New Executive Order on HBCUs Establishes Initiative to ‘Promote Excellence And Innovation’
On April 23, 2025, President Donald Trump issued an executive order (EO) that moved a long-standing presidential initiative focused on supporting Historically Black Colleges and Universities (HBCUs) from the U.S. Department of Education to the White House.
Quick Hits
On April 23, President Trump issued a new EO designed to “elevate the value and impact of our nation’s HBCUs as beacons of educational excellence and economic opportunity that serve as some of the best cultivators of tomorrow’s leaders in business, government, academia, and the military.”
The EO establishes an initiative—“the White House Initiative on Historically Black Colleges and Universities”—“housed in the Executive Office of the President and led by an Executive Director designated by the President.”
There are approximately one hundred HBCUs in the United States. Although HBCUs were originally founded to educate Black students, they now enroll students who are not Black.
The executive order establishes the White House Initiative on Historically Black Colleges and Universities under the executive office of the president, to be led by an executive director designated by the president. The executive order outlines two primary missions for the initiative: (1) increasing the private-sector role, including the role of private foundations, in strengthening and further supporting HBCUs; and (2) enhancing HBCUs’ capabilities to serve the country’s young adults. Specifically, the executive order calls for increasing the private-sector role in:
assisting HBCUs with “institutional planning and development, fiscal stability, and financial management”;
“upgrading institutional infrastructure, including the use of technology”; and
“providing professional development opportunities for HBCU students to help build America’s workforce in technology, healthcare, manufacturing, finance, and other high-growth industries.”
In addition, the executive order calls for enhancing HBCUs’ capabilities to serve the country’s young adults by:
“fostering private-sector initiatives and public-private and philanthropic partnerships to promote centers of academic research and program excellence at HBCUs”;
“partnering with private entities and [K-12] education stakeholders to build a pipeline of students that may be interested in attending HBCUs”;
“addressing efforts to promote student success and retention at HBCUs, including college affordability, degree attainment, campus modernization, and infrastructure improvements.”
The executive order establishes, within the U.S. Department of Education, a board, referred to as “the President’s Board of Advisors on Historically Black Colleges and Universities.” The board is to be comprised of current HBCU presidents and representatives in philanthropy, education, business, finance, entrepreneurship, innovation, and private foundations. The board is tasked with advising the president on matters pertaining to the HBCU PARTNERS Act, which became law in 2020.
Furthermore, the initiative will organize an annual White House summit on HBCUs “to discuss matters related to the [i]nitiative’s missions and functions.”
While the executive order does not specifically identify or otherwise promise funding for the initiative, the White House also released a fact sheet that references HBCU-related funding secured during President Trump’s first term.
One-Two Punch Delivered to Department of Education on DEI
Separate District Courts Take Divergent Routes to Temporarily Bar Enforcement of the Dear Colleague Letter on DEI in Education
On April 24, 2025, the U.S. District Courts for the District of New Hampshire and the District of Maryland issued separate orders blocking enforcement of all, or large portions of, the Dear Colleague Letter (“DCL”) issued by the Department of Education (“DOE”) on February 14, 2025. The DCL related to the viability of various “DEI” programs in the wake of last year’s Supreme Court decision in Students for Fair Admissions v. Harvard.
After the DCL, the DOE also issued a February 28, 2025, Frequently Asked Questions document About Racial Preferences and Stereotypes under Title VI of the Civil Rights Act (the “FAQ”) and later created the End DEI Portal pursuant to the DCL. Further, on April 3, 2025, the DOE issued a compliance certification requirement (the “Certification Requirement”), mandating state and local education agencies certify adherence to Title VI of the Civil Rights Act of 1964 and the 2023 Supreme Court ruling in Students for Fair Admissions v. Harvard. Certification is reportedly an imposed condition for receiving federal financial assistance.
In the New Hampshire case, NEA, et al v. U.S. Dept. of Education, the court preliminarily enjoined the enforcement or implementation of the DCL, the February 28 FAQ, the End DEI Portal, and the Certification Requirement. The Court found that the plaintiffs had a high likelihood of establishing that the DCL, FAQs, and Portal are facially unconstitutional due to their vagueness, and thus enjoined enforcement of these documents and the Certification Requirement until further action of the court. The injunction, however, only limits enforcement as to the plaintiffs in the case, the NEA, NEA New Hampshire and the Center for Black Educator Development as well their respective affiliates. Thus, the order is not a nationwide injunction.
