Motion for Preliminary Injunction, State of Michigan et al. v. DeVos, No. 3:20-cv-04478 (N.D. Cal.), Doc. 25-3 (July 17, 2020)

Summary

Plaintiffs' Notice of Motion and Motion for Preliminary Injunction; Memorandum of Points and Authorities in State of Michigan, State of California, et al. v. Elisabeth D. DeVos and the United States Department of Education, Case No. 3:20-cv-04478-SK, filed 07/17/20 before Judge Sallie Kim. The introduction says Plaintiffs seek provisional relief to stop the Department's attempt to divert hundreds of millions of dollars of CARES Act emergency assistance to services for private-school students. It states that Congress appropriated approximately $16 billion for elementary and secondary schools through Title I allocation formulas. Plaintiffs argue that the Department's guidance and interim final rule base allocations on all private-school students, not low-income ones, and are ultra vires.

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Case 3:20-cv-04478-SK Document 25-3 Filed 07/17/20 Page 1 of 72

XAVIER BECERRA
Attorney General of California
MICHAEL NEWMAN
Senior Assistant Attorney General
SARAH E. BELTON
Supervising Deputy Attorney General
REBEKAH A. FRETZ
JAMES F. ZAHRADKA II
GARRETT M. LINDSEY (SBN 293456)
Deputy Attorneys General
300 South Spring Street, Suite 1702
Los Angeles, CA 90013
Telephone: (213) 269-6402
E-mail: Garrett.Lindsey@do}.ca.gov
Attorneys for Plaintiff State of California

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION

STATE OF MICHIGAN, STATE OF Case No. 3:20-cv-04478-SK
CALIFORNIA, DISTRICT OF
COLUMBIA, STATE OF HAWAII, STATE | PLAINTIFFS’ NOTICE OF MOTION

OF MAINE, STATE OF MARYLAND, AND MOTION FOR PRELIMINARY
STATE OF NEW MEXICO, INJUNCTION; MEMORANDUM OF
COMMONWEALTH OF POINTS AND AUTHORITIES IN
PENNSYLVANIA, STATE OF SUPPORT THEREOF

WISCONSIN, THE BOARD OF
EDUCATION FOR THE CITY SCHOOL
DISTRICT OF THE CITY OF NEW YORK,
BOARD OF EDUCATION FOR THE CITY | Judge: Hon. Sallie Kim
OF CHICAGO, CLEVELAND Trial Date: —§ None set
MUNICIPAL SCHOOL DISTRICT Action Filed: July 7, 2020
BOARD OF EDUCATION, and SAN
FRANCISCO UNIFIED SCHOOL
DISTRICT,

Plaintiffs,

ELISABETH D. DEVOS, in her official
capacity as the United States Secretary of
Education, and UNITED STATES
DEPARTMENT OF EDUCATION,

Defendants.

Pls.’ Notice of Mot. and Mot. for Prelim. Inj. (3:20-cv-4478-SK)
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Case 3:20-cv-04478-SK Document 25-3 Filed 07/17/20 Page 2 of 72

TABLE OF CONTENTS

Page
Background 000......ceccceecceessessseceseceeeeeseecssecsaecesaeceseeeeseeesuecaecseeeeeseecsaeceaecseeeeeseecsaecaeeseeeenseecnseceeeeaees 3
I. The Pandemic’s Effect on Public Elementary and Secondary Education............... 3
I. ESSER and GEER Funds to Assist Public Schools ..........ccceceecceseceteeneeeteeeeeeeeeeeees 5
Il. The Department’s Guidance and the Rule... eeeeceseceseeneeeseeeeeeeceaecneeeaeeeneees 6
IV. The Impact of the Department’s Actions on Plaintiffs 0.0.0... eeeeceeeeceteeneeeneeeeeees 9
I. Plaintiffs Are Likely to Succeed on their Claims that the Rule and the
Guidance Are Unlawful and Unconstitutional .......0 ccc eeeeseceteeeeeeeeeeeeeeeeseeneeeaee 10
A. The Rule and the Guidance Are Ultra Vires, Violate the Separation
of Powers, and Exceed ED’s Statutory Authority.......0..ccccccceeseeeeeeeees 10
1. ED Has No Rulemaking Authority under Sections 18002,
18003, and 18005 of the CARES Act... eee ceeeeseeneeneeereeeeeeeees 10
2. ED Has No Authority to Attach a Supplement-Not-Supplant
Condition to ESSER or GEER Funds... eeeeceeeceseeeeeeeeeneeesees 11
3. ED Does Not Have Implicit Authority to Issue the Rule.............. 12
B. The Funding Conditions in the Rule and the Guidance Violate the
Spending Clause .......eccccccccccssccsseceeecessecsecseeeeseeeeeseecsaeceeeeeeeenseecseenseeeees 16
C. ED’s Actions Are Arbitrary and Capricious in Violation of the APA...... 20
D. The Rule Is Procedurally Defective Under the APA as ED Did Not
Have Good Cause to Issue the Rule as an Interim Final Rule. ................. 25
Il. Plaintiffs Will Suffer Irreparable Harm 00.0.0... ccceccceecceesceeeeceeeeeeeeeeseecsaeenteensees 27
II. The Public Interest Weighs Heavily in Favor of Provisional Relief...............0. 29
1

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Case 3:20-cv-04478-SK Document 25-3 Filed 07/17/20 Page 6 of 72

TABLE OF AUTHORITIES
(continued)

Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136, 134

Stat. 281 (attached as Appendix) .......ec ee ceccceeceeescecsseceeceeeeeeseecsaeceseeneeeeeseecnseeneeeees

Further Consolidated Appropriations Act, 2020, Pub. L. No. 116-94, 133 Stat.

OTHER AUTHORITIES

34 Code of Federal Regulations

§ 76.665 ccccccssscsssssessesssssessssssssscsesssssesessssssessssusvesssssussessisisesssssssnsssssssaessessiseseesnseveee

166 Congressional Record

E340 (daily edition March 31, 2020) (statement of Representative Jayapal)............

H1856 (daily edition March 27, 2020) (statement of Representative

CARES Act Programs; Equitable Services to Students and Teachers in Non-Public

Schools, 85 Federal Register 39,479 (July 1, 2020) .....eeeeecceceseceseeeeeeeseeesteeeteeeees

Vv

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Case 3:20-cv-04478-SK Document 25-3 Filed 07/17/20 Page 7 of 72

NOTICE OF MOTION AND MOTION FOR PRELIMINARY INJUNCTION

PLEASE TAKE NOTICE that Plaintiffs hereby move the Court under Federal Rule of Civil
Procedure 65 for entry of a preliminary injunction prohibiting Defendants from imposing or
enforcing an equitable services requirement under Section 18005 of the Coronavirus Aid, Relief,
and Economic Security Act (CARES Act or Act) in a manner not wholly and explicitly described
by Section 1117 of the Elementary and Secondary Education Act of 1965 (ESEA). Defendants
have promulgated a guidance document and interim final rule in violation of the U.S. Constitution
and the Administrative Procedure Act. Plaintiffs seek an order from the Court prohibiting
Defendants from imposing or enforcing unlawful limitations or requirements on the use of funds
allocated under Sections 18002 and 18003 of the CARES Act. This motion is based on this
Notice of Motion and Motion, the Memorandum of Points and Authorities, the accompanying
declarations and Request for Judicial Notice (RJN), as well as the papers, evidence and records on
file, and any other written or oral evidence or arguments as may be presented.

MEMORANDUM OF POINTS AND AUTHORITIES

INTRODUCTION

Plaintiffs bring this motion to seek provisional relief to stop the U.S. Department of
Education’s (ED) unlawful attempt to divert hundreds of millions of dollars of emergency
assistance, intended by Congress to enable public schools to prepare for and respond to the
COVID-19 pandemic, for services to private-school students. In the CARES Act, H.R. 748, 116th
Cong. (2020), Congress appropriated approximately $16 billion for elementary and secondary
schools, funneling the money through well-established Title I allocation formulas—directing the
funding to local educational agencies (LEAs) (i.e., school districts) with significant populations of
students from low-income families. Congress directed that a portion of this funding be reserved
by recipient LEAs to provide “equitable services” to at-risk private-school students in their
districts, consistent with Title I’s requirements. Rather than follow Congress’s clear directive, ED
essentially rewrote this equitable services provision of the CARES Act through a guidance
document and, subsequently, an interim final rule, in a manner that favors private schools and

contradicts the statute’s plain language and congressional intent.
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ED’s guidance document directed LEAs to allocate CARES Act funds based on the total
number of all private-school students, rather than the total number of low-income private-school
students as provided under the Title I equitable services requirement that Congress referenced in
the CARES Act, and then to provide equitable services to all private school students, rather than
only those at risk as also required under the Title I equitable services requirement that Congress
referenced in the CARES Act. ED’s rewrite of the allocation method and eligibility of private-
school students shifts a significantly higher percent of LEAs’ CARES Act funding to private
schools, leaving the public schools with less funding to respond to the pandemic.

After significant push back from numerous stakeholders, including state educational
agencies, ED doubled down on its erroneous interpretation of the CARES Act with the
publication of an interim final rule. The rule—which was effective immediately and did not
provide for any notice and comment—followed ED’s original guidance, pushing LEAs to divert
their CARES Act funds away from public schools to fund services for all private school students.
The Rule offered LEAs an untenable choice: follow ED’s guidance or be subjected to punitive
restrictions on the use of the funds for public schools. Both options are unsupported by the plain
language of the statute, and the so-called “choice” appears to be an attempt to force LEAs to
follow ED’s original scheme and divert more funding to private schools.

The Department’s guidance and interim final rule are ultra vires and violate separation of
powers principles and the Spending Clause because the CARES Act neither requires LEAs to
divert funding from public schools to provide equitable services for all private-school students,
nor delegates authority to Defendants to impose any such allocation requirements. To the
contrary, the Department’s guidance and interim final rule directly conflict with the plain
language of the statute, which manifests Congress’s intent to: (a) allocate funding for equitable
services for private-school students based on the number of low-income private-school students
within the LEA, and (b) provide LEAs flexibility to use the CARES Act funding for their public
schools. The Department’s guidance and interim final rule violate the Administrative Procedure
Act (APA) because they are in excess of statutory authority, are arbitrary and capricious, and

were issued without complying with notice and comment requirements.
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ED’s guidance and rule will irreparably harm Plaintiffs and their public-school students
by diverting funding away from the public schools at a time when such emergency relief is
urgently needed and when state and local government budgets are stretched thin by the effects of
the pandemic. Congress appropriated these funds for the express purpose of quickly providing
emergency support for public-educational agencies’ response to the fallout from the COVID-19
pandemic. Plaintiffs require such funding not only to assist their public schools’ transition to
remote learning, obtain personal protective equipment (PPE) for students and staff, and deep-
clean their schools, among other emergency needs, but also to provide supports for their
vulnerable populations beyond the provision of core educational services. ED seeks to force
LEAs to divert hundreds of millions of dollars that Congress directed to these public schools and
targeted at vulnerable students, for services to all private-school students—regardless of need—
despite private schools having access to other funding sources in the CARES Act, which are
unavailable to traditional public schools. Immediate relief is required as Plaintiff States and LEAs
must have a clear understanding of how to allocate and use the emergency CARES Act funding
as they prepare for the start of the 2020-2021 school year.

Plaintiffs respectfully request that the Court grant their motion and enjoin ED’s erroneous

and unauthorized guidance and rule.

BACKGROUND

I. THE PANDEMIC’S EFFECT ON PUBLIC ELEMENTARY AND SECONDARY EDUCATION

The effect of COVID-19 on elementary and secondary education has been swift,
multifaceted, and unsparing. Schools across the county were forced to suspend in-person
instruction to slow the spread of the virus and protect the health of students, staff, and their
families. See Guerrant Decl. § 13; Constancio Decl. § 11; Goldson Decl. ¥ 11; Gordon Decl. ¥ 13;
Hoffmann Decl. ¥ 10; Jackson Decl. § 12; Jones Decl. § 9; Kaneshiro-Erdmann Decl. 4 10, 12;
Salmon Decl. § 8; Stem Decl. § 10; Stewart Decl. § 14; Wallace Decl. § 10. Many schools then
transitioned quickly to remote learning. See Guerrant Decl. {| 13-14; Constancio Decl. 9§ 11-13;
Baca Decl. § 10; Goldson Decl. § 11; Gordon Decl. § 13; Hoffmann Decl. 4 9; Jackson Decl. §

12; Jones Decl. §] 10; Makin Decl. 11-13; Salmon Decl. 8; Stewart Decl. ¥ 14; Wallace Decl.
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4 11. This transition required significant expenditures on computer software, internet-connected
devices for students, and other technologies to ensure learning could continue remotely. See
Constancio Decl. §] 13; Goldson Decl. §] 11; Gordon Decl. § 13; Hoffmann Decl. 9] 10, 12;
Jackson Decl. J 12-13, 17; Jones Decl. § 14; Kaneshiro-Erdmann Decl. ff] 10-11; Makin Decl.
15; Oates Decl. §] 24; Salmon Decl. §] 9; Stewart Decl. § 26; Wallace Decl. § 11.

In addition to the ongoing costs associated with transitioning to remote learning, to prepare
for the 2020-2021 school year, LEAs and schools have sought to procure PPE, deep-clean
schools, and take other proactive measures to allow for safer in-person instruction. See Guerrant
Decl. §] 28; Gordon Decl. §] 24; Jackson Decl. ¥ 15; Jones Decl. 4] 14, 29; Kaneshiro-Erdmann
Decl. §/ 25; Makin Decl. J 16-17, 29; Oates Decl. 24; Salmon Decl. ] 22; Stem Decl. 14;
Stewart Decl. {| 26. Most States and LEAs are still determining how and if in-person instruction
could restart for the 2020-2021 school year and what the additional costs would be if remote
learning continued. See Guerrant Decl. § 13; Constancio Decl. {| 13-14; Goldson § 11; Jackson
Decl. ¥ 18; Jones Decl. §] 11; Kaneshiro-Erdmann Decl. § 10; Makin Decl. § 13; Oates Decl. ] 24;
Stem Decl. § 13; Stewart Decl. ¥ 15.

While ED emphasizes that “[t]he pandemic has harmed all our Nation’s students by
disrupting their education,” the health and economic impacts of the virus have been concentrated
among the Nation’s low-income families, especially families of color. RJN Ex. G; see Jones Decl.
{| 12. These are, in many cases, the same students who will need more assistance when school
returns, including remedial instruction, mental health services, free and reduced-price meals, and
other supports. States and LEAs must ensure that meals are served to qualifying students and
families; special education and related services are provided to students with disabilities; English
learners and migrant students have access to appropriate instruction and supports; and public
education is free and accessible to all students, including economically disadvantaged students.
Public schools are financially responsible for providing these supports; private schools are not.

As they take on the financial challenges of transitioning to remote learning and preparing
for the 2020-2021 school year, State Education Agencies’ (SEAs) and LEAs’ budgets have been

substantially impacted by the economic effects of the pandemic on state and local tax revenues.
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See Guerrant Decl. 9 12, 15, 26; Constancio Decl. § 16; Goldson § 10, 13; Gordon Decl. ¥ 12;
Hoffmann Decl. ¥ 13; Jackson Decl. § 26; Jones Decl. { 14; Kaneshiro-Erdmann Decl. 4 15, 25;
Oates Decl. { 10; Salmon Decl. 11; Stem Decl. §] 27; Wallace Decl. § 12. In short, the States and
their public schools are facing a perfect storm caused by COVID-19 and the economic impact of
efforts to combat it.

II. ESSER AND GEER FUNDS TO ASSIST PUBLIC SCHOOLS

To address the described needs in public schools, on March 27, Congress enacted the
CARES Act, under which it appropriated $30.75 billion to ED “to prevent, prepare for, and
respond to coronavirus, domestically or internationally.” Coronavirus Aid, Relief, and Economic
Security Act (CARES Act or Act), P.L. No. 116-136, 134 Stat. 281, 564. Within that amount,
relevant here, Congress created two programs, the Governor’s Emergency Education Relief Fund
(GEER) and the Elementary and Secondary School Emergency Relief Fund (ESSER), and
appropriated approximately $16 billion for public elementary and secondary education for these
programs. Id. §§ 18001(b)(1), (3), 18002-18003.

In the CARES Act, Congress directed ED to provide emergency grants from the GEER
fund to state governors; in turn, governors are to distribute the funds to LEAs and other
educational entities that “have been most significantly impacted by coronavirus.” Id. § 18002(a),
(c). The funds may then be used to support the LEAs “to continue to provide educational services
to their students and to support the on-going functionality of the [LEA].” Id. § 18002(c)(1).

Congress instructed ED to distribute the ESSER funds to SEAs “in the same proportion as
each State received under [Title I, Part A] in the most recent fiscal year.” Id. § 18003(b).
Allocation of Title I-A funds to states is based primarily on the numbers of children from low-
income families and foster children in each state’s LEAs. See 20 U.S.C. §§ 6332-6339. The SEAs
must then sub-grant 90 percent of the ESSER funds to LEAs in the state “in proportion to the
amount of funds such [LEAs] and charter schools that are local educational agencies received
under [Title I-A] in the most recent fiscal year.” CARES Act § 18003(c). Thus, only LEAs that
participate in the Title I-A program—because they have a high proportion of economically-

disadvantaged children—are eligible to receive ESSER local subgrants. See RJN Ex. A at 4.
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Through the CARES Act, Congress provided LEAs that receive ESSER funds wide latitude
to use the funds, listing twelve authorized uses in the Act, including for broad purposes such as
“activities that are necessary to maintain the operation of and continuity of services in [LEAs] and
continuing to employ existing staff of the [LEA],” 1.e., to support any operation, service, or staff
existing prior to the pandemic. Id. § 18003(d)(12); see also id. § 18003(d)(1)-(12).

Congress required LEAs that receive GEER and/or ESSER funds to reserve a portion of
these funds to provide “equitable services” to private-school students “in the same manner as
provided under Section 1117 of the ESEA of 1965.” Id. § 18005(a) (emphasis added). Section
1117 of the ESEA, 20 U.S.C.§ 6320, which is part of Title I-A, sets both the method of
apportioning funds for equitable services and the eligibility for such services. For allocation, the
LEA calculates the “proportional share” of the funds for equitable services “based on the number
of children from low-income families who attend private schools” and reside in the “participating
school attendance areas” (i.e., the geographic area in which children are normally served by a
Title I-A school). 20 U.S.C. § 6320(a)(4)(A); see also 20 U.S.C. § 6313(a)(2) (defining “school
attendance area”). Once the LEA has calculated the proportional share for equitable services, it
uses those funds to provide services to at-risk private-school students after consultation with the
private schools. 20 U.S.C. § 6320(a) (incorporating definition of “eligible children” from 20
U.S.C. § 6315(c)). ED confirmed the Section 1117 proportional share calculation and the
eligibility for equitable services under Section 1117 in a guidance document issued in October
2019. See RJN Ex. B at 30.

Til. THE DEPARTMENT’S GUIDANCE AND THE RULE

Despite ED reiterating the well-established proportional share calculation and eligibility
requirements for equitable services under Section 1117 just months ago, ED decided to modify
these requirements for CARES Act funds, contradicting Congress’s clear instruction in the
CARES Act that equitable services be provided “in the same manner as provided under Section
1117.” CARES Act § 18005(a) (emphasis added).

On April 30, 2020, the Department issued a guidance document, titled Providing

Equitable Services to Students and Teachers in Non-Public Schools Under the CARES Act
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Programs (Guidance), interpreting Section 18005 of the CARES Act. RJN Ex. C. In the
Guidance, ED instructs LEAs to calculate the proportional share of their CARES Funds for
equitable services by the comparative enrollments of all students in public and private schools in
the district, rather than the comparative enrollments of low-income students, as required by
Section 1117(a)(4)(A)(@). Compare RJN Ex. C at 6-7 with 20 U.S.C. § 6320(a)(4)(A)(). In
essence, ED rejects the calculation of the proportionate share under Section 1117 that Congress
specified in the CARES Act and instead adopts the calculation under a different section of the
ESEA, Section 8501 (found at 20 U.S.C. § 7881). By changing the calculation method to
determine the proportional share of CARES Act funding for equitable services, the amount of
CARES Act funds allocated for private schools is drastically inflated because low-income
students generally comprise a relatively smaller share of their overall enrollment than at public
schools. See, e.g., Hoffmann Decl. §[ 33. In addition to changing the proportional share
calculation, ED instructed LEAs to provide equitable services to all private-school students,
rather than only the at-risk private-school students in the participating school attendance area.
RJN Ex. C at 5. This aspect of the Guidance ignores Section 1117’s eligibility requirements
providing that only at-risk private-school students are entitled to services. 20 U.S.C. § 6320(a).

