Iowa Governor Signs Law Making State the First to Remove Gender Identity Protections From Civil Rights Code
On February 28, 2025, Iowa Governor Kim Reynolds signed legislation making the state the first to remove antidiscrimination protections for gender identity from its civil rights code.
Quick Hits
Iowa Governor Reynolds signed a bill into law that removes “gender identity” as a protected class under the state’s civil rights code.
The law further defines gender as binary, requires birth certificates to indicate sex, and restricts teaching about “gender theory” from kindergarten through sixth grade.
The enactment further amends the law to specifically state that “separate accommodations are not inherently unequal.”
Senate File (SF) 418, which takes effect on July 1, 2025, removes “gender identity” as a protected class in the Iowa Civil Rights Act, which prohibits discrimination in employment, wages, public accommodations, housing, education, and credit practices. The new law makes it more difficult for transgender individuals to bring claims alleging discrimination or harassment in state court. Furthermore, the amended law states that “separate accommodations are not inherently unequal.”
The governor’s signature came one day after state lawmakers approved the legislation on February 27, 2025. The legislation was fast-tracked through the state legislature, passing both the Iowa House and Senate in less than a week after it was introduced on February 24, 2025.
“It is common sense to acknowledge the obvious biological differences between men and women. In fact, it is necessary to secure genuine equal protection for women and girls,” Governor Reynolds said in a statement.
In recent years, Iowa has enacted laws that prevent doctors from administering gender-affirming care to individuals under the age of eighteen, ban transgender students from using school bathrooms that do not correspond with their sex at birth, and prohibit transgender students from participating in girls’ high school sports and women’s college athletics.
SF 418 makes several other key changes to Iowa state law regarding sex and gender, rejecting the idea of gender identity as separate from biological sex. Specifically, the law defines “sex” in statutes as “the state of being either male or female as observed or clinically verified at birth” and defines “female” and “male” based on reproductive systems that produce ova and sperm, respectively. The law further asserts that the term “gender” should be considered synonymous with sex and not “gender identity, experienced gender, gender expression, or gender role.”
The law also requires birth certificates to include a designation of the sex of the person, and it removes a provision allowing for a new birth certificate to be established based on a notarized affidavit by a licensed physician stating that the person’s sex designation has changed due to surgery or other treatment.
Additionally, the bill impacts school curricula, prohibiting schools from providing any program, curriculum, test, survey, questionnaire, promotion, or instruction related to “gender theory” or sexual orientation to students in kindergarten through sixth grade.
Next Steps
Iowa is now the first state to remove protections for gender identity from its civil rights code. The Iowa law comes amid a new push at the federal level since President Trump took office to define “sex” as binary and immutable, including with EO 14168, “Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government.”
The administration has further sought to limit the Supreme Court of the United States’ holding in Bostock v. Clayton County, Georgia, in which the Court held that the firing of an employee because of the employee’s sexual orientation or gender identity constituted unlawful sex discrimination under Title VII of the Civil Rights Act of 1964.
Amid the changes in federal guidance and state law, employers should remember that Bostock remains good law and states, “The answer is clear. An employer who fires an individual for being homosexual or transgender fires that person for traits or actions it would not have questioned in members of a different sex. Sex plays a necessary and undisguisable role in the decision, exactly what Title VII forbids.” (Emphasis added.)
Should Law Schools Be Teaching California Corporate Law?
It has been my experience that corporate law attorneys at national law firms tend to have a great deal of knowledge about and experience with Delaware corporate law. The reason for this is that Delaware has historically been the state in which most publicly traded companies are incorporated. Even when the client is not a Delaware corporation, courts in other states will look to Delaware precedents do the strong reputation of the Court of Chancery. Only a handful of publicly traded corporations are incorporated in California. Nonetheless, as a California lawyer I am often surprised at the lack of familiarity that many large law firms, including those with a significant presence in California, have with California corporate law.
