State of Michigan v. DeVos

Background

The case concerns the Coronavirus Aid, Relief, and Economic Security Act of 2020, commonly called the CARES Act, which provided funding for elementary and secondary schools during the coronavirus pandemic. The plaintiffs were eight states, the District of Columbia, and four municipal school districts. They sued Secretary of Education Betsy DeVos and the United States Department of Education under the Constitution and the Administrative Procedure Act, a federal law governing agency action.

The CARES Act required local educational agencies 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. Section 1117 uses a formula based on the number of children from low-income families attending private schools.

The Department first issued guidance directing local educational agencies to calculate private-school funding based on the total number of students enrolled in public and private schools. It later issued an interim final rule that gave school districts two options. One option allowed use of the low-income-student formula but imposed additional limits. The other avoided those limits only if districts used the total-student formula.

Claims and preliminary-injunction standard

The plaintiffs asserted six claims, including that the Department exceeded its authority, violated separation-of-powers principles and the Constitution’s Spending Clause, and violated the Administrative Procedure Act. They sought a preliminary injunction, which is temporary relief issued before final judgment when the requesting party shows, among other things, likely success on the merits, likely irreparable harm, favorable balancing of hardships, and that the injunction serves the public interest.

Court’s analysis

The court held that the plaintiffs were likely to succeed on their claims that the rule was unlawful under the Administrative Procedure Act. It concluded that the phrase “in the same manner” required use of Section 1117’s funding formula. In the court’s view, the language required private-school funding to be based on the number of low-income students attending private schools, leaving no ambiguity for the Department to resolve.

The court rejected the Department’s reliance on the broader context of the CARES Act and its argument that the pandemic affected all students. The court said the Department could not replace Congress’s specific formula with one of its own choosing. It also concluded that the CARES Act provision was a formula grant, meaning Congress specified how the money was to be allocated and the Department could not add its own conditions.

The court found likely irreparable harm. For example, Michigan submitted evidence that it had planned to reserve $5,107,921 in funds for private schools under the Section 1117 formula, while the rule would require it to divert $21,604,648.63. The court also cited evidence concerning funding and operational effects in Oakland Unified School District and Wisconsin schools.

The court did not decide the plaintiffs’ other arguments about notice and comment, whether the rule was arbitrary and capricious, or the constitutional Spending Clause claim. It found that resolving the statutory and Administrative Procedure Act issues was sufficient for the preliminary injunction.

Order

Judge James Donato granted the preliminary injunction. The Department of Education, Secretary Betsy DeVos, and their officers, agents, employees, attorneys, and persons acting with them or at their direction who knew of the injunction were preliminarily barred from implementing or enforcing the April 30, 2020 guidance or the July 1, 2020 interim final rule against the plaintiffs. The injunction remains in place pending further order of the court. The plaintiffs were excused from posting a bond.