The Guidance generated significant push back from Congressional leaders and multiple
educational associations. See, e.g., RJN Ex. D. Secretary DeVos responded to a letter from an
organization representing chief state school officers nationwide with a letter of her own in which
she accused those who opposed the Guidance of seeking to “improperly discriminate against an
entire class of children,” and implied that LEAs have a “reflex to share as little as possible with
students and teachers outside of their control” and a lack of “concern[]” for private school
students “concentrated in low-income and middle-class communities.” RJN Ex. E.

ED published the interim final rule (the Rule) in the Federal Register on July 1, 2020. 85
Fed. Reg. 39,479. The Rule was published without notice and comment and was effective
immediately.

While the Rule reflects ED’s general position in the Guidance, ED added language under

which LEAs are ostensibly presented with two choices regarding how to calculate the
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proportional share of CARES Act funds for equitable services—neither of which comports with
the CARES Act requirements and each of which relies on an interpretation of the reference to
Section 1117 in the underlying statutory text that is irreconcilable with the other. Under Option
#1 (Title I-Only Schools Option), the LEA could use the Section 1117 proportional share
calculation; as directed by the plain language of Section 18005, however, they would then be
subject to two “poison pill” requirements, severely restricting the LEA’s use of the public-school
share of the funds. 34 C.F.R. § 76.665(c)(1)(1). Under Option #2 (Private School Enrollment
Option), the LEA would calculate the proportional share of CARES Act funds for equitable
services using the Guidance’s calculation, which apportions the funds between public and private
schools based on the total number of students in each group, contrary to Section 1117. 34 C.F.R.
§ 76.665(c)(1)(ii).

For LEAs that calculate the proportional share of CARES Act funds for equitable services
using Option #1 (Title I-Only Schools Option), the LEA would incur two poison pills: (1) the
public-school share of the CARES Act funds must be used exclusively at Title I schools, thereby
excluding districts’ non-Title I schools; and (2) the public-school share of the CARES Act funds
could only be used for costs that were not previously covered by state and local funds to avoid a
violation of Title I’s “supplement not supplant” requirements for federal funding under Section
1118 of the ESEA. 34 C.F.R. § 76.665(c)(1), (c)(3); 20 U.S.C. § 6321(b)(1). Under Option #1,
the LEA’s hands are tied; it cannot use the funds as explicitly stated in the CARES Act to assist
all of its schools in responding to the pandemic nor address the severe diminution of state and
local funding.

Regardless of how the LEA calculates the proportional share of CARES Act funds, the
Rule still requires eligibility for all private-school students to receive equitable services, ignoring
the Section 1117 eligibility requirements that only at-risk private-school students are eligible for
services. 34 C.F.R. § 76.665(d)(2). This results in less equity even for private schools and their at-
risk students, as private schools that serve large numbers of at-risk students will receive a
diminished allocation of CARES Act funds and the services for at-risk students could be diluted.

See, e.g., Hoffmann Decl. {fj 32, 43.
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The proportional share calculation methods, the poison pill requirements, and the
eligibility requirements in the Rule are all nowhere to be found in the CARES Act. ED, through
the Rule, has rewritten Section 18005 to drive emergency moneys away from public schools and
at-risk students when they need the money most.

IV. THE IMPACT OF THE DEPARTMENT’S ACTIONS ON PLAINTIFFS

Plaintiffs estimate that their LEAs will be forced to divert over $150 million in CARES Act
funds from public schools to provide equitable services to all private-school students if they
follow Option #2 (Private School Enrollment Option). See Guerrant Decl. J 23, 37; Constancio
Decl. | 27, 35; Goldson Decl. 44 18, 21; Gordon Decl. 4 19, 31; Hoffmann Decl. 4 22, 42;
Jackson Decl. {| 22, 26, 36; Jones Decl. 4] 25, 27, 39; Kaneshiro-Erdmann Decl. § 22; Makin
Decl. [ 26, 41; Oates Decl. §] 20; Salmon Decl. §] 18; Stem Decl. {[[ 25, 35; Stewart Decl. § 24;
Wallace Decl. Jf] 16, 21. And, as described further below, many of the LEAs in the Plaintiff
States and the Plaintiff LEAs will be forced to follow Option #2, as Option #1 would impose too
strict a requirement on their usage of the funds to be practically effective. See Hoffmann Decl.
{| 29; Oates Decl. J] 15, 19. Put simply, if the Department’s Rule and Guidance are allowed to
stand, hundreds of millions of dollars will be diverted away from public schools to private
schools, seriously impeding public schools’ ability to respond to and prepare for education during
the pandemic. Additional impacts to the Plaintiffs are described below. See infra Argument, § II.

LEGAL STANDARD

A preliminary injunction is appropriate when the plaintiffs establish that they are likely to
succeed on the merits, they are likely to suffer irreparable harm in the absence of preliminary
relief, the balance of equities tips in their favor, and an injunction is in the public interest. Winter
v. NRDC, 555 U.S. 7, 20 (2008). A preliminary injunction is “often dependent as much on the
equities of [the] case as the substance of the legal issues it presents.” Trump v. Int’] Refugee
Assistance Project, 137 S. Ct. 2080, 2087 (2017). “[S]erious questions going to the merits and a
balance of hardships that tips sharply towards the plaintiff can support issuance of a preliminary
injunction,” so long as the other preliminary injunction factors are met. All. for the Wild Rockies

v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011) (internal quotations omitted).
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ARGUMENT

I. PLAINTIFFS ARE LIKELY TO SUCCEED ON THEIR CLAIMS THAT THE RULE AND THE

GUIDANCE ARE UNLAWFUL AND UNCONSTITUTIONAL

A. The Rule and the Guidance Are Ultra Vires, Violate the Separation of

Powers, and Exceed ED’s Statutory Authority

The U.S. Constitution “exclusively grants the power of the purse to Congress, not the
President.” City & Cty. of San Francisco v. Trump, 897 F.3d 1225, 1231 (9th Cir. 2018).
“‘[B]ecause Congress has the exclusive power to spend,” if Congress “has not delegated authority
to the Executive to [impose funding] condition[s],” the executive branch lacks the authority to
impose the conditions. Id. at 1233. Also, when “Congress intends to impose a condition on the
grant of federal moneys, it must do so unambiguously.” Pennhurst State Sch. & Hosp. v.
Halderman, 451 U.S. 1, 17 (1981). The executive branch, thus, cannot coopt Congress’s spending
power by imposing a condition that Congress did not unambiguously impose or delegate authority
to impose. Cf. La. Pub. Serv. Comm’n v. FCC, 476 U.S. 355, 374 (1986) (“[A]n agency literally
has no power to act .. . unless and until Congress confers power upon it.”). Furthermore, the
executive branch “may not decline to follow a statutory mandate . . . simply because of policy

objections.” In re Aiken Cty., 725 F.3d 255, 259 (D.C. Cir. 2013). As discussed below, the Rule

and the Guidance cannot survive under these foundational constitutional principles.

1. ED Has No Rulemaking Authority under Sections 18002, 18003, and
18005 of the CARES Act

The absence of rulemaking authority in Sections 18002, 18003, and 18005 is in contrast to
other portions of the Act where Congress clearly delegated rulemaking authority to federal
agencies. For example, Congress: granted “emergency rulemaking authority” to the Small
Business Administration to carry out the Paycheck Protection Program, CARES Act § 1114, H.R.
748-32; directed the Bureau of Prisons to engage in rulemaking to provide for video visitations
for inmates (and exempted those rules from notice and comment requirements), CARES Act
§ 12003(c), H.R. 748-236; and delegated authority to the ED Secretary to “waive the application
of... negotiated rulemaking” under the Higher Education Act of 1965 to suspend collection of

student loans, CARES Act § 3513(f), H.R. 748-124.
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“[W |here Congress includes particular language in one section of a statute but omits it in
another section of the same Act, it is generally presumed that Congress acts intentionally and
purposely in the disparate inclusion or exclusion.” Russello v. United States, 464 U.S. 16, 23
(1983); see also Azar v. Allina Health Servs., 139 S. Ct. 1804, 1813 (2019) (applying this
principle to grants of rulemaking authority). So too here. Congress expressly delegated
rulemaking authority in other sections of the Act, but did not include it with respect to the GEER
and ESSER funds. Accordingly, this Court should find that Congress did not delegate rulemaking
authority to ED to interpret Section 18005 of the Act, and that ED therefore lacks authority to

promulgate the Rule.
2. ED Has No Authority to Attach a Supplement-Not-Supplant

Condition to ESSER or GEER Funds

Elsewhere in the Act, Congress chose to expressly include supplement-not-supplant
requirements, similar to the supplement-not-supplant condition that ED attaches to ESSER and
GEER funds through the Guidance and Rule. The CARES Act requires that federal funds from
the “Payments to States for the Child Care Development Block Grant” “shall be used to
supplement, not supplant State . . . general revenue funds for child care assistance for low-income
families,” and that funds allocated for “carrying activities under the Runaway and Homeless
Youth Act... shall be used to supplement, not supplant, existing funds.” H.R. 748-277. Because
Congress expressly attached supplement-not-supplant conditions on other allocations in the
CARES Acct, it can be presumed Congress intended to exclude ESSER and GEER funds from
such conditions, and ED exceeded its statutory authority in attaching such conditions in the Rule,
34 C.F.R. § 76.665(c)(3). See also United States v. Youssef, 547 F.3d 1090, 1094 (9th Cir. 2008)
(omission of a requirement in one statutory provision combined with the requirement’s inclusion
in a similar provision is “evidence of Congress’s expressed intent not to impose” the
requirement). Additionally, Congress expressly authorized uses of GEER and ESSER funds that
are incompatible with a supplement-not-supplant requirement, CARES Act § 18002(c)(1) (funds

“support the ability of such local educational agencies to continue to provide educational services

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to their students and to support the on-going functionality of the local educational agency”; id. §
18003(d)(12) (funds can be used “to maintain the operation of and continuity of services in local
educational agencies and continuing to employ existing staff of the local educational agency’’),
further underscoring congressional intent not to create such a requirement that ED purports to
impose.

3. ED Does Not Have Implicit Authority to Issue the Rule

ED claims that it has implicit interpretive authority to impose restrictions and
requirements on the formula grants funds received by LEAs in the CARES Act. 85 Fed. Reg. at
39,481, 39,488. Courts have been skeptical of claims of implicit authority, as well as claims of
broad authority to impose conditions on formula grants and interpret general appropriation
statutes. The U.S. Supreme Court held the Attorney General lacked authority to issue a rule
interpreting the meaning of a law, even when Congress had delegated the authority to ensure
compliance with the law to the Attorney General. Gonzales v. Oregon, 546 U.S. 243, 263-64
(2006). Similarly, the Ninth Circuit held that an executive agency’s broad interpretation of its
authority to impose grant conditions without specific authority “would be antithetical to the
concept of a formula grant[.]” City of Los Angeles v. Barr, 941 F.3d 931, 942 (9th Cir. 2019); see
also City of Los Angeles v. McLaughlin, 865 F.2d 1084, 1088 (9th Cir. 1989) (“formula grants,”
unlike discretionary ones, “are not awarded at the discretion of a state or federal agency, but are
awarded pursuant to a statutory formula”). Thus, Plaintiffs are entitled to their share of the GEER
and ESSER funds, and ED is prohibited from redirecting these funds or placing additional
conditions on the grants.

In the CARES Act, Congress chose to adopt proportional allocation under Title I-A of the
ESEA, and the method and procedure of Section 1117 of the ESEA for equitable services, but
chose not to incorporate or involve the ESEA itself. See CARES Act § 18003(b)-(c). Instead of
simply making an additional appropriation under the existing Title I-A program of the ESEA with
conditions specific to address the COVID-19 pandemic, Congress instead directed the funds in
such a way that they are not a part of the Title I-A program and thus not subject to Title I-A

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restrictions. Therefore, because the CARES Act funds are not Title I-A funds, any authority ED
maintains to administer the Title I-A program does not provide authority to impose rules on
CARES Act funds.

Congress’ actions in this area contrast with how Congress made a number of other
CARES Act appropriations and reflect a deliberate policy choice. For example, to carry out
section 4631 of the ESEA, Congress simply made an additional appropriation for the established
“Safe Schools and Citizen Education” fund. Compare 133 Stat. 2534, 2589 (appropriating funds
for the “Safe Schools and Citizenship Education” program to carry out activities authorized by
Title IV-F of the ESEA) with CARES Act, H.R. 748-289 (appropriating an additional amount for
“Safe Schools and Citizenship Education” as part of the CARES Act). ED lacks authority to
override Congress’s decision that LEAs provide equitable services “in the same manner” as an
ESEA program, but not as part of an ESEA program, and similarly cannot override Congress’s
decision that ESSER and GEER funds be distributed outside an established ESEA program.

Nor did the language of the Act leave any interpretative gap for ED to fill. ED points to
the supposed facial ambiguity in the language “in the same manner as provided under Section
1117 of the ESEA.” 85 Fed. Reg. 39,481.' However, “in the same manner” has a well-understood
meaning in the statutory context, and that meaning applies to the procedure or methods used to
effect the statutorily prescribed act. See, e.g., Wilder’s S.S. Co. v. Low, 112 F. 161, 164 (9th Cir.
1901) (“[T]he phrase ‘in the same manner’ has a well-understood meaning in legislation, and that
meaning is not one of restriction or limitation, but of procedure.”). The Supreme Court found a
legislative direction to collect a penalty “in the same manner” as under a set of statutes was “best
read” as a directive to an agency to use “the same ‘methodology and procedures’” as within the

referenced statutes. Nat’] Fed’n of Indep. Bus. v. Sebelius (NFIB), 132 S. Ct. 2566, 2583-84

' ED promulgated a grant requirement that education systems in the outlying territories
provide equitable services “in the same manner as provided under section 8501 of the ESEA” in
order to receive CARES Act education funding grants. Section 8501 is referenced nowhere in the
Act. Thus, ED clearly does not regard the phrase “in the same manner as provided under” as
ambiguous, since it used this phrase itself. RJN Ex. F at 4. ED has not promulgated any guidance
or rules to clarify this grant requirement. ED’s position that this language is ambiguous in Section
18005(a) is fatally inconsistent with ED’s own actions.

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(2012); see also United States v. Timilty, 148 F.3d 1, 3, 5 (1st Cir. 1998) (federal law allowing
restitution order to be enforced “in the same manner as a judgment in a civil action,” meant the
judgment was enforced by same procedural mechanism as a judgment in civil action). Here,
Congress has used well-understood language to directly instruct LEAs receiving ESSER and
GEER funds to adopt the established methodology and procedures used to administer equitable
services as they would for services attached to Title I-A allocations, while unequivocally
declining to impose programmatic requirements of Title I-A, such as use of funds and
supplement-not-supplant restrictions. There is no ambiguity.”

The final clause of Section 18005(a) instructs LEAs to determine the provision of
equitable services “in consultation with representatives of [private] schools.” ED argues that
Congress did not intend to completely incorporate Section 1117 because Section 1117 requires
consultation with representatives of private schools, thus rendering the final clause of Section
18005(a) “superfluous.” 85 Fed. Reg. at 39,481. However, because Section 18005(a) only applies
to LEAs, the language to “determine[] in consultation with representatives of non-public schools”
is best read as excluding other parties from the consultation process. In particular, this reasonably
excludes SEAs from consultation procedure, as Section 18005(a)’s requirement to provide
equitable services only applies to LEAs but SEAs may be required to provide equitable services
under Section 1117(b)(6)(C) of the ESEA. Section 18005(b) requires that the control of funds and
property provided by equitable services be retained by a public agency, similar to the requirement
of Section 1117(d) of the ESEA. ED again claims that a reading which incorporates wholesale
Section 1117 renders Section 18005(b) surplusage. See 85 Fed. Reg. at 39,481. The well-

understood meaning of “in the same manner” incorporates methodology and procedure, so this

* Leaving aside the threshold ambiguity question, ED’s proposed resolution to the
purported ambiguity of the phrase “in the same manner” is also flawed because it creates multiple
“manners” from whole cloth, an interpretation at odds with Congress’ intent. ED provides no
reasoned analysis of how Congress’ instruction that LEAs are to provide equitable services “in
the same manner” as under Section 1117 can be read to empower ED to create two entirely
different methods of doing so, still less how ED is justified in putting forth two methods that
diverge so dramatically (a divergence caused in large part by the fact that they derive from two
distinct provisions of the ESEA). As a basic matter of statutory construction, it strains credulity
for ED to interpret the singular term “manner” to mean two entirely distinct and divergent
“manners,” further underscoring the arbitrary and capricious nature of its action.

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reasserted non-procedural restraint is not surplusage. In any event, ED does not provide a
reasoned explanation as to how its reading does not render the final clause of Section 18005(a)
and all of Section 18005(b) surplusage.

Instead of adopting the well-understood meaning of “in the same manner’”—and without
providing a reasoned or supportable alternative meaning for this phrase—ED has decided that
Congress did not intend Sections 1117(a)(1), (b)(1)(E), (J)(Gi), and (c) to be applied to CARES
Act funds because “the CARES Act is a separate appropriation allowing separate permissible uses
of taxpayer funds” than a Title I-A appropriation. 85 Fed. Reg. 39,481. However, these
provisions—which describe methods or procedures to apportion funding for equitable services to
private schools based on the relative population of low-income children, or to consider the
proportion of low-income children when apportioning funding for equitable services—are
squarely within the accepted definition of “manner.” As a section of Title I, Part A of the ESEA,
Section 1117 only applies to a provision of equitable services proportioned on low-income
children; applying convoluted logic to somehow apply Section 1117 in a manner which ignores
these provisions aimed at ensuring that fundamental congressional purpose is carried out is
nonsensical. Without providing reasoning, ED argues that because Title I-A fund’s permissible
uses differ from those of ESSER or GEER funds, Section 1117’s funding and eligibility criteria
are “inapposite” of the CARES Act. However, Congress was aware of these broader uses when it
explicitly instructed the LEAs to provide equitable services in the same manner as provided by
Section 1117. CARES Act § 18003(d)(1)-(12) (allowing the use of ESSER funds for any activity
authorized by the ESEA and eleven other categories of activities).

Rather than follow the Congressional directive that LEAs provide equitable services in the
same manner as under Section 1117 of the ESEA, ED is attempting to substitute the agency’s
choice; namely, ED effectively requires LEAs to follow section 8501 from the ESEA. Section
8501 of the ESEA is the general rule for equitable services under the ESEA, and Section 1117 is
an exception only applicable to Title I-A. See 20 U.S.C. § 7881(a)(1), (b)(1) (stating that Section
8501 governs “[e]xcept as otherwise provided in this act” and is expressly applicable to Titles I-

C, I-A, III-A, IV-A, and IV). The key difference in the operation of the two statutes is that while
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Section 1117(a)(1) calculates the expenditures for equitable services based on the proportion of
private-school students from low-income families residing in the LEA’s public school attendance
area, Section 8501 calculates expenditures for equitable services based on the proportion of all
eligible children in the LEA’s area. RJN Ex. K at 34-35.

Congress decided that equitable services expenditures under ESSER and GEER funds
should be proportional and provided to typical Title I-A eligible private school students, and DOE
decided this was “inapposite.” An agency’s disagreement with Congress’s policy cannot be
permitted to serve as a source of ambiguity. ED should not be permitted to rely on an invented

ambiguity to override the will of Congress as reflected in the text of the Act.
B. The Funding Conditions in the Rule and the Guidance Violate the

Spending Clause

Under the Spending Clause of the U.S. Constitution, funding conditions may only be
imposed if they are “unambiguous[]” and related “to the federal interest in particular . . .
programs.” South Dakota v. Dole, 483 U.S. 203, 207 (1987) (internal quotations omitted). The
funding conditions in the Rule violate both of these criteria.

The Rule violates the Spending Clause’s clear and settled requirements in three respects.
First, the Rule’s funding conditions were not “unambiguously” imposed by Congress. Pennhurst,
451 US. at 17 (“[I]f Congress intends to impose a condition on the grant of federal moneys, it
must do so unambiguously.”); see also Kollaritsch v. Mich. State Univ. Bd. of Trs., 944 F.3d 613,
629 (6th Cir. 2019) (“Congress ha[s] to identify any condition on its funding ‘unambiguously.’”’).
The CARES Act “in no way suggests that the grant of . . . funds is ‘conditioned’” on the
requirement that LEAs calculate and set aside their GEER and ESSER Funds for equitable
services to all private-school students and teachers, provide equitable services to all private-
school students, limit LEAs’ uses of funds, or limit their distribution of funds to Title I schools
only. See Pennhurst, 451 U.S. at 23. Congress, therefore, did not in “clear terms” authorize the
Rule’s proportional share and eligibility requirements as required to satisfy the Spending Clause.
See id. at 17, 23 (Congress must “speak with a clear voice” to impose conditions under the
Spending Clause). To the contrary, Congress explicitly and clearly directed LEAs to follow

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Section 1117 of the ESEA when apportioning CARES Act funds for equitable services and
determining which private-school students were eligible for such services, and specified twelve
broad purposes for which ESSER funds can be used by both Title I and non-Title I schools.
CARES Act § 18003.

