Reply to Opposition/Response, State of Michigan et al. v. DeVos, No. 3:20-cv-04478 (N.D. Cal.), Doc. 73 (August 5, 2020)
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Plaintiffs' reply in support of their motion for preliminary injunction 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-JD, U.S. District Court for the Northern District of California, Doc. 73, filed August 5, 2020. The caption lists a hearing date of August 18, 2020 before Judge James Donato. The reply argues that Section 18005 of the CARES Act is not ambiguous because its phrase "in the same manner" has a settled meaning. It states that the injunction is needed to avoid diverting more than $150 million in CARES Act funds intended for public schools to private schools. Later headings address the constitutional claims, the APA and irreparable harm.
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“Reply to Opposition/Response, State of Michigan et al. v. DeVos, No. 3:20-cv-04478 (N.D. Cal.), Doc. 73 (August 5, 2020).”
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Case 3:20-cv-04478-JD Document 73 Filed 08/05/20 Page 1 of 19
1 XAVIER BECERRA DANA NESSEL
Attorney General of California Attorney General of Michigan
2 MICHAEL NEWMAN FADWA A. HAMMOUD*
Senior Assistant Attorney General Solicitor General
3 SARAH E. BELTON TONI L. HARRIS*
Supervising Deputy Attorney General NEIL GIOVANATTI*
4 REBEKAH A. FRETZ Assistant Attorneys General
JAMES F. ZAHRADKA II P.O. Box 30758
5 GARRETT M. LINDSEY (SBN 293456) Lansing, MI 48909
Deputy Attorneys General Telephone: (517) 335-7603
6 300 South Spring Street, Suite 1702 E-mail: GiovanattiN@michigan.gov
Los Angeles, CA 90013 Attorneys for Plaintiff State of Michigan
7 Telephone: (213) 269-6402 *Appearing Pro Hac Vice
E-mail: Garrett.Lindsey@doj.ca.gov
8 Attorneys for Plaintiff State of California
9
IN THE UNITED STATES DISTRICT COURT
10
FOR THE NORTHERN DISTRICT OF CALIFORNIA
11
SAN FRANCISCO DIVISION
12
13 STATE OF MICHIGAN, STATE OF Case No. 3:20-cv-04478-JD
CALIFORNIA, et al.,
14 PLAINTIFFS’ REPLY IN SUPPORT OF
Plaintiffs, MOTION FOR PRELIMINARY
15 INJUNCTION
v.
16 Date: August 18, 2020
Time: 11:30 AM
17 ELISABETH D. DEVOS, in her official Judge: Hon. James Donato
capacity as the United States Secretary of Trial Date: None set
18 Education, and UNITED STATES Action Filed: July 7, 2020
DEPARTMENT OF EDUCATION,
19
Defendants.
20
21
22
23
24
25
26
27
28
Pls.’ Reply ISO Mot. for Prelim. Inj. (3:20-cv-04478-JD)
Case 3:20-cv-04478-JD Document 73 Filed 08/05/20 Page 2 of 19
1 TABLE OF CONTENTS
2 Page
3 INTRODUCTION .......................................................................................................................... 1
ARGUMENT .................................................................................................................................. 2
4
I. Plaintiffs Are Likely to Succeed on Their Claims that the Rule and the
5 Guidance Are Unlawful and Unconstitutional ........................................................ 2
A. The Equitable Services Requirement in Section 18005 of the
6 CARES Act Is Not Ambiguous .................................................................. 2
7 1. Section 18005 of the CARES Act Is Not Ambiguous .................... 2
2. The Rule Is Not Entitled to Deference. ........................................... 5
8
B. Defendants Fail to Offer Any Viable Argument Contesting
9 Plaintiffs’ Constitutional Claims ................................................................. 7
C. ED’s Actions Are Arbitrary and Capricious in Violation of the APA ........ 7
10
D. ED Did Not Have Good Cause to Issue the Rule as an Interim Final
11 Rule ............................................................................................................. 9
II. Plaintiffs Will Suffer Irreparable Harm ................................................................ 10
12
III. The Public Interest Weighs Heavily in Favor of Provisional Relief..................... 12
13 CONCLUSION ............................................................................................................................. 13
14
15
16
17
18
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21
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1 TABLE OF AUTHORITIES
2 Page
3
CASES
4
Am. Trucking Ass’ns v. City of Los Angeles
5 559 F.3d 1046 (9th Cir. 2009)...................................................................................................12
6
California v. Azar
7 911 F.3d 558 (2018) ..................................................................................................................10
8 Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc.
467 U.S. 837 (1984) ................................................................................................................5, 6
9
Citizens to Preserve Overton Park, Inc. v. Volpe
10 401 U.S. 402 (1971) ....................................................................................................................8
11 Confederated Tribes of the Chehalis Reservation v. Mnuchin
12 No. 20-cv-01002, 2020 WL 1984297 (D.D.C. Apr. 27, 2020) .................................................10
13 Dalton v. Specter
511 U.S. 462 (1994) ....................................................................................................................7
14
Dep’t of Homeland Sec. v. Regents of the Univ. of Cal.
15 140 S. Ct. 1891 (2020) ............................................................................................................8, 9
16 FCC v. Fox Television Stations, Inc.
556 U.S. 502 (2009) ....................................................................................................................9
17
18 Gonzales v. Oregon
546 U.S. 243 (2006) ................................................................................................................5, 6
19
Morales v. Trans World Airlines, Inc.
20 504 U.S. 374 (1992) ..................................................................................................................11
21 Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co.
