Nat'l Ass'n for the Advancement of Colored People v. DeVos

485 F.Supp.3d 136

NATIONAL ASSOCIATION FOR the ADVANCEMENT OF COLORED PEOPLE, et al., Plaintiffs,

v.Elisabeth D. DEVOS, et al., Defendants.

No. 20-cv-1996 (DLF)

United States District Court, District of Columbia.

Signed September 4, 2020

Wendy Lecker, Pro Hac Vice, Jessica Levin, Pro Hac Vice, Education Law Center, Newark, NJ, Bacardi Jackson, Pro Hac Vice, Samuel T.S. Boyd, Pro Hac Vice, Southern Poverty Law Center, Miami, FL, Christine Bischoff, Pro Hac Vice, Katherine Dunn, Pro Hac Vice, Michael Joseph Tafelski, Pro Hac Vice, Southern Poverty Law Center, Montgomery, AL, David Patrick Thoreson, Pro Hac Vice, Jessica Reich Baril, Pro Hac Vice, Tamerlin J. Godley, Pro Hac Vice, Munger, Tolles & Olson LLP, Los Angeles, CA, Jonathan Ian Kravis, Adele El-Khouri, Munger, Tolles & Olson LLP, Washington, DC, Lindsey Rubinstein, Pro Hac Vice, Southern Poverty Law Center, Jackson, MS, for Plaintiffs National Association for the Advancement of Colored People, Penelope Lantz, Marsha Lopez, Susan Book, Michele Wilson, Adrienne Gilby, Kimberly Rommel-Enright, Stephen Enright, Tracy O'Connor, Elise McIntosh, Deborah Johnson, Beth Lewis, Jeannette Diaz, Brittany Aldous, Abraham Camejo, Keisha Guyton, Lisa Mingrone, Whitney Batteast, Herbert Brown, Villi Prempeh, Denver County School District No. 1, Pasadena Unified School District, Stamford Public Schools.

Adele El-Khouri, Munger, Tolles & Olson LLP, Washington, DC, for Plaintiffs Dekalb County School District, Broward County Public Schools.

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

MEMORANDUM OPINION

DABNEY L. FRIEDRICH, United States District Judge In March of 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Pub. L. No. 116-136, 134 Stat. 281 (2020) (to be codified as 20 U.S.C. § 3401 note). As part of its comprehensive relief effort, the CARES Act appropriated billions of dollars in funding for elementary and secondary schools across the nation. See CARES Act § 18001. A few months later, the Department of Education interpreted those funding provisions in an Interim Final Rule. 85 Fed. Reg. 39,479 (July 1, 2020). This suit soon followed. Before the Court is the plaintiffs’ motion for preliminary injunction or, in the alternative, summary judgment, Dkt. 36, which the Court considers as an expedited motion for summary judgment pursuant to Federal Rule of Civil Procedure 65(a)(2). For the reasons that follow, the Court will grant the motion.

I. BACKGROUND

A. Statutory Framework

In response to the ongoing global pandemic of 2020, Congress passed a comprehensive relief effort known as the CARES Act. Pub. L. No. 116-136, 134 Stat. 281 (2020). The CARES Act appropriated billions of dollars to aid schools through the challenges of the pandemic. See CARES Act § 18001. The Act did so through three sub-funds, two of which are relevant here. The first, the Governors’ Emergency Education Relief Fund (GEER), provides governors with discretion to distribute funding to the Local Education Agencies (LEAs) that need it most. Id. § 18002. The second, the Elementary and Secondary School Emergency Relief Fund (ESSER), directs the Department of Education to disburse funds to each state. Each state then disburses funds to its LEAs, which pass on funding to schools pursuant to a specific formula. Id. § 18003.

Unlike the GEER fund (and other CARES Act sub-funds), the ESSER fund leaves no room for discretion as to which LEAs or schools receive funding. Rather, it dictates that the funds "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 [Elementary and Secondary Education Act (ESEA)] of 1965 in the most recent fiscal year." Id. (emphasis added).

The Act also dictates how certain private schools may receive GEER and ESSER funding. It states that any "local educational agency receiving funds ... shall provide equitable services in the same manner as provided under § 1117 of the ESEA of 1965 to students and teachers in non-public schools, as determined in consultation with representatives of non-public schools." Id. § 18005. Thus, the Act incorporates by reference a different statute, which in turn describes, among other things, the formula for how funds should be divided between public and private schools. See 20 U.S.C. § 6320(a)(4)(A)(i) ( § 1117 of the ESEA). The referenced provision states: "Expenditures for educational services and other benefits to eligible private school children shall be equal to the proportion of funds allocated to participating school attendance areas based on the number of children from low-income families who attend private schools." Id. These provisions are the subject of this litigation.