Second, the inconsistencies between the CARES Act and the Rule, as well as between the
2019 guidance, RJN Ex. B., and the Guidance (see infra at 6-7.), did not “enable the [Plaintiffs] to
exercise their choice knowingly, cognizant of the consequences of their participation” in CARES
Act funding. Pennhurst, 451 U.S. at 17. While the plain language of the CARES Act requires that
funds be apportioned in the same manner as Section 1117 of the ESEA, the Rule and Guidance
impose proportional share and eligibility conditions that are contrary to and irreconcilable with
the language of the CARES Act. These inconsistencies have created considerable confusion
among SEAs and LEAs in the Plaintiff States and unforeseen consequences. Gordon Decl. { 28;
Hoffmann Decl. 49 35-37, Jackson Decl. § 25; 40-41; Jones Decl. §§ 28, 33, 36; Salmon Decl. §
25; Stewart Decl. § 35. ED’s interpretation of Section 18005 of the CARES Act has created
unanticipated administrative and financial burdens on SEAs and LEAs, has delayed the
distribution of funds to students and teachers, and placed SEAs and LEAs in potential legal
jeopardy. Guerrant Decl. §] 29-34; Constancio Decl. {| 29-30; Baca Decl. § 21; Gordon Decl. {J
26-27; Hoffmann Decl. ¥§ 30, 35-36, 40; Jackson Decl. ¥§| 29-33; Jones Decl. 30-36;
Kaneshiro-Erdmann Decl. {{] 27, Makin Decl. {| 30-34, 36, 38, 43; Oates Decl. §] 23; 31; Salmon
Decl. §[ 23-25; Stem Decl. §] 28-30; Stewart Decl. 9] 27-33, 35.

Third, the Rule’s funding conditions violate the Spending Clause’s prohibition on “post
acceptance” conditions. Pennhurst, 451 U.S. at 25 (1981). “[L]egislation enacted pursuant to the
spending power is much in the nature of a contract.” Id. at 17. Like with contracts, States “cannot
knowingly accept conditions of which they are ‘unaware’ or which they are ‘unable to
ascertain.’” Arlington Cent. Sch. Dist. Bd. of Educ. v. Murphy, 548 U.S. 291, 296 (2006) (quoting
Pennhurst, 451 U.S. at 17). As such, the federal government cannot “surpris[e]” states with

funding conditions after acceptance of congressionally appropriated funds. Pennhurst, 451 U.S. at

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25; see also NFIB, 567 U.S. at 584. That is exactly what ED has done here. Plaintiff States did
not know of ED’s interpretation of Section 18005 at the time they applied for grants from the
GEER and ESSER funds. Guerrant Decl. § 18; Constancio Decl. 4 19; Baca Decl. § 13; Gordon
Decl. § 16; Jones Decl. § 18; Jackson Decl. § 20; Kaneshiro-Erdmann Decl. § 18; Makin Decl. 4
20; Salmon Decl. §] 14; Stewart Decl. § 19. To receive CARES Act funds, the Plaintiff States’
SEAs and some LEAs were required to certify, and did certify, that they would comply with the
equitable service provision of the CARES Act and “any other applicable law or regulation,” and
ensure that LEAs receiving ESSER funds “will provide equitable services to students and
teachers in non-public schools located within the LEA in the same manner as provided under
section 1117 of the ESEA.” RJN Ex. H. Guerrant Decl. {| 16-17; Constancio Decl. 4 17-18;
Baca Decl. {| 11-12; Makin Decl. {J 18-19; Goldson Decl. 4 14-15; Gordon Decl. 4 14-15;
Jones Decl. 4§ 16-17; Kaneshiro-Erdmann Decl. 16-17; Salmon Decl. 4 12-13; Stem Decl. 4
16-17; Stewart Decl. §] 17-18. The Rule’s post-application funding conditions effectively force
the Plaintiff States to violate Section 18005 of the CARES Act, placing them at risk of breaching
the certification. The States also relied on express assurances from ED that an LEA could use
CARES Act funds for any schools in the district or target funds based on poverty, school needs,
and other targeting measures without regard to Title I eligibility or funding, and without the funds
being subject to a supplanting prohibition. RJN Ex. A at 5; Jones Decl. § 28; see Constancio Decl.
4] 34. The States “had no way to know at the time [they] accepted such funds” that ED would later
impose conditions on the use of those funds that were inconsistent with the CARES Act. See New
York v. HHS, 414 F. Supp. 3d 475, 568 (S.D.N.Y. 2019) appeal docketed, No. 20-32 (2nd Cir.
Jan. 3, 2020).

Separately, ED’s interpretation of Section 18005 of the CARES Act in the Rule and
Guidance violates the Spending Clause’s relatedness requirement because the Rule’s proportional
share and eligibility conditions do not have any “nexus” to the key purpose of Section 18005 of
the CARES Act—filling the gap created by reduced state and local funding due to the COVID-19
pandemic. See Cty. of Santa Clara v. Trump, 275 F. Supp. 3d 1196, 1214 (N.D. Cal. 2017), aff'd

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in part, vacated in part for unrelated reasons, remanded sub. nom. San Francisco, 897 F.3d 1225
(9th Cir. 2018). Instead, the Rule’s funding mandates are in direct contradiction to Congress’s
plainly expressed intent to require SEAs and LEAs to follow Section 1117, and the Title I-A
allocation formula generally, when apportioning CARES Act funds for equitable services, and
undermine the purpose of the CARES Act. Compare 20 U.S.C. § 6320(a)(4)(1) (determining
proportional share of expenditures for equitable services based on enrollment of children from
low-income families) with 34 C.F.R. § 76.665(c)(ii) (determining proportional share of funds for
equitable services based on enrollment of all children.). Under either proportional share option in
the Rule, public schools stand to lose out on substantial emergency funding, which is not only
unrelated to, but directly contrary to the central purpose of the Education Stabilization Fund. If
LEAs follow the Rule’s Title I-schools only option when apportioning CARES act funds, non-
Title I schools across the States will receive no emergency funding to support their schools, and
LEAs will lose the ability to use the funds to maintain operations that are funded on an LEA-wide
basis. Guerrant Decl. § 36; Constancio Decl. 4 32-33; Baca Decl. § 24; Gordon Decl. { 30;
Hoffmann Decl. 4 30-31, 39; Jackson Decl. 4] 27, 35; Jones Decl. § 38; Kaneshiro-Erdmann
Decl. § 28; Makin Decl. §] 40; Oates Decl. §] 16-17; Salmon Decl. ff] 20-21; Stem Decl. §[ 32;
Stewart Decl. §] 37; Wallace Decl. 20. If LEAs follow the second option to apportion funds
based on total private school enrollment, LEAs and public schools will lose out on significant
amounts of ESSER and GEER funds, which will be diverted to private schools for students who
would not otherwise qualify for Title I-A equitable services. Guerrant Decl. J 23, 27; Constancio
Decl. {| 27, 35; Baca Decl. §] 20; Goldson Decl. 9 18, 21, 23; Gordon Decl. J§ 19, 31; Hoffmann
Decl. 22, 31-33, 42, 49; Jackson Decl. §] 22, 36; Jones Decl. 4] 25, 27, 39; Kaneshiro-
Erdmann Decl. §] 22; Makin Decl. 4] 26, 41; Oates Decl. §[ 20-21; Salmon Decl. §] 18; Stem Decl.
4] 24, 33; Stewart Decl. 44] 24, 38; Wallace Decl. 4 16, 21. This loss of emergency funding will
have significant negative impacts on public schools, including to services for students and
potential loss of jobs for teachers and staff. Guerrant Decl. | 38-39; Jones Decl, § 40; Goldson
Decl. §[ 24-25; Gordon Decl. {| 32-33; Oates Decl. J 24-25; Stem Decl. §] 34; Wallace Decl. 7

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22-23. The funding conditions imposed by the Rule thus undermine the key purpose of the
Education Stabilization Fund; a fortiori, they are unrelated to that purpose and are invalid under
the Spending Clause. See City & Cty. of San Francisco v. Sessions, 349 F. Supp. 3d 924, 959
(N.D. Cal. 2018) (immigration requirements were unrelated to grant’s purpose to provide
flexibility to the states through formula grants), aff'd in part, vacated in part for unrelated
reasons sub. nom. City & Cty. of San Francisco v. Barr, Nos. 18-17308, 18-17311 (9th Cir. July
13, 2020) (affirming requirements were unlawful but narrowing geographic scope of injunction).

C. ED’s Actions Are Arbitrary and Capricious in Violation of the APA

Even if Congress had somehow granted discretion to the Secretary to conduct rulemaking
as to the implementation of the GEER and ESSER Funds (it did not), ED’s actions are also
“arbitrary, capricious, [and] an abuse of discretion” and must be set aside under the APA. 5
U.S.C. § 706(2)(A).> ED has failed to meet the APA’s requirements that an agency “examine the
relevant data and articulate a satisfactory explanation for its action.” Motor Vehicle Mfrs. Ass’n of
US., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). It has offered a legally
erroneous rationalization for its misconduct, failed to articulate a reasoned explanation for its
reversal of its prior position, acted contrary to statutory language and congressional intent, and
failed to consider the reliance interests implicated by its actions and other important aspects of the
problem.

First, as discussed above, Defendants did not and cannot articulate how their position
comports with the plain text of Section 18005 of the CARES Act. Thus, their action must be set
aside as based on an incorrect legal premise. See Safe Air for Everyone v. EPA, 488 F.3d 1088,
1101 (9th Cir. 2007). ED’s basic argument for the Guidance and Rule—that “the phrase ‘provide
equitable services in the same manner as provided under section 1117 of the ESEA of 1965’”

should not be construed “as if Congress simply incorporated the entirety of section 1117 by

> For the same reasons that their actions are ultra vires, violate separation of powers
principles, and exceed ED’s statutory authority, supra at 10-20, these requirements and
limitations also violate the APA’s prohibition on agency action “contrary to constitutional right,
power, privilege, or immunity” or “in excess of statutory jurisdiction, authority or limitations, or
short of statutory right.” 5 U.S.C. § 706(2)(B)-(C).

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reference,” 85 Fed. Reg. 39,479—is incorrect. Supra at 12-16. Because “that flawed premise is
fundamental” to ED’s agency action, the action must be set aside. Safe Air for Everyone, 488 F.3d
at 1101; see also SEC v. Chenery Corp., 318 U.S. 80, 94 (1943) (“an order may not stand” if
based on agency’s mistake of law).

Second, ED failed to adequately explain (or explain at all) why it was reversing its own
prior guidance and other instructions to SEAs and LEAs regarding how equitable services under
Section 1117 should be provided. See, e.g., FCC v. Fox Television Stations, Inc., 556 U.S. 502,
516 (2009) (where agency changes policy, “a reasoned explanation is needed for disregarding
facts and circumstances that underlay . . . the prior policy”’); see also Dep’t of Homeland Sec. v.
Regents of the Univ. of Cal., 140 S. Ct. 1891, 1912 (2020) (requiring “reasoned analysis to
support” rescission of prior policy) (quoting State Farm, 463 U.S. at 52) (punctuation omitted).
As a predicate to fulfilling this requirement, an agency must “display awareness that it is
changing position” and “may not, for example, depart from a prior policy sub silentio.” Fox
Television, 556 U.S. at 515.

It is clear that Defendants have materially changed their position. First, ED’s Title I-A
guidance for providing equitable services under Section 1117 to private-school students—issued
under the current administration less than a year ago—confirmed that equitable services should
only be provided to at-risk students who reside in Title I public school attendance areas. As stated
in that document: “[T]o be eligible for Title I services, a private school child must reside in a
participating Title I public school attendance area and must be identified by the LEA as low
achieving on the basis of multiple, educationally related, objective criteria.” RJN Ex. B at 30. But
in the 2020 Guidance and the Rule, ED requires LEAs to provide equitable services to all private
school children, rather than only “low achieving” students in a Title I-A school attendance area.
Second, in the 2019 guidance, ED specified that, under Section 1117, funding for equitable
services should be based on the number of children in private schools who are economically
disadvantaged or in foster care. It instructed LEAs to “determine an accurate count of children
from low-income families who attend public and private schools and reside in participating Title I

public school attendance areas in order to allocate the proportional share.” RJN Ex. B at 30. But
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the 2020 Guidance and Rule instruct LEAs to ignore Section 1117’s proportional share
calculation based on the number of low-income students, and proportion the funds based on the
total number of students—tregardless of income. Third, in May 2020, ED published a “Frequently
Asked Questions” document which explicitly stated that “supplement not supplant” rules did not
apply to CARES Act funds. RJN Ex. A at 5. But one of the poison pill restrictions on “Option #1”
would apply “supplement not supplant” restrictions to CARES Act funds. ED has failed to even
acknowledge its changed positions on these crucial issues regarding the equitable services
requirements, much less provide a “reasoned explanation” for them.

Relatedly, ED failed to take into account the reliance interests that its former position
generated on the part of the States and LEAs. “When an agency changes course . . . it must be
cognizant that longstanding policies may have engendered serious reliance interests that must be
taken into account. It would be arbitrary and capricious to ignore such matters.” Regents, 140
S. Ct. at 1913 (quoting Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117, 2126 (2016))
(punctuation omitted); see also Fox Television, 556 U.S. at 515-16 (requiring agencies to
“provide a more detailed justification than what would suffice for a new policy created on a blank
slate” under such circumstances). The “serious reliance interests” engendered by ED’s prior
policies include school districts’ reliance on the May 2020 FAQ document when they developed
their budgets; as discussed above, in that document, ED explicitly stated that “supplement and not
supplant” rules did not apply to CARES Act funds. RJN Ex. A at 5. The new “supplement not
supplant” requirement of Option #1 represents an unexplained about-face, which will require
school districts which choose (or, for LEAs with only Title I schools, are forced to use) this
option to revamp their budgets to reflect their significantly curtailed flexibility to use these funds
to address COVID-19. See Jones Decl. § 28; Hoffmann Decl. { 40.

ED’s rewrite of the equitable services requirements is also arbitrary and capricious because,
in imposing the Rule, ED “relied on factors which Congress has not intended it to consider,
entirely failed to consider an important aspect of the problem,” and “offered an explanation for its
decision that runs counter to the evidence before the agency.” State Farm, 463 U.S. at 43. ED

ignored “important aspect[s] of the problem,” including, among others, the myriad harms to
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students, States, and LEAs discussed herein. These harms include: (1) the impact on LEAs from
loss of ESSER and GEER moneys diverted to private schools, and the predictable adverse impact
on the States’ and LEAs’ fiscs as they fill the gap created by these diversions; (2) for LEAs that
choose Option #1 (Title I-schools only Option), (a) the loss of all CARES Act emergency funding
for LEAs’ non-Title I schools, (b) those LEAs’ inability to use the funds to maintain operations
that are funded on an LEA-wide basis, and (c) those LEAs’ Title I schools’ inability to use
CARES Act funds for existing costs (due to the application of “supplement not supplant’); (3) for
LEAs that choose Option #2 (Private-school enrollment Option) when apportioning CARES Act
funds, the LEAs’ and public schools’ loss of millions of ESSER and GEER moneys, which will
be diverted to private schools for students who would not otherwise qualify for Title I-A equitable
services; (4) significant added administrative burdens on LEAs and SEAs;4 (5) diversion of SEA
resources to provide technical assistance to LEAs regarding the Guidance and Rule; and (6) the
delay in distributing funds to students and teachers caused by Defendants’ inconsistent
interpretations, contrary to the core purpose of the CARES Act to quickly deploy these urgently
needed funds. See supra at 9, 17-19; infra at 27-29.

Further, the imposition of this burden runs contrary to Congress’s intent. Congress intended
SEAs and LEAs to have a great deal of flexibility in their uses of CARES Act funds. See, e.g.,
CARES Act §§ 18002(c)(1), 18003(d)(12) (setting forth broad set of permitted uses for CARES
Act funds, expressly including maintaining continuity of services and continuing to employ
existing LEA staff); Congress intended to deliver LEAs “need[ed] funding flexibility due to the
disruption in the academic year from COVID-19.” 166 Cong. Rec. H1856 (daily ed. Mar. 27,

2020) (statement of Rep. Underwood). ED’s awareness of Congress’s intent was made manifest

4 The Rule contains a brief discussion of “implementation costs,” 85 Fed. Reg. 39,485-86,
but this discussion focuses only on data collection and not the numerous other administrative
burdens discussed herein. Indeed, in the Rule ED acknowledges that “[a]ffected LEAs will likely
face some administrative costs to implement these statutory requirements, but ED largely lacks
data to quantify these costs,” 85 Fed. Reg. 39,485, demonstrating ED’s utter failure to gather and
examine the relevant data before enacting the Rule. (Such information may well have been
supplied had ED followed the APA’s notice and comment requirements.) The Rule goes on to
assert, without any support: “However, ED expects that these entities will largely experience
benefits exceeding these administrative costs.” Id.

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in a letter sent on June 12, 2020, acknowledging that “Congress . . . intended that grantees have
substantial flexibility in the use of these [CARES Act] dollars.” RJN Ex. I at 3, as well as the
Rule itself, see 85 Fed. Reg. 39,480 (“the CARES Act affords LEAs . . . flexibility”). Defendants’
imposition of these restrictions on LEAs, significantly limiting their flexibility to use the funds, is
“contrary to plain congressional intent,” and thus arbitrary and capricious.° E. Bay Sanctuary
Covenant v. Trump, 950 F.3d 1242, 1277 (9th Cir. 2020).

Another way in which the Rule is incompatible with congressional intent is its failure to
follow Congress’ unambiguously expressed directive that CARES Act funds should be used to
support the most vulnerable students. Congress made this clear by using the Title I-A allocation
method, which tracks low-income students; statements by members of Congress further support
this intent. See, e.g., 166 Cong. Rec. E340 (daily ed. Mar. 31, 2020) (statement of Rep. Jayapal)
(Congress intended that LEAs have this funding to “help alleviate the challenges educators,
students and families are struggling with in light of school closures” particularly those “students
with disabilities, English language learners, and students experiencing homelessness”). ED’s
repeated insistence that Congress actually intended to prioritize support for all private-school
students, see, e.g., 85 Fed. Reg. 39,479 (“The pandemic has harmed all our Nation’s students by
disrupting their education. Nothing in the CARES Act suggests Congress intended to differentiate
between students based upon the public or non-public nature of their school with respect to
eligibility for relief’), 39,480 (“services under the CARES Act programs can be available for all
students—public and non-public—without regard to poverty, low achievement, or residence in a
participating Title I public school attendance area’), 39,482 (“the CARES Act authorizes an LEA
to serve all students—public and non-public—who have been affected by COVID-19”), reflects

its erroneous premise that Congress intended to direct these funds to all private-school students—

> Tronically, Defendants list “flexibility in administration of equitable services” as one of
the positive impacts of the Rule, 85 Fed. Reg. 39,486, and repeatedly claim that they are
providing LEAs with flexibility through the Rule. 85 Fed. Reg. 39,480 (“we are affording
flexibility to... LEA[s]’”); 39,481 (“ED has resolved the ambiguity by permitting LEAs
flexibility to provide equitable services’); 39,484 (“This interim final rule is meant to provide
flexibility ... for SEAs and LEAs”), (the Rule “offers appropriate flexibility”’).

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many of whom are affluent or at least economically secure°—on an equal basis with public
schools that educate large populations of at-risk and low-income students.’ Further, private
schools appear to have been able to receive significant financial support from the CARES Act’s
Paycheck Protection Program, CARES Act § 1102, H.R. 748-6, far exceeding what is guaranteed
to LEAs from the ESSER fund. See Hoffman Decl. {| 44-49.

D. The Rule Is Procedurally Defective Under the APA as ED Did Not Have
Good Cause to Issue the Rule As an Interim Final Rule.