In the second case, AFT v. U.S. Department of Labor, the Maryland federal court took a different path to a similar end. The court preliminarily held that in issuing the DCL, DOE failed to comply with the federal Administrative Procedure Act, and as a result, the DCL was presumptively invalid. Rather than enjoin enforcement, as the New Hampshire court had done, the Maryland court held that a nationwide stay of the DCL was the appropriate remedy under the APA. The court declined to stay the FAQs or the Portal, however, finding neither to be a final agency action. Similarly, the court did not stay the Certification Requirement, holding it was not identified or raised in the Amended Complaint, but cryptically ruled “Insofar as the Court considers the Certification Requirement as an implementation of the Letter, it would of course be improper for the government to initiate enforcement based on a stayed policy, through certification or otherwise.” The stay, nevertheless, effectively precludes enforcement of the DCL nationally against any party.
Significantly, the court explained that only those aspects of the DCL that represented a change from pre-existing law were stayed, and that the stay would also preclude enforcement based on the FAQs to the extent they were based on changes made in the DCL. This will leave room for argument about which portions of the DCL are “new” law and which are merely declarative of prior law.
As a practical matter, the two decisions give educational institutions (particularly those who employ or contract or work with members or affiliates of the NEA) some breathing room to assess how to respond to the administration’s focus on DEI efforts in educational programming. While the issue is unlikely to go away entirely, enforcement of the penalties and the Certification Requirement have been kicked down the road for now.
Harvard’s Tax-Exempt Status Dispute with the Trump Administration: Implications for Nonprofits
On April 16, 2025, President Donald Trump signaled a desire for Harvard University (Harvard or the University) to lose its tax-exempt status after the University refused several demands in the Trump Administration’s letter to Harvard, dated April 11, 2025, including reforms to governance and leadership, hiring and admission processes, student programs with records of antisemitism or bias and student discipline, as well as a discontinuation of DEI programs. Harvard’s refusal resulted in the Department of Education freezing $2.2 billion in grants and $60 million in contracts to Harvard. The Trump administration plans to freeze another $1 billion in federal funding for Harvard’s health research.
Harvard University sued the Trump administration on Monday, April 21, 2025, for infringing on the University’s free speech rights under the First Amendment. Additionally, Harvard argues that the administration’s actions against the University were arbitrary and capricious and outside the scope of its authority. Harvard contends that the federal government cannot impose unrelated conditions for higher-education institutions to access federal funding. The fate of Harvard’s federal funding and tax-exempt status may now set a precedent that could impact other nonprofit organizations.
While most nonprofit organizations focus on their missions, even a mission-driven organization can lose its 501(c)(3) status if it violates the Illegality Doctrine.1 In Bob Jones University v. United States (1983), the Supreme Court affirmed that a tax-exempt organization must operate in a manner consistent with public policy and federal law.2 The Court upheld the IRS’s decision to revoke tax-exempt status based on racially discriminatory practices — even though the institution claimed a religious purpose.3 If a tax-exempt organization engages in illegal activity or operates against public policy, it risks revocation — even if the charitable purpose itself is lawful.
Can the President Direct the IRS To Revoke Harvard’s Tax-Exempt Status?
On April 15, 2025, President Trump posted on Truth Social: “Perhaps Harvard should lose its Tax Exempt Status and be Taxed as a Political Entity if it keeps pushing political, ideological, and terrorist inspired/supporting ‘Sickness? Remember, Tax Exempt Status is totally contingent on acting in the PUBLIC INTEREST!”
Generally, Section 7217 of the Internal Revenue Code of 1986 (the Code) prohibits the President, and other executive branch employees, from either directly or indirectly requesting that the IRS investigate or audit specific targets. The IRS has declined to comment to date on whether they are considering review or revocation of Harvard’s tax-exempt status. Additionally, a White House spokesman stated, “Any forthcoming actions by the I.R.S. are conducted independently of the President, and investigations into any institution’s violations of their tax status were initiated prior to the President’s TRUTH.” However, if the IRS revokes Harvard’s status, Harvard will almost certainly appeal.
What Rev. Rule 80-278 Says – and Why It Still Matters
With calls to revoke Harvard’s tax-exempt status making headlines again, nonprofit organizations must revisit Rev. Rul. 80-278, one of the IRS’s clearest positions on when 501(c)(3) status can be revoked. In Rev. Rul. 80-278, the IRS held that an organization systematically violating civil rights laws was not entitled to tax-exempt status even if its stated mission was charitable.4 Charitable purpose is not enough if the conduct is illegal or contrary to “clearly defined and established” public policy.5
Harvard’s legal position was made clear by a spokesperson for the University, who stated that “there is no legal basis for revoking the University’s exemption.” However, the burden of proof would be on Harvard to prove that its activities are not illegal or against public policy, and that it is otherwise entitled to tax exemption. Ultimately, if Harvard exhausts all administrative remedies with the IRS, then it could potentially file for a declaratory judgement remedy under Section 7428 of the Code. Historically, there is no IRS precedent that directly applies to protected speech by students or faculty.
What Should Your Nonprofit Do?
