Oakley v. DeVos

Background

The plaintiffs were Chancellor Eloy Ortiz Oakley, the Board of Governors of the California Community Colleges, and several California community college districts. They sued Betsy DeVos, in her official capacity as Secretary of Education, and the United States Department of Education over the interpretation and implementation of provisions of the Coronavirus Aid, Relief, and Economic Security Act.

The CARES Act created the Higher Education Emergency Relief Fund, or HEERF. At least half of the relevant funds had to be used for emergency financial aid grants to students whose expenses were connected to the disruption of campus operations caused by the coronavirus. The Education Department stated that only students eligible for programs under Title IV of the Higher Education Act could receive the grants. Those rules excluded, among others, students with undocumented status, Dreamers, students with pending asylum applications, and students with certain other immigration statuses, as well as students who failed other federal-aid requirements.

The plaintiffs sought a preliminary injunction—a temporary court order issued before final judgment—prohibiting the Department from imposing or enforcing those restrictions. They also challenged the restrictions as exceeding the Department’s authority, violating separation-of-powers principles and the Spending Clause, and violating the Administrative Procedure Act.

Court’s analysis

The court first held that the dispute was ripe, meaning sufficiently developed for judicial review. The Department had repeatedly stated its position and had published an Interim Final Rule restating that HEERF grants were limited to students eligible for Title IV assistance. The court found that the issue was primarily legal and that delaying review would create immediate hardship because colleges were being forced either to withhold funds from some students or risk enforcement and possible loss of federal funding.

On the constitutional claims, the court concluded that the plaintiffs were likely to succeed in showing that the Department exceeded its authority. Section 18004 of the CARES Act expressly referred to Title IV systems for distributing funds, but the court determined that this referred to administrative systems rather than Title IV eligibility requirements. The statute did not expressly impose those requirements or give the Secretary authority to create them. The court also rejected the Department’s arguments based on the phrases “cost of attendance,” “emergency financial aid grants,” and “students.” In the court’s view, the statutory formula counted students who would not qualify for Title IV aid, and the same term “students” should not have different meanings within the HEERF provisions.

The court also rejected the Department’s argument that a separate immigration statute, 8 U.S.C. § 1611, independently barred most noncitizens from receiving HEERF funds. The court found that applying that statute to HEERF was not automatic or indisputable. It reasoned that HEERF was a one-time emergency program directed to institutions and designed to address pandemic-related needs, including food, housing, technology, health care, and child care. The court found that the plaintiffs were likely to succeed on their argument that the Department’s eligibility restrictions violated the Administrative Procedure Act because they exceeded the Department’s statutory authority. The court did not decide the plaintiffs’ separate argument that the Department’s shifting positions were arbitrary and capricious.

Preliminary-injunction factors and disposition

The court found that the plaintiffs were likely to suffer irreparable harm without an injunction, including loss of future federal funding, budget uncertainty, harm to their institutional missions, and harm to students who needed assistance for basic necessities and educational tools. It found that the balance of equities and the public interest favored an injunction because of the emergency circumstances and the likely effect of the restrictions on hundreds of thousands of students.

The court therefore granted plaintiffs’ motion for a preliminary injunction. During the pendency of the action, the defendants and those acting with them were restrained and enjoined from: (1) imposing or enforcing eligibility requirements for HEERF assistance, including those in the Department’s April 21 guidance, May 21 updated statement, and June 11 Interim Final Rule; (2) requiring California community colleges to accept those restrictions as funding conditions; or (3) penalizing colleges, including by withholding, terminating, or recovering HEERF or other federal funds, based on alleged noncompliance with those restrictions. The court also granted the motions for leave to file amicus briefs and terminated docket numbers 16, 24, 27, 29, and 30.