463 U.S. 29 (1983) ......................................................................................................................8
22
23 Nat’l Fed’n of Indep. Bus. v. Sebelius
567 U.S. 519 (2012) ................................................................................................................2, 3
24
Sierra Club v. Trump
25 929 F.3d 670 (9th Cir. 2019).................................................................................................6, 13
26 Sierra Club v. Trump
963 F.3d 874 (9th Cir. 2020).......................................................................................................7
27
28
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1 TABLE OF AUTHORITIES
(continued)
2 Page
3 Skidmore v. Swift & Co.
323 U.S. 134 (1944) ................................................................................................................6, 7
4
United States v. Timilty
5
148 F.3d 1 (1st Cir. 1998) ...........................................................................................................2
6
United States v. Valverde
7 628 F.3d 1159 (9th Cir. 2010)...................................................................................................10
8 Washington v. DeVos
No. 2:20-CV-0182-TOR, 2020 WL 3125916 (E.D. Wash. June 12, 2020)................................6
9
Washington v. Trump
10 441 F. Supp. 3d 1101 (W.D. Wash. 2020) ................................................................................10
11
Whitman v. Am. Trucking Ass’ns
12 531 U.S. 457 (2001) ....................................................................................................................6
13 Wilder’s S.S. Co. v. Low
112 F. 161 (9th Cir. 1901).......................................................................................................2, 3
14
STATUTES
15
5 United States Code
16 § 706 ..........................................................................................................................................10
17
20 United States Code
18 § 6320 ..........................................................................................................................................3
19 OTHER AUTHORITIES
20 34 C.F.R. § 76.665 (2020)...............................................................................................................11
21 H.R. 748, 116th Cong.
§ 1102 ........................................................................................................................................13
22
§ 18002 ....................................................................................................................................2, 3
23 § 18003 ..............................................................................................................................3, 4, 12
§ 18005 .............................................................................................................................. passim
24
H.R. 6800, 116th Cong.
25 title IV .......................................................................................................................................11
26 Phyllis W. Jordan, What Congressional Covid Funding Means for K-12 Schools,
Future Ed (July 29, 2020), https://www.future-ed.org/what-congressional-
27
covid-funding-means-for-k-12-schools/ ...................................................................................11
28
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1 INTRODUCTION
2 Plaintiffs’ motion for preliminary injunction and the 15 declarations from education
3 agencies across the country demonstrate that injunctive relief from the U.S. Department of
4 Education’s (ED) unlawful rewrite of Section 18005 of the CARES Act is necessary to avoid
5 diverting more than $150 million in CARES Act funds intended for public schools to private
6 schools. ED fails to produce any evidence rebutting Plaintiffs’ motion or the corresponding
7 declarations. See generally Defs.’ Mem. in Opp’n to Pls.’ Mot. for Prelim. Inj., ECF No. 68
8 (Opp.). Defendants also fail to address, let alone refute, many of the arguments asserted by
9 Plaintiffs in support of their claims. Most pointedly, Defendants do not even reference their
10 improper addition of a supplement-not-supplant restriction, despite the utter lack of evidence of
11 congressional intent to impose such a restriction. Defendants also fail to refute the substance of
12 Plaintiffs’ constitutional claims; the lack of rulemaking authority in Sections 18002, 18003, and
13 18005 of the CARES Act; the lack of any implicit rulemaking authority; and ED’s inexplicable
14 change in policy from that announced in its initial Guidance to the new two-pronged approach
15 published in the Rule, including the addition of two oppressive “poison pill” restrictions on
16 LEAs’ use of the funds if the LEAs choose to allocate the funds using the proportional-share
17 calculation in Section 1117 of the ESEA.
18 Instead, ED erroneously claims that Section 18005 is ambiguous and therefore gives ED
19 authority to interpret the statute through emergency rulemaking. As addressed in both Plaintiffs’
20 principal brief and further below, ED’s faulty interpretation of Section 18005 is contrary to the
21 plain language of the CARES Act. ED’s claim that the relevant statutory language is ambiguous
22 is inconsistent with controlling Supreme Court and Ninth Circuit precedent. Further, Defendants’
23 unsupported attempt to minimize the significant harms caused by ED’s Rule to public education
24 falls flat. Plaintiffs have demonstrated significant and irreparable harm due to the Rule.
25 In short, Defendants’ arguments fail to rebut Plaintiffs’ likelihood of success on their
26 claims, the irreparable harm they face, and the balance of equities weighing heavily in favor of an
27 injunction. This Court should grant Plaintiffs’ motion and enjoin ED from imposing or enforcing
28 its Guidance or Rule on Plaintiffs during the pendency of this action.
1
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1 ARGUMENT
2 I. PLAINTIFFS ARE LIKELY TO SUCCEED ON THEIR CLAIMS THAT THE RULE AND THE
GUIDANCE ARE UNLAWFUL AND UNCONSTITUTIONAL
3
A. The Equitable Services Requirement in Section 18005 of the CARES Act Is
4 Not Ambiguous
5 Defendants’ principal argument is that Section 18005 is ambiguous, thereby requiring ED
6 to exercise interpretative rulemaking authority to resolve the purported ambiguity. Opp. 5, 7-10.
7 Section 18005 is unambiguous. ED’s attempt to read ambiguity into the statute so that ED can
8 pursue its policy objective of redirecting funds to support private schools neither validates its
9 exercise of rulemaking authority nor entitles its interpretation to any degree of deference.
10 1. Section 18005 of the CARES Act Is Not Ambiguous
11 The pertinent phrase in Section 18005—“in the same manner”—“has a settled and well-
12 understood meaning in legislation.” Wilder’s S.S. Co. v. Low, 112 F. 161, 164 (9th Cir. 1901); see
13 also Nat’l Fed’n of Indep. Bus. v. Sebelius (NFIB), 567 U.S. 519, 545-46 (2012); United States v.