In light of the ongoing dispute with Harvard, and the potential for time and cost associated with defending tax-exempt status, nonprofit organizations should diligently review their internal governing documents, ongoing federal and state grants and contracts, and other materials to ensure compliance with federal and state laws related to tax-exempt status.
Suggested Actions
Audit Advocacy and Activities. Make sure your lobbying, programming and public-facing content align with your exempt purpose and IRS standards.
Review Governance & Oversight. Ensure your board understands its fiduciary role in legal compliance — not just mission direction.
Compile Basic Organizational Information for Potential Audits. Begin compiling materials that commonly would come up in an audit or investigation, such as tax returns, relevant agreements and grant or scholarship program materials.
Develop a Rapid-Response Framework. Have a plan for if (or when) your tax status, operations or speech get questioned by regulators, donors or the media.
[1] Rev. Rul. 80-278, 1980-2 C.B. 175 (1980).
[2] Bob Jones Univ. v. United States, 461 U.S. 574, 103 S. Ct. 2017, 76 L. Ed. 2d 157 (1983).
[3] Id. at 602-604.
[4] Rev. Rul. 80-278, 1980-2 C.B. 175 (1980).
[5] Id.
U.S. Department of Education and the Department of Justice Initiate Title IX Enforcement Against Maine
The U.S. Department of Education (“ED”) is seeking to terminate federal education funding of the Maine Department of Education (“Maine DOE”) for noncompliance with Title IX of the Education Amendments of 1972 (“Title IX”). Colleges, school districts, and other regulated entities may learn valuable lessons about the Administration’s approach to federal civil rights compliance by following this story.
On February 21, 2025, the ED’s Office for Civil Rights (“OCR”) launched a directed investigation, alleging that Maine DOE had violated Title IX by allowing boys to compete on girls’ sports teams in Maine. Specifically, OCR alleged that Maine law, which permits student athletes in public school districts to compete on teams according to their gender identity, violates Title IX, citing the Executive Order, “Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government.” Shared in a previous client alert, this Executive Order sought to limit the definition of sex under Title IX, and rescinded ED’s guidance protecting LGBTQIA+ students from harassment and discrimination under Title IX..
On March 19, 2025, OCR concluded that Maine DOE was in violation of Title IX, as its public school districts, which receive federal financial assistance, had policies or practices that “allow[ed] boys to participate in girls’ athletics programs and/or den[ied] female students access to female-only intimate facilities.” The speed of the investigation was surprising; previous OCR investigations of alleged civil rights violations often took months, and sometimes years, to complete. In fact, the speed with which OCR here acted has led commenters to question whether the investigation was sufficiently thorough.
On the same day that OCR concluded its directed investigation, OCR proposed a Resolution Agreement requiring Maine DOE and Maine public school districts to fulfill a number of conditions to demonstrate compliance with Title IX.
Under the Resolution Agreement, Maine public school districts would be required to submit an annual certification of compliance with Title IX, and promptly notify OCR of any violations, such as the participation of transgender female athletes in girls’ sports. Under the same agreement, Maine DOE would be required to:
rescind or revise any prior guidance documents or rules which permitted transgender female athletes to participate in girls’ teams and categories;
revoke individual recognitions from transgender female athletes;
award those recognitions and send a letter of apology to cisgender female athletes who received the next highest score or demonstrated the next best performance;
direct to all Maine public school districts that they must not allowing transgender female athletes to participate in any athletic program, access any locker room, or access any bathroom that is designated for females; and
clarify that if that state law conflicts with Title IX, a public school district must comply with Title IX or risk losing its federal funding.
In the intervening weeks, both the Maine Principal’s Association and Maine School Administrative District No. 51 refused to sign the Resolution Agreement, citing that compliance would violate the Maine Human Rights Act (“MHRA”), which prohibits discrimination based on a range of protected characteristics, including sex, sexual orientation, and gender identity. On April 11, 2025, the Maine Attorney General confirmed to ED that the state would not sign the Resolution Agreement.
On April 12, 2025, ED referred its Title IX investigation of Maine DOE to the U.S. Department of Justice (“DOJ”) for further enforcement action and ED initiated an administrative proceeding to terminate Maine DOE’s federal K-12 education funding, including formula and discretionary grants. Notably, under OCR’s current Case Processing Manual, the process allows for a referral to the DOJ or an administrative proceeding to terminate federal funds, not both. On April 16, 2025, the DOJ filed a civil suit against Maine.
Importantly, ED is not the only executive agency that has recently investigated Maine for alleged Title IX. The Department of Agriculture froze funding used for school lunch programs on the basis of alleged violations of Title IX, and Maine has filed its own lawsuit against the Department of Agriculture seeking to stop the freeze. The Department of Health and Human Services conducted its own investigation and, like DOE, concluded that Maine had violated Title IX and referred the matter to the DOJ. The Social Security Administration also terminated a contract with Maine in early March; however, the termination was later rescinded.
