Fairfax County and Arlington can take their challenge to federal grant conditions back to a district court, after a US appeals ruling on 15 October.

The Virginia school boards sued after the Education Department imposed grant conditions over policies allowing transgender students to use bathrooms and locker rooms matching their gender identity. The department found the policies violated Title IX, the federal law against sex discrimination in federally funded education. The districts disputed that finding.

When they declined to change the policies, the department designated them as high-risk grant recipients. Their Education Department grants were put on a reimbursement basis: they must document eligible expenses already paid with non-federal money. Both sides agreed that no funding had yet been denied, withheld or terminated, the opinion records.

The district court had dismissed the cases as financial disputes belonging in the Court of Federal Claims. The Fourth Circuit said some of the boards’ claims concerned Title IX and the department’s findings and designations. Federal funding was involved, but that did not make every claim a contract dispute.

Judge Allison Rushing wrote the majority opinion, joined by Chief Judge Albert Diaz. Judge Julius Richardson dissented, considering the cases essentially grant-payment disputes for the Court of Federal Claims.

The district court must now address the department’s remaining objections. The appeals ruling does not decide whether the school policies comply with Title IX or grant the boards’ requested injunctions.