14 Timilty, 148 F.3d 1, 3, 5 (1st Cir. 1998). Defendants offer nothing to counter this long-established
15 precedent, under which “in the same manner” means “to use the same methodology and
16 procedures.” NFIB, 567 U.S. at 545; Wilder’s S.S. Co., 112 F. at 164 (“[i]t means by similar
17 proceedings”).1 Employing this well-understood construction of Section 18005, LEAs are
18 required to adopt the procedures and methodologies of Section 1117, including the proportional-
19 share calculation and eligibility requirements. This plain reading directly cuts against ED’s
20 flawed interpretation and is alone sufficient for the Court to deem the phrase unambiguous.
21 Disregarding this binding legal precedent, Defendants argue that Section 18005 is
22 ambiguous for two reasons. First, Defendants claim the permitted uses for GEER and ESSER
23 funds in Sections 18002(c) and 18003(d) allow “for a broad range of services that benefit all
24 students” and are purportedly in “tension” with the eligibility requirements in Section 1117,
25 which, by their nature, limit the private-school students who receive equitable services. Opp. 7-8
26
1
Defendants apparently attempt to avoid this binding precedent by picking one word in
27 the phrase (“manner”), pointing to a dictionary definition of that term, and ignoring the other
words in the phrase. Opp. 9. But the phrase is well-understood, as confirmed in NFIB and the
28 other cases cites above, rendering Defendants’ efforts to chop the phrase apart meritless.
2
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1 (emphasis in original). Second, Defendants assert that, if Section 18005 fully incorporates Section
2 1117, two provisions in Section 18005 are purportedly rendered superfluous because they are
3 similar to provisions in Section 1117. Opp. 8. Neither of these arguments has merit.
4 For their first argument, Defendants incorrectly conflate the permitted uses of CARES Act
5 funds set forth in Sections 18002(c) and 18003(d) with the eligibility requirements for equitable
6 services under Section 1117. Section 1117’s eligibility requirements and proportional-share
7 calculation are unrelated to the use of the funds under both the CARES Act and Title I-A. These
8 requirements from Section 1117 are incorporated into Section 18005 as they are the procedures
9 for determining the amount of funding for equitable services and who is eligible. See NFIB, 567
10 U.S. at 545; Wilder’s S.S. Co., 112 F. at 164. Only after the funds are allocated between public
11 schools and equitable services for private schools, and eligibility for services is determined, do
12 the permitted uses described in Sections 18002(c) and 18003(d) come into play.
13 While some of the permitted uses described in Sections 18002(c) and 18003(d) are only
14 available to LEAs by their nature, see, e.g., H.R. 748, 116th Cong. (CARES Act) § 18002(c)
15 (“support the ability of such [LEAs] to continue to provide educational services to their students
16 and to support the on-going functionality of the [LEA]”); § 18003(d)(5) (“[d]eveloping and
17 implementing procedures and systems to improve the preparedness and response efforts of
18 [LEAs]”), (d)(12) (“[o]ther activities that are necessary to maintain the operation of and
19 continuity of services in [LEAs] and continuing to employ existing staff of the [LEA]”), other
20 permitted uses mirror the available services described in Section 1117. Compare 20 U.S.C. §
21 6320(a)(1)(A) with CARES Act § 18003(d)(1), (4), (10), (11). As the eligibility requirements
22 incorporated into Section 18005 are unrelated to the permitted uses described in Sections
23 18002(c) and 18003(d), the latter create no ambiguity in Section 18005.
24 Second, the inclusion of a consultation provision and public-maintenance provision in
25 Section 18005 does not render the comparable provisions in Section 1117 superfluous. As
26 explained in Plaintiffs’ principal brief, the consultation provision is not the same in the two
27 statutes, as Section 18005 limits the parties involved in consultation. Pls.’ Mot. for Prelim. Inj.,
28 ECF No. 35 (Mot.) 14. The public-maintenance provision is not necessarily a procedure or
3
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1 methodology that would be incorporated into Section 18005 under a plain reading of the statute
2 consistent with the Supreme Court and Ninth Circuit’s understanding of “in the same manner.”
3 Id. at 15. Thus, these provisions do not create ambiguity.
4 In addition, Defendants’ contention that the term “equitable” in and of itself means all
5 students should have access to services using the CARES Act funds mischaracterizes the broader
6 context of the statute and ignores that “equitable services” is a well-understood term of art. See
7 Opp. 10; see also Amici Private School Associations’ and Advocacy Groups’ Amicus Br. in
8 Supp. of Defs. and in Opp. to Prelim. Inj., ECF No. 60-1 at 8-9. The ESSER funds are provided
9 to the states, then the LEAs, through well-established Title I formulas that are based on the
10 number of low-income students in the states and LEAs. See CARES Act § 18003(c). If an LEA
11 did not receive Title I-A funds in the previous fiscal year, it will not necessarily receive ESSER
12 funds. Thus, Defendants’ argument that Congress’s use of the term “equitable” means that all
13 students should benefit from CARES Act funds does not comport with Congress’ choice to direct
14 funds to low-income students or the fact that not all LEAs will receive CARES Act funds for
15 public- or private-school students. Congress’s vision of what an “equitable” funding allocation
16 consists of—not ED’s vision—controls.