While not all jurisdictions have the same gender-based protections as Maine, all entities regulated by the DOE should follow Maine’s experience for indication of OCR and DOE’s approach to that type of investigation. Institutions alleged to have violated civil rights laws should expect speedy agency action, and possibly from multiple agencies.
International Students Face Visa Revocations and Status Terminations – What Does that Mean for Higher Education Institutions?
Over the past two weeks, institutions of higher education have been faced with the challenges of notifying members of their campus communities about visa revocations and status terminations, and advising affected international students on what to do next. Unlike more high-profile immigration cases that followed student protest activity, the latest round of visa revocations and status terminations appear to be happening because students are “failing to maintain status.” But what does that mean and how should institutions react?
To understand the impact, the meaning of key terms like “visa” and “status,” have to be understood, because they are distinct concepts in U.S. immigration law. When people speak of how long someone can stay in the United States, they might say “their visa expires in June” or “they have to leave because their visa is expiring,”; such statements are technically incorrect, however, because they confuse a visa with status.
While a visa is a critical immigration document, it does not actually determine how long someone can stay in the United States. A visa is issued by the U.S. government and allows a noncitizen to apply for entry to the country, but does not guarantee that the noncitizen will be actually allowed to enter or remain in the United States. In contrast, a noncitizen’s status determines how long and under what conditions they can stay in the United States. Notably, noncitizens can change status, for example from F-1 student status to H-1B specialty occupation status, without ever leaving the United States.
Most higher education students come to study in the United States. on an F-1 student visa. F-1 visas are issued by the U.S. Department of State. Once students enter the United States., they are granted F-1 student status, and their F-1 status is tracked by the Department of Homeland Security’s Student and Exchange Visitor Program (SEVP). As long as a student continues to maintain their F-1 student status, the requirements of which are set by law, they are permitted to remain in the United States.
While visa revocations have not traditionally been common, they are a tool available to immigration authorities. One of the scenarios that has historically led to visa revocation is an arrest for driving under the influence (DUI) leading to a visa revocation on health-related grounds (on the basis of suspected alcoholism or other substance abuse issues). A visa revocation, while significant, only impacts a person’s ability to return to the United States. following international travel. It does not impact status. An F-1 student can have their F-1 visa revoked, expire or cancelled, but can still remain in the United States with their valid F-1 student status.
Termination of status, however, ends a person’s permission to stay in the United States. A student’s F-1 student status can be terminated if a student “fails to maintain status” or due to an agency “termination of status.” Historically, a student’s failure to maintain their F-1 status was reported by the colleges and universities themselves if, for example, an international student engaged in unauthorized employment, failed to maintain a full course of study, or was convicted of certain crimes. The agency-initiated termination of status is limited by statute.
During the past two weeks, the U.S. government has changed its practices related to visa revocations and status terminations, and has begun terminating international students’ F-1 student status, either in addition to or instead of revoking their F-1 visas. As a result, F-1 students whose F-1 student status has been terminated no longer have permission to stay in the United States, even if they have a valid F-1visa.
Institutions are finding out about students’ F-1 status terminations by auditing their SEVIS (Student and Exchange Visitor Information System) record. SEVIS is a web-based system that colleges and the Department of Homeland Security use to maintain information about F-1 students. In some cases, students report being unaware that their F-1 status had been terminated until they receive outreach from their school after such audits, because they received no communication from the U.S. government about their status termination.
These changes have caused stress and uncertainty for institutions of higher education and their international students. In light of concerns expressed by higher education clients, we suggest that clients and higher education institutions work closely with in-house counsel, and recommend international student offices to keep abreast of the latest developments in this area. Specifically, colleges and universities should:
Regularly check SEVIS to determine if students’ F-1 status has been terminated and communicate any developments to the affected students as soon as possible.
Prepare to refer international students to immigration lawyers for individualized assistance. Many institutions of higher education have referral lists, but legal clinics available on some campuses are also an option.
Consider options for international students who may choose to leave the United States, specifically how they can continue their studies or transfer to another college or university in their home country. These considerations may be especially important or acute for graduate-level students engaged in fellowships, research, and TA-ships on campus.
Prepare for possible federal immigration enforcement activity on or around campus, including the types of requests for information federal agencies might make, and the institution’s obligations under state and federal law.
Develop and implement a plan to handle campus community and leadership, local community, and political concerns. In addition to planning for internal and external communications, expect that individual immigration cases and class action lawsuits related to F-1 visa revocations and F-1 status terminations may occur.