“The APA requires that, prior to promulgating rules, an agency must issue a general notice
of proposed rulemaking.” California v. Azar, 911 F.3d 558, 575 (9th Cir. 2018); 5 U.S.C. §
553(b); see also Paulsen v. Daniels, 413 F.3d 999, 1005 (9th Cir. 2005) (“[I]t is antithetical to the
structure and purpose of the APA for an agency to implement a rule first, and then seek comment
later.”). Here, Defendants issued the Rule as an interim final rule, making the Rule effective
immediately and circumventing the notice and comment requirements of the APA. See 85 Fed.
Reg. 39,479.

Pursuant to 5 U.S.C. § 553(b)(B), an agency may publish a rule without prior notice and
comment only “for good cause” when the “notice and public procedure . . . are impracticable,
unnecessary, or contrary to the public interest.” This good cause exception is “usually invoked in

emergencies” and the agency “must overcome a high bar if it seeks to invoke the good cause

° ED recognizes that some “financially well-resourced” private schools have “tuition and
fees comparable to those charged by the most highly selective postsecondary institutions,” and
“tend to serve families from the highest income brackets,” but dismisses these as small in number
and notes that such private schools are “not required to accept equitable services.” 85 Fed. Reg.
39,483. Further, ED says that it “particularly discourages” such schools from accepting CARES
Act funds, and proclaims its belief that “such non-public schools have ample resources to serve
their students and teachers during the COVID-19 national emergency and should not rely on
taxpayer funds to do so.” Id. First, it should be noted that according to the most recent Census
data, almost 600,000 students attend non-sectarian private schools, with an average annual tuition
of over $22,000. See RJN Ex. J. And ED’s “discourage[ment]” and “belie[f],” of course, do not
impact those schools’ eligibility for CARES Act funds under the Rule.

Tn the Rule, ED briefly discusses CCSSO’s position that Congress “‘intended to
concentrate ESSER funds in areas of the most need, where the educational and social impacts of
the COVID crisis will be most extreme and difficult to overcome with limited local funds,’” but
summarily dismisses this view as a “rigid” interpretation not supported by the text of the CARES
Act. 85 Fed. Reg. 39,480. ED points to its Option #1 (Title I-schools only Option) as a means to
address the needs of an “LEA that helps poor children by spending its CARES Act funds only in
its Title I schools,” ignoring the fact that ED then imposes draconian restrictions on the use of
funds under this option which are completely untethered from the CARES Act’s text.

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exception to bypass the notice and comment requirement.” Azar, 911 F.3d at 575; United States v.
Valverde, 628 F.3d 1159, 1164 (9th Cir. 2010).8

In the Rule, ED states that there is good cause to waive these notice and comment
procedures because of “the immediate need for certainty regarding applicable requirements” for
“determining the amount of funds available for [equitable] services.” 85 Fed. Reg. at 39,483. This
rationale cannot satisfy good cause for multiple reasons.

First, remedying uncertainty in a statute “is not a reasonable justification for bypassing
notice and comment.” Valverde, 628 F.3d at 1166. As the Ninth Circuit has adopted, “if “good
cause’ could be satisfied by an Agency’s assertion that ‘normal procedures were not followed
because of the need to provide immediate guidance and information[,]| . . . then an exception to
the notice requirement would be created that would swallow the rule.” Id. (quoting Zhang v.
Slattery, 55 F.3d 732, 746 (2d Cir. 1995)).

Further, the Rule allows for a 30-day post-promulgation comment period, see 85 Fed. Reg.
at 39,484, which “casts further doubt upon the authenticity and efficacy of the asserted need to
clear up potential uncertainty.” Valverde, 628 F.3d at 1166; see also Azar, 911 F.3d at 576.

“(A |llowing for post-promulgation comments implicitly suggests that the rules will be
reconsidered and that the ‘level of uncertainty is, at best, unchanged.’” Azar, 911 F.3d at 576
(quoting United States v. Reynolds, 710 F.3d 498, 510 (3d Cir. 2013)).

And, most damning here, the ostensible uncertainty regarding the calculation of the
proportional share of CARES Act funds for equitable shares is a phantom “problem” of ED’s
invention. The CARES Act clearly adopts the Section 1117 proportional share calculation as
discussed above—ED is the only entity that seems to dispute the plain language of the CARES

Act, and its indefensible position is what has created the uncertainty for SEAs and LEAs across

85 U.S.C. § 553(a)(2) exempts some regulatory actions from the requirements of 5 U.S.C.
§ 553, but ED is generally prohibited from using this exemption for actions governing formula
grants or existing grants. 20 U.S.C. § 1232(d) (restricting ED’s use of the 5 U.S.C. § 553(a)(2)
exemption only to regulatory actions “that govern the first grant competition under a new or
substantially revised program authority”). Additionally, ED has stated in the notice it published
with the Rule in the federal register that it would comply with 5 USC § 553, 85 Fed. Reg. 39,483,
and it is bound by that commitment. See Sequoia Orange Co. v. Yeutter, 973 F.2d 752, 757 (9th
Cir. 1992).

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the Nation. ED should not be permitted to create uncertainty, and then leverage that uncertainty to
justify promulgating a rule without following notice and comment procedures.

The APA requires courts to hold unlawful and set aside agency actions that fail to comply
with the procedures required by law. 5 U.S.C. § 706(2)(D). Because Defendants promulgated the
Rule without following the APA’s notice and comment requirements and failed to demonstrate
good cause for dispensing with them, the Rule should be held unlawful.

II. PLAINTIFFS WILL SUFFER IRREPARABLE HARM

The Rule threatens imminent and irreparable harm to the States, LEAs, their public schools,
and the students they serve. The public schools will lose significant CARES Act funds to private
schools or be unable to use the funds for their response to the pandemic. With state and local
budgets stretched, students will lose out where sufficient resources are simply not available to
make up the shortfalls caused by the diversion of CARES Act funds caused by the Guidance and
Rule. As a result of ED’s rewriting of the requirements under Section 18005 of the CARES Act,
Plaintiffs also face adverse legal action against them no matter which option their LEAs choose.

The financial harm to the public schools and LEAs from the Guidance and the Rule is
enormous. In sum, for the Plaintiff States and Plaintiff LEAs, if their LEAs choose to utilize
Option #2 to calculate the proportional share of CARES Act funds for equitable services, the
LEAs and their public schools will lose over $150 million, compared to if the LEAs follow the
CARES Act’s explicit instruction to use the Section 1117 calculation method. See Guerrant Decl.
{| 23, 37; Constancio Decl. 44] 27, 35; Goldson Decl. §[ 18, 21; Gordon Decl. 4§ 19, 31;
Hoffmann Decl. 49 22, 42; Jackson Decl. {{ 22, 26, 36; Jones Decl. 49] 25, 27, 39; Kaneshiro-
Erdmann Decl. §] 22; Makin Decl. 4] 26, 41; Oates Decl. 4 20; Salmon Decl. ¥ 18; Stewart Decl. §
24; Stem Decl. ff 25, 35; Wallace Decl. 4 16, 21. Plaintiff States and LEAs will be required to
backfill this lost funding for their public schools. See Guerrant Decl. §] 26; Jackson Decl. ¥ 26;
Jones Decl. § 29; Kaneshiro-Erdmann Decl. § 25; Makin Decl. {| 27; Oates Decl. 4 22; Stem Decl.
4] 27; Stewart Decl. §§[ 25-26. If the LEAs in the Plaintiff States and Plaintiff LEAs follow Option
#1 under the Rule to calculate the proportional share of CARES Act funds for equitable services,

the LEAs would only be able to use the funds to support their Title I schools. See Guerrant Decl.
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{| 27, 36; Constancio Decl. ¥ 33; Baca Decl. § 24; Hoffmann Decl. 4] 29-30, 39; Jones Decl. §
38; Jackson Decl. §/[ 27, 35; Kaneshiro-Erdmann Decl. {| 26, 28; Makin Decl. §j 28, 40; Oates
Decl. § 16; Salmon Decl. §[ 20; Stem Decl. {[§[ 28, 34; Stewart Decl. 9] 25, 37; Wallace Decl. § 20.
The thousands of non-Title I schools in LEAs that would otherwise receive CARES Act funds
will receive zero funding to address the many problems created by the pandemic. See Guerrant
Decl. | 27, 36; Constancio Decl. § 33; Baca Decl. §] 24; Hoffmann Decl. §[ 29, 39; Jones Decl. 4
38; Jackson Decl. §/[ 27, 35; Kaneshiro-Erdmann Decl. {| 26, 28; Makin Decl. §j 28, 40; Oates
Decl. § 16; Salmon Decl. §[ 20; Stem Decl. {[§[ 28, 34; Stewart Decl. 9] 25, 37; Wallace Decl. § 20.
To make matters worse, the Title I public schools receiving funds will be unable to use the
CARES Act funds where they are needed most. See Guerrant Decl. {] 27, 36; Constancio Decl. 4
33; Baca Decl. § 24; Gordon Decl. § 30; Hoffmann Decl. 49 29-31, 39-41; Jackson Decl. {§ 27,
35; Jones Decl. §] 28; Kaneshiro-Erdmann Decl. {{ 26, 28; Makin Decl. {§ 28, 40; Oates Decl. §
18; Salmon Decl. § 21; Stem Decl. ¥ 34; Stewart Decl. 49 25, 37; Wallace Decl. § 20. Thus, even
if all LEAs utilize Option #1 in the Rule, the Plaintiff States and LEAs will need to allocate
hundreds of millions of dollars to the schools that will no longer be eligible to receive CARES
Act funds and to assist schools that cannot use the CARES Act funds for their intended purposes.

This significant monetary loss to the SEAs, LEAs, public schools, and public-school
students constitutes irreparable harm. Azar, 911 F.3d at 581 (states could establish irreparable
harm where they suffer economic harm and “will not be able to recover monetary damages
connected to the IFRs” (citing 5 U.S.C. § 702 (permitting relief “other than money damages’);
see also Cty. of Santa Clara v. Trump, 250 F. Supp. 3d 497, 537 (N.D. Cal. 2017) (federal
executive order interfering with counties’ ability to budget, plan for the future, and properly serve
their residents constituted a basis for irreparable harm); Texas v. United States, 809 F.3d 134, 186
(Sth Cir. 2015), aff'd by an equally divided Court, 136 S. Ct. 2271 (2016) (impact on state’s
resources caused by federal program enabling certain immigrants to obtain drivers’ licenses
constituted irreparable harm)).

Alternatively, if LEAs—either unilaterally or with a State’s permission—calculate the

proportionate share of CARES Act funds for equitable services as required by the Act, i.e., using
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the Section 1117 calculation and using the funds for the purposes expressly provided for in the
Act, both the Plaintiff States and Plaintiff LEAs will face legal jeopardy as they cannot comply
with certifications verifying that they will abide by both the CARES Act and ED’s regulations.
See Guerrant Decl. § 33; Baca Decl. { 21; Constancio Decl. § 30; Gordon Decl. §] 26; Jackson
Decl. ¥ 32; Jones Decl. §] 34; Kaneshiro-Erdmann Decl. § 27; Makin Decl. § 36; Stem Decl. ¥ 31;
Stewart Decl. §] 33. This leaves Plaintiff States and LEA in an untenable position in which,
regardless of what their LEAs choose, they will be in violation of either the CARES Act’s
requirements or the Rule’s requirements. Whatever choice Plaintiffs make, they will be harmed.
See Am. Trucking Ass’ns v. City of Los Angeles, 559 F.3d 1046, 1057-58 (9th Cir. 2009) (a party
faces an irreparable injury when it is harmed no matter what choice it makes).

Finally, as the Guidance and Rule impinge on constitutional separation of powers principles

2 66

and the Spending Clause, Defendants’ “constitutional violation alone, coupled with the damages
incurred,” from loss of public-school funding “suffice to show irreparable harm.” Am. Trucking
Ass’ns, Inc., 559 F.3d at 1058-59.

II. THE PUBLIC INTEREST WEIGHS HEAVILY IN FAVOR OF PROVISIONAL RELIEF

The “balance of the equities” and “public interest” factors of the Winter test merge when
the government is a party. Nken v. Holder, 556 U.S. 418, 435 (2009). In assessing these factors,
courts consider the impacts of the injunction on nonparties as well. See League of Wilderness
Defenders/Blue Mountains Biodiversity Project v. Connaughton, 752 F.3d 755, 766 (9th Cir.
2014).

The public interest in allowing schools to respond to the myriad urgent challenges posed by
the COVID-19 pandemic weighs overwhelmingly in favor of an injunction here. As discussed
supra at 3-4, the challenges caused by the pandemic have contributed to heightened need for
public-school funding, particularly for schools with a high proportion of low-income and at-risk
children. Congress specifically responded to this crisis by making GEER and ESSER funds
available to public schools that needed assistance to respond to the pandemic and provided

flexibility to the SEAs and LEAs in using these funds to best serve students. An injunction is

needed to preserve this congressional intent, as the “public . . . has an interest in ensuring that
29

Pls.’ Notice of Mot. and Mot. for Prelim. Inj. (3:20-cv-4478-SK)
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statutes enacted by their representatives are not imperiled by executive fiat.” Sierra Club v.
Trump, No. 19-16102, 2020 WL 3478900, at *16 (9th Cir. June 26, 2020) (quoting E. Bay
Sanctuary Covenant v. Trump, 932 F.3d 742, 779 (9th Cir. 2018)) (punctuation omitted); see also
San Francisco, 897 F.3d at 1244 (upholding injunction regarding federal grants because “the
public interest cannot be disserved by an injunction that brings clarity to all parties and to citizens
dependent on public services”).

Supporting public schools’ continued ability to provide their students with an education is
also in the public interest. See, e.g., Meyer v. Nebraska, 262 U.S. 390, 400 (1923) (“The
American people have always regarded education and acquisition of knowledge as matters of
supreme importance which should be diligently promoted.”). Diverting funding to private schools
and away from public schools, when private schools can access, and have accessed, other funding
sources under the CARES Act that are unavailable to public schools, leaves public schools
without the emergency relief funding Congress sought to provide them during the pandemic.

Conversely, Defendants “cannot suffer harm “from an injunction that merely ends an
unlawful practice’.” Sierra Club, 2020 WL 3478900, at *16 (quoting Rodriguez v. Robbins, 715
F.3d 1127, 1145 (9th Cir. 2013)). In fact, an injunction here would only require that the ESSER
and GEER funds be utilized in the manner that Congress intended—making assistance available
for public schools and at-risk private-school students, and providing flexibility to SEAs and LEAs
to use the funds. See id. (“‘[t]he public interest favors enforcing” Congress’s “calculated choice”).

COVID-19 has had particularly insidious effects on low-income communities, and
Congress recognized this effect by directing the majority of the ESSER and GEER funds to those
LEAs particularly harmed by the pandemic. Private schools have access to other avenues of
funding under the CARES Act. ED should not divert funding from public schools to private
schools contrary to the plain language of the CARES Act, Congress’ clear intent, and in the face

of this public health crisis’s crushing blow to public education.

CONCLUSION

For the foregoing reasons, Plaintiffs request this Court grant their Motion.

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Pls.’ Notice of Mot. and Mot. for Prelim. Inj. (3:20-cv-4478-SK)
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Dated: July 17, 2020

31

Respectfully Submitted,

XAVIER BECERRA

Attorney General of California
MICHAEL L. NEWMAN

Senior Assistant Attorney General
SARAH E. BELTON

Supervising Deputy Attorney General

/s/ Garrett Lindsey

GARRETT LINDSEY

JAMES F. ZAHRADKA II

REBEKAH A. FRETZ

Deputy Attorneys General

Attorneys for Plaintiff State of California

DANA NESSEL

Attorney General of Michigan

FADWA A. HAMMOUD

Solicitor General

TONI L. HARRIS*

NEIL GIOVANATTI*

Assistant Attorneys General

Attorneys for Plaintiff State of Michigan
* Appearing Pro Hac Vice

Pls.’ Notice of Mot. and Mot. for Prelim. Inj. (3:20-cv-4478-SK)
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Case 3:20-cv-04478-SK Document 25-3

KARL A. RACINE

Attorney General of District of Columbia
KATHLEEN KONOPKA

Deputy Attorney General, Public Advocacy
Division

Attorneys for Plaintiff District of Columbia
Appearing pro hac vice (application
forthcoming)

CLARE E. CONNORS

Attorney General of Hawaii

HOLLy T. SHIKADA

KEVIN M. RICHARDSON

Deputy Attorneys General

Attorneys for Plaintiff State of Hawaii
Appearing pro hac vice (application
forthcoming)

AARON M. FREY

Attorney General of Maine

SARAH A. FORSTER*

Assistant Attorney General
Attorneys for Plaintiff State of Maine
* Appearing pro hac vice

BRIAN E. FROSH

Attorney General of Maryland

STEVEN M. SULLIVAN

Solicitor General

Attorneys for Plaintiff State of Maryland
Appearing pro hac vice (application
forthcoming)

HECTOR BALDERAS

New Mexico Attorney General

P. CHOLLA KHOURY

LisA GIANDOMENICO*

Assistant Attorneys General

Attorneys for Plaintiff State of New Mexico
* Appearing pro hac vice

JOSH SHAPIRO

Attorney General of Pennsylvania
MICHAEL J. FISCHER

Chief Deputy Attorney General
Attorneys for Plaintiff Commonwealth of
Pennsylvania

Appearing pro hac vice (application
forthcoming)

Filed 07/17/20 Page 38 of 72

32

JOSHUA L. KAUL

Attorney General of Wisconsin

HANNAH S. JURSS

Assistant Attorney General

Attorneys for Plaintiff State of Wisconsin
Appearing pro hac vice (application
forthcoming)

JAMES E. JOHNSON

Corporation Counsel of the City of New York
ERIC PROSHANSKY

Hope Lu

GAIL RUBIN

Assistant Corporation Counsel

Attorneys for Plaintiff the Board of
Education of the City School District of the
City of New York

Appearing pro hac vice (application
forthcoming)

BOARD OF EDUCATION, CITY OF CHICAGO
DEPARTMENT OF LAW

JOSEPH MORIARTY

General Counsel

J. ERNEST MINCY

Deputy General Counsel for Litigation
Attorneys for Plaintiff Chicago Board of
Education

Appearing pro hac vice (application
forthcoming)

SAN FRANCISCO UNIFIED SCHOOL DISTRICT
DANIELLE HOUCK

General Counsel

SUSANNE NAOMI STARECKI KIM

Sr. Deputy General Counsel

Legal Department

Attorneys for Plaintiff San Francisco Unified
School District

SQUIRE PATTON Bocas (US) LLP

GABRIEL COLWELL (CABN 216783)

COLIN R. JENNINGS (OHBN 0068704)

W. MICHAEL HANNA (OHBN 0020149)
EMILY R. SPIVACK (OHBN 0090777)
KEVIN J. BURTZLAFF (OHBN 0039648)
Cleveland Municipal School District Board
of Education

Attorneys for Plaintiff Cleveland Municipal
School District

Appearing pro hac vice (application
forthcoming)

Pls.’ Notice of Mot. and Mot. for Prelim. Inj. (3:20-cv-4478-SK)
Case 3:20-cv-04478-SK Document 25-3 Filed 07/17/20 Page 39 of 72

CARES Act Appendix
werent @se 3:20-cv-04478-SK Document 25-3 Filed 07/17/20 Page 40 of 72

US. GOVi
INFORMATION

GPO

One Hundred Sixteenth Congress
of the
Wnited States of America

AT THE SECOND SESSION

Begun and held at the City of Washington on Friday,
the third day of January, two thousand and twenty

An Act

To amend the Internal Revenue Code of 1986 to repeal the excise tax on high
cost employer-sponsored health coverage.

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the “Coronavirus Aid, Relief, and
Economic Security Act” or the “CARES Act”.

SEC. 2. TABLE OF CONTENTS.
The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. References.

DIVISION A—KEEPING WORKERS PAID AND EMPLOYED, HEALTH CARE
SYSTEM ENHANCEMENTS, AND ECONOMIC STABILIZATION

TITLE I—KEEPING AMERICAN WORKERS PAID AND EMPLOYED ACT

Sec. 1101. Definitions.

Sec. 1102. Paycheck protection program.

Sec. 1103. Entrepreneurial development.

Sec. 1104. State trade expansion program.

Sec. 1105. Waiver of matching funds requirement under the women’s business cen-
ter program.

Sec. 1106. Loan forgiveness.

Sec. 1107. Direct appropriations.

Sec. 1108. Minority business development agency.

Sec. 1109. United States Treasury Program Management Authority.

Sec. 1110. Emergency EIDL grants.

Sec. 1111. Resources and services in languages other than English.

Sec. 1112. Subsidy for certain loan payments.

Sec. 1113. Bankruptcy.

Sec. 1114. Emergency rulemaking authority.

