Michigan v. Devos

• Decision Date: 26 August 2020
• Docket Number: Case No. 3:20-cv-04478-JD
• Citation: 481 F.Supp.3d 984
• Court: U.S. District Court — Northern District of California
• Parties: State of MICHIGAN, et al., Plaintiffs, v. Betsy DEVOS, et al., Defendants.

481 F.Supp.3d 984

State of MICHIGAN, et al., Plaintiffs,

v.Betsy DEVOS, et al., Defendants.

Case No. 3:20-cv-04478-JD

United States District Court, N.D. California.

Signed August 26, 2020

Fadwa Alawieh Hammoud, Pro Hac Vice, Neil Giovanatti, Pro Hac Vice, Toni L. Harris, Pro Hac Vice, Michigan Department of Attorney General, Lansing, MI, for Plaintiff State of Michigan.

James F. Zahradka, II, California Department of Justice Bureau of Children's Justice, Oakland, CA, Rebekah A. Fretz, California Department of Justice Bureau of Children's Justice, Garrett Murlan Lindsey, California Department of Justice Civil Rights Enforcement Section, Los Angeles, CA, for Plaintiff State of California.

Kathleen Marie Konopka, Nicole Hill, Attorney General-Public Advocacy Division, Washington, DC, for Plaintiff District of Columbia.

Aaron M. Frey, Litigation Division, Sarah Forster, Pro Hac Vice, Office of the Attorney General, Augusta, ME, for Plaintiff State of Maine.

Lisa Marie Giandomenico, New Mexico Office of the Attorney General, P. Choulla Khoury, Albuquerque, NM, for Plaintiff State of New Mexico.

Hannah Jurss, Joshua L. Kaul, Wisconsin Department of Justice, Madison, WI, for Plaintiff State of Wisconsin.

Kevin M. Richardson, State of Hawaii Department of the Attorney General, Honolulu, HI, for Plaintiff State of Hawaii.

Eric Proshansky, Gail Rubin, Hope Y. Lu, Pro Hac Vice, New York, NY, for Plaintiff The Board of Education for the City School District of the City of New York.

James Ernest Mincy, III, Joseph T. Moriarty, Chicago Board of Education, Chicago, IL, for Plaintiff Board of Education for the City of Chicago.

Steven Marshall Sullivan, Office of the Attorney General of Maryland, Baltimore, MD, for Plaintiff State of Maryland.

Danielle Marie Houck, Legal Department, Susanne N. Kim, San Francisco Unified School District, San Francisco, CA, for Plaintiff San Francisco Unified School District.

Colin Robert Jennings, Squire Patton Boggs (US) LLP, Kevin J. Burtzlaff, Pro Hac Vice, Cleveland Municipal School District, Cleveland, OH, Emily R. Spivak, Pro Hac Vice, W. Michael Hanna, Squire Patton Boggs, Gabriel Colwell, Squire Sanders (US) LLP, Los Angeles, CA, for Plaintiff Cleveland Municipal School District Board of Education.

Michael John Fischer, Office of Attorney General, Philadelphia, PA, for Plaintiff Commonwealth of Pennsylvania.

William Kerwin Lane, III, Department of Justice, Washington, DC, for Defendants.

ORDER RE PRELIMINARY INJUNCTION

Re: Dkt. No. 35

JAMES DONATO, United States District Judge This case arises out of the funding provisions for elementary and secondary schools in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) of 2020. Plaintiffs, who are eight states, the District of Columbia, and four municipal school districts, have sued under the United States Constitution and the Administrative Procedure Act to block an interim final rule promulgated by defendants, the Secretary of Education and the United States Department of Education (the Department), that imposed a variety of conditions on how the CARES Act funds should be shared by public and private schools. Dkt. No. 24. Plaintiffs also moved for a preliminary injunction prohibiting enforcement of the interim final rule pending a full disposition of the case on the merits. Dkt. No. 35. The injunction is granted.

BACKGROUND

The salient facts are undisputed. The CARES Act was enacted on March 27, 2020, to provide trillions of dollars in financial relief, and other assistance, to Americans suffering from the coronavirus pandemic and its economic fallout. Dkt. No. 24 ¶ 2, Dkt. No. 68 at 1. The CARES Act earmarked approximately $16 billion to help elementary and secondary schools maintain their operations and provide effective education during the pandemic. Dkt. No. 35 at 1, Dkt. No. 68 at 2.