SCOTUS Ruling: Freezing $65 Million in Teacher Grants Amid DEI Controversy
On April 4, 2025, the United States Supreme Court granted an emergency application to vacate the First Circuit Court of Appeals’ March 10 temporary restraining order (TRO) in the case of Department of Education v. California. The TRO had previously required the federal government to reinstate approximately $65 million in grants earmarked for recruiting and training teachers, which were previously terminated due to certain diversity, equity and inclusion (DEI) training and initiatives included in the grants. The Supreme Court’s decision allows the Department of Education to withhold and halt funding for these grants, prompting significant implications for organizations that rely on these grants. While the opinion is limited only to several grants for teacher recruitment and training, it opens the door for government agencies to immediately freeze or terminate grant funding and gives grant recipients little or no recourse to access potentially critical funding until lengthy and expensive litigation is complete.
The Court’s 5-4 majority opinion stated that the government would be unable to claw back funds without immediate intervention and funds may be withheld until litigation is completed. The Court’s opinion effectively stays the TRO and allows the Department of Education to proceed with its plan to terminate grants under the Teacher Quality Partnership (TQP) and Supporting Effective Educator Development (SEED) programs while the matter is litigated.
Although temporary restraining orders are typically not appealable, the Court majority believed that appellate review was justified because the TRO more closely resembled a preliminary injunction, which is appealable. The Court also noted that the government was likely to succeed in showing that the District Court did not have the authority to order payments of money under the Administrative Procedure Act, which does not typically cover monetary claims. Additionally, the Court majority believed that the state respondents would not suffer irreparable harm while the TRO was stayed because they had the financial means to continue the programs and could recover any wrongly withheld funds through appropriate legal channels. In dissent, several justices criticized the majority decision because the Department of Education’s grant funding terminations contradicted clear congressional goals in disbursing grant funding to educational institutions and other objectives.
With this opinion, organizations will need to carefully weigh whether to pursue injunctive relief based on the scope and size of the grant versus the time, cost and likelihood of success associated with litigation. For smaller grants and/or smaller organizations, this opinion may limit the ability or desire to challenge an adverse agency action related to a grant.
This opinion also raises important questions about whether a court has the authority to require grant payments in an injunction. It opens the floodgates for other cases to be brought by the new administration, including previous attempts to cut Federal assistance funding and foreign aid. As tensions between federal courts and the executive branch over funding decisions rise, time will tell what role the judicial branch will have in shaping or impacting this Administration’s policies.
Supreme Court Lifts Restraining Order on Grant Terminations
The Supreme Court recently issued a ruling with significant impacts for federal contractors and grantees looking to challenge terminations of their contracts and grants in U.S. district courts. Terminated contractors and grantees may strongly prefer to challenge terminations in the district courts rather than in the Court of Federal Claims, because the Court of Federal Claims does not have authority to grant equitable relief to do things like restore funding or enjoin terminations, and the available grounds for challenging contract and grant terminations in the Court of Federal Claims are significantly limited.
In February 2025, the Department of Education (“DOE”) terminated $600 million in grants for teacher training on the grounds that the training included diversity, equity, and inclusion (“DEI”) concepts and thus no longer effectuated DOE priorities. The grantees challenged these terminations in a lawsuit filed in the U.S. District Court for the District of Massachusetts. The District Court issued a Temporary Restraining Order (“TRO”) directing DOE to restore the terminated grant funding. DOE asked the First Circuit to stay the TRO pending appeal, which the First Circuit denied. DOE then filed an emergency appeal to the U.S. Supreme Court, where a majority of the justices sided with DOE.
In a 5-4 per curiam ruling, the Supreme Court stated that the district court likely does not have jurisdiction under the Administrative Procedures Act because the controlling law for jurisdictional purposes is likely instead the Tucker Act. The majority seems to suggest that the Tucker Act applies to disputes arising under government contracts and grants and requires plaintiffs to file lawsuits in the Court of Federal Claims—rather than the district courts. The immediate effect of the Supreme Court’s ruling is that DOE can proceed with terminating these grants while the plaintiffs’ litigation proceeds.
The dissenting opinions authored by Justices Kagan, Sotomayor, and Jackson took issue with the majority’s decision to focus on jurisdictional arguments that they feel do not require the Supreme Court’s emergency intervention. The dissenters also criticized the majority’s reasoning that by enjoining the termination of the grants, the district court was enforcing “a contractual obligation to pay money,” a type of claim that must be brought in the Court of Federal Claims. The dissenters suggested that the plaintiffs were actually seeking injunctive relief based on allegations that DOE violated a federal statute.
Although the Supreme Court’s decision is not a final, binding ruling on whether district courts have jurisdiction over challenges to contract and grant terminations, the ruling puts the jurisdictional issue front and center for all district court judges who are adjudicating termination challenges. Already we are noticing that the Department of Justice is filing Notices of Supplemental Authority in numerous other litigation challenges, arguing that the Supreme Court believes that government contractors and grantees with disputes against the United States do not belong in U.S. district court.