17 Defendants further fail to explain why ED incorporates the proportional-share calculation
18 described in Section 8501 of the ESEA (based on total enrollment of students), and not Section
19 1117 (based on enrollment of low-income students). Instead, Defendants deflect, arguing that if
20 Congress had referenced Section 8501, rather than Section 1117, the same allegedly superfluous
21 provisions described above would still render Section 18005 ambiguous. But Defendants miss the
22 point: the Guidance and Rule incorporate the proportional-share calculation from Section 8501,
23 despite the CARES Act specifically referencing Section 1117. No rationale supports this
24 interpretation and, again, Congress’s policy choice governs here. 2
25 Moreover, Defendants’ argument that Section 18005 is ambiguous and that all students
26 should receive services using CARES Act funds does not square with ED’s Rule. For example,
27 2
Further evidencing that ED’s Rule departs from congressional intent, at least 100
members of Congress submitted comments to the Rule expressing their disagreement with ED’s
28 interpretation of Section 18005. See Suppl. Req. for Judicial Notice Exs. 1-21.
4
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1 ED’s theory that Section 18005 requires all private-school students be counted for purposes of
2 allocating funds is negated by Option #1 of the Rule, which permits LEAs to calculate the
3 proportional share based on the number of low-income students only. ED provides no explanation
4 for this discrepancy. Likewise, in the phrase ED seeks to interpret, “manner” is singular, so no
5 support exists for the Rule’s two options (“manners”) for proportioning the funds. Further, the
6 supplement-not-supplant restriction that ED includes with Option #1 under the Rule is not
7 referenced or included in any relevant section of the CARES Act, while Congress expressly
8 incorporated supplement-not-supplant requirements for uses of other CARES Act funding outside
9 K-12 education. ED invented this restriction, which has no basis in the statute, and seems
10 designed to push LEAs to proportion funds under Option #2, the only option ED offered in its
11 Guidance.
12 Section 18005 is clear: LEAs should follow the procedures and methodologies set forth in
13 Section 1117 for providing equitable services to private-school students. ED’s attempt to sow
14 discord and confusion about Section 18005 is unsupported, and its Guidance and Rule make no
15 sense under its own interpretation of Section 18005.
16 2. The Rule is Not Entitled to Deference.
17 Assuming arguendo that Section 18005 is ambiguous (it is not), ED’s interpretation is not
18 entitled to deference. Chevron deference “is warranted only ‘when it appears that Congress
19 delegated authority to the agency generally to make rules carrying the force of law, and that the
20 agency interpretation claiming deference was promulgated in the exercise of that authority.’”
21 Gonzales v. Oregon, 546 U.S. 243, 255-56 (2006) (quoting United States v. Mead Corp., 533
22 U.S. 218, 226-27 (2001)) (emphasis added). Defendants cannot meet either requirement here.
23 To support its claim that Congress has delegated its authority here, ED points to two
24 provisions in its organic act, 20 U.S.C. Ch. 31, to justify its rulemaking. First, ED cites provisions
25 allowing the Secretary to “make, promulgate, [and] issue . . . rules and regulations governing the
26 manner of operation of, and governing the applicable programs administered by, the
27 Department.” Opp. 9 (quoting 20 U.S.C. § 1221e-3). However, a court in this Circuit has
28 expressly rejected ED’s efforts to apply this provision in the context of the CARES Act. See
5
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1 Washington v. DeVos, No. 2:20-CV-0182-TOR, 2020 WL 3125916, at *9 (E.D. Wash. June 12,
2 2020). That decision correctly noted that “courts have expressed skepticism where an agency
3 attempts to impose special conditions on grants absent express authority to do so, as such a broad
4 interpretation would be antithetical to the concept of a formula grant.” Id. (quoting City of Los
5 Angeles v. Barr, 941 F.3d 931, 942 (9th Cir. 2019) (punctuation omitted).
6 Second, ED cites its general administrative delegation to promulgate rules “necessary or
7 appropriate to manage the functions of the Secretary or the Department.” Opp. 9 (quoting 20
8 U.S.C. § 3474). This delegation is limited, restricted to the functions of the Secretary or ED. See
9 Gonzales, 546 U.S. at 264-65 (“When Congress chooses to delegate a power [to interpret a
10 statute], it does so not by referring back to the administrator’s functions, but by giving authority
11 over the provisions of the statute [the administrator] is to interpret”). The activities of LEAs are
12 not “the functions of the Secretary or the Department.” Lacking congressional authority to
13 interpret Section 18005, Chevron deference is not warranted.
14 Even if Congress had provided authority to ED to interpret the CARES Act, courts must
15 still use the “traditional tools of statutory construction” to determine whether “the intent of
16 Congress is clear” and “give effect to the unambiguously expressed intent of Congress.” Chevron
17 U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 842-43 & n.9 (1984). When a statute is
18 ambiguous to some extent and the agency has authority to interpret the statute, an agency cannot
19 offer an interpretation that contradicts the portion of the statute that is unambiguous. See Whitman
20 v. Am. Trucking Ass’ns, 531 U.S. 457, 481 (2001). As discussed above and in Plaintiffs’ motion,
21 see Mot. 12-15, even if some aspects of Section 18005 are ambiguous (they are not), in directing
22 LEAs to provide equitable services “in the same manner as” provided under Section 1117, when
23 it could have instead referenced Section 8501, Congress unambiguously demonstrated its intent
24 that equitable services be provided using the proportions provided by Section 1117 of the ESEA.