TITLE II—ASSISTANCE FOR AMERICAN WORKERS, FAMILIES, AND
BUSINESSES

Subtitle A—Unemployment Insurance Provisions

Sec. 2101. Short title.

Sec. 2102. Pandemic Unemployment Assistance.

Sec. 2103. Emergency unemployment relief for governmental entities and nonprofit
organizations.

Sec. 2104. Emergency increase in unemployment compensation benefits.

Sec. 2105. Temporary full Federal funding of the first week of compensable regular
unemployment for States with no waiting week.

Sec. 2106. Emergency State staffing flexibility.

Sec. 2107. Pandemic emergency unemployment compensation.

Sec. 2108. Temporary financing of short-time compensation payments in States
with programs in law.

Sec. 2109. Temporary financing of short-time compensation agreements.
Case 3:20-cv-04478-SK Document 25-3 Filed 07/17/20 Page 41 of 72

Sec.
Sec.
Sec.

Sec.
Sec.

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

Sec.
Sec.

. 2110.
. 2111.
. 2112.

. 2113.
. 2114.

. 2115.
. 2116.

. 2204.

2201.
2202.
2203.

2205.
2206.

H.R. 748—2

Grants for short-time compensation programs.

Assistance and guidance in implementing programs.

Waiver of the 7-day waiting period for benefits under the Railroad Un-
employment Insurance Act.

Enhanced benefits under the Railroad Unemployment Insurance Act.
Extended unemployment benefits under the Railroad Unemployment In-
surance Act.

Funding for the DOL Office of Inspector General for oversight of unem-
ployment provisions.

Implementation.

Subtitle B—Rebates and Other Individual Provisions

2020 recovery rebates for individuals.

Special rules for use of retirement funds.

Temporary waiver of required minimum distribution rules for certain re-
tirement plans and accounts.

Allowance of partial above the line deduction for charitable contribu-
tions.

Modification of limitations on charitable contributions during 2020.
Exclusion for certain employer payments of student loans.

Subtitle C—Business Provisions

. Employee retention credit for employers subject to closure due to
COVID-19.

. Delay of payment of employer payroll taxes.

. Modifications for net operating losses.

. Modification of limitation on losses for taxpayers other than corpora-
tions.

. Modification of credit for prior year minimum tax liability of corpora-
tions.

. Modifications of limitation on business interest.

. Technical amendments regarding qualified improvement property.

. Temporary exception from excise tax for alcohol used to produce hand
sanitizer.

TITLE III—SUPPORTING AMERICA’S HEALTH CARE SYSTEM IN THE FIGHT

Sec

Sec.
Sec.
Sec.

Sec.
Sec.
Sec.

. 8001

. 3101.
. 3102.
. 3103.

. 3111.
. 3112.

. 3121.

AGAINST THE CORONAVIRUS
Subtitle A—Health Provisions
. Short title.
PART I—ApprESSING SUPPLY SHORTAGES
SUBPART A—MEDICAL PRODUCT SUPPLIES

National Academies report on America’s medical product supply chain
security.

Requiring the strategic national stockpile to include certain types of
medical supplies.

Treatment of respiratory protective devices as covered countermeasures.

SUBPART B—MITIGATING EMERGENCY DRUG SHORTAGES

Prioritize reviews of drug applications; incentives.
Additional manufacturer reporting requirements in response to drug
shortages.

SUBPART C—PREVENTING MEDICAL DEVICE SHORTAGES
Discontinuance or interruption in the production of medical devices.
PART II—AccEss TO HEALTH CARE FOR COVID-19 PATIENTS
SUBPART A—COVERAGE OF TESTING AND PREVENTIVE SERVICES

. Coverage of diagnostic testing for COVID-19.
. Pricing of diagnostic testing.
. Rapid coverage of preventive services and vaccines for coronavirus.

SUBPART B—SUPPORT FOR HEALTH CARE PROVIDERS

. Supplemental awards for health centers.

. Telehealth network and telehealth resource centers grant programs.

. Rural health care services outreach, rural health network development,
and small health care provider quality improvement grant programs.
Case 3:20-cv-04478-SK Document 25-3 Filed 07/17/20 Page 42 of 72

Sec.
Sec.

Sec.
Sec.

Sec.
Sec.
Sec.

Sec.
Sec.

Sec.
Sec.
Sec.
Sec.

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

Sec.
Sec.
Sec.
Sec.
Sec.

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

Sec.
Sec.

Sec.
Sec.

Sec.
Sec.

3214.
3215.

. 38216.

H.R. 748—3

United States Public Health Service Modernization.

Limitation on liability for volunteer health care professionals during
COVID-19 emergency response.

Flexibility for members of National Health Service Corps during emer-
gency period.

SUBPART C—MISCELLANEOUS PROVISIONS

. Confidentiality and disclosure of records relating to substance use dis-

order.

. Nutrition services.
. Continuity of service and opportunities for participants in community

service activities under title V of the Older Americans Act of 1965.

. Guidance on protected health information.
. Reauthorization of healthy start program.
. Importance of the blood supply.

PART III—INNOVATION

. Removing the cap on OTA during public health emergencies.
. Priority zoonotic animal drugs.

PART IV—HEALTH CARE WORKFORCE

. Reauthorization of health professions workforce programs.
. Health workforce coordination.

. Education and training relating to geriatrics.

. Nursing workforce development.

Subtitle B—Education Provisions

. Short title.

. Definitions.

. Campus-based aid waivers.

. Use of supplemental educational opportunity grants for emergency aid.
. Federal work-study during a qualifying emergency.

. Adjustment of subsidized loan usage limits.

. Exclusion from Federal Pell Grant duration limit.

. Institutional refunds and Federal student loan flexibility.

. Satisfactory academic progress.

. Continuing education at affected foreign institutions.

. National emergency educational waivers.

. HBCU Capital financing.

. Temporary relief for federal student loan borrowers.

. Provisions related to the Corporation for National and Community Serv-

ice.

. Workforce response activities.

. Technical amendments.

. Waiver authority and reporting requirement for institutional aid.
. Authorized uses and other modifications for grants.

. Service obligations for teachers.

Subtitle C—Labor Provisions

. Limitation on paid leave.
. Emergency Paid Sick Leave Act Limitation.
. Unemployment insurance.

OMB Waiver of Paid Family and Paid Sick Leave.

. Paid leave for rehired employees.

. Advance refunding of credits.

. Expansion of DOL Authority to postpone certain deadlines.

. Single-employer plan funding rules.

. Application of cooperative and small employer charity pension plan rules

to certain charitable employers whose primary exempt purpose is pro-
viding services with respect to mothers and children.

. Federal contractor authority.
. Technical corrections.

Subtitle D—Finance Committee

. Exemption for telehealth services.
. Inclusion of certain over-the-counter medical products as qualified med-

ical expenses.

. Increasing Medicare telehealth flexibilities during emergency period.
. Enhancing Medicare telehealth services for Federally qualified health

centers and rural health clinics during emergency period.
Case 3:20-cv-04478-SK Document 25-3 Filed 07/17/20 Page 43 of 72

H.R. 748—4

Sec. 3705. Temporary waiver of requirement for face-to-face visits between home
dialysis patients and physicians.

Sec. 3706. Use of telehealth to conduct face-to-face encounter prior to recertification
of eligibility for hospice care during emergency period.

Sec. 3707. Encouraging use of telecommunications systems for home health serv-
ices furnished during emergency period.

Sec. 3708. Improving care planning for Medicare home health services.

Sec. 3709. Adjustment of sequestration.

Sec. 3710. Medicare hospital inpatient prospective payment system add-on pay-
ment for COVID-19 patients during emergency period.

Sec. 3711. Increasing access to post-acute care during emergency period.

Sec. 3712. Revising payment rates for durable medical equipment under the Medi-
care program through duration of emergency period.

Sec. 3713. Coverage of the COVID-19 vaccine under part B of the Medicare pro-

gram. without any cost-sharing.

equiring Medicare prescription drug plans and MA-PD plans to allow

during the COVID-19 emergency period for fills and refills of covered

part D drugs for up to a 3-month supply.

Sec. 3715. Providing home and community-based services in acute care hospitals.

Sec. 3716. Clarification regarding uninsured individuals.

Sec. 3717. Clarification regarding coverage of COVID-19 testing products.

Sec. 3718. Amendments relating to reporting requirements with respect to clinical
diagnostic laboratory tests.

Sec. 3719. Expansion of the Medicare hospital accelerated payment program during
the COVID-19 public health emergency.

Sec. 3720. Delaying requirements for enhanced FMAP to enable State legislation
necessary for compliance.

Subtitle E—Health and Human Services Extenders
PART I—MEDICARE PROVISIONS

Sec. 3801. Extension of the work geographic index floor under the Medicare pro-
gram.

Sec. 3802. Extension of funding for quality measure endorsement, input, and selec-
tion.

Sec. 3803. Extension of funding outreach and assistance for low-income programs.

PART II—MEDIcaID PROVISIONS

Sec. 3811. Extension of the Money Follows the Person rebalancing demonstration
program.

Sec. 3812. Extension of spousal impoverishment protections.

Sec. 3813. Delay of DSH reductions.

Sec. 3814. Extension and expansion of Community Mental Health Services dem-
onstration program.

PART ITI—HuMAN SERVICES AND OTHER HEALTH PROGRAMS

Sec. 3821. Extension of sexual risk avoidance education program.

Sec. 3822. Extension of personal responsibility education program.

Sec. 3823. Extension of demonstration projects to address health professions work-
force needs.

Sec. 3824. Extension of the temporary assistance for needy families program and
related programs.

PART IV—PuBLIC HEALTH PROVISIONS

Sec. 3831. Extension for community health centers, the National Health Service
Corps, and teaching health centers that operate GME programs.
Sec. 3832. Diabetes programs.

PART V—MISCELLANEOUS PROVISIONS
Sec. 3841. Prevention of duplicate appropriations for fiscal year 2020.
Subtitle F—Over-the-Counter Drugs
PART I—OTC DrucG REVIEW

Sec. 3851. Regulation of certain nonprescription drugs that are marketed without
an approved drug application.

Sec. 3852. Misbranding.

Sec. 3853. Drugs excluded from the over-the-counter drug review.

Sec. 3854. Treatment of Sunscreen Innovation Act.

Sec. 3855. Annual update to Congress on appropriate pediatric indication for cer-
tain OTC cough and cold drugs.
Case 3:20-cv-04478-SK Document 25-3 Filed 07/17/20 Page 44 of 72

H.R. 748—5

Sec. 3856. Technical corrections.

PART II—UsER FEES

Sec. 3861. Finding.
Sec. 3862. Fees relating to over-the-counter drugs.

TITLE IV—ECONOMIC STABILIZATION AND ASSISTANCE TO SEVERELY
DISTRESSED SECTORS OF THE UNITED STATES ECONOMY

Subtitle A—Coronavirus Economic Stabilization Act of 2020

Sec. 4001. Short title.

Sec. 4002. Definitions.

Sec. 4003. Emergency relief and taxpayer protections.

Sec. 4004. Limitation on certain employee compensation.

Sec. 4005. Continuation of certain air service.

Sec. 4006. Coordination with Secretary of Transportation.

Sec. 4007. Suspension of certain aviation excise taxes.

Sec. 4008. Debt guarantee authority.

Sec. 4009. Temporary Government in the Sunshine Act relief.

Sec. 4010. Temporary hiring flexibility.

Sec. 4011. Temporary lending limit waiver.

Sec. 4012. Temporary relief for community banks.

Sec. 4013. Temporary relief from troubled debt restructurings.

Sec. 4014. Optional temporary relief from current expected credit losses.

Sec. 4015. Non-applicability of restrictions on ESF during national emergency.

Sec. 4016. Temporary credit union provisions.

Sec. 4017. Increasing access to materials necessary for national security and pan-
demic recovery.

Sec. 4018. Special Inspector General for Pandemic Recovery.

Sec. 4019. Conflicts of interest.

Sec. 4020. Congressional Oversight Commission.

Sec. 4021. Credit protection during COVID-19.

Sec. 4022. Foreclosure moratorium and consumer right to request forbearance.

Sec. 4023. Forbearance of residential mortgage loan payments for multifamily prop-
erties with federally backed loans.

Sec. 4024. Temporary moratorium on eviction filings.

Sec. 4025. Protection of collective bargaining agreement.

Sec. 4026. Reports.

Sec. 4027. Direct appropriation.

Sec. 4028. Rule of construction.

Sec. 4029. Termination of authority.

Subtitle B—Air Carrier Worker Support
Sec. 4111. Definitions.
Sec. 4112. Pandemic relief for aviation workers.
Sec. 4113. Procedures for providing payroll support.
Sec. 4114. Required assurances.
Sec. 4115. Protection of collective bargaining agreement.
Sec. 4116. Limitation on certain employee compensation.
Sec. 4117. Tax payer protection.
Sec. 4118. Reports.
Sec. 4119. Coordination.
Sec. 4120. Direct appropriation.

TITLE V—CORONAVIRUS RELIEF FUNDS
Sec. 5001. Coronavirus Relief Fund.
TITLE VI—MISCELLANEOUS PROVISIONS
Sec. 6001. COVID-19 borrowing authority for the United States Postal Service.
Sec. 6002. Emergency designation.
DIVISION B—EMERGENCY APPROPRIATIONS FOR CORONAVIRUS HEALTH
RESPONSE AND AGENCY OPERATIONS

SEC. 3. REFERENCES.

Except as expressly provided otherwise, any reference to “this
Act” contained in any division of this Act shall be treated as
referring only to the provisions of that division.
Case 3:20-cv-04478-SK Document 25-3 Filed 07/17/20 Page 45 of 72

H.R. 748—6

DIVISION A—KEEPING WORKERS PAID
AND EMPLOYED, HEALTH CARE SYS-
TEM ENHANCEMENTS, AND ECO-
NOMIC STABILIZATION

TITLE I—KEEPING AMERICAN
WORKERS PAID AND EMPLOYED ACT

SEC. 1101. DEFINITIONS.

In this title—

(1) the terms “Administration” and “Administrator” mean
the Small Business Administration and the Administrator
thereof, respectively; and

(2) the term “small business concern” has the meaning
given the term in section 3 of the Small Business Act (15
U.S.C. 636).

SEC. 1102. PAYCHECK PROTECTION PROGRAM.

(a) IN GENERAL.—Section 7(a) of the Small Business Act (15
U.S.C. 636(a)) is amended—
(1) in paragraph (2)—

(A) in subparagraph (A), in the matter preceding clause
(i), by striking “and (E)” and inserting “(E), and (F)”; and

(B) by adding at the end the following:

“(F) PARTICIPATION IN THE PAYCHECK PROTECTION PRO-
GRAM.—In an agreement to participate in a loan on a
deferred basis under paragraph (36), the participation by
the Administration shall be 100 percent.”; and
(2) by adding at the end the following:

“(36) PAYCHECK PROTECTION PROGRAM.—

“(A) DEFINITIONS.—In this paragraph—

“i) the terms ‘appropriate Federal banking agency’
and ‘insured depository institution’ have the meanings
given those terms in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813);

“(Gi) the term ‘covered loan’ means a loan made
under this paragraph during the covered period;

“(iii) the term ‘covered period’ means the period
beginning on February 15, 2020 and ending on June
30, 2020;

“Gv) the term ‘eligible recipient?’ means an indi-
vidual or entity that is eligible to receive a covered

n;

“(v) the term ‘eligible self-employed individual’ has
the meaning given the term in section 7002(b) of the
Families First Coronavirus Response Act (Public Law
116-127);

“(vi) the term ‘insured credit union’ has the
meaning given the term in section 101 of the Federal
Credit Union Act (12 U.S.C. 1752);

“vii) the term ‘nonprofit organization’ means an
organization that is described in section 501(c)(3) of
the Internal Revenue Code of 1986 and that is exempt
from taxation under section 501(a) of such Code;
Case 3:20-cv-04478-SK Document 25-3 Filed 07/17/20 Page 46 of 72

H.R. 748—7

“(viii) the term ‘payroll costs’-—
“(I) means—

“(aa) the sum of payments of any com-
pensation with respect to employees that is
a—

“AA) salary, wage, commission, or
similar compensation;
“BB) payment of cash tip or equiva-

“(CC) payment for vacation, parental,
family, medical, or sick leave;

“(DD) allowance for dismissal or sepa-
ration;

“(EE) payment required for the provi-
sions of group health care benefits,
including insurance premiums;

“FF) payment of any retirement ben-
efit; or

“GG) payment of State or local tax
assessed on the compensation of
employees; and
“(bb) the sum of payments of any com-

pensation to or income of a sole proprietor
or independent contractor that is a wage,
commission, income, net earnings from self-
employment, or similar compensation and that
is in an amount that is not more than $100,000
in 1 year, as prorated for the covered period;
and

“TID shall not include—

“(aa) the compensation of an individual
employee in excess of an annual salary of
$100,000, as prorated for the covered period;

“(bb) taxes imposed or withheld under
chapters 21, 22, or 24 of the Internal Revenue
Code of 1986 during the covered period;

“(cc) any compensation of an employee
whose principal place of residence is outside
of the United States;

“(dd) qualified sick leave wages for which
a credit is allowed under section 7001 of the
Families First Coronavirus Response Act
(Public Law 116-127); or

“ee) qualified family leave wages for
which a credit is allowed under section 7003
of the Families First Coronavirus Response
Act (Public Law 116-127); and

“(ix) the term ‘veterans organization’ means an
organization that is described in section 501(c)(19) of
the Internal Revenue Code that is exempt from tax-
ation under section 501(a) of such Code.

“(B) PAYCHECK PROTECTION LOANS.—Except as other-
wise provided in this paragraph, the Administrator may
guarantee covered loans under the same terms, conditions,
and processes as a loan made under this subsection.
Case 3:20-cv-04478-SK Document 25-3 Filed 07/17/20 Page 47 of 72

H.R. 748—8

“(C) REGISTRATION OF LOANS.—Not later than 15 days
after the date on which a loan is made under this para-
graph, the Administration shall register the loan using
the TIN (as defined in section 7701 of the Internal Revenue
Code of 1986) assigned to the borrower.

“(D) INCREASED ELIGIBILITY FOR CERTAIN SMALL
BUSINESSES AND ORGANIZATIONS.—

“@) IN GENERAL.—During the covered period, in
addition to small business concerns, any business con-
cern, nonprofit organization, veterans organization, or
Tribal business concern described in section 31(b)(2)(C)
shall be eligible to receive a covered loan if the business
concern, nonprofit organization, veterans organization,
or Tribal business concern employs not more than the
greater of—

“(T) 500 employees; or

“ID if applicable, the size standard in number
of employees established by the Administration
for the industry in which the business concern,
nonprofit organization, veterans organization, or
Tribal business concern operates.

“Gi) INCLUSION OF SOLE PROPRIETORS, INDE-
PENDENT CONTRACTORS, AND ELIGIBLE SELF-EMPLOYED
INDIVIDUALS.—

“(I) IN GENERAL.—During the covered period,
individuals who operate under a sole proprietor-
ship or as an independent contractor and eligible
self-employed individuals shall be eligible to
receive a covered loan.

employed individual, independent contractor, or
sole proprietorship seeking a covered loan shall
submit such documentation as is necessary to
establish such individual as eligible, including pay-
roll tax filings reported to the Internal Revenue
Service, Forms 1099-MISC, and income and
expenses from the sole proprietorship, as deter-
mined by the Administrator and the Secretary.
“(@ii) BUSINESS CONCERNS WITH MORE THAN 1 PHYS-

ICAL LOCATION.—During the covered period, any busi-

ness concern that employs not more than 500

employees per physical location of the business concern

and that is assigned a North American Industry Classi-
fication System code beginning with 72 at the time
of disbursal shall be eligible to receive a covered loan.

“(iv) WAIVER OF AFFILIATION RULES.—During the
covered period, the provisions applicable to affiliations
under section 121.103 of title 13, Code of Federal Regu-
lations, or any successor regulation, are waived with
respect to eligibility for a covered loan for—

“T) any business concern with not more than
500 employees that, as of the date on which the
covered loan is disbursed, is assigned a North
American Industry Classification System code
beginning with 72;
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H.R. 748—9

“IT) any business concern operating as a fran-
chise that is assigned a franchise identifier code
by the Administration; and

“(III) any business concern that receives finan-
cial assistance from a company licensed under sec-
tion 301 of the Small Business Investment Act
of 1958 (15 U.S.C. 681).

“(yvy) EMPLOYEE.—For purposes of determining
whether a business concern, nonprofit organization,
veterans organization, or Tribal business concern
described in section 31(b)(2)(C) employs not more than
500 employees under clause (i)(I), the term ‘employee’
includes individuals employed on a full-time, part-time,
or other basis.