B. Regulatory Background

In April 2020, the Department of Education issued guidance about CARES Act funding for private schools. Providing Equitable Services to Students and Teachers in Non-Public Schools Under the CARES Act Programs , https://oese.ed.gov/files/2020/06/Providing-Equitable-Services-under-the-CARES-Act-Programs-Update-6-25-2020.pdf (Apr. 30, 2020). The Department advised that the GEER and ESSER funds should be used to "serve all non-public school students and teachers without regard to family income, residency, or eligibility based on low achievement." Id. at 3 (emphasis added).

The Department made this position binding in July 2020, when it issued an interim final rule to the same effect. See 85 Fed. Reg. 39,479. In its explanation, the Department reasoned that the relevant text of the CARES Act was ambiguous and that its interpretation was reasonable in light of the text, structure, and purpose of the CARES Act. It ultimately announced: "We have concluded the phrase ‘in the same manner as provided under section 1117 ’ does not simply mean ‘as provided under section 1117.’ " Id.

In other words, the Department does not read the CARES Act to require that funds be disbursed pursuant to the formula outlined in § 1117 of the ESEA. Rather, it contends that all private schools are entitled to equal relief funding as public schools, regardless of low-income student population. Id. The Department thus declared that LEAs have "two options" under the Act. See 85 Fed. Reg. 39,482. They can either disburse funds equally between all public schools and all private schools or disburse funds based on low-income student population for both public and private schools. Id. Either way, the Department interprets the CARES Act to forbid differentiation between public and private schools. See id.

Although the Department engaged in rulemaking to issue its interim final rule, the CARES Act does not vest the Department with rulemaking authority. See generally CARES Act §§ 18001–18005. The Department thus rested its authority to issue the interim final rule on its general rulemaking powers to administer programs under its purview. See 85 Fed. Reg. 39,481.

Further, the Department issued the interim final rule without engaging in notice and comment rulemaking. See 85 Fed. Reg. 39,484 ("Waiver of Proposed Rulemaking"). Instead, the Department opened a post-issuance comment period of thirty days. Id. To justify foregoing the usual rulemaking process, the Department cited the Administrative Procedure Act (APA) exception for good cause, finding that notice and comment was "impracticable, unnecessary, or contrary to the public interest," 5 U.S.C. § 553(b)(B), given the exigencies of the global pandemic. Id.

C. Procedural History

The plaintiffs—advocacy groups, public school districts, and parents of children who attend public schools—brought this suit on July 22, 2020.¹ Dkt. 1. On August 11, 2020, the plaintiffs moved for a preliminary injunction or, in the alternative, summary judgment. Dkt. 36. After providing notice and considering the parties’ respective positions during a status hearing, the Court consolidated the preliminary injunction motion into an expedited motion for summary judgment under Federal Rule of Civil Procedure 65(a)(2).² See Univ. of Tex. v. Camenisch , 451 U.S. 390, 395, 101 S.Ct. 1830, 68 L.Ed.2d 175 (1981) ("[T]he parties should normally receive clear and unambiguous notice [of the court's intent to consolidate] either before the hearing commences or at a time which will still afford the parties a full opportunity to present their respective cases.").

In this expedited motion, the plaintiffs assert four claims, each of which presents a pure question of law: first, whether the Department's actions are ultra vires, in violation of the separation of powers; second, whether the Department's interim final rule violates the Spending Clause, U.S. Const. art. I, § 8; and third and fourth, whether the Department's actions violate the APA as an agency action not in accordance with law or in excess of statutory authority, 5 U.S.C. § 706(2)(A), (C). In short, plaintiffs primarily contend that (1) the Department did not have authority to issue the interim final rule, and (2) the interim final rule the Department did issue was contrary to the CARES Act.

II. LEGAL STANDARD

Summary judgment is proper if the moving party "shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; see also Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is "material" if it has the potential to change the substantive outcome of the litigation. See id. at 248, 106 S.Ct. 2505 ; Holcomb v. Powell , 433 F.3d 889, 895 (D.C. Cir. 2006). And a dispute is "genuine" if a reasonable jury could determine that the evidence warrants a verdict for the nonmoving party. See Anderson , 477 U.S. at 248, 106 S.Ct. 2505 ; Holcomb , 433 F.3d at 895.

In a case reviewing agency action, summary judgment "serves as the mechanism for deciding, as a matter of law, whether the agency action is supported by the administrative record and otherwise consistent...