We will continue to monitor further legal developments as the district court in Massachusetts considers its response to the jurisdictional points that the Supreme Court majority has raised.
The Possible Securities Act Implications Of Harvard’s “Nyet” To Government Civil Rights Reform Demands
Last week, the United States General Services Administration, Department of Education, and Department of Health and Human Services sent a letter to Alan M. Garber, the President of Harvard University, and Penny Pritzker, Lead Member of the Harvard Corporation. The letter asserts that “Harvard has in recent years failed to live up to both the intellectual and civil rights conditions that justify federal investment”. The letter outlined an agreement in principle so that Harvard could maintain its “financial relationship with the federal government”. Harvard responded a few days later through its outside counsel with an unequivocal nyet: “Harvard will not accept the government’s terms as an agreement in principle”. Yesterday, President Trump raised the stakes even higher by posting the following:
Perhaps Harvard should lose its Tax Exempt Status and be Taxed as a Political Entity if it keeps pushing political, ideological, and terrorist inspired/supporting “Sickness?” he wrote on Truth Social. “Remember, Tax Exempt Status is totally contingent on acting in the PUBLIC INTEREST!
In the midst of this donnybrook, Harvard is offering $750 million in bonds. According to the offering memorandum, the offer and sale has not been registered under the Securities Act of 1933 in reliance upon Section 3(a)(4). That statute exempts:
Any security issued by a person organized and operated exclusively for religious, educational, benevolent, fraternal, charitable, or reformatory purposes and not for pecuniary profit, and no part of the net earnings of which inures to the benefit of any person, private stockholder, or individual, or any security of a fund that is excluded from the definition of an investment company under section 3(c)(10)(B) of the Investment Company Act of 1940.
The exemption does not expressly refer to tax exempt status under the Internal Revenue Code, but the Offering Memorandum does state that the issuer is “exempt from federal income tax pursuant to Section 510(c)(3) of the Internal Revenue Code”. Loss of that tax exemption likely would call into question the availability of the Section 3(a)(4) for future offerings. With respect to the current offering, it is also possible that the Securities and Exchange Commission could question whether any part of the net earnings Harvard inure to the benefit of any person.
The Section 3(a)(4) exemption does not exempt Harvard from liability under Section12(a)(2) or Section 17 of the Securities Act. Thus, it is possible that the SEC may take an interest in the adequacy of disclosures in Harvard’s Offering Memorandum, as was recently suggested on a LinkedIn post by Professor Steven Davidoff Solomon at the University of California, Berkeley School of Law.
Finally, it should be noted that Harvard’s bond offering is not necessarily exempt from state qualification/registration requirements or antifraud provisions. State qualification/registration requirements may also apply to resales of the bonds. Thus, one or more states may decide to take a look at Harvard’s bond offering as well.
New Proposed Bill in Louisiana Targets Synthetic Dyes and Food Additives
On March 18, 2025, Louisiana introduced Senate Bill 14, a bill that would require products containing artificial dyes, chemical additives, and other ingredients to include a warning label on the product where the substances are banned or not authorized in other countries. The bill lists 51 different ingredients that would require the warning, including several synthetic dyes, synthetic or artificial vanillin, propylparaben, potassium bromate, melatonin, bleached flour, and others. Any food items containing any of the listed ingredients would be required to bear the following warning label, “WARNING: This product contains an artificial color, chemical, or food additive that is banned in Australia, Canada, the European Union, or the United Kingdom.”
Additionally, SB 14 would prohibit public schools and non-public schools receiving state funds from serving ultra-processed foods. The bill defines ultra-processed food as any food or beverage that contains the following: Blue dye 1, Blue dye 2, Green dye 3, Red dye 3, Red dye 40, Yellow dye 5, Yellow dye 6, azodicarbonamide, Butylated hydroxyanisole (BHA), Butylated hydroxytoluene (BHT), Potassium bromate, propylparaben, and titanium dioxide.
Some additional provisions of the bill would also require any food service establishment that cooks or prepares food using seed oil to display a disclaimer on the menu or other clearly visible location, prohibit soft drinks from SNAP eligibility, and require physicians and physician assistants to complete continuing education on nutrition and metabolic health.
This bill mirrors Texas SB 25, as we’ve previously blogged about, which would also require warning labels on packaged food products containing artificial colors, chemicals, or food additives that do not have a regulatory clearance in other countries.
LA SB 14 is the latest in a host of newly proposed bills this legislative cycle targeting synthetic dyes and various other food additives, which, if adopted, will create a divided and complicated regulatory scheme across the country.
Keller and Heckman will continue to monitor developments related to state legislative efforts to prohibit food additives.