“(vi) AFFILIATION.—The provisions applicable to
affiliations under section 121.103 of title 13, Code of
Federal Regulations, or any successor thereto, shall
apply with respect to a nonprofit organization and
a veterans organization in the same manner as with
respect to a small business concern.

“(E) MAXIMUM LOAN AMOUNT.—During the covered
period, with respect to a covered loan, the maximum loan
amount shall be the lesser of—

“()(I) the sum of—

“aa) the product obtained by multiplying—

“(AA) the average total monthly payments
by the applicant for payroll costs incurred
during the 1-year period before the date on
which the loan is made, except that, in the
case of an applicant that is seasonal employer,
as determined by the Administrator, the aver-
age total monthly payments for payroll shall
be for the 12-week period beginning February

15, 2019, or at the election of the eligible

recipient, March 1, 2019, and ending June

30, 2019; by

“(BB) 2.5; and

“(bb) the outstanding amount of a loan under
subsection (b)(2) that was made during the period
beginning on January 31, 2020 and ending on
the date on which covered loans are made available
to be refinanced under the covered loan; or
“(ID if requested by an otherwise eligible recipient

that was not in business during the period beginning

on February 15, 2019 and ending on June 30, 2019,

the sum of—

“aa) the product obtained by multiplying—

“(AA) the average total monthly payments
by the applicant for payroll costs incurred

during the period beginning on January 1,

2020 and ending on February 29, 2020; by

“(BB) 2.5; and

“(bb) the outstanding amount of a loan under
subsection (b)(2) that was made during the period
beginning on January 31, 2020 and ending on
the date on which covered loans are made available
to be refinanced under the covered loan; or
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H.R. 748—10

“(i) $10,000,000.

“(F) ALLOWABLE USES OF COVERED LOANS.—

“() IN GENERAL.—During the covered period, an
eligible recipient may, in addition to the allowable
uses of a loan made under this subsection, use the
proceeds of the covered loan for—

“(T) payroll costs;

“IT costs related to the continuation of group
health care benefits during periods of paid sick,
medical, or family leave, and insurance premiums;

“TII) employee salaries, commissions, or
similar compensations;

“IV) payments of interest on any mortgage
obligation (which shall not include any prepayment
of or payment of principal on a mortgage obliga-
tion);

“(V) rent (including rent under a lease agree-

ment);

“VI) utilities; and

“(VID interest on any other debt obligations
that were incurred before the covered period.

“(Gi) DELEGATED AUTHORITY.—

“() IN GENERAL.—For purposes of making cov-
ered loans for the purposes described in clause
(i), a lender approved to make loans under this
subsection shall be deemed to have been delegated
authority by the Administrator to make and
approve covered loans, subject to the provisions
of this paragraph.

“IT) CONSIDERATIONS.—In evaluating the
eligibility of a borrower for a covered loan with
the terms described in this paragraph, a lender
shall consider whether the borrower—

“(aa) was in operation on February 15,

2020; and

“(bb)(AA) had employees for whom the
borrower paid salaries and payroll taxes; or

“(BB) paid independent contractors, as
reported on a Form 1099—MISC.

“Gii) ADDITIONAL LENDERS.—The authority to
make loans under this paragraph shall be extended
to additional lenders determined by the Administrator
and the Secretary of the Treasury to have the nec-
essary qualifications to process, close, disburse and
service loans made with the guarantee of the Adminis-
tration.

“(iv) REFINANCE.—A loan made under subsection
(b)(2) during the period beginning on January 31, 2020
and ending on the date on which covered loans are
made available may be refinanced as part of a covered
oan.

“(v) NONRECOURSE.—Notwithstanding the waiver
of the personal guarantee requirement or collateral
under subparagraph (J), the Administrator shall have
no recourse against any individual shareholder,
member, or partner of an eligible recipient of a covered
loan for nonpayment of any covered loan, except to
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H.R. 748—11

the extent that such shareholder, member, or partner

uses the covered loan proceeds for a purpose not

authorized under clause (i).

“(G) BORROWER REQUIREMENTS.—

“(i) CERTIFICATION.—An eligible recipient applying
for a covered loan shall make a good faith certifi-
cation—

“T) that the uncertainty of current economic
conditions makes necessary the loan request to
support the ongoing operations of the eligible
recipient;

“IT) acknowledging that funds will be used
to retain workers and maintain payroll or make
mortgage payments, lease payments, and utility

ayments;

“ID that the eligible recipient does not have
an application pending for a loan under this sub-
section for the same purpose and duplicative of
amounts applied for or received under a covered
loan; and

“(IV) during the period beginning on February
15, 2020 and ending on December 31, 2020, that
the eligible recipient has not received amounts
under this subsection for the same purpose and
duplicative of amounts applied for or received
under a covered loan.

“(H) FEE WAIVER.—During the covered period, with
respect to a covered loan—

“(i) in lieu of the fee otherwise applicable under
paragraph (23)(A), the Administrator shall collect no
fee; and

“(ii) in lieu of the fee otherwise applicable under
paragraph (18)(A), the Administrator shall collect no
fee.

“(J) CREDIT ELSEWHERE.—During the covered period,
the requirement that a small business concern is unable
to obtain credit elsewhere, as defined in section 3(h), shall
not apply to a covered loan.

“(J) WAIVER OF PERSONAL GUARANTEE REQUIREMENT.—
During the covered period, with respect to a covered loan—

“(i) no personal guarantee shall be required for
the covered loan; and
, “(i) no collateral shall be required for the covered
oan.

“(K) MATURITY FOR LOANS WITH REMAINING BALANCE
AFTER APPLICATION OF FORGIVENESS.—With respect to a
covered loan that has a remaining balance after reduction
based on the loan forgiveness amount under section 1106
of the CARES Act—

“@) the remaining balance shall continue to be
guaranteed by the Administration under this sub-
section; and

“(ii) the covered loan shall have a maximum matu-
rity of 10 years from the date on which the borrower
applies for loan forgiveness under that section.

“L) INTEREST RATE REQUIREMENTS.—A covered loan
shall bear an interest rate not to exceed 4 percent.
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H.R. 748—12

“(M) LOAN DEFERMENT.—
“) DEFINITION OF IMPACTED BORROWER.—

“T) IN GENERAL.—In this subparagraph, the
term ‘impacted borrower’ means an _ eligible
recipient that—

“(aa) is in operation on February 15, 2020;

“(bb) has an application for a covered loan
that is approved or pending approval on or
after the date of enactment of this paragraph.
“IIT) PRESUMPTION.—For purposes of this

subparagraph, an impacted borrower is presumed

to have been adversely impacted by COVID-19.

“Gi) DEFERRAL.—During the covered period, the
Administrator shall—

“(T) consider each eligible recipient that applies
for a covered loan to be an impacted borrower;
and

“IT) require lenders under this subsection to
provide complete payment deferment relief for
impacted borrowers with covered loans for a period
of not less than 6 months, including payment of
principal, interest, and fees, and not more than
1 year.

“Gii) SECONDARY MARKET.—During the covered
period, with respect to a covered loan that is sold
on the secondary market, if an investor declines to
approve a deferral requested by a lender under clause
(ii), the Administrator shall exercise the authority to
purchase the loan so that the impacted borrower may
receive a deferral for a period of not less than 6 months,
including payment of principal, interest, and fees, and
not more than 1 year.

“(iv) GUIDANCE.—Not later than 30 days after the
date of enactment of this paragraph, the Administrator
shall provide guidance to lenders under this paragraph
on the deferment process described in this subpara-
graph.

“(N) SECONDARY MARKET SALES.—A covered loan shall
be eligible to be sold in the secondary market consistent
with this subsection. The Administrator may not collect
any fee for any guarantee sold into the secondary market
under this subparagraph.

“(O) REGULATORY CAPITAL REQUIREMENTS.—

“() RISK WEIGHT.—With respect to the appropriate
Federal banking agencies or the National Credit Union
Administration Board applying capital requirements
under their respective risk-based capital requirements,
a covered loan shall receive a risk weight of zero per-

t.

“Gi) TEMPORARY RELIEF FROM TDR DISCLOSURES.—
Notwithstanding any other provision of law, an insured
depository institution or an insured credit union that
modifies a covered loan in relation to COVID-19-
related difficulties in a troubled debt restructuring on
or after March 13, 2020, shall not be required to comply
with the Financial Accounting Standards Board
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H.R. 748—138

Accounting Standards Codification Subtopic 310-40
(Receivables — Troubled Debt Restructurings by Credi-
tors’) for purposes of compliance with the requirements

of the Federal Deposit Insurance Act (12 U.S.C. 1811

et seq.), until such time and under such circumstances

as the appropriate Federal banking agency or the

National Credit Union Administration Board, as

applicable, determines appropriate.

“(P) REIMBURSEMENT FOR PROCESSING.—

“G) IN GENERAL.—The Administrator shall
reimburse a lender authorized to make a covered loan
at a rate, based on the balance of the financing out-
standing at the time of disbursement of the covered
loan, of—

“T) 5 percent for loans of not more than
$350,000;

“(II) 3 percent for loans of more than $350,000
and less than $2,000,000; and

“TII) 1 percent for loans of not less than
$2,000,000.

“(i) FEE LIMITS.—An agent that assists an eligible
recipient to prepare an application for a covered loan
may not collect a fee in excess of the limits established
by the Administrator.

“Gii) TIMING.—A reimbursement described in
clause (i) shall be made not later than 5 days after
the disbursement of the covered loan.

“(iv) SENSE OF THE SENATE.—It is the sense of
the Senate that the Administrator should issue guid-
ance to lenders and agents to ensure that the proc-
essing and disbursement of covered loans prioritizes
small business concerns and entities in underserved
and rural markets, including veterans and members
of the military community, small business concerns
owned and controlled by socially and economically dis-
advantaged individuals (as defined in _ section
8(d)(3)(C)), women, and businesses in operation for
less than 2 years.

“(Q) DUPLICATION.—Nothing in this paragraph shall
prohibit a recipient of an economic injury disaster loan
made under subsection (b)(2) during the period beginning
on January 31, 2020 and ending on the date on which
covered loans are made available that is for a purpose
other than paying payroll costs and other obligations
described in subparagraph (F) from receiving assistance
under this paragraph.

“(R) WAIVER OF PREPAYMENT PENALTY.—Notwith-
standing any other provision of law, there shall be no
prepayment penalty for any payment made on a covered
loan.”.

(b) COMMITMENTS FOR 7(A) LOANS.—During the period begin-
ning on February 15, 2020 and ending on June 30, 2020—

(1) the amount authorized for commitments for general
business loans authorized under section 7(a) of the Small Busi-
ness Act (15 U.S.C. 636(a)), including loans made under para-
graph (36) of such section, as added by subsection (a), shall
be $349,000,000,000; and
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H.R. 748—14

(2) the amount authorized for commitments for such loans
under the heading “BUSINESS LOANS PROGRAM ACCOUNT” under
the heading “SMALL BUSINESS ADMINISTRATION” under title
V of the Consolidated Appropriations Act, 2020 (Public Law
116-93; 133 Stat. 2475) shall not apply.

(c) EXPRESS LOANS.—

(1) IN GENERAL.—Section 7(a)(31)(D) of the Small Business
Act (15 U.S.C. 636(a)(31)(D)) is amended by striking “$350,000”
and inserting “$1,000,000”.

(2) PROSPECTIVE REPEAL.—Effective on January 1, 2021,
section 7(a)(31)(D) of the Small Business Act (15 U.S.C.
636(a)(31)(D)) is amended by striking “$1,000,000” and
inserting “$350,000”.

(d) EXCEPTION TO GUARANTEE FEE WAIVER FOR VETERANS.—
Section 7(a)(31)(G) of the Small Business Act (15 U.S.C.
636(a)(31)(G)) is amended—

(1) by striking clause (ii); and

(2) by redesignating clause (iii) as clause (ii).

(e) INTERIM RULE.—On and after the date of enactment of
this Act, the interim final rule published by the Administrator
entitled “Express Loan Programs: Affiliation Standards” (85 Fed.
Reg. 7622 (February 10, 2020)) is permanently rescinded and shall
have no force or effect.

SEC. 1103. ENTREPRENEURIAL DEVELOPMENT.

(a) DEFINITIONS.—In this section—

(1) the term “covered small business concern” means a
small business concern that has experienced, as a result of
COVID-19—

(A) supply chain disruptions, including changes in—
(i) quantity and lead time, including the number

of shipments of components and delays in shipments;
(ii) quality, including shortages in supply for

quality control reasons; and
(iii) technology, including a compromised payment

network;

(B) staffing challenges;

(C) a decrease in gross receipts or customers; or

(D) a closure;

(2) the term “resource partner” means—

(A) a small business development center; and

(B) a women’s business center;

(3) the term “small business development center” has the
meaning given the term in section 3 of the Small Business
Act (15 U.S.C. 632); and

(4) the term “women’s business center” means a women’s
business center described in section 29 of the Small Business
Act (15 U.S.C. 656).

(b) EDUCATION, TRAINING, AND ADVISING GRANTS.—

(1) IN GENERAL.—The Administration may provide financial
assistance in the form of grants to resource partners to provide
education, training, and advising to covered small business
concerns.

(2) USE OF FUNDS.—Grants under this subsection shall
be used for the education, training, and advising of covered
small business concerns and their employees on—
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H.R. 748—31

and unsecured debts in an amount greater than

$7,500,000 (excluding debt owed to 1 or more affiliates

or insiders);
“Gi) any debtor that is a corporation subject to

the reporting requirements under section 13 or 15(d)

of the Securities Exchange Act of 1934 (15 U.S.C. 78m,

780(d)); or

“(ii) any debtor that is an affiliate of an issuer,
as defined in section 3 of the Securities Exchange

Act of 1934 (15 U.S.C. 78c).”.

(2) APPLICABILITY OF CHAPTERS.—Section 103(i) of title 11,
United States Code, is amended by striking “small business
debtor” and inserting “debtor (as defined in section 1182)”.

(3) APPLICATION OF AMENDMENT.—The amendment made
by paragraph (1) shall apply only with respect to cases com-
menced under title 11, United States Code, on or after the
date of enactment of this Act.

(4) TECHNICAL CORRECTIONS.—

(A) DEFINITION OF SMALL BUSINESS DEBTOR.—Section
101(51D)(B)(iii) of title 11, United States Code, is amended
to read as follows:

“(ii) any debtor that is an affiliate of an issuer

(as defined in section 3 of the Securities Exchange

Act of 1934 (15 U.S.C. 78c)).”.

(B) UNCLAIMED PROPERTY.—Section 347(b) of title 11,
United States Code, is amended by striking “1194” and
inserting “1191”.

(5) SUNSET.—On the date that is 1 year after the date
of enactment of this Act, section 1182(1) of title 11, United
States Code, is amended to read as follows:

“1) DEBTOR.—The term ‘debtor’ means a small business
debtor.”.

(b) BANKRUPTCY RELIEF.—

(1) IN GENERAL.—

(A) EXCLUSION FROM CURRENT MONTHLY INCOME.—Sec-
tion 101(10A)(B)Gi) of title 11, United States Code, is
amended—

(i) in subclause (IID), by striking “; and” and
inserting a semicolon;

(ii) in subclause (IV), by striking the period at
the end and inserting “; and”; and

(iii) by adding at the end the following:

“(V) Payments made under Federal law
relating to the national emergency declared by
the President under the National Emergencies Act
(50 U.S.C. 1601 et seq.) with respect to the
coronavirus disease 2019 (COVID-19).”.

(B) CONFIRMATION OF PLAN.—Section 1325(b)(2) of title
11, United States Code, is amended by inserting “payments
made under Federal law relating to the national emergency
declared by the President under the National Emergencies
Act (50 U.S.C. 1601 et seq.) with respect to the coronavirus
disease 2019 (COVID-19),” after “other than”.

(C) MODIFICATION OF PLAN AFTER CONFIRMATION.—Sec-
tion 1329 of title 11, United States Code, is amended by
adding at end the following:
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H.R. 748—32

“d)(1) Subject to paragraph (3), for a plan confirmed prior
to the date of enactment of this subsection, the plan may be modified
upon the request of the debtor if—

“(A) the debtor is experiencing or has experienced a mate-
rial financial hardship due, directly or indirectly, to the
coronavirus disease 2019 (COVID-19) pandemic; and

“(B) the modification is approved after notice and a hearing.
“2) A plan modified under paragraph (1) may not provide

for payments over a period that expires more than 7 years after
the time that the first payment under the original confirmed plan
was due.

“(3) Sections 1322(a), 1322(b), 1323(c), and the requirements
of section 1325(a) shall apply to any modification under paragraph
(1).”.

(D) APPLICABILITY.—

(i) The amendments made by subparagraphs (A)
and (B) shall apply to any case commenced before,
on, or after the date of enactment of this Act.

(ii) The amendment made by subparagraph (C)
shall apply to any case for which a plan has been
confirmed under section 1325 of title 11, United States
Code, before the date of enactment of this Act.

(2) SUNSET.—

(A) IN GENERAL.—

(i) EXCLUSION FROM CURRENT MONTHLY INCOME.—
Section 101(10A)(B)(ii) of title 11, United States Code,
is amended—

(I) in subclause (III), by striking the semicolon
at the end and inserting “; and”;

(II) in subclause (IV), by striking “; and” and
inserting a period; and

(III) by striking subclause (V).

(ii) CONFIRMATION OF PLAN.—Section 1325(b)(2) of
title 11, United States Code, is amended by striking
“payments made under Federal law relating to the
national emergency declared by the President under
the National Emergencies Act (50 U.S.C. 1601 et seq.)
with respect to the coronavirus disease 2019 (COVID-—
19),”.

(iii) MODIFICATION OF PLAN AFTER CONFIRMA-
TION.—Section 1329 of title 11, United States Code,
is amended by striking subsection (d).

(B) EFFECTIVE DATE.—The amendments made by
subparagraph (A) shall take effect on the date that is

1 year after the date of enactment of this Act.

SEC. 1114. EMERGENCY RULEMAKING AUTHORITY.

Not later than 15 days after the date of enactment of this
Act, the Administrator shall issue regulations to carry out this
title and the amendments made by this title without regard to
the notice requirements under section 553(b) of title 5, United
States Code.
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H.R. 748—33

TITLE II—ASSISTANCE FOR AMERICAN
WORKERS, FAMILIES, AND BUSINESSES

Subtitle A—Unemployment Insurance
Provisions

SEC. 2101. SHORT TITLE.

This subtitle may be cited as the “Relief for Workers Affected
by Coronavirus Act”.

SEC. 2102. PANDEMIC UNEMPLOYMENT ASSISTANCE.

(a) DEFINITIONS.—In this section:

(1) COVID-19.—The term “COVID-19” means the 2019
Novel Coronavirus or 2019-nCoV.

(2) COVID-19 PUBLIC HEALTH EMERGENCY.—The term
“COVID-19 public health emergency” means the public health
emergency declared by the Secretary of Health and Human
Services on January 27, 2020, with respect to the 2019 Novel
Coronavirus.

(3) COVERED INDIVIDUAL.—The term “covered individual’—

(A) means an individual who—

(i) is not eligible for regular compensation or
extended benefits under State or Federal law or pan-
demic emergency unemployment compensation under
section 2107, including an individual who has
exhausted all rights to regular unemployment or
extended benefits under State or Federal law or pan-
demic emergency unemployment compensation under
section 2107; and

(ii) provides self-certification that the individual—

(I) is otherwise able to work and available
for work within the meaning of applicable State
law, except the individual is unemployed, partially
unemployed, or unable or unavailable to work
because—

(aa) the individual has been diagnosed
with COVID-19 or is experiencing symptoms
of COVID-19 and seeking a medical diagnosis;

(bb) a member of the individual’s house-
hold has been diagnosed with COVID-19;

(cc) the individual is providing care for
a family member or a member of the individ-
ual’s household who has been diagnosed with
COVID-19;

(dd) a child or other person in the house-
hold for which the individual has primary
caregiving responsibility is unable to attend
school or another facility that is closed as a
direct result of the COVID-19 public health
emergency and such school or facility care is
required for the individual to work;

(ee) the individual is unable to reach the
place of employment because of a quarantine
imposed as a direct result of the COVID-19
public health emergency;

Page 56 of 72
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H.R. 748—123

the Committee on Education and Labor of the House of Rep-

resentatives, and the Committee on Appropriations of the House

of Representatives of such waiver.
(3) PUBLICATION.—Not later than 30 days after granting

a waiver under this section, the Secretary shall publish a

notice of the Secretary’s decision (including which waiver was

granted and the reason for granting the waiver) in the Federal

Register and on the website of the Department of Education.