25 Finally, although not argued by Defendants, their interpretation could theoretically be
26 entitled to more limited Skidmore deference, which courts may grant to agency interpretations to
27 the extent that their reasoning is persuasive. See Sierra Club v. Trump, 929 F.3d 670, 692 (9th
28 Cir. 2019) (citing Skidmore v. Swift & Co., 323 U.S. 134 (1944)). Under Skidmore, courts afford
6
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1 deference “depend[ing] upon the thoroughness evident in [the agency’s] consideration, the
2 validity of its reasoning, its consistency with earlier and later pronouncements, and all those
3 factors which give it power to persuade.” 323 U.S. at 140. As discussed throughout Plaintiffs’
4 principal brief and herein, ED’s interpretation and Rule lack any indicia of thoroughness or valid
5 reasoning, and are inconsistent not only with Section 18005 itself, but with ED’s own prior
6 interpretations. The Rule is thus not entitled to Skidmore deference.
7 B. Defendants Fail to Offer Any Viable Argument Contesting Plaintiffs’
Constitutional Claims
8
Defendants fail to provide any substantive response to Plaintiffs’ multiple constitutional
9
claims. Rather, Defendants cite Dalton v. Specter, 511 U.S. 462 (1994), for the sweeping
10
proposition that if a plaintiff makes a constitutional challenge to an action by the federal
11
government which also implicates a lack of statutory authority, the constitutional challenge is
12
barred. See Opp. 12. The Ninth Circuit recently rejected this exact argument. See Sierra Club v.
13
Trump, 963 F.3d 874, 889-90 (9th Cir. 2020).
14
As the Ninth Circuit explained, Dalton is limited to instances in which plaintiffs’ claim is
15
one “simply alleging that the [executive branch] has exceeded [its] statutory authority.” Id. at 890
16
(quoting Dalton, 511 U.S. at 473) (quotation marks omitted). But Plaintiffs’ constitutional
17
challenge here is “address[ing a] situation[] in which the [executive branch] exceeds [its]
18
statutory authority, and in doing so, also violates a specific constitutional prohibition,” id.;
19
namely, the Spending Clause and separation of powers. See Mot. 10, 16-20. Dalton is accordingly
20
inapplicable.
21
C. ED’s Actions Are Arbitrary and Capricious in Violation of the APA
22
Defendants barely address Plaintiffs’ arguments that their actions are arbitrary and
23
capricious for numerous reasons in addition to their inconsistency with the CARES Act. Compare
24
Opp. 11-12 with Mot. 21-23. To the extent they even discuss those issues, Defendants’ skeletal
25
arguments fail.
26
First, Defendants repeatedly urge this Court not to “second guess” ED’s “policy judgment”
27
under the APA’s arbitrary and capricious standard. Opp. 11 (citing FCC v. Fox Television
28
7
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1
Stations, Inc., 556 U.S. 502, 530 (2009)). To be sure, under that standard “a court is not to
2
substitute its judgment for that of the agency.” Dep’t of Homeland Sec. v. Regents of the Univ. of
3
Cal. (Regents), 140 S. Ct. 1891, 1905 (2020) (quoting Fox Television Stations, 556 U.S. at 513)
4
(internal quotation marks omitted). However, courts are obligated to make a “searching and
5
careful” inquiry, Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971), into
6
“whether the decision was based on a consideration of the relevant factors and whether there has
7
been a clear error of judgment,” Regents, 140 S. Ct. at 1905 (quoting Citizens to Preserve
8
Overton Park, 401 U.S. at 416) (internal quotation marks omitted). That review includes whether
9
the agency “failed to consider important aspects of the problem,” Regents, 140 S. Ct. at 1910
10
(internal punctuation omitted), and “whether there was legitimate reliance” on ED’s prior
11
policies; on the latter point, if those policies “have engendered serious reliance interests,” they
12
“must be taken into account.” Id. at 1913 (citing, inter alia, Fox Television Stations, 556 U.S. at
13
515) (internal quotation marks omitted).
14
Defendants refute none of these legal principles, nor dispute that they failed to consider the
15
myriad issues that Plaintiffs set forth in their motion, supported by declarations from multiple
16
LEAs and SEAs. See Mot. 9, 17-19, 21-23, 27-29. Instead, Defendants argue only that Plaintiffs’
17
assessment of harms is “one-sided,” in that it “ignores [harms] suffered by private school students
18
and teachers during the pandemic.” Opp. 11. In stark contrast to Plaintiffs’ robust evidentiary
19
presentation, Defendants provide not a shred of evidence of these ostensible harms, nor cite to
20
any evidence that such harms drove Congress’s passage of the CARES Act. Even leaving this
21
failure aside, the fact that private school students and teachers’ interests may also be a relevant
22
factor for ED to take into account when it promulgated the Guidance and Rule does not excuse
23
ED’s failure to take into account the serious and uncontested harms that its actions cause to public
24
school students, teachers, and schools.3 Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm
25
3
Nor does Defendants’ sweeping statement that “Congress directed that use of CARES
26 Act funds be equitable,” Opp. 11, undermine Plaintiffs’ arguments on this score. As discussed
above, Defendants point to nothing in the CARES Act’s text or legislative history to support their
27 interpretation. Supra at 4. Further, the equitable services provisions themselves manifest
Congress’s intent that federal education funds are equitably distributed for services to appropriate
28 (continued…)
8
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Case 3:20-cv-04478-JD Document 73 Filed 08/05/20 Page 13 of 19
1
Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (if an agency fails to consider “an important aspect of
2
the problem” in issuing a rule, that rule is arbitrary and capricious).
3
Defendants’ claim that they have not changed their prior policies, Opp. 11-12, also falls
4
flat. Most critically, Defendants completely ignore and have no response to the fact that they are
5
reversing course on their earlier explicit statement that supplement-not-supplant restrictions
6
would not apply to CARES Act funds, see Mot. 22 (citing Req. for Judicial Notice, ECF No. 35-3
7
(RJN) Ex. A at 5), apparently conceding this point. This alone renders their actions arbitrary and
8
capricious.
