The designation followed the department’s determination that the districts’ policies allowing transgender students to access sex-segregated facilities based on gender identity likely violate Title IX, which conditions federal funding on compliance with sex discrimination rules. Fairfax County Public School buses idle at a middle school in Falls Church, Va., July 20, 2020. The school divisions sued, arguing the federal government is misinterpreting Title IX and unlawfully using federal funding to coerce local policy changes. “Their argument that grants are not contracts — that’s foreclosed by recent Supreme Court precedent,” Kambli said, adding that the districts would not be in court absent the funding consequences. America First Legal, a pro-Trump law group that filed an amicus brief supporting the federal government, argued the school divisions are misreading Grimm v. Gloucester County School Board.