President Trump Orders Closure of the Department of Education: What Schools and EdTech Companies Need to Know About FERPA
On March 20, 2025, President Donald Trump issued Executive Order 14242 directing the Secretary of Education “to the maximum extent appropriate and permitted by law, [to] take all necessary steps to facilitate the closure of the Department of Education[.]” This long-expected but dramatic move has educational institutions and education technology (EdTech) vendors—companies that provide services such as online homework, grade tracking, and teaching materials—wondering what now happens to the millions of students’ education records they maintain. More importantly for would-be brokers of student data, does the sudden disappearance of the main enforcer of the Family Educational Rights and Privacy Act of 1974 (FERPA) make student data a gold mine or a minefield?
Quick Hits
FERPA is a federal law that sets out a number of requirements educational institutions that receive federal funding must meet for the protection of student educational records.
A recent Executive Order diminishes the federal government’s power to enforce FERPA, heightening concerns that EdTech vendors could use student education data in prohibited ways.
However, vendors would do so at their own risk, as the legal landscape surrounding student education records requires compliance with more than just FERPA.
What Is FERPA?
FERPA requires educational institutions that receive federal funding to protect student educational records. FERPA applies to all public and private K-12 schools, as well as post-secondary educational institutions, that receive federal funding. Specifically, FERPA requires such educational institutions to: (i) obtain consent prior to releasing education records, (ii) permit parents and eligible students to access and correct their records, (iii) provide annual notice of rights, (iv) maintain reasonable measures to keep education records secure, and more.
While FERPA does not apply directly to EdTech companies, vendors are typically required by their contracts with individual educational institutions to comply fully with FERPA’s obligations and restrictions. FERPA does not contain a private right of action. Instead, aggrieved parents and eligible students can file complaints with the U.S. Department of Education, which investigates and enforces alleged violations. If the Department finds a FERPA violation, the relevant educational institution can be disciplined, up to and including the loss of federal funding.
A Student Data Gold Mine …
The Department has long been criticized for failing to adequately enforce FERPA. As of 2025, the Department has never imposed a financial penalty on an institution for violating FERPA, instead working with violators to achieve voluntary, monitored compliance. Many have expressed concerns that abolishing or substantially changing the structure of the Department could further erode the likelihood of strong FERPA enforcement at the federal level.
The prospect of a “Wild West” environment in the absence of the Department of Education may have schools and EdTech vendors salivating at the prospect of buying, selling, sharing, using, or otherwise processing the data of the millions of students (and former students) in the United States. Student data is a treasure trove. According to a report issued by the International Trade Administration in 2020, the EdTech market was estimated to be worth $89.49 billion, and it is projected to grow at a compound annual growth rate of 19.9 percent until 2028.
A FERPA exception already permits school officials to disclose education records to EdTech vendors if the vendor has a legitimate educational interest, the vendor is subject to the school’s supervision, and the school contractually prohibits the vendor from further disclosure. However, a federal enforcement vacuum may encourage such vendors to think they can ignore the FERPA obligations to which they have agreed when processing student data. It may also encourage third parties, contractors, consultants, and other organizations that do not fit within this exception to think they can bypass FERPA entirely.
… or a Regulatory Minefield?
Despite the potential decrease in enforcement at the federal level, (1) the existence of other FERPA regulators, (2) bipartisan interest in reform, and (3) uncertainty regarding the extent of the Department’s closure cut against any argument that FERPA compliance will be less important in the coming days.
First, FERPA does not preempt state or local laws. The Executive Order even emphasizes returning “authority over education to the States and local communities.” Nearly all states have enacted at least one state-level student privacy law that supplements FERPA with additional privacy safeguards. These will persist regardless of what happens federally. In California, for example, the Student Online Personal Information Protection Act prohibits the use of student data for targeted advertising. Many states, like Illinois, have transposed FERPA into state statutes. Other states, like Virginia, incorporate FERPA by reference, essentially making compliance a state requirement as well as a federal requirement. Keeping aware of state-level obligations is of paramount importance for both educational institutions and EdTech providers, especially because in some states, like Wyoming, civil actions for damages may be permitted under public records laws if parents or students are knowingly or intentionally denied the right to inspect public school records.
Moreover, there appears to be a strong bipartisan interest in FERPA reform, with commentators associated with the current administration indicating that they support amending FERPA to facilitate enforcement in the Department’s absence. These commentators have taken the position that “[r]ather than preserving a failing federal system, a potential reorganization of the Department of Education presents a critical opportunity to … protect student data[.]” Some interested parties have proposed a private right of action for FERPA violations, while others want to explore other avenues to fill in regulatory gaps in student privacy, including by transferring many of the Department of Education’s responsibilities to other agencies.
