By Hannah Albarazi

Law360, San Francisco (August 18, 2020, 9:51 PM EDT) -- A California federal judge considering whether to block U.S. Department of Education Secretary Betsy DeVos' new rule expanding private schools' access to COVID-19 relief funding said Tuesday he didn't see how the CARES Act was ambiguous or why the department thought it had authority to create the rule.

"Where is the department finding room to run?" U.S. District Judge James Donato asked Tuesday during a video hearing in which he considered a coalition of states' bid for a preliminary injunction against a rule it says enhances private schools' access to Coronavirus Aid, Relief and Economic Security Act funding while unfairly inhibiting access by public schools in low-income areas.

Counsel for the Department of Education, William K. Lane III of the U.S. Department of Justice's Civil Division, argued that the CARES Act was ambiguous in its command that services provided to private schools be "equitable." Lane said DeVos reasonably interpreted the statute and issued an interim final rule.

But Judge Donato told the department he was having trouble seeing how the statute was unclear in any meaningful way and said that if Congress wants the secretary of education to do rulemaking, "They say so."

Neil Giovanatti of Michigan's Department of Attorney General urged Judge Donato to block DeVos and her department's new rule, saying they are essentially pulling a "reverse Robin Hood, taking from the poor and giving to the rich."

The department's rule, issued July 1, requires federal coronavirus relief funds be distributed based on the number of students in any private school that wishes to participate, and that equitable services must be provided to all students enrolled, even those from affluent families, according to the Michigan and California-led coalition of states.

The regulation not only contradicts the plain language of the coronavirus relief legislation but could also mean that public schools serving low-income students would receive less money while that funding is diverted to their private school peers, the states say. And it violates the Administrative Procedure Act and the U.S. Constitution, according to the coalition's complaint filed July 7. 

As part of the CARES Act, which was signed into law in late March, Congress established a formula for the distribution of $13.2 billion in aid for K-12 schools nationwide, according to the states and the District of Columbia. That money is given to state education agencies to aid individual schools during the pandemic.

The coalition says the law requires that funding be doled out in line with Title I of the Elementary and Secondary Education Act, which was created to distribute funds to schools with a high percentage of students from low-income families.

The Department of Education and DeVos have unlawfully exceeded their authority, undermined congressional intent and failed to justify the decision, the coalition claims.

On Tuesday, Giovanatti told Judge Donato that the department's rule contains "two poison pill" restrictions for public school districts. He said it requires them to either use their CARES Act funds exclusively on schools with high instances of poverty while reserving funds based on the number of low-income students enrolled at private schools in the district, or requires them to commit to using the funds to benefit all schools while reserving funds for all students enrolled in their district's private schools.

Giovanatti argued that private schools are already receiving funds through the Payroll Protection Program and in some cases have received more federal funding per student than public schools.

He said the Department of Education's priority appears to be making sure that private schools get more funding, even if it's to the detriment of public schools.

"The court has the ability to right this wrong by Secretary DeVos and her administration, and we respectfully request that the court accordingly issue a preliminary injunction," Giovanatti said.

Judge Donato took the motion under advisement and said he'll get his order out as soon as possible.

California Attorney General Xavier Becerra said Tuesday that the state is fighting the Trump administration's "attempt to siphon" CARES Act funds from K-12 public schools, writing on Twitter that "Shameful doesn't even begin to cover it."

DeVos has also been sued over guidance blocking coronavirus aid for foreign students. In June, a California federal judge temporarily blocked that rule, finding that it is likely unconstitutional. In July, a Massachusetts federal judge ordered the Department of Education not to deny a Haitian student emergency funds based on her immigration status.

The parties did not immediately respond to requests for comment Tuesday.

The states and the District of Columbia are represented by Michael Newman, Sarah E. Belton, Rebekah A. Fretz, James F. Zahradka II and Garrett M. Lindsey of the California Attorney General's Office, Toni L. Harris and Neil Giovanatti of the Michigan Department of Attorney General, Kathleen Konopka, Brendan B. Downes and Nicole Hill of the Office of the Attorney General for the District of Columbia, Sarah A. Forster of the Maine Attorney General's Office, P. Cholla Khoury and Lisa Giandomenico of the New Mexico Attorney General's Office and Hannah S. Jurss of the Wisconsin Department of Justice.

DeVos and the Department of Education are represented by William K. Lane III, Ethan P. Davis, David Morrell and Jennifer Ricketts of the U.S. Department of Justice's Civil Division.

The case is State of Michigan et al. v. Betsy DeVos et al., case number 3:20-cv-04478, in the U.S. District Court for the Northern District of California.

--Additional reporting by Hailey Konnath and Suzanne Monyak. Editing by Orlando Lorenzo.

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