On August 14, 2025, the U.S. District Court for the District of Maryland issued a significant decision in American Federation of Teachers v. U.S. Department of Education, holding that the Department's demand that states and school districts affirmatively certify compliance with the Department's interpretation of Title VI and Students for Fair Admissions v. Harvard was unlawful. At the same time, the court reaffirmed a prior holding that a Dear Colleague Letter (DCL) setting forth changes in the Department's interpretation of the law was also unlawful.
In February 2025, the U.S. Department of Education issued a DCL and accompanying FAQs that sought to reinterpret Title VI of the Civil Rights Act of 1964 in light of the Department's interpretation of the Supreme Court's Students for Fair Admissions v. Harvard decision. The guidance broadly discouraged race-conscious educational programming. A few weeks later, the Department introduced new compliance certification requirements for states and school districts receiving federal funds (the Certification Requirement). An institution that declined to certify would risk losing its federal funding. If a certification was later deemed to be false, that could also result in a loss of funding and possibly other consequences including exposure to litigation under the False Claims Act.
Several different actions were brought by various groups to challenge the DCL and the Certification Requirement, including the action brought in Maryland by the American Federation of Teachers.1 In April, the U.S. District Court for the District of Maryland issued a temporary injunction staying the DCL based on a finding that the Department likely exceeded its authority by imposing new legal obligations without proper rulemaking but declined to rule on the Certification Requirement, finding that the plaintiffs had failed to plead facts relating to Certification in their complaint.
Plaintiffs later filed a Second Amended Complaint adding new counts and facts relating to the Certification Requirement and moved for summary judgment with regard to all issues. In its August 14 decision, the court granted the motion, again finding that the DCL "is unconstitutionally vague because it attaches consequences to violating provisions rooted in 'broad and value-laden terms' like DEI that mean very different things to different people." As the court noted, "[l]aws that regulate conduct based on 'wholly subjective judgments without statutory definitions, narrowing context, or settled legal meanings' raise vagueness concerns."The court therefore vacated the DCL under the Administrative Procedure Act (APA) based on the Department's failure to comply with the APA and findings that the DCL violated the First and Fifth Amendments.
In addition, the court also vacated the Certification Requirement based on its finding that the Department, by attaching serious consequences to compliance with standardless terms, had violated the APA and the Fifth Amendment's Due Process protections against unreasonably vague laws.
What This Means for Employers and Institutions Receiving Federal Funds2
- Potential FCA Exposure Clarified: As these challenges work their way through the courts, decisions such as this provide institutions with a concrete example to point to in defense of any claims of false certification.
- Potential Weakening of Government's Ability to Rely on Executive Branch Statements: The ruling supports the argument that informal agency letters like the DCL cannot create enforceable obligations under the FCA.
- But Broader FCA Risk Persists: Liability may still arise from other civil rights laws (e.g., Title VII, Section 1981), including for example, based on false grant statements, misuse of federal funds, and violations of the ban on incentive-based student recruitment.
Practical Insight
Because the preliminary injunction in this case had already been in place for months, many educational institutions had been operating as if the DCL and its FAQs were not in effect. For now, employers can reasonably rely on this decision to avoid the certification requirements tied to the February 14 DCL. However, employers should be careful not to rely too broadly on the implications of the recent decision.
In fact, continued caution is warranted. This ruling does not impact other federal guidance—particularly those related to federal grants and IE&D (Inclusion Equity and Diversity) compliance. The DOJ's Civil Rights Fraud Initiative remains active, encouraging qui tam suits under the FCA. These suits can result in treble damages and statutory penalties per violation. Additionally, in her July 29 memorandum, Attorney General Pam Bondi offered clarification on the scope of federal anti-discrimination laws directed at institutions of higher education, among others. The memorandum emphasized that institutions remain subject to other federal statutes—including Title VII—that prohibit discriminatory practices. Bondi's guidance underscored that liability under the FCA can still arise from misrepresentations tied to these statutes, even if the Department of Education's DCL has been invalidated. Her memorandum serves as a reminder that federal enforcement efforts are not limited to educational programming alone, and that institutions receiving federal funds must maintain rigorous compliance across all civil rights obligations to avoid exposure under the FCA and related enforcement initiatives.
Bottom Line
While the DCL's invalidation offers temporary relief, institutions receiving federal funds must continue to monitor evolving guidance and ensure compliance with all applicable laws and contractual obligations. The FCA remains a potent enforcement tool—and informal guidance may still carry risk when tied to federal funding streams.
Footnotes
1. Other actions were brought in New Hampshire and the District of Columbia. In New Hampshire, a federal court judge granted a preliminary injunction enjoining the government from enforcing or implementing the DCL and the Certification Requirement. Nat'l Educ. Ass'n v. Dep't of Educ. ("NEA"), No. 25-91, – F. Supp. 3d – , 2025 WL 1188160 (D.N.H. Apr. 24, 2025).In D.C., the federal court judge denied a motion for a preliminary injunction as to the letter but granted a nationwide preliminary injunction as to the Certification Requirement. Nat'l Ass'n for the Advancement of Colored People v. Dep't of Educ. ("NAACP"), No. 25-1120, – F. Supp. 3d – , 2025 WL 1196212 (D.D.C. Apr. 24, 2025).
2. As discussed above, in American Federation of Teachers v. Department of Education, the court found that the certification mandate—requiring institutions to affirm compliance with the administration's interpretation of Title VI—was procedurally invalid. This matters for federal contractors across industries because such certifications, if inserted into contracts without proper rulemaking, could expose recipients to FCA liability if later deemed false or misleading.
The FCA angle here is critical: the government has increasingly used the threat of FCA enforcement as leverage to compel compliance with policy preferences. But this ruling signals that certifications imposed without formal rulemaking may be legally vulnerable—and that contractors who challenge them could have a viable defense. Looking ahead, this decision could serve as a roadmap for contesting certification clauses in federal contracts, especially where agencies bypass notice-and-comment procedures. It's a reminder that procedural safeguards aren't just bureaucratic formalities—they're essential guardrails against overreach and potential liability.
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