9
Further, Defendants’ argument that they neither formally altered their general interpretation
10
of Section 1117’s equitable services provisions nor their interpretation of the use of Title I funds
11
for those services, Opp. 11, is a non sequitur, as Plaintiffs are not contending that they did so.
12
Rather, as Plaintiffs demonstrated in their motion and discuss further herein, supra at 2-5, via the
13
Guidance and Rule Defendants seek to enact a sub silentio change to those interpretations (i.e.,
14
that LEAs are only required to provide equitable services to private school students who are (1) at
15
risk, and (2) reside in Title I public school attendance areas) based on a mistaken view that, in the
16
CARES Act, Congress created a massive exception to the general statutory requirements. Indeed,
17
Defendants’ arguments only reinforce that ED has failed to “display awareness that it is changing
18
position,” Fox Television Stations, 556 U.S. at 515, a hallmark of arbitrary and capricious action.
19
Tellingly, Defendants do not even contest Plaintiffs’ evidence—supported by multiple
20
declarations—that LEAs and SEAs justifiably took budgetary actions in reliance on ED’s extant
21
policies. See Mot. 22. Defendants failed to take this reliance into account when they took their
22
actions, and it was “arbitrary and capricious to ignore such matters.” Regents, 140 S. Ct. at 1913
23
(quoting Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117, 2126 (2016)).
24
D. ED Did Not Have Good Cause to Issue the Rule as an Interim Final Rule
25
Defendants claim the same emergency requiring the issuance of an injunction here was the
26
basis for issuing the Rule as an interim final rule. Opp. 12. However, the COVID pandemic and
27
private-school students. Defendants make no showing that Congress empowered them to adopt
28 additional measures that in Defendants’ view somehow enhance “equity.”
9
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Case 3:20-cv-04478-JD Document 73 Filed 08/05/20 Page 14 of 19
1 its unprecedented economic effects on public education did not necessitate the Rule, unlike the
2 need for an injunction. ED’s creation of uncertainty regarding the allocation of ESSER and GEER
3 funds through the issuance of the Guidance and the Rule does not support the issuance of the Rule
4 absent notice-and-comment procedures. Uncertainty is not sufficient good cause normally, let
5 alone when the uncertainty is solely created by ED, as it is here. United States v. Valverde, 628
6 F.3d 1159, 1166 (9th Cir. 2010) (uncertainty “is not a reasonable justification for bypassing
7 notice and comment”). Having no good cause to issue the Rule without notice-and-comment, the
8 Rule is unlawful. 5 U.S.C. § 706(2)(D).
9 II. PLAINTIFFS WILL SUFFER IRREPARABLE HARM
10 Defendants do not contest that Plaintiffs are subject to significant harm as a result of the
11 Rule. Rather, Defendants argue that these harms—caused by significant diversions of funding
12 away from the public schools—are not irreparable. Opp. 13-14. Defendants’ argument is
13 unsupported by any evidence and conflicts with legal precedent.
14 The loss of more than $150 million in emergency funding is irreparable harm as Plaintiffs
15 will not be able to recover damages from ED or funds improperly diverted to private schools.
16 California v. Azar, 911 F.3d 558, 581 (2018) (“harm is irreparable here because the states will not
17 be able to recover monetary damages connected to the IFRs”) 4; see also, e.g., Washington v.
18 Trump, 441 F. Supp. 3d 1101, 1126 (W.D. Wash. 2020) (loss of tax revenue and federal
19 government funding of a local project constituted irreparable harm). Defendants’ characterization
20 of this diversion of these funds as merely an “economic injury,” Opp. 13, is “terribly misguided”
21 as these “are not funds appropriated to carry out secondary or residual government functions” but
22 “are monies that Congress appropriated on an emergency basis to assist [] governments in
23 providing core public services” in response to the pandemic. Confederated Tribes of the Chehalis
24 Reservation v. Mnuchin, No. 20-cv-01002, 2020 WL 1984297, at *8 (D.D.C. Apr. 27, 2020)
25 (holding tribes suffered irreparable harm due to an agency’s action reducing their share of
26 4
Defendants’ attempt to distinguish Azar lacks merit. Opp. 14 n.4. Just like the plaintiffs
in Azar, Plaintiffs here are unable to recover economic damages and will be required to expend
27 their own resources to compensate for the loss of funds driven by the Guidance and Rule. See
Guerrant Decl. ¶ 26; Jackson Decl. ¶ 26; Jones Decl. ¶ 29; Kaneshiro-Erdmann Decl. ¶ 25; Makin
28 Decl. ¶ 27; Oates Decl. ¶ 22; Stem Decl. ¶ 27; Stewart Decl. ¶¶ 25-26.
10
Pls.’ Reply ISO Mot. for Prelim. Inj. (3:20-cv-04478-JD)
Case 3:20-cv-04478-JD Document 73 Filed 08/05/20 Page 15 of 19
1 CARES Act funding). This loss of funding is immediate: Plaintiffs and their public schools must
2 make immediate decisions to address the pandemic’s effects on education, particularly with the
3 imminent start of the school year. With the steep drop in funding available for public education
4 available at the state and local level, see Guerrant Decl. ¶¶ 12, 15, 26; Constancio Decl. ¶ 16;
5 Goldson Decl. ¶¶ 10, 13; Gordon Decl. ¶ 12; Hoffmann Decl. ¶ 13; Jackson Decl. ¶ 26; Jones
6 Decl. ¶ 14; Kaneshiro-Erdmann Decl. ¶¶ 15, 25; Oates Decl. ¶ 10; Salmon Decl. ¶ 11; Stem Decl.
7 ¶ 27; Wallace Decl. ¶ 12, LEAs must use all available resources including ESSER and GEER
8 funds to meet the current and unprecedented demands, see Guerrant Decl. ¶ 28; Gordon Decl.