Finally, the true extent to which the Department will be shuttered remains to be seen, as full closure may require an act of Congress. And, it is vital to remember that FERPA is a federal law, not a Department of Education regulation. Therefore, even if the Department were to close entirely, that would not make FERPA liability vanish forever. FERPA would remain in effect, and a future administration may reinitiate enforcement.
Next Steps
Despite the potential closure of the Department of Education, schools and EdTech vendors that ignore FERPA’s obligations regarding student data nevertheless face a number of continued risks. The Department has traditionally pursued only patterns of noncompliance and egregious violations, and ignoring FERPA over the next three and a half years could be construed as just that. Moreover, for EdTech vendors, FERPA noncompliance could give rise to breach of contract claims, while enforcement by other regulators may cause the school with which the EdTech vendor is working to lose funding—and, by extension, risk the vendor missing payday. Businesses operating in the education space may want to remain mindful of the full breadth of their obligations and act accordingly, even as changes take place within the federal education (and EdTech) landscape.
Court Reverses $10 Million Sexual Harassment Verdict Due To Judge’s “Bizarre Comments”
On April 7, 2025, the California Court of Appeal reversed a whopping $10 million verdict in favor of an employee in a sexual harassment case due to the trial judge’s improper evidentiary rulings and inappropriate comments during the post-judgment phase of trial. Odom v. Los Angeles Cmty. Coll. Dist., No. B327997, 2025 WL 1021951, at *1 (Cal. Ct. App. Apr. 7, 2025).
Sabrena Odom, a tenured Los Angeles Community College (“LACC”) professor, sued LACC and one of its top administrators for sexual harassment and retaliation. After a three-week trial, the jury awarded plaintiff a total of $10 million for past and future mental suffering and emotional distress damages.
The appellate court reversed, finding that the trial judge improperly admitted 20-year old newspaper articles regarding the administrator-defendant’s alleged stalking and sexual assault of a previous partner. The judge also erred in allowing “me too” testimony from a student at LACC regarding her complaint against a different administrator.
The trial court committed additional error when the judge made “extreme and bizarre” racial and gender-based comments to defendant’s counsel, a Black woman, during the post-judgment phase of trial. Among other things, the judge talked about “miscegenation” and the societal impact of mixed-race football players as well as his support for Black Lives Matter. He also repeated an offensive joke he heard as a young lawyer about female secretaries doing a better job providing sexual favors than typing. The judge eventually recused himself after defendant’s counsel moved to disqualify him.
The Court of Appeal found the $10 million jury award to be “excessive” in that plaintiff continued to work through the close of trial and had no economic damages. The Court agreed with defendants that there is no precedent for this high of an award absent economic or debilitating injuries, and the award was grossly disproportionate to awards in comparable cases; the Court remanded for a new trial.
This case is just the latest example of a “nuclear” verdict rendered by a California jury and serves as yet another reminder to employers of the unparalleled benefits of having an arbitration program, as we have previously reported. We will continue to monitor this case for updates.
Institutions’ Title IX Compliance Under the Microscope: DOJ, ED Form Special Investigations Team to Enforce Gender Ideology EOs
Takeaway
The DOJ and ED are allocating resources to increase enforcement of Title IX concerning participation of transgender athletes, the use of intimate spaces, and “gender ideology” generally.
Article
Institutions should carefully review their policies and practices now that the Department of Justice (DOJ) and Department of Education (ED) have recently formed a special investigations team to increase and prioritize enforcement of the administration’s position under Title IX of the Education Amendments of 1972.
In February, President Donald Trump issued two executive orders on the administration’s position on Title IX’s application to gender identity and transgender students: “Keeping Men Out of Women’s Sports” and “Defending Women from Gender Ideology Extremism.”
On April 4, 2025, the DOJ and ED announced the creation of a “Title IX Special Investigations Team” for the purpose of “ensur[ing] timely, consistent resolutions to protect students, and especially female athletes, from the pernicious effects of gender ideology in school programs and activities.”
The Special Investigations Team includes:
ED Office for Civil Rights investigators and attorneys
DOJ Civil Rights Division attorneys
ED Office of General Counsel attorneys
ED Student Privacy Policy staff and an FSA Enforcement investigator
The Team appears to be a reallocation of current government resources rather than any addition of new positions or personnel.
What does this mean for institutions subject to Title IX?
The DOJ and ED are allocating resources to bolster enforcement of Title IX concerning participation of transgender athletes, the use of intimate spaces, and “gender ideology” generally. Complaints about transgender students participating in athletics or using intimate spaces based on their gender identity, as opposed to their biological sex at birth, likely will be prioritized for enforcement action. Policies and practices relating to pronouns and name changes based on gender identity also will be subject to increased scrutiny.
What should institutions do now?
Institutions subject to Title IX should review their policies and practices to ensure compliance with current law, review their Title IX training materials, and consider the benefits of providing employees with additional training.