Court weighs funding feud over Virginia schools’ transgender bathroom policies
A federal appeals court heard arguments over the Education Department’s decision to place Fairfax and Arlington County public schools on a “high risk” reimbursement-only funding status after finding their policies allowing transgender students to use bathrooms and locker rooms that match their gender identity likely violate Title IX. The designation withholds regular federal payments unless the districts change those policies. The school systems sued, arguing the department is misreading Title IX and unlawfully coercing local policy changes; they rely on a 4th Circuit 2020 decision (Grimm v. Gloucester County) that supports policies allowing transgender students’ facility access.
A district judge dismissed the suit, citing the Supreme Court’s recent ruling that disputes rooted in federal grant conditions must be brought in the U.S. Court of Federal Claims under the Tucker Act, not in district court. On appeal, the districts say they seek judicial review of agency action under the Administrative Procedure Act, not contract enforcement. During oral argument, the districts’ lawyer framed the case as statutory and constitutional interpretation, while the Justice Department argued Supreme Court precedent treats grant conditions as contractual and therefore funnels the dispute into the Court of Federal Claims.
Judges on the 4th Circuit panel probed both sides: one questioned whether parts of the dispute (such as challenging the “high risk” designation itself) could be heard in district court, while another seemed inclined to the goverment’s contract-based view. America First Legal filed an amicus brief backing the government and disputing the districts’ reading of Grimm.The panel gave no timeline for a decision.
Judges weigh Title IX funding fight over Virginia schools’ pro-transgender bathroom policies
A federal appeals court on Thursday weighed the Trump administration’s use of federal education funding to pressure two major Northern Virginia school systems to abandon policies allowing students who identify as transgender to use bathrooms and locker rooms of their choosing.
The case before the 4th U.S. Circuit Court of Appeals stems from a move by the Department of Education last summer to designate Fairfax County and Arlington County public schools as “high risk” recipients of federal funds. The designation followed the department’s determination that the districts’ policies allowing transgender students to access sex-segregated facilities based on gender identity likely violate Title IX, which conditions federal funding on compliance with sex discrimination rules.
Rather than cutting off funds outright, the department placed the districts on a reimbursement-only system, delaying payments unless the schools change their restroom and locker room policies.
The school divisions sued, arguing the federal government is misinterpreting Title IX and unlawfully using federal funding to coerce local policy changes. They contend their policies are required by the 4th Circuit’s 2020 ruling in Grimm v. Gloucester County School Board, which LGBT advocates cite as having found that policies which bar transgender students from bathrooms aligned with gender identity violate federal law.
U.S. District Judge Rossie Alston, an appointee of President Donald Trump, dismissed the lawsuit earlier this year, citing the Supreme Court’s decision in Department of Education v. California. That ruling held that disputes “founded upon” federal grant agreements are contractual in nature and must be brought in the U.S. Court of Federal Claims under the Tucker Act, not in federal district court.
The school divisions appealed, arguing their case seeks judicial review of unlawful agency action under the Administrative Procedure Act.
During Thursday’s argument, Timothy Heaphy, an attorney representing the districts, said the dispute centers on statutory interpretation and not contract enforcement.
“What it involves is not the terms of a contract,” Heaphy told the panel, “but rather the substantive interpretation of Title IX and the equal protection clause.”
Justice Department lawyer Abhishek Kambli pushed back on Heaphy’s argument, arguing the recent Supreme Court precedent foreclosed attempts to separate grant conditions from grant contracts.
“Their argument that grants are not contracts — that’s foreclosed by recent Supreme Court precedent,” Kambli said, adding that the districts would not be in court absent the funding consequences.
U.S. Circuit Judge Allison Rushing, a Trump appointee, pressed the government on whether Title IX itself contemplates judicial review outside the U.S. Court of Federal Claims, noting that the statute provides specific procedures for appealing funding enforcement actions.
“Why wouldn’t the district court have jurisdiction over any part of this suit?” Rushing asked, questioning whether the Education Department’s “high risk” designation could be challenged independently of funding disputes.
U.S. Circuit Judge Julius Richardson, also appointed by Trump, appeared more receptive to the government’s position, suggesting that adding conditions to federal grants places the dispute squarely within contract law, even if those conditions are justified by Title IX.
America First Legal, a pro-Trump law group that filed an amicus brief supporting the federal government, argued the school divisions are misreading Grimm v. Gloucester County School Board. The group said the case “turn[s] on the meaning of Title IX with respect to school restroom and locker room policies” and noted that it has “taken a contrary position on the meaning of Grimm in several cases.”
AFL also argued that the districts are attempting to bypass Supreme Court precedent governing federal grants by reframing a funding dispute as a civil rights challenge.
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The case comes as the Trump administration ramps up enforcement against school districts with progressive transgender policies, including with a recent Justice Department lawsuit against neighboring Loudoun County over alleged equal protection violations against Christian students.
Chief U.S. Circuit Judge Albert Diaz, an appointee of President Barack Obama, rounded out the panel, which did not indicate when it would rule.
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