9 ¶ 24; Jackson Decl. ¶ 15; Jones Decl. ¶¶ 14, 29; Kaneshiro-Erdmann Decl. ¶ 25; Makin Decl.
10 ¶¶ 16-17, 29; Oates Decl. ¶ 24; Salmon Decl. ¶ 22; Stem Decl. ¶ 14; Stewart Decl. ¶ 26. While
11 Defendants suggest that the LEAs could “reapportion unobligated GEER and ESSER funds” at
12 the conclusion of the litigation, LEAs do not have the luxury of waiting or “unobligat[ing]” funds.
13 Opp. 13. The need for funds is desperate and immediate. 5 Guerrant Decl. ¶ 26; Jackson Decl.
14 ¶ 26; Jones Decl. ¶ 29; Kaneshiro-Erdmann Decl. ¶ 25; Makin Decl. ¶ 27; Oates Decl. ¶ 22; Stem
15 Decl. ¶ 27; Stewart Decl. ¶¶ 25-26.
16 Separate from the irreparable economic harm the Rule will cause, Defendants fail to
17 address the irreparable harm caused by the imposition of the supplement-not-supplant restriction
18 on LEAs who choose Option #1 for appropriating the CARES Act funds. See 34 C.F.R.
19 § 76.665(c)(3). This restriction threatens the loss of future Title I funding if the LEAs use the
20 CARES Act funds for non-Title I schools, including for district-wide expenditures like purchases
21 of remote learning equipment, transportation, and facility sanitation. See, e.g., Oates Decl. ¶ 17;
22 Hoffmann Decl. ¶¶ 41-42; Jones Decl. ¶ 38; Jackson Decl. ¶ 35; Constancio Decl. ¶ 34. Such a
23 Hobson’s choice constitutes irreparable harm where the threat of civil enforcement and loss of
24 future funding looms large. See Morales v. Trans World Airlines, Inc., 504 U.S. 374, 381 (1992);
25
5
Congress continues to recognize the immediate need for additional funding for public
26 education, as shown by the stimulus package proposals currently under consideration; both
versions proposed by the parties include tens of billions of dollars for education. See HEROES
27 Act, H.R. 6800, 116th Cong., title IV (2020); see also Phyllis W. Jordan, What Congressional
Covid Funding Means for K-12 Schools, Future Ed (July 29, 2020), https://www.future-
28 ed.org/what-congressional-covid-funding-means-for-k-12-schools/.
11
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Case 3:20-cv-04478-JD Document 73 Filed 08/05/20 Page 16 of 19
1 Am. Trucking Ass’ns v. City of Los Angeles, 559 F.3d 1046, 1057 (9th Cir. 2009).
2 Finally, as discussed in Plaintiffs’ principal brief, the Rule places Plaintiffs in legal
3 jeopardy because they cannot comply with both the Rule and Section 18005. Defendants assert
4 that Plaintiffs cannot demonstrate ED would “mount a legal challenge” if a plaintiff did not
5 comply with the Rule. Opp. 14. But Defendants do not categorically renounce ED’s ability to
6 enforce the Rule against Plaintiffs during the pendency of this litigation, and the certifications that
7 Plaintiffs executed remain legally binding on Plaintiffs. Guerrant Decl. Ex. A; Constancio Decl.
8 Ex. A; Stewart Decl. Ex. A; Kaneshiro-Erdmann Decl. Ex. A; Makin Decl. Ex. A; Salmon Decl.
9 Ex. A; Goldson Decl. Ex. A; Baca Decl. Ex. A; Stem Decl. Ex. A; Jones Decl. Ex. A; Jackson
10 Decl. Ex. A; Gordon Decl. Ex. A. In fact, ED asks the Court to deny granting the preliminary
11 injunction so that Defendants may “continue implementing” the CARES Act in order to “ensure[]
12 that all students benefit from the CARES Act funds.” 6 Opp. 15. Thus, Plaintiffs remain stuck,
13 unable to comply with the Rule and Section 18005 while the threat of ED’s potential enforcement
14 remains looming.
15 Plaintiffs’ 15 declarations make clear that the Rule has caused and continues to cause
16 irreparable harm. Defendants submit no evidence to counter these declarations and fail to show
17 how the significant loss of funds for Plaintiffs’ public-school students does not amount to
18 irreparable harm.
19 III. THE PUBLIC INTEREST WEIGHS HEAVILY IN FAVOR OF PROVISIONAL RELIEF
20 For the equity elements, Defendants’ arguments rely heavily on their contention that
21 private schools, like public schools, are also adversely impacted by the COVID-19 pandemic. See
22 Opp. 14-15. Plaintiffs do not contest that private schools are likely impacted by the pandemic—
23 however, the low-income students targeted to receive Title I and CARES Act funds have faced
24 significantly greater health and economic impacts from the virus than many private school
25 students. See RJN Exs. G, J; Jones Decl. ¶ 12. Defendants disregard that Congress provided
26 6
As discussed above, Defendants’ implementation of the CARES Act does not ensure that
“all” students benefit from the CARES Act funds at issue. Because only LEAs that received Title
27 I-A funding in the previous school year were allocated ESSER funds, see CARES Act §
18003(c), students who reside in an LEA that did not receive Title I-A funds (whether they attend
28 public or private schools) will not necessarily receive a benefit under the Rule.
