Federal Court Vacates Education Department’s Dear Colleague Letter on DEI: What Schools, Colleges, and Contractors Need to Know

This ruling is relevant not only for colleges and universities, but also for K–12 school districts, state education agencies, contractors or grantees receiving federal education funds, and recipients of federal funding generally because it challenges the administration’s interpretation and understanding of current anti-discrimination law.

Background and Procedural History
The DCL grew out of President Trump’s January Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” Citing the Supreme Court’s decision in Students for Fair Admissions v. Harvard (SFFA), 600 U.S. 181 (2023), the DCL characterized many DEI-related activities as likely unlawful and asserted that discussions about structural racism and related concepts risked creating a “hostile” and “discriminatory” environment.

The Certification Requirement targeted state education agencies (SEAs), requiring them to attest—within 10 days—to full compliance with the DCL and to collect similar certifications from local school districts (LEAs).

By late April, multiple lawsuits were filed challenging both agency actions. District courts in New Hampshire and D.C. issued preliminary injunctions. Likewise, the American Federation of Teachers (AFT) and several school districts sued in the District of Maryland in April. All three federal courts issued temporary stays on April 24, 2025. (See Pillsbury’s May 7, 2025, client alert discussing injunctions entered in American Federation of Teachers v. U.S. Department of Education and early posture.) In the Maryland action brought by AFT, Judge Gallagher advanced the case to summary judgment and issued a ruling on August 14 largely in favor of AFT.

AFT Court’s Findings
The AFT court found that both the DCL and the Certification Requirement amounted to final agency actions and were legislative rules “subject to the notice and comment procedures” required by the APA —a process ED bypassed.

In concluding that these actions were legislative rules and more than guidance on existing law, the court emphasized the fact that the DCL “adopt[ed] a new position inconsistent with existing regulations, or otherwise effect[ed] a substantive change in existing law or policy.” The court highlighted ED’s prior guidance interpreting anti-discrimination law—particularly SFFA (as published by the Biden administration and described in Pillsbury’s August 13, 2023, client alert), and current regulations, which endorsed race-neutral measures as lawful ways to improve diversity. The court observed that the current Administration’s interpretation of SFFA and anti-discrimination law to date was a departure from prior ED interpretations and the broader understanding of anti-discrimination law.

With respect to Title VI, the court explained that SFFA prohibited intentional differential treatment based on race in college and university admission decisions, but that the SFFA holding was not a per se bar on all race-conscious activity or DEI initiatives across all programs. The court concluded that, by treating “race-conscious” as synonymous with “discriminatory,” the DCL exceeded Title VI’s text and SFFA’s holding. The agency’s Certification Requirement compounded the issue by requiring recipients to affirm compliance with ED’s expanded interpretation of Title VI, despite those interpretations lacking adequate legal foundation.

Further, the court concluded that the DCL imposed viewpoint-based restrictions on speech about systemic racism and diversity—raising First Amendment concerns—and that both agency actions created due process issues under the Fifth Amendment by failing to provide fair notice of what the Administration would treat as illegal DEI.

Nationwide Vacatur Remedy
The AFT court applied the ordinary APA remedy of vacatur, which sets aside unlawful agency action in its entirety. Citing APA Section 706, the court explained that vacatur renders the challenged agency actions void, null, and nonexistent—removing them from legal effect absent further lawful rulemaking. The court distinguished the Supreme Court’s June 27, 2025, Trump v. CASA decision, which, in the context of legal challenges to President Trump’s Executive Order relating to birthright citizenship, sharply limited universal injunctions, holding that district court injunctions must not be broader than “necessary to provide complete relief to the plaintiffs” in any case. Judge Gallagher clarified that while universal injunctions are now disfavored, the statutory remedy of vacatur under the APA remains valid and binding nationwide. Furthermore, unlike an injunction, which bars enforcement, vacatur removes the challenged rule from legal effect altogether.

General Implications for Education
Although the vacated Certification Requirement targeted K–12 public school districts, the DCL applied broadly across the education sector and many institutions had already begun internal reviews in response to ED’s directives. These efforts should now be reevaluated. While this ruling helps restore the pre-DCL status quo, it does not eliminate the risk of scrutiny by the Administration, as evidenced by ongoing investigations. Institutions facing such investigations will need to decide based on their risk tolerance whether to litigate or agree to a resolution. In either instance, institutions must continue to meet their obligations under Title VI, avoid intentional discrimination (both traditional and reverse), investigate harassment and ensure that race-neutral DEI efforts do not cross into preferential treatment. As explained in Pillsbury’s August 4, 2025, client alert on a recent Guidance memo from Attorney General Bondi (the “Bondi Memo”), the Administration’s policy views about what constitutes “unlawful discrimination” for federal funding recipients that engage in DEI practices may result in other agency enforcement efforts, even without relying on the DCL or the Certification Requirement.