The CARES Act channeled the distribution of this funding through two programs. The Governor's Emergency Education Relief (GEER) Fund provides state governors with funding to distribute in their discretion to the local educational agencies most severely impacted by the coronavirus. Coronavirus Aid, Relief, and Economic Security Act, P.L. No. 116-136 (Mar. 27, 2020), § 18002. The Elementary and Secondary School Emergency Relief (ESSER) Fund allocates funds to each state "in the same proportion as each State received under part A of title I of the [Elementary and Secondary Education Act] of 1965 in the most recent fiscal year." Id. § 18003(b).

Section 18005 of the CARES Act directs local educational agencies (LEAs) to share a portion of GEER and ESSER funds with private schools. The allocation of public funds to private schools has long been a feature of the Elementary and Secondary Education Act of 1965 (ESEA), 20 U.S.C. § 6301 et seq. (2015). LEAs have historically used a formula in Section 1117 of the ESEA to calculate the funding to be shared with private schools. The formula in Section 1117 states that a private school located within a Title I-eligible area may receive a portion of the LEA's Title I funds "based on the number of children from low-income families who attend" the private school. Id. § 6320(a)(4)(A)(i). In effect, the share of Title I funds awarded to private schools is determined by the number of low-income children attending private schools in Title I-eligible areas.

The CARES Act expressly incorporated Section 1117 in connection with the distribution of the GEER and ESSER funding. Section 18005(a) of the CARES Act instructs LEAs receiving GEER or ESSER funds to "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."

The parties’ dispute is largely grounded in their disagreement over Congress's intent in incorporating Section 1117. The lawsuit and the injunction motion turn on the meaning of the phrase "in the same manner as provided under section 1117."

In response to Section 18005(a), LEAs began to formulate GEER and ESSER allocations to private schools based on Section 1117. See , e.g. , Dkt. No. 35-2 at 9, 59, 132. This work became uncertain when the Department indicated that the interpretation of Section 18005(a) required additional "clarity." Dkt. No. 35-3 at 66. On April 30, 2020, the Department published its views on Section 18005(a) in a non-binding guidance document entitled "Providing Equitable Services to Students and Teachers in Non-Public Schools Under the CARES Act Programs" (the Guidance). Dkt. No. 35-3 at 65. The Guidance instructed LEAs to calculate the funds to be shared with private schools on the basis of "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." Providing Equitable Services at 6. Put more plainly, the Department directed that private schools should get a share based on their overall student population, and not just their number of low-income students.

The Guidance prompted a torrent of responses. The Chairs of the United States House of Representatives Committee on Education and Labor, and Committee on Appropriations, and the Ranking Member of the United States Senate Committee on Health, Education, Labor and Pensions, voiced concerns to the Department that it was implementing a share formula at odds with Section 18005(a) and Section 1117. See Dkt. No. 35-3 at 79. A number of state and local public education officials represented by the Council of Chief State School Officers expressed the same concerns, and advised the Department that the Guidance would cause significant adverse financial and operational impacts on public schools. See Dkt. No. 35-3 at 82.

On July 1, 2020, the Department issued an interim final rule (the Rule) that adopted and to a degree expanded the directives in the Guidance. See " CARES Act Programs; Equitable Services to Students and Teachers in Non-Public Schools," 85 Fed. Reg. 39479 (July 1, 2020) (to be codified at 34 C.F.R. pt. 76). As an interim final rule, the Rule went into immediate effect without a notice-and-comment period. Id.

The Department stated that the Rule was intended to resolve "a critical ambiguity" in Section 18005(a). 85 Fed Reg. at 39479. In the Department's view, the "context" of the CARES Act was the harm inflicted on "all of our Nation's students" by the pandemic. Id. (emphasis in original). A "mechanistic application" of the share formula in Section 1117 would award funds to private schools based only on their low-income students, and not all of their students. Id. Because the Department believed that the use of the formula in Section 1117 would be inconsistent with the concern for all students implicit in the CARES Act, it concluded that "the phrase ‘in the same manner as provided under section 1117’ does not simply mean ‘as provided under section 1117.’ " Id. The Department also noted certain consultation and funding control terms overlapped in Section 18005(a) and Section 1117, which it saw as another indication that "in the same manner" meant something other than what those words would ordinarily denote. Id. at 39481.

The Department invoked "our interpretive authority under Chevron U.S.A., Inc., v. Natural Res. Def. Council, Inc., 467 U.S. 837, 844, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)," to implement a different share formula to govern the distribution of funds to private schools. Id. at 39479. The Rule presented LEAs with two options. Under the first option, LEAs could use the low-income student formula in Section 1117, but only if they limited CARES Act funding to public and private schools that were already participating in Title I funding. 85 Fed Reg. at 39488. School districts could not use CARES Act funding for district-wide measures that would also benefit schools not participating in Title I funding. Dkt. No. 35 at 23. LEAs would also have to comply with "supplement-not-supplant"...