12
Pls.’ Reply ISO Mot. for Prelim. Inj. (3:20-cv-04478-JD)
Case 3:20-cv-04478-JD Document 73 Filed 08/05/20 Page 17 of 19
1 private schools with access to other emergency funds in the CARES Act, which are not available
2 to public schools. Specifically, Congress authorized the Paycheck Protection Program (PPP),
3 which numerous private schools are eligible for and have taken advantage of. CARES Act
4 § 1102; see also The Council of The Great City Schools Amicus Curiae Br. in Supp. of Pls.’ Mot.
5 for Prelim. Inj., ECF No. 47-1 at 9-10 & Ex. B; Hoffmann Decl. ¶¶ 47-48. PPP is not available to
6 public schools. Since private schools have access to PPP funding that public schools do not, it is
7 not equitable for private schools to receive ESSER and GEER funds on an equal basis as public
8 schools.
9 Finally, the public interest is served by having Congress’s intended appropriations
10 implemented and not thwarted by ED’s efforts to meet its own policy goals. Cf. Sierra Club, 929
11 F.3d at 707 (“The public interest in ensuring protection of this separation of powers is
12 foundational and requires little elaboration.”). The equitable factors weigh heavily in favor of
13 Plaintiffs.
14 CONCLUSION
15 For the foregoing reasons, and those addressed in Plaintiffs’ principal brief, Plaintiffs
16 request this Court grant their motion.
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Pls.’ Reply ISO Mot. for Prelim. Inj. (3:20-cv-04478-JD)
Case 3:20-cv-04478-JD Document 73 Filed 08/05/20 Page 18 of 19
1 Dated: August 5, 2020 Respectfully Submitted,
2 DANA NESSEL
Attorney General of Michigan
3 FADWA A. HAMMOUD*
Solicitor General
4
/s/ Neil Giovanatti
5
NEIL GIOVANATTI*
6 TONI L. HARRIS*
Assistant Attorneys General
7 Attorneys for Plaintiff State of Michigan
*Appearing Pro Hac Vice
8
9 XAVIER BECERRA
Attorney General of California
10 MICHAEL L. NEWMAN
Senior Assistant Attorney General
11 SARAH E. BELTON
Supervising Deputy Attorney General
12 REBEKAH A. FRETZ
GARRETT M. LINDSEY
13 JAMES F. ZAHRADKA II
Deputy Attorneys General
14 Attorneys for Plaintiff State of California
15
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Pls.’ Reply ISO Mot. for Prelim. Inj. (3:20-cv-04478-JD)
Case 3:20-cv-04478-JD Document 73 Filed 08/05/20 Page 19 of 19
1 KARL A. RACINE JAMES E. JOHNSON
Attorney General of District of Columbia Corporation Counsel of the City of New York
2 KATHLEEN KONOPKA ERIC PROSHANSKY
Deputy Attorney General, Public Advocacy HOPE LU
3 Division GAIL RUBIN
Attorneys for Plaintiff District of Columbia Assistant Corporation Counsel
4 Appearing pro hac vice (application Attorneys for Plaintiff the Board of
forthcoming) Education of the City School District of the
5 City of New York
CLARE E. CONNORS Appearing pro hac vice (application
6 Attorney General of Hawaii forthcoming)
HOLLY T. SHIKADA
7 KEVIN M. RICHARDSON* BOARD OF EDUCATION, CITY OF CHICAGO
Deputy Attorneys General DEPARTMENT OF LAW
8 Attorneys for Plaintiff State of Hawaii JOSEPH MORIARTY
*Appearing pro hac vice General Counsel
9 J. ERNEST MINCY*
AARON M. FREY Deputy General Counsel for Litigation
10 Attorney General of Maine Attorneys for Plaintiff Chicago Board of
SARAH A. FORSTER* Education
11 Assistant Attorney General *Appearing pro hac vice
Attorneys for Plaintiff State of Maine
12 *Appearing pro hac vice SAN FRANCISCO UNIFIED SCHOOL DISTRICT
DANIELLE HOUCK
13 BRIAN E. FROSH General Counsel
Attorney General of Maryland SUSANNE NAOMI STARECKI KIM
14 STEVEN M. SULLIVAN* Sr. Deputy General Counsel
Solicitor General Legal Department
15 Attorneys for Plaintiff State of Maryland Attorneys for Plaintiff San Francisco Unified
*Appearing pro hac vice School District
16
HECTOR BALDERAS SQUIRE PATTON BOGGS (US) LLP
17 New Mexico Attorney General GABRIEL COLWELL (CABN 216783)*
P. CHOLLA KHOURY COLIN R. JENNINGS (OHBN 0068704)*
18 LISA GIANDOMENICO* W. MICHAEL HANNA (OHBN 0020149)*
Assistant Attorneys General EMILY R. SPIVACK (OHBN 0090777)*
19 Attorneys for Plaintiff State of New Mexico KEVIN J. BURTZLAFF (OHBN 0039648)*
*Appearing pro hac vice Cleveland Municipal School District Board
20 of Education
JOSH SHAPIRO Attorneys for Plaintiff Cleveland Municipal
21 Attorney General of Pennsylvania School District
MICHAEL J. FISCHER *Appearing pro hac vic
22 Chief Deputy Attorney General
Attorneys for Plaintiff Commonwealth of
23 Pennsylvania
Appearing pro hac vice (application
24 forthcoming)
25 JOSHUA L. KAUL
Attorney General of Wisconsin
26 HANNAH S. JURSS*
Assistant Attorney General
27 Attorneys for Plaintiff State of Wisconsin
*Appearing pro hac vice
28
15
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