Counsel should also be mindful of whether any applicable state law requirements conflict with the federal government’s stance on DEI. Several states have passed laws mandating DEI programs in public education, in procurement efforts, or supporting DEI generally, while other states have banned DEI programs. For example, some states require inclusive curriculum elements targeted by the DCL. With the federal DCL now vacated, that federal-state tension is reduced, but institutions should reassess those mandates against Title VI and consult counsel where residual conflicts persist.

False Claims Act Implications
While the vacatur reduces False Claims Act risk for recipients of federal education funds, it does not extinguish it. The Department of Justice Civil Rights Taskforce remains ready to investigate purported false claims based on violations of anti-discrimination laws. In addition, the Bondi Memo noted above in many ways mirrors the DCL, especially in addressing race-conscious trainings and what it terms unlawful facially neutral “proxies” for discrimination. The AFT decision calls into question the soundness of that guidance, but the guidance remains a signal for policy enforcement. Because the Bondi Memo closely tracks many of the same theories rejected by the AFT court (e.g., categorizing race-neutral measures as illegal proxies for discrimination; treating DEI-related trainings as hostile; FCA exposure for undefined “DEI violations”; and discouragement of DEI-focused partnerships), institutions should recognize the Bondi Memo as an indication of DOJ’s continuing enforcement positions and priorities. However, as the Bondi Memo itself acknowledges, the guidance is not binding law.

When defending against FCA claims, the AFT vacatur arguably weakens the government’s materiality arguments generally, and specifically, prevents the government from treating compliance with the DCL or Certification Requirement as conditions of payment or key to funding eligibility. Post-vacatur, the government cannot credibly claim that compliance with either document is material to payment decisions—especially given the court’s findings of procedural and constitutional defects. Under the Supreme Court’s 2016 decision in Universal Health Services, Inc. v. U.S. ex rel. Escobar, materiality turns on whether compliance is a condition of payment and whether the government consistently treats violations as important. Post-vacatur and given the procedural and constitutional defects, the government’s materiality argument in treating DEI practices as FCA violations is diminished.

Likewise, the essential element of scienter in FCA claims will become more difficult to prove post-vacatur as institutions will be able to point to various court holdings, including the AFT holding, for alternative readings of anti-discrimination law. Institutions that relied on longstanding anti-discrimination law treating DEI practices as lawful, as discussed in AFT, or that relied on advice of legal counsel or contrary judicial interpretations may now have stronger arguments that any alleged misstatements were not “knowing” under the FCA. Following the Supreme Court’s 2023 decision in U.S. ex rel. Schutte v. SuperValu Inc., defendants may defeat scienter by demonstrating that they interpreted legal requirements differently in good faith, especially where federal interpretations were unclear or contested.

What Should Institutions Do Now?

• De-prioritize Vacated Guidance. Treat both the DCL and related Certification Requirement as nonbinding. ED may not rely on those agency pronouncements in its enforcement efforts. Reevaluate activities adopted in reliance on those materials and document any adjustments with supporting rationale. Continue monitoring policy direction, including themes reflected in the Bondi Memo, as well as any developments relating to appeals of the AFT district court decision.
• Validate Certification Basis. Before executing any new certifications, confirm they do not rely on the vacated DCL or related materials. For certifications already submitted, particularly those filed under protest, review with counsel whether to preserve clarifications or reservations in your records.
• Maintain Title VI Compliance. Continue Title VI compliance efforts. The AFT ruling curbs unlawful agency overreach, not statutory nondiscrimination duties. Ensure your policies are race-neutral in design and avoid intentional race-based treatment. Continue investigating all complaints, maintaining equality in discipline, and avoiding any disparate treatment on the basis of protected characteristics.
• Align Internal Communications. Centralize compliance communications. Align faculty and staff guidance, update board briefing materials, and coordinate responses to any Office of Civil Rights (OCR) or regulator inquiries citing the vacated actions.
• Track Potential Rulemaking. Monitor future rulemaking. While the Department has not yet issued a Notice of Proposed Rulemaking to replace the vacated actions, it may move in that direction. Preserve records of reliance and operational cost for potential comment submissions.