(4) REPORT.—Not later than 30 days after the date of

enactment of this Act, the Secretary shall prepare and submit
a report to the Committee on Health, Education, Labor, and
Pensions and the Committee on Appropriations of the Senate,
and the Committee on Education and Labor and the Committee
on Appropriations of the House of Representatives, with rec-
ommendations on any additional waivers under the Individuals
with Disabilities Education Act (20 U.S.C. 1401 et seq.), the
Rehabilitation Act of 1973 (29 U.S.C. 701 et seq.), the
Elementary and Secondary Education Act of 1965 (20 U.S.C.
6301 et seq.), and the Carl D. Perkins Career and Technical
Education Act of 2006 (20 U.S.C. 2301 et seq.) the Secretary
believes are necessary to be enacted into law to provide limited
flexibility to States and local educational agencies to meet
the needs of students during the emergency involving Federal
primary responsibility determined to exist by the President
under section 501(b) of the Robert T. Stafford Disaster Relief
and Emergency Assistance Act (42 U.S.C. 5191(b)) with respect
to the Coronavirus Disease 2019 (COVID-19).

(e) TERMS.—In this section, the term “State educational agency”
includes the Bureau of Indian Education, and the term “local edu-
cational agency” includes Bureau of Indian Education funded
schools operated pursuant to a grant under the Tribally Controlled
Schools Act of 1988 (25 U.S.C. 2501 et seq.), or a contract under
the Indian Self-Determination and Education Assistance Act (25
U.S.C. 5301 et seq.).

SEC. 3512. HBCU CAPITAL FINANCING.

(a) DEFERMENT PERIOD.—

(1) IN GENERAL.—Notwithstanding any provision of title
III of the Higher Education Act of 1965 (20 U.S.C. 1051 et
seq.), or any regulation promulgated under such title, the Sec-
retary may grant a deferment, for the duration of a qualifying
emergency, to an institution that has received a loan under
part D of title III of such Act (20 U.S.C. 1066 et seq.).

(2) TERMS.—During the deferment period granted under
this subsection—

(A) the institution shall not be required to pay any
periodic installment of principal or interest required under
the loan agreement for such loan; and

(B) the Secretary shall make principal and interest
payments otherwise due under the loan agreement.

(3) CLosInG.—At the closing of a loan deferred under this
subsection, terms shall be set under which the institution shall
be required to repay the Secretary for the payments of principal
and interest made by the Secretary during the deferment, on
a schedule that begins upon repayment to the lender in full
on the loan agreement, except in no case shall repayment
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H.R. 748—124

be required to begin before the date that is 1 full fiscal year

after the date that is the end of the qualifying emergency.

(b) TERMINATION DATE.—

(1) IN GENERAL.—The authority provided under this section
to grant a loan deferment under subsection (a) shall terminate
on the date on which the qualifying emergency is no longer
in effect.

(2) DURATION.—Any provision of a loan agreement or insur-
ance agreement modified by the authority under this section
shall remain so modified for the duration of the period covered
by the loan agreement or insurance agreement.

(c) REPORT.—Not later than 180 days after the date of enact-
ment of this Act, and every 180 days thereafter during the period
beginning on the first day of the qualifying emergency and ending
on September 30 of the fiscal year following the end of the qualifying
emergency, the Secretary shall submit to the authorizing commit-
tees (as defined in section 103 of the Higher Education Act of
1965 (20 U.S.C. 1003)) a report that identifies each institution
that received assistance under this section.

(d) FUNDING.—There is hereby appropriated, out of any money
in the Treasury not otherwise appropriated, $62,000,000 to carry
out this section.

SEC. 3513. TEMPORARY RELIEF FOR FEDERAL STUDENT LOAN BOR-
ROWERS.

(a) IN GENERAL.—The Secretary shall suspend all payments
due for loans made under part D and part B (that are held by
the Department of Education) of title IV of the Higher Education
Act of 1965 (20 U.S.C. 1087a et seq.; 1071 et seq.) through Sep-
tember 30, 2020.

(b) No ACCRUAL OF INTEREST.—Notwithstanding any other
provision of the Higher Education Act of 1965 (20 U.S.C. 1001
et seq.), interest shall not accrue on a loan described under sub-
section (a) for which payment was suspended for the period of
the suspension.

(c) CONSIDERATION OF PAYMENTS.—Notwithstanding any other
provision of the Higher Education Act of 1965 (20 U.S.C. 1001
et seq.), the Secretary shall deem each month for which a loan
payment was suspended under this section as if the borrower of
the loan had made a payment for the purpose of any loan forgive-
ness program or loan rehabilitation program authorized under part
D or B of title IV of the Higher Education Act of 1965 (20 U.S.C.
1087a et seq.; 1071 et seq.) for which the borrower would have
otherwise qualified.

(d) REPORTING TO CONSUMER REPORTING AGENCIES.—During
the period in which the Secretary suspends payments on a loan
under subsection (a), the Secretary shall ensure that, for the pur-
pose of reporting information about the loan to a consumer reporting
agency, any payment that has been suspended is treated as if
it were a regularly scheduled payment made by a borrower.

(e) SUSPENDING INVOLUNTARY COLLECTION.—During the period
in which the Secretary suspends payments on a loan under sub-
section (a), the Secretary shall suspend all involuntary collection
related to the loan, including—

(1) a wage garnishment authorized under section 488A
of the Higher Education Act of 1965 (20 U.S.C. 1095a) or
section 3720D of title 31, United States Code;
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H.R. 748—125

(2) a reduction of tax refund by amount of debt authorized
under section 3720A of title 31, United States Code, or section
6402(d) of the Internal Revenue Code of 1986;

(3) a reduction of any other Federal benefit payment by
administrative offset authorized under section 3716 of title
31, United States Code (including a benefit payment due to
an individual under the Social Security Act or any other provi-
sion described in subsection (c)(3)(A)(i) of such section); and

(4) any other involuntary collection activity by the Sec-
retary.

(f) WAIvVERS.—In carrying out this section, the Secretary may
waive the application of—

(1) subchapter I of chapter 35 of title 44, United States
Code (commonly known as the “Paperwork Reduction Act”);

(2) the master calendar requirements under section 482
of the Higher Education Act of 1965 (20 U.S.C. 1089);

(3) negotiated rulemaking under section 492 of the Higher
Education Act of 1965 (20 U.S.C. 1098a); and

(4) the requirement to publish the notices related to the
system of records of the agency before implementation required
under paragraphs (4) and (11) of section 552a(e) of title 5,
United States Code (commonly known as the “Privacy Act of
1974”), except that the notices shall be published not later
than 180 days after the date of enactment of this Act.

(g) NOTICE TO BORROWERS AND TRANSITION PERIOD.—To inform
borrowers of the actions taken in accordance with this section
and ensure an effective transition, the Secretary shall—

(1) not later than 15 days after the date of enactment
of this Act, notify borrowers—

A) of the actions taken in accordance with subsections

(a) and (b) for whom payments have been suspended and

interest waived;

(B) of the actions taken in accordance with subsection

(e) for whom collections have been suspended;

(C) of the option to continue making payments toward
principal; and

(D) that the program under this section is a temporary
program.

(2) beginning on August 1, 2020, carry out a program
to provide not less than 6 notices by postal mail, telephone,
or electronic communication to borrowers indicating—

(A) when the borrower’s normal payment obligations
will resume; and

(B) that the borrower has the option to enroll in
income-driven repayment, including a brief description of
such options.

SEC. 3514. PROVISIONS RELATED TO THE CORPORATION FOR
NATIONAL AND COMMUNITY SERVICE.

(a) ACCRUAL OF SERVICE Hours.—

(1) ACCRUAL THROUGH OTHER SERVICE HOURS.—

(A) IN GENERAL.—Notwithstanding any other provision
of the Domestic Volunteer Service Act of 1973 (42 U.S.C.
4950 et seq.) or the National and Community Service Act
of 1990 (42 U.S.C. 12501 et seq.), the Corporation for
National and Community Service shall allow an individual
described in subparagraph (B) to accrue other service hours
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H.R. 748—235
RELATED AGENCIES
LEGAL SERVICES CORPORATION
PAYMENT TO THE LEGAL SERVICES CORPORATION

For an additional amount for “Payment to the Legal Services
Corporation”, $50,000,000, to prevent, prepare for, and respond
to coronavirus, domestically or internationally: Provided, That none
of the funds appropriated under this heading in this Act to the
Legal Services Corporation shall be expended for any purpose
prohibited or limited by, or contrary to any of the provisions of,
sections 501, 502, 503, 504, 505, and 506 of Public Law 105-
119, and all funds appropriated in this Act to the Legal Services
Corporation shall be subject to the same terms and conditions
set forth in such sections, except that all references in sections
502 and 503 to 1997 and 1998 shall be deemed to refer instead
to 2019 and 2020, respectively, and except that sections 501 and
503 of Public Law 104-134 (referenced by Public Law 105-119)
shall not apply to the amount made available under this heading:
Provided further, That for the purposes of this Act, the Legal
Services Corporation shall be considered an agency of the United
States Government: Provided further, That such amount is des-
ignated by the Congress as being for an emergency requirement
pursuant to section 251(b)(2)(A)G) of the Balanced Budget and
Emergency Deficit Control Act of 1985.

GENERAL PROVISIONS—THIS TITLE

SEc. 12001. Amounts provided by the Consolidated Appropria-
tions Act, 2020, (Public Law 116-93) for the Hollings Manufacturing
Extension Partnership under the heading “National Institute of
Standards and Technology—Industrial Technology Services” shall
not be subject to cost share requirements under 15 U.S.C.
278k(e)(2): Provided, That the authority made available pursuant
to this section shall be elective for any Manufacturing Extension
Partnership Center that also receives funding from a State that
is conditioned upon the application of a Federal cost sharing require-
ment.

SEC. 12002. (a) Funds appropriated in this title for the National
Science Foundation may be made available to restore amounts,
either directly or through reimbursement, for obligations incurred
by the National Science Foundation for research grants and other
necessary expenses to prevent, prepare for, and respond to
coronavirus, domestically or internationally, prior to the date of
enactment of this Act.

(b) Grants or cooperative agreements made by the National
Science Foundation under this title, to carry out research grants
and other necessary expenses to prevent, prepare for, and respond
to coronavirus, domestically or internationally, shall include
amounts to reimburse costs for these purposes incurred between
January 20, 2020, and the date of issuance of such grants or
agreements.

BUREAU OF PRISONS

SEC. 12003. (a) DEFINITIONS.—In this section—
(1) the term “Bureau” means the Bureau of Prisons;
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H.R. 748—236

(2) the term “covered emergency period” means the period
beginning on the date on which the President declared a
national emergency under the National Emergencies Act (50
U.S.C. 1601 et seq.) with respect to the Coronavirus Disease
2019 (COVID-19) and ending on the date that is 30 days
after the date on which the national emergency declaration
terminates; and

(3) the term “Secretary” means the Secretary of Health
and Human Services.

(b) SUPPLY OF PERSONAL PROTECTIVE EQUIPMENT AND TEST
Kits TO BUREAU OF PRISONS; HOME CONFINEMENT AUTHORITY.—

(1) PERSONAL PROTECTIVE EQUIPMENT AND TEST KITS.—

(A) FINDINGS.—Congress finds the following:

(i) There is an urgent need for personal protective
equipment and test kits to the Bureau based on the
density of the inmate population, the high traffic, the
high volume of inmates, the high rate of turnover
of inmates and personnel, and the number of high-
security areas, within the facilities of the Bureau.

(ii) The inability of the Bureau to secure the pur-
chase of infectious disease personal protective equip-
ment and related supplies now and in the future is
a vulnerability.

(iii) The Bureau is currently competing in and
engaging the same landscape of vendors as all other
Federal agencies and private entities.

(iv) The ability of the Bureau to purchase needed
equipment and supplies is currently subject to an indi-
vidual manufacturer’s specific recognition of the
Bureau as a priority and subsequent allocation of the
inventory of the manufacturer to the Bureau.

(B) CONSIDERATION.—The Secretary shall appro-
priately consider, relative to other priorities of the Depart-
ment of Health and Human Services for high-risk and
high-need populations, the distribution of infectious disease
personal protective equipment and COVID-19 test kits to
the Bureau for use by inmates and personnel of the Bureau.
(2) HOME CONFINEMENT AUTHORITY.—During the covered

emergency period, if the Attorney General finds that emergency
conditions will materially affect the functioning of the Bureau,
the Director of the Bureau may lengthen the maximum amount
of time for which the Director is authorized to place a prisoner
in home confinement under the first sentence of section
3624(c)(2) of title 18, United States Code, as the Director deter-
mines appropriate.

(c) VIDEO VISITATION.—

(1) IN GENERAL.—During the covered emergency period,
if the Attorney General finds that emergency conditions will
materially affect the functioning of the Bureau, the Director
of the Bureau shall promulgate rules regarding the ability
of inmates to conduct visitation through video teleconferencing
and telephonically, free of charge to inmates, during the covered
emergency period.

(2) EXEMPTION FROM NOTICE-AND-COMMENT RULEMAKING
REQUIREMENTS.—Section 553 of title 5, United States Code,
shall not apply to the promulgation of rules under paragraph
(1) of this subsection.
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H.R. 748—237

(d) EMERGENCY REQUIREMENT.—The amount provided by this
section is designated by the Congress as being for an emergency
requirement pursuant to section 251(b)(2)(A)G) of the Balanced
Budget and Emergency Deficit Control Act of 1985.

TEMPORARY AUTHORITY OF DIRECTOR OF THE USPTO DURING THE
COVID—19 EMERGENCY.

SEc. 12004. (a) IN GENERAL.—During the emergency period
described in subsection (e), the Director may toll, waive, adjust,
or modify, any timing deadline established by title 35, United
States Code, the Trademark Act, section 18 of the Leahy-Smith
America Invents Act (35 U.S.C. 321 note), or regulations promul-
gated thereunder, in effect during such period, if the Director deter-
mines that the emergency related to such period—

(1) materially affects the functioning of the Patent and

Trademark Office;

(2) prejudices the rights of applicants, registrants, patent
owners, or others appearing before the Office; or

(3) prevents applicants, registrants, patent owners, or
others appearing before the Office from filing a document or
fee with the Office.

(b) PuBLic NoticE.—If the Director determines that tolling,
waiving, adjusting, or modifying a timing deadline under subsection
(a) is appropriate, the Director shall publish publicly a notice to
such effect.

(c) STATEMENT REQUIRED.—Not later than 20 days after the
Director tolls, waives, adjusts, or modifies a timing deadline under
subsection (a) and such toll, waiver, adjustment, or modification
is in effect for a consecutive or cumulative period exceeding 120
days, the Director shall submit to Congress a statement describing
the action taken, relevant background, and rationale for the period
of tolling, waiver, adjustment, or modification.

(d) OTHER LAWS.—Notwithstanding section 301 of the National
Emergencies Act (50 U.S.C. 1631), the authority of the Director
under subsection (a) is not contingent on a specification made
by the President under such section or any other requirement
under that Act (other than the emergency declaration under section
201(a) of such Act (50 U.S.C. 1621(a))). The authority described
in this section supersedes the authority of title II of the National
Emergencies Act (50 U.S.C. 1621 et seq.).

(e) EMERGENCY PERIOD.—The emergency period described in
this subsection includes the duration of the portion of the emergency
declared by the President pursuant to the National Emergencies
Act on March 13, 2020, as a result of the COVID-19 outbreak
(and any renewal thereof) beginning on or after the date of the
enactment of this section and the 60 day period following such
duration.

(f) RULE OF CONSTRUCTION.—Nothing in this section may be
construed as limiting other statutory authorities the Director may
have to grant relief regarding filings or deadlines.

(g) SUNSET.—Notwithstanding subsection (a), the authorities
provided under this section shall expire upon the expiration of
the 2-year period after the date of the enactment of this section.

(h) DEFINITIONS.—In this section:
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H.R. 748—278

that CCDBG State plans do not need to be amended prior to
utilizing existing authorities in the CCDBG Act for the purposes
provided herein: Provided further, That States, Territories, and
Tribes are authorized to use funds appropriated under this heading
in this Act to provide child care assistance to health care sector
employees, emergency responders, sanitation workers, and other
workers deemed essential during the response to coronavirus by
public officials, without regard to the income eligibility requirements
of section 658P(4) of such Act: Provided further, That funds appro-
priated under this heading in this Act shall be available to eligible
child care providers under section 658P(6) of the CCDBG Act,
even if such providers were not receiving CCDBG assistance prior
to the public health emergency as a result of the coronavirus,
for the purposes of cleaning and sanitation, and other activities
necessary to maintain or resume the operation of programs: Pro-
vided further, That payments made under this heading in this
Act may be obligated in this fiscal year or the succeeding two
fiscal years: Provided further, That funds appropriated under this
heading in this Act may be made available to restore amounts,
either directly or through reimbursement, for obligations incurred
to prevent, prepare for, and respond to coronavirus, domestically
or internationally, prior to the date of enactment of this Act: Pro-
vided further, That such amount is designated by the Congress
as being for an emergency requirement pursuant to section
251(b)(2)(A)G) of the Balanced Budget and Emergency Deficit Con-
trol Act of 1985.

CHILDREN AND FAMILIES SERVICES PROGRAMS

For an additional amount for “Children and Families Services
Programs”, $1,874,000,000, to remain available through September
30, 2021, to prevent, prepare for, and respond to coronavirus, domes-
tically or internationally, which shall be used as follows: (1)
$1,000,000,000 for carrying out activities under sections 674
through 679 of the Community Services Block Grant Act, including
for federal administrative expenses, and of which no part shall
be subject to section 674(b)(3) of such Act: Provided, That to the
extent Community Services Block Grant funds are distributed as
grant funds by a State to an eligible entity as provided under
such Act, and have not been expended by such entity, they shall
remain with such entity for carryover into the next two fiscal
years for expenditure by such entity consistent with program pur-
pose: Provided further, That for services furnished under such Act
during fiscal years 2020 and 2021, States may apply the last sen-
tence of section 673(2) of such Act by substituting “200 percent”
for “125 percent”; (2) $750,000,000 for making payments under
the Head Start Act, including for Federal administrative expenses,
and allocated in an amount that bears the same ratio to such
portion as the number of enrolled children served by the agency
involved bears to the number of enrolled children by all Head
Start agencies: Provided further, That none of the funds appro-
priated in this paragraph shall be included in the calculation of
the “base grant” in subsequent fiscal years, as such term is defined
in sections 640(a)(7)(A), 641A(h)(1)(B), or 645(d)(3) of the Head
Start Act: Provided further, That funds appropriated in this para-
graph are not subject to the allocation requirements of section
640(a) of the Head Start Act: Provided further, That up to
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H.R. 748—279

$500,000,000 shall be available for the purpose of operating supple-
mental summer programs through non-competitive grant supple-
ments to existing grantees determined to be most ready to operate
those programs by the Office of Head Start; (3) $2,000,000 for
the National Domestic Violence Hotline as authorized by section
303(b) of the Family Violence Prevention and Services Act: Provided
further, That the Secretary may make such funds available for
providing hotline services remotely; (4) $45,000,000 for Family
Violence Prevention and Services formula grants as authorized
by section 303(a) of the Family Violence and Prevention and Serv-
ices Act with such funds available to grantees without regard to
matching requirements under section 306(c)(4) of such Act: Provided
further, That the Secretary may make such funds available for
providing temporary housing and assistance to victims of family,
domestic, and dating violence; (5) $25,000,000 for carrying out
activities under the Runaway and Homeless Youth Act: Provided
further, That such amounts shall be used to supplement, not sup-
plant, existing funds and shall be available without regard to
matching requirements; (6) $45,000,000 shall be used for child
welfare services as authorized by subpart 1 of part B of title
IV of the Social Security Act (other than sections 426, 427, and
429 of such subpart), with such funds available to grantees without
regard to matching requirements under section 424(a) of that Act
or any applicable reductions in federal financial participation under
section 424(f) of that Act; and (7) $7,000,000 for Federal administra-
tive expenses: Provided further, That funds appropriated under
this heading in this Act may be made available to restore amounts,
either directly or through reimbursement, for obligations incurred
to prevent, prepare for, and respond to coronavirus, domestically
or internationally, prior to the date of enactment of this Act: Pro-
vided further, That such amount is designated by the Congress
as being for an emergency requirement pursuant to section
251(b)(2)(A)G) of the Balanced Budget and Emergency Deficit Con-
trol Act of 1985.

ADMINISTRATION FOR COMMUNITY LIVING

AGING AND DISABILITY SERVICES PROGRAMS

For an additional amount for “Aging and Disability Services
Programs”, $955,000,000, to remain available until September 30,
2021, to prevent, prepare for, and respond to coronavirus, domesti-
cally or internationally: Provided, That of the amount made avail-
able under this heading in this Act to prevent, prepare for, and
respond to coronavirus, $820,000,000 shall be for activities author-
ized under the Older Americans Act of 1965 (“OAA”), including
$200,000,000 for supportive services under part B of title II;
$480,000,000 for nutrition services under subparts 1 and 2 of part
C of title III; $20,000,000 for nutrition services under title VI;
$100,000,000 for support services for family caregivers under part
E of title III; and $20,000,000 for elder rights protection activities,
including the long-term ombudsman program under title VII of
such Act: Provided further, That of the amount made available
under this heading in this Act, $50,000,000 shall be for aging
and disability resource centers authorized in sections 202(b) and
411 of the OAA to prevent, prepare for, and respond to coronavirus:
Provided further, That of the amount made available under this
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H.R. 748—280

heading in this Act to prevent, prepare for, and respond to
coronavirus, $85,000,000 shall be available for centers for inde-
pendent living that have received grants funded under part C
of chapter I of title VII of the Rehabilitation Act of 1973: Provided
further, That to facilitate State use of funds provided under this
heading in this Act, matching requirements under sections
304(d)(1)(D) and 373(g)(2) of the OAA shall not apply to funds
made available under this heading in this Act: Provided further,
That the transfer authority under section 308(b)(4)(A) of the OAA
shall apply to funds made available under this heading in this
Act by substituting “100 percent” for “40 percent”: Provided further,
That the State Long-Term Care Ombudsman shall have continuing
direct access (or other access through the use of technology) to
residents of long-term care facilities during any portion of the
public health emergency relating to coronavirus beginning on the
date of enactment of this Act and ending on September 30, 2020,
to provide services described in section 712(a)(3)(B) of the OAA:
Provided further, That such amount is designated by the Congress
as being for an emergency requirement pursuant to section
251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Con-
trol Act of 1985.

OFFICE OF THE SECRETARY
PUBLIC HEALTH AND SOCIAL SERVICES EMERGENCY FUND

(INCLUDING TRANSFER OF FUNDS)

For an additional amount for “Public Health and Social Services
Emergency Fund”, $27,014,500,000, to remain available until Sep-
tember 30, 2024, to prevent, prepare for, and respond to coronavirus,
domestically or internationally, including the development of nec-
essary countermeasures and vaccines, prioritizing platform-based
technologies with U.S.-based manufacturing capabilities, the pur-
chase of vaccines, therapeutics, diagnostics, necessary medical sup-
plies, as well as medical surge capacity, addressing blood supply
chain, workforce modernization, telehealth access and infrastruc-
ture, initial advanced manufacturing, novel dispensing, enhance-
ments to the U.S. Commissioned Corps, and other preparedness
and response activities: Provided, That funds appropriated under
this paragraph in this Act may be used to develop and demonstrate
innovations and enhancements to manufacturing platforms to sup-
port such capabilities: Provided further, That the Secretary of
Health and Human Services shall purchase vaccines developed
using funds made available under this paragraph in this Act to
respond to an outbreak or pandemic related to coronavirus in quan-
tities determined by the Secretary to be adequate to address the
public health need: Provided further, That products purchased by
the Federal government with funds made available under this para-
graph in this Act, including vaccines, therapeutics, and diagnostics,
shall be purchased in accordance with Federal Acquisition Regula-
tion guidance on fair and reasonable pricing: Provided further,
That the Secretary may take such measures authorized under cur-
rent law to ensure that vaccines, therapeutics, and diagnostics
developed from funds provided in this Act will be affordable in
the commercial market: Provided further, That in carrying out
the previous proviso, the Secretary shall not take actions that
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H.R. 748—284

to the Committees on Appropriations of the House of Representa-
tives and the Senate on obligation of funds, including obligations
to such eligible health care providers summarized by State of the
payment receipt: Provided further, That such reports shall be
updated and submitted to such Committees every 60 days until
funds are expended: Provided further, That such amount is des-
ignated by the Congress as being for an emergency requirement
pursuant to section 35 1(b 2X ANG) of the Balanced Budget and
Emergency Deficit Control Act of 1985.

DEPARTMENT OF EDUCATION

EDUCATION STABILIZATION FUND

For an additional amount for “Education Stabilization Fund”,
$30,750,000,000, to remain available through September 30, 2021,
to prevent, prepare for, and respond to coronavirus, domestically
or internationally: Provided, That such amount is designated by
the Congress as being for an emergency requirement pursuant
to section 251(b)(2)(A)G) of the Balanced Budget and Emergency
Deficit Control Act of 1985.

GENERAL PROVISIONS

EDUCATION STABILIZATION FUND

SEc. 18001. (a) ALLOCATIONS.—From the amount made avail-
able under this heading in this Act to carry out the Education
Stabilization Fund, the Secretary shall first allocate—

(1) not more than 1/2 of 1 percent to the outlying areas
on the basis of their respective needs, as determined by the
Secretary, in consultation with the Secretary of the Interior;

(2) one-half of 1 percent for the Secretary of Interior, in
consultation with the Secretary of Education, for programs
operated or funded by the Bureau of Indian Education; and

1 percent for grants to States with the highest
coronavirus burden to support activities under this heading
in this Act, for which the Secretary shall issue a notice inviting
applications not later than 30 days of enactment of this Act
and approve or deny applications not later than 30 days after
receipt.

(b) RESERVATIONS.—After carrying out subsection (a), the Sec-
retary shall reserve the remaining funds made available as follows:

(1) 9.8 percent to carry out section 18002 of this title.

(2) 43.9 percent to carry out section 18003 of this title.

(3) 46.3 percent to carry out section 18004 of this title.

GOVERNOR’S EMERGENCY EDUCATION RELIEF FUND

18002. (a) GRANTS.—From funds reserved under section
1800 of this title, the Secretary shall make Emergency Edu-
cation Relief grants to the Governor of each State with an approved
application. The Secretary shall issue a notice inviting applications
not later than 30 days of enactment of this Act and shall approve
or deny applications not later than 30 days after receipt.

(b) ALLOCATIONS.—The amount of each grant under subsection
(a) shall be allocated by the Secretary to each State as follows:
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H.R. 748—285

(1) 60 percent on the basis of their relative population
of individuals aged 5 through 24.

2) 40 percent on the basis of their relative number of
children counted under section 1124(c) of the Elementary and
Secondary Education Act of 1965 (referred to under this heading
as “ESEA”).

(c) USES OF FUNDS.—Grant funds awarded under subsection
(b) may be used to—

(1) provide emergency support through grants to local edu-
cational agencies that the State educational agency deems have
been most significantly impacted by coronavirus to support
the ability of such local educational agencies to continue to
provide educational services to their students and to support
the on-going functionality of the local educational agency;

(2) provide emergency support through grants to institu-
tions of higher education serving students within the State
that the Governor determines have been most significantly
impacted by coronavirus to support the ability of such institu-
tions to continue to provide educational services and support
the on-going functionality of the institution; and

(3) provide support to any other institution of higher edu-
cation, local educational agency, or education related entity
within the State that the Governor deems essential for carrying
out emergency educational services to students for authorized
activities described in section 18003(d)(1) of this title or the
Higher Education Act, the provision of child care and early
childhood education, social and emotional support, and the
protection of education-related jobs.

(d) REALLOCATION.—Each Governor shall return to the Sec-
retary any funds received under this section that the Governor
does not award within one year of receiving such funds and the
Secretary shall reallocate such funds to the remaining States in
accordance with subsection (b).

ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND

SEC. 18003. (a) GRANTS.—From funds reserved under section
18001(b)(2) of this title, the Secretary shall make elementary and
secondary school emergency relief grants to each State educational
agency with an approved application. The Secretary shall issue
a notice inviting applications not later than 30 days of enactment
of this Act and approve or deny applications not later than 30
days after receipt.

(b) ALLOCATIONS TO STATES.—The amount of each grant under
subsection (a) 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 ESEA of 1965 in the most recent fiscal year.

(c) SUBGRANTS TO LOCAL EDUCATIONAL AGENCIES.—Each State
shall allocate not less than 90 percent of the grant funds awarded
to the State under this section as subgrants to local educational
agencies (including charter schools that are local educational agen-
cies) in the State in proportion to the amount of funds such local
educational agencies and charter schools that are local educational
agencies received under part A of title I of the ESEA of 1965
in the most recent fiscal year.

(d) USES oF FunpDs.—A local educational agency that receives
funds under this title may use the funds for any of the following:
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H.R. 748—286

(1) Any activity authorized by the ESEA of 1965, including
the Native Hawaiian Education Act and the Alaska Native
Educational Equity, Support, and Assistance Act (20 U.S.C.
6301 et seq.), the Individuals with Disabilities Education Act
(20 U.S.C. 1400 et seq.) (“IDEA”), the Adult Education and
Family Literacy Act (20 U.S.C. 1400 et seq.), the Carl D.
Perkins Career and Technical Education Act of 2006 (20 U.S.C.
2301 et seq.) (“the Perkins Act”), or subtitle B of title VII
of the McKinney-Vento Homeless Assistance Act (42 U.S.C.
114381 et seq.).

(2) Coordination of preparedness and response efforts of
local educational agencies with State, local, Tribal, and terri-
torial public health departments, and other relevant agencies,
to improve coordinated responses among such entities to pre-
vent, prepare for, and respond to coronavirus.

(3) Providing principals and others school leaders with
the resources necessary to address the needs of their individual
schools.

(4) Activities to address the unique needs of low-income
children or students, children with disabilities, English
learners, racial and ethnic minorities, students experiencing
homelessness, and foster care youth, including how outreach
and service delivery will meet the needs of each population.

(5) Developing and implementing procedures and systems
to improve the preparedness and response efforts of local edu-
cational agencies.

(6) Training and professional development for staff of the
local educational agency on sanitation and minimizing the
spread of infectious diseases.

(7) Purchasing supplies to sanitize and clean the facilities
of a local educational agency, including buildings operated by
such agency.

(8) Planning for and coordinating during long-term clo-
sures, including for how to provide meals to eligible students,
how to provide technology for online learning to all students,
how to provide guidance for carrying out requirements under
the Individuals with Disabilities Education Act (20 U.S.C. 1401
et seq.) and how to ensure other educational services can con-
tinue to be provided consistent with all Federal, State, and
local requirements.

(9) Purchasing educational technology (including hardware,
software, and connectivity) for students who are served by
the local educational agency that aids in regular and sub-
stantive educational interaction between students and their
classroom instructors, including low-income students and stu-
dents with disabilities, which may include assistive technology
or adaptive equipment.

(10) Providing mental health services and supports.

(11) Planning and implementing activities related to
summer learning and supplemental afterschool programs,
including providing classroom instruction or online learning
during the summer months and addressing the needs of low-
income students, students with disabilities, English learners,
migrant students, students experiencing homelessness, and
children in foster care.

(12) Other activities that are necessary to maintain the
operation of and continuity of services in local educational
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H.R. 748—287

agencies and continuing to employ existing staff of the local

educational agency.

(e) STATE FUNDING.—With funds not otherwise allocated under
subsection (c), a State may reserve not more than 1/2 of 1 percent
for administrative costs and the remainder for emergency needs
as determined by the state educational agency to address issues
responding to coronavirus, which may be addressed through the
use of grants or contracts.

(f) REALLOCATION.—A State shall return to the Secretary any
funds received under this section that the State does not award
within 1 year of receiving such funds and the Secretary shall
reallocate such funds to the remaining States in accordance with
subsection (b).

HIGHER EDUCATION EMERGENCY RELIEF FUND

SEc. 18004. (a) IN GENERAL.—The Secretary shall allocate
funding under this section as follows:

) 90 percent to each institution of higher education to
prevent, prepare for, and respond to coronavirus, by appor-
tioning it—

(A) 75 percent according to the relative share of full-
time equivalent enrollment of Federal Pell Grant recipients
who are not exclusively enrolled in distance education
courses prior to the coronavirus emergency; and

(B) 25 percent according to the relative share of full-
time equivalent enrollment of students who were not Fed-
eral Pell Grant recipients who are not exclusively enrolled
in distance education courses prior to the coronavirus emer-
gency.

(2) 7.5 percent for additional awards under parts A and
B of title III, parts A and B of title V, and subpart 4 of
part A of title VII of the Higher Education Act to address
needs directly related to coronavirus, that shall be in addition
to awards made in section 18004(a)(1) of this title, and allocated
by the Secretary proportionally to such programs based on
the relative share of funding appropriated to such programs
in the Further Consolidated Appropriations Act, 2020 (Public
Law 116-94) and which may be used to defray expenses
(including lost revenue, reimbursement for expenses already
incurred, technology costs associated with a transition to dis-
tance education, faculty and staff trainings, payroll) incurred
by institutions of higher education and for grants to students
for any component of the student’s cost of attendance (as defined
under section 472 of the Higher Education Act), including food,
housing, course materials, technology, health care, and child
care.

(3) 2.5 percent for part B of title VII of the Higher Edu-
cation Act for institutions of higher education that the Secretary
determines have the greatest unmet needs related to
coronavirus, which may be used to defray expenses (including
lost revenue, reimbursement for expenses already incurred,
technology costs associated with a transition to distance edu-
cation, faculty and staff trainings, payroll) incurred by institu-
tions of higher education and for grants to students for any
component of the student’s cost of attendance (as defined under
section 472 of the Higher Education Act), including food,
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H.R. 748—288

housing, course materials, technology, health care, and child

care.

(b) DISTRIBUTION.—The funds made available to each institu-
tion under subsection (a)(1) shall be distributed by the Secretary
using the same systems as the Secretary otherwise distributes
funding to each institution under title IV of the Higher Education
Act of 1965 (20 U.S.C. 1001 et seq.).

(c) USES OF FUNDS.—Except as otherwise specified in subsection
(a), an institution of higher education receiving funds under this
section may use the funds received to cover any costs associated
with significant changes to the delivery of instruction due to the
coronavirus, so long as such costs do not include payment to contrac-
tors for the provision of pre-enrollment recruitment activities;
endowments; or capital outlays associated with facilities related
to athletics, sectarian instruction, or religious worship. Institutions
of higher education shall use no less than 50 percent of such
funds to provide emergency financial aid grants to students for
expenses related to the disruption of campus operations due to
coronavirus (including eligible expenses under a student’s cost of
attendance, such as food, housing, course materials, technology,
health care, and child care).

(d) SPECIAL PROVISIONS.—(1) In awarding grants under section
18004(a)(3) of this title, the Secretary shall give priority to any
institution of higher education that is not otherwise eligible for
funding under paragraphs (1) and (2) of section 18004(a) of this
title of at least $500,000 and demonstrates significant unmet needs
related to expenses associated with coronavirus.

(2) A Historically Black College and University or a Minority
Serving Institution may use prior awards provided under titles
III, V, and VII of the Higher Education Act to prevent, prepare
for, and respond to coronavirus.

(e) REPoRT.—An institution receiving funds under this section
shall submit a report to the Secretary, at such time and in such
manner as the Secretary may require, that describes the use of
funds provided under this section.

ASSISTANCE TO NON-PUBLIC SCHOOLS

SEc. 18005. (a) IN GENERAL.—A local educational agency
receiving funds under sections 18002 or 18003 of this title shall
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 representa-
tives of non-public schools.

(b) PUBLIC CONTROL OF FUNDS.—The control of funds for the
services and assistance provided to a non-public school under sub-
section (a), and title to materials, equipment, and property pur-
chased with such funds, shall be in a public agency, and a public
agency shall administer such funds, materials, equipment, and prop-
erty and shall provide such services (or may contract for the provi-
sion of such services with a public or private entity).

CONTINUED PAYMENT TO EMPLOYEES

Sec. 18006. A local educational agency, State, institution of
higher education, or other entity that receives funds under “Edu-
cation Stabilization Fund”, shall to the greatest extent practicable,
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H.R. 748—289

continue to pay its employees and contractors during the period
of any disruptions or closures related to coronavirus.

DEFINITIONS

SEC. 18007. Except as otherwise provided in sections 18001-
18006 of this title, as used in such sections—

(1) the terms “elementary education” and “secondary edu-
cation” have the meaning given such terms under State law;

(2) the term “institution of higher education” has the
meaning given such term in title I of the Higher Education
Act of 1965 (20 U.S.C. 1001 et seq.);

(3) the term “Secretary” means the Secretary of Education;

(4) the term “State” means each of the 50 States, the
District of Columbia, and the Commonwealth of Puerto Rico;

(5) the term “cost of attendance” has the meaning given
such term in section 472 of the Higher Education Act of 1965.

(6) the term “Non-public school” means a_ non-public
elementary and secondary school that (A) is accredited, licensed,
or otherwise operates in accordance with State law; and (B)
was in existence prior to the date of the qualifying emergency
for which grants are awarded under this section;

(7) the term “public school” means a public elementary
or secondary school; and

(8) any other term used that is defined in section 8101
of the Elementary and Secondary Education Act of 1965 (20
U.S.C. 7801) shall have the meaning given the term in such
section.

MAINTENANCE OF EFFORT

SEc. 18008. (a) A State’s application for funds to carry out
sections 18002 or 18003 of this title shall include assurances that
the State will maintain support for elementary and secondary edu-
cation, and State support for higher education (which shall include
State funding to institutions of higher education and state need-
based financial aid, and shall not include support for capital projects
or for research and development or tuition and fees paid by stu-
dents) in fiscal years 2020 and 2021 at least at the levels of
such support that is the average of such State’s support for
elementary and secondary education and for higher education pro-
vided in the 3 fiscal years preceding the date of enactment of
this Act.

(b) The secretary may waive the requirement in subsection
(a) for the purpose of relieving fiscal burdens on States that have
experienced a precipitous decline in financial resources.

SAFE SCHOOLS AND CITIZENSHIP EDUCATION

For an additional amount for “Safe Schools and Citizenship
Education”, $100,000,000, to remain available through September
30, 2021, to prevent, prepare for, and respond to coronavirus, domes-
tically or internationally, to supplement funds otherwise available
for “Project SERV”, including to help elementary, secondary and
postsecondary schools clean and disinfect affected schools, and assist
in counseling and distance learning and associated costs: Provided,
That such amount is designated by the Congress as being for
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H.R. 748—290

an emergency requirement pursuant to section 251(b)(2)(A)G) of
the Balanced Budget and Emergency Deficit Control Act of 1985.

GALLAUDET UNIVERSITY

For an additional amount for “Gallaudet University”,
$7,000,000, to remain available through September 30, 2021, to
prevent, prepare for, and respond to coronavirus, domestically or
internationally, including to help defray the expenses directly
caused by coronavirus and to enable grants to students for expenses
directly related to coronavirus and the disruption of university
operations: Provided, That such amount is designated by the Con-

gress as being for an emergency requirement pursuant to section
35 1(b\Q(ANG) of the Balanced Budget and Emergency Deficit Con-
trol Act of 1985.

STUDENT AID ADMINISTRATION

For an additional amount for “Student Aid Administration”,
$40,000,000, to remain available through September 30, 2021, to
prevent, prepare for, and respond to coronavirus, domestically or
internationally, for carrying out part D of title I, and subparts
1, 8, 9 and 10 of part A, and parts B, C, D, and E of title
IV of the HEA, and subpart 1 of part A of title VII of the Public
Health Service Act: Provided, That such amount is designated by
the Congress as being for an emergency requirement pursuant
to section 251(b)(2)(A)G) of the Balanced Budget and Emergency
Deficit Control Act of 1985.

HOWARD UNIVERSITY

For an additional amount for “Howard University”, $13,000,000,
to remain available through September 30, 2021, to prevent, prepare
for, and respond to coronavirus, domestically or internationally,
including to help defray the expenses directly caused by coronavirus
and to enable grants to students for expenses directly related to
coronavirus and the disruption of university operations: Provided,
That such amount is designated by the Congress as being for
an emergency requirement pursuant to section 251(b)(2)(A)G) of
the Balanced Budget and Emergency Deficit Control Act of 1985.

DEPARTMENTAL MANAGEMENT
PROGRAM ADMINISTRATION

For an additional amount for “Program Administration”,
$8,000,000, to remain available through September 30, 2021 to
prevent, prepare for, and respond to coronavirus, domestically or
internationally: Provided, That such amount is designated by the
Congress as being for an emergency requirement pursuant to section
251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Con-
trol Act of 1985.

OFFICE OF THE INSPECTOR GENERAL
For an additional amount for “Office of the Inspector General”,

$7,000,000, to remain available through September 30, 2022, to
prevent, prepare for, and respond to coronavirus, domestically or


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