A forthcoming paper by UCLA Professor Andrew Verstein argues “A teacher who stresses Delaware law in their teaching prepares their students for large, public company work, but ignores the laws applicable to the great mass of corporate practice”. Importantly, Professor Verstein backs up his claim with data. In fact, his paper is based on a database of 100 million entity formations for all U.S. states dating back to the nation’s beginning. Based on these data, Professor Verstein reaches the unexpected conclusion that Delaware is not first in incorporations. According to Professor Verstein, leadership belongs to California:
Yet, California has recently grown from a strong player to the very top state for corporate formations.
He also notes:
California has more than doubled its per-person rate of corporate formation during a period in which Delaware barely budged.
Nonetheless, it cannot be gainsaid that Delaware has the lion’s share of publicly traded corporations whilst California has only a handful – primarily regulated entities such as utilities and banks.
California’s General Corporation Law differs significantly from the corporate laws of Delaware, Nevada and the Model Business Corporation Act. If Professor Verstein’s analysis is correct, laws schools may be doing a disservice to their students by focusing on Delaware’s General Corporation Law.
Trump Administration’s Title IX Changes Revert Regulations Back to 2020, and Further Changes Are Possible
On January 31, the U.S. Department of Education (“DOE”) confirmed that, effective immediately and applicable to all open Title IX investigations, it will enforce the first Trump administration’s 2020 Title IX regulations (“the 2020 Rule”).[1]
This comes as no surprise to higher educational institutions, many of whom have been preparing to apply the 2020 rule since January 9, 2025, when a federal district court vacated the Biden-era Title IX regulations in Tennessee v. Cardona, and others of whom never stopped applying the 2020 rule due to a wide-ranging injunction issued by a Kansas U.S. District Court in 2024.[2] However, when viewed in context with other executive orders, the January 31 DCL both clarifies and raises questions as to how those rules apply going forward.
First, the January 31 DCL clarifies that educational institutions are expected to implement the 2020 rule immediately, including for cases that are ongoing. Immediate implementation means that institutions should look at any processes that are currently under way under their 2024 rule, and ensure that the process has not deprived the parties of any rights that they would have had under the 2020 rule.
The January 31 DCL is not explicit as to how DOE defines sex under Title IX, but it seems likely that this definition does not include gender identity. The January 31 DCL as issued initially stated that reading “sex” to include gender identity, sex stereotypes, and sexual orientation was inconsistent with Title IX. However, the DOE issued a revised version of the DCL on February 4 which removed this language. Educational institutions should note that the Kentucky U.S. District Court held in Tennessee vs. Cardona that the definition of “sex” under Title IX did not include gender identity, and the administration is not appealing this decision. They should also be aware that the administration, through a January 20 executive order, has directed all executive agencies including the DOE to interpret “sex” as “an individual’s immutable biological classification as either male or female,” not inclusive of gender identity. What remains to be seen is whether state laws that do protect gender identity will be seen as conflicting with Title IX, or whether institutions in those states will be able to protect discrimination based on biological sex under Title IX, and gender identity under state law.
What does the January 31st DCL mean for higher educational institutions?
Most institutions should have little difficulty turning back to their 2020 policies, but as they do, they should also consider any developments in state law or other regulations, including those requiring protections based on gender identity. Institutions should be mindful that more clarification and guidance is likely forthcoming from the DOE within the coming weeks.
One aspect of the 2024 policies that institutions may wish to keep in place are requirements to accommodate and prohibit discrimination on the basis of pregnancy and related conditions. While the specific requirements of the 2024 rule are no longer in place, courts have long read Title IX as prohibiting discrimination based on pregnancy and related conditions, and the 2024 regulations provided a comprehensive way to prevent such discrimination. The DOE has not issued any guidance on this subject, and does not seem poised to do so.
[1] 85 Fed. Reg. 30026 (2020).
[2] Tennessee v. Cardona, No. CV 2:24-072-DCR, 2025 WL 63795 (E.D. Ky. Jan. 9, 2025), as amended (Jan. 10, 2025)(Finding that the DOE exceeded its statutory authority by redefining “on the basis of sex” inconsistently with what the court found is Title IX’s express language and purpose: to combat discrimination against women, and based on the Spending Clause and First Amendment principles of vagueness and overbreadth, the 2024 Rule is arbitrary and capricious, and constitutionally infirm); See 89 Fed. Reg. 33474 (2024).
Florida Enacts Immigration-Related Laws Expanