12

Consequently, plaintiffs have established that they are likely to prevail on their claim that

13 the Rule must be set aside under Sections 706(2)(A) and (C) of the APA. They have also

14 established that there was no ambiguity in Section 18005(a) for the Department to fill in, and so its

15 sole duty was to “‘give effect to the unambiguously expressed intent of Congress.’” Utility Air,

16 573 U.S. at 326. The Department went well beyond its statutory authority by trying to replace the

17 share formula mandated by Congress in Section 18005(a) with one of its own choosing. Id.

18

This is enough to find that the merits inquiry weighs in plaintiffs’ favor. The Court need

19 not take up plaintiffs’ other contentions with respect to whether the Department provided an

20 adequate period of notice and comment before promulgating the Rule, or acted arbitrarily and

21 capriciously in ignoring evidence about the Rule’s impacts. The Court also declines at this time to

22 reach the constitutional argument plaintiffs assert under the Spending Clause. See Jean v. Nelson,

23 472 U.S. 846, 854 (1985); United States v. Kaluna, 192 F.3d 1188, 1197 (9th Cir. 1999) (“courts

24 are not ‘to decide questions of a constitutional nature unless absolutely necessary to a decision of

25 the case’”) (quoting Burton v. United States, 196 U.S. 283, 295 (1905)).

26

B. Irreparable Harm

27

Plaintiffs have demonstrated a likelihood of irreparable harm. They submitted a number of

28 substantial declarations detailing, often on a district and school-level basis, the financial and 12

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United States District Court Northern District of California

1 operational harms enforcement of the Rule would inflict. The Court’s task in evaluating this

2 evidence was made considerably easier by the fact that the Department does not meaningfully

3 dispute it. Counsel for the Department forthrightly acknowledged at the hearing that plaintiffs

4 would sustain measurable financial and budgetary hardships under the Rule. See Hrg. Tr. at

5 34:17-18.

6

Since irreparable harm is largely conceded by the Department, the Court will highlight just

7 some of plaintiffs’ evidence, mainly for the sake of illustration. Michigan, for example, submitted

8 evidence that it had planned to reserve $5,107,921 in ESSER funds for private schools according

9 to Section 1117 calculations, but that the Rule would require it to divert $21,604,648.63 to private

10 schools -- over four times as much. Dkt. No. 35-2, Ex. 1 at 6. Losing $16,496,727.63 of federal

11 funding to private schools would be the equivalent of laying off 466 teachers from public schools

12 in Flint, Michigan. Dkt. No. 35-2, Ex. 1 at 10. As much as 33% of Grand Rapids, Michigan’s

13 total ESSER funding would be sent to private schools under the Rule’s option two calculations.

14 Id.

15

The Oakland Unified School District has resorted to private donations of food and

16 education technology for low-income students while waiting for its CARES Act funding. Dkt.

17 No. 35-2, Ex. 3 at 10-11. The district cannot use its CARES Act funds for these same purposes

18 because the Rule’s supplement-not-supplant requirement bars it from replacing other sources of

19 funding like private donations. Id. To comply with the Rule, the district has had to mothball $2.2

20 million in CARES Act funding -- money that the district would use now for students returning to

21 school. Id. at 9.

22

Wisconsin schools had to choose between diverting over $4 million of CARES Act

23 funding to private schools or abandoning district-wide coronavirus preparation such as sanitizing

24 school buses. Dkt. No. 35-2, Ex. 11 at 10. Wisconsin also estimates that its Department of Public

25 Instruction will need to devote approximately 7,000 hours of work between July 1 and September

26 30 to planning and budgeting in response to the Rule. Dkt. No. 35-2, Ex. 11 at 8. Other plaintiffs

27 have also reported serious disruptions to their budgets and planning efforts.

28 13

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United States District Court Northern District of California

1

These impacts amount to irreparable harm. See, e.g., Certain Named and Unnamed Non-

2 Citizen Children and Their Parents v. Texas, 448 U.S. 1327, 1332-33 (1980) (finding that

3 delaying or hampering students’ participation in school is considered an irreparable harm).

4 Economic injuries in the APA are deemed irreparable because plaintiffs are unable to recover

5 money damages. E. Bay Sanctuary Covenant v. Barr, 964 F.3d 832, 854 (9th Cir. 2020). The

6 Ninth Circuit has held that disruptions to budget plans also are a cognizable irreparable harm.

7 Washington v. Trump, 847 F.3d 1151, 1168-69 (9th Cir. 2017). Consequently, the irreparable

8 harm inquiry weighs in plaintiffs’ favor.

9

C. Balance of Hardships and the Public Interest

10

The balance of hardships and the public interest are considered together in this case. See

11 E. Bay Sanctuary Covenant, 964 F.3d at 854 (“When the government is a party, the third and

12 fourth preliminary injunction factors merge.”) (citing Drakes Bay Oyster Co. v. Jewell, 743 F.3d

13 1073, 1092 (9th Cir. 2014)). There is a strong public interest in ensuring that the laws duly

14 enacted by elected representatives are not undermined by agency actions. See id. at 855 (citing

15 Maryland v. King, 567 U.S. 1301, 1301 (2012)). There is also a strong public interest in

16 safeguarding our nation’s public schools from the pandemic, and giving school districts access to

17 the funds that Congress authorized for this very purpose. “Providing public schools ranks at the

18 very apex of the function of the state.” Wisconsin v. Yoder, 406 U.S. 205, 213 (1972).

19

To be sure, there is a public interest in sharing CARES Act funds with private schools, as

20 the Department suggests. That is what Congress provided for in Section 18005(a), and the

21 evidence before the Court also indicates that private schools have had access to additional funding

22 under the Paycheck Protection Program. Dkt. No. 35 at 25. But allowing the Department to

23 rewrite the statutory formula for sharing education funds is manifestly not in the public interest.

24 See E. Bay Sanctuary Covenant, 964 F.3d at 855. Consequently, the balance of hardships and

25 public interest inquiries for injunctive relief weigh in plaintiffs’ favor.

26

27

28 14

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United States District Court Northern District of California

1

CONCLUSION

2

A preliminary injunction is granted as follows.

3

(1) The United States Department of Education, Secretary Betsy DeVos, and their officers,

4 agents, employees, attorneys, and any person acting in concert with them, or at their behest, and

5 who has knowledge of this injunction, are preliminarily enjoined from implementing or enforcing

6 against plaintiffs the provisions in the Guidance (April 30, 2020) or the interim final rule, 85 Fed.

7 Reg. 39479 (July 1, 2020). The injunction will remain in place pending further order of the Court.

8

(2) Plaintiffs are excused from posting a bond under Federal Rule of Civil Procedure

9 65(c).

10

The Court sets a case management conference for September 17, 2020, at 10:00 a.m. A

11 joint case management statement is due by September 10, 2020.

12

IT IS SO ORDERED.

13 Dated: August 26, 2020

14

15

16

JAMES DONATO United States District Judge

17

18

19

20

21

22

23

24

25

26

27

28 15

 
 Case 3:20-cv-04478-JD Document 90 Filed 11/06/20 Page 1 of 5

1 XAVIER BECERRA Attorney General of California
2 MICHAEL NEWMAN Senior Assistant Attorney General
3 SARAH E. BELTON Supervising Deputy Attorney General
4 REBEKAH A. FRETZ JAMES F. ZAHRADKA II
5 GARRETT M. LINDSEY (SBN 293456) Deputy Attorneys General
6 300 South Spring Street, Suite 1702 Los Angeles, CA 90013
7 Telephone: (213) 269-6402 E-mail: Garrett.Lindsey@doj.ca.gov
8 Attorneys for Plaintiff State of California

DANA NESSEL Attorney General of Michigan FADWA A. HAMMOUD Solicitor General TONI L. HARRIS* NEIL GIOVANATTI* Assistant Attorneys General P.O. Box 30758 Lansing, MI 48909 Telephone: (517) 335-7603 E-mail: GiovanattiN@michigan.gov Attorneys for Plaintiff State of Michigan *Appearing Pro Hac Vice

9 IN THE UNITED STATES DISTRICT COURT
10 FOR THE NORTHERN DISTRICT OF CALIFORNIA
11 SAN FRANCISCO DIVISION
12

13 STATE OF MICHIGAN, STATE OF

Case No. 3:20-cv-04478-JD

14 CALIFORNIA, et al.,

STIPULATION TO ENTER AN ORDER

15

Plaintiffs, AND JUDGMENT GRANTING A PERMANENT INJUNCTION AND

16

v.

CLOSING THE CASE

17 ELISABETH D. DEVOS, in her official

18

capacity as the United States Secretary of Education, and UNITED STATES

19 DEPARTMENT OF EDUCATION,

Date:

Time:

Judge:

Hon. James Donato

Trial Date: None set

Action Filed: July 7, 2020

20

Defendants.

21

22

23

24

25

26

27

28

Stipulation to Enter an Order and Judgment (20-cv-4478-JD)

Case 3:20-cv-04478-JD Document 90 Filed 11/06/20 Page 2 of 5

1

Plaintiffs State of Michigan, State of California, District of Columbia, State of Hawaii,

2 State of Maine, State of Maryland, State of New Mexico, Commonwealth of Pennsylvania, State

3 of Wisconsin, the Board of Education for the City School District of the City of New York,

4 Board of Education for the City of Chicago, Cleveland Municipal School District Board of

5 Education, and San Francisco Unified School District brought suit against Defendants Elisabeth

6 D. DeVos, in her official capacity as the United States Secretary of Education, and the United

7 States Department of Education (Department) alleging, among other contentions, that

8 Defendants violated the Administrative Procedure Act by acting in excess of statutory authority,

9 5 U.S.C. § 706(2)(C), and/or not in accordance with law, 5 U.S.C. § 706(2)(A), by promulgating

10 the interim final rule “CARES Act Programs; Equitable Services to Students and Teachers in

11 Non-Public Schools,” 85 Fed. Reg. 39479 (July 1, 2020) (Interim Final Rule), and by issuing a

12 related guidance document on April 30, 2020 (Guidance).

13

Plaintiffs subsequently sought a preliminary injunction of enforcement of the Interim Final

14 Rule and the Guidance. On August 26, 2020, this Court granted a preliminary injunction

15 prohibiting Defendants from implementing or enforcing against Plaintiffs the Interim Final Rule

16 and the Guidance. That injunction remains in place pending further order of the Court.

17

On September 25, 2020, Secretary DeVos issued a letter stating that the Department would

18 “enforce the law as the courts have opined” and “will not appeal the [courts’] rulings” in this

19 case and in other cases filed throughout the country challenging the Guidance and the Interim

20 Final Rule.1

21

On October 9, 2020, the Department issued a guidance document replacing the Guidance.

22 This document acknowledges that this Court and two other courts “issued decisions conclud[ing]

23 that an LEA must determine the proportional share available to provide equitable services to

24 non-public school students and teachers in accordance with section 1117(a)(4)(A) of the

25 Elementary and Secondary Education Act of 1965 (ESEA).”2

26 1 https://oese.ed.gov/files/2020/09/Secretary-DeVos-Letter-to-Chief-State-School-
27 Officers-09-25-2020.pdf. 2 https://oese.ed.gov/files/2020/10/Providing-Equitable-Services-under-the-CARES-Act-
28 Programs-Update-10-9-2020.pdf.
1
Stipulation to Enter an Order and Judgment (20-cv-4478-JD)

Case 3:20-cv-04478-JD Document 90 Filed 11/06/20 Page 3 of 5

1

Therefore, Plaintiffs and Defendants, having been represented by counsel and acting by

2 and through such counsel, hereby stipulate and consent to the entry of a permanent injunction as

3 follows:

4

1. As to all Plaintiffs and any local or state education agency, school district, or public

5

school located within the geographical boundaries of any Plaintiff (collectively,

6

Plaintiff Parties), the United States Department of Education, Secretary DeVos, and

7

their officers, agents, employees, attorneys, and any person acting in concert with

8

them, or at their behest, are permanently enjoined from:

9

a. Enforcing or implementing the provisions in the April 30, 2020 Guidance and

10

the Interim Final Rule, 85 Fed. Reg. 39479 (July 1, 2020), regarding the

11

proportional-share calculation to be used for CARES Act funds for the

12

provision of equitable services to students and teachers in non-public schools

13

under Section 18005 of the CARES Act;

14

b. Taking any action inconsistent with calculating the proportional share in

15

accordance with Section 1117(a)(4)(A) of the ESEA, for the provision of

16

equitable services to students and teachers in non-public schools under Section

17

18005 of the CARES Act;

18

c. Taking any action enforcing or implementing a requirement that funds provided

19

under Section 18002 or 18003 of the CARES Act supplement, not supplant,

20

other sources of funding or expenditures;

21

d. Taking any action enforcing or implementing a restriction on the use of funds

22

provided under Section 18002 or 18003 of the CARES Act based on whether a

23

public school participates or is eligible to participate in a program under Title I,

24

Part A of the ESEA; and

25

e. Enforcing or implementing any penalty or taking any other adverse action,

26

including the withholding, termination, suspension, or recovery of funds,

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against a Plaintiff Party arising out of actions that a Plaintiff Party initiated

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before the preliminary injunction order, dated August 26, 2020, taken in

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Stipulation to Enter an Order and Judgment (20-cv-4478-JD)

Case 3:20-cv-04478-JD Document 90 Filed 11/06/20 Page 4 of 5

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reliance on the April 30, 2020 Guidance or the Interim Final Rule, 85 Fed. Reg.

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39479 (July 1, 2020).

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2. This stipulation is contingent on this Court retaining jurisdiction to enforce this

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permanent injunction as to any of the Plaintiff Parties.

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3. Defendants also stipulate to waiving any rights they might have to seek reconsideration

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of and/or appeal the preliminary injunction and the permanent injunction issued

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pursuant to this stipulation.

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9 Dated: November 6, 2020

10 By: /s/ Garrett Lindsey

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XAVIER BECERRA

Attorney General of California

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MICHAEL NEWMAN

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Senior Assistant Attorney General SARAH E. BELTON

Supervising Deputy Attorney General 14 GARRETT LINDSEY

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JAMES F. ZAHRADKA II REBEKAH A. FRETZ

Deputy Attorneys General 16 Attorneys for Plaintiff State of California

17 By: /s/ Neil Giovanatti

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DANA NESSEL

Attorney General of Michigan

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FADWA A. HAMMOUD

Solicitor General

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NEIL GIOVANATTI*

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TONI L. HARRIS* Assistant Attorneys General

Attorneys for Plaintiff State of Michigan 22 *Appearing Pro Hac Vice

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Respectfully submitted, JEFFREY CLARK Acting Assistant Attorney General MARCIA BERMAN Assistant Director, Federal Programs Branch /s/ Kate Talmor KATE TALMOR (Maryland Bar) Trial Attorney U.S. Department of Justice, Civil Division 1100 L St NW Washington, DC (202) 616-8351 kate.talmor@usdoj.gov Attorneys for Defendants

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Stipulation to Enter an Order and Judgment (20-cv-4478-JD)

Case 3:20-cv-04478-JD Document 90 Filed 11/06/20 Page 5 of 5

1 ATTESTATION OF SIGNATURES
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3 I, Garrett M. Lindsey, hereby attest, pursuant to Local Civil Rule 5-1(i)(3) of the Northern
4 District of California that concurrence in the filing of this document has been obtained from each
5 signatory hereto.
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7 Dated: November 6, 2020 8 9

/s/ Garrett M. Lindsey GARRETT M. LINDSEY Deputy Attorney General Attorney for State of California

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Stipulation to Enter an Order and Judgment (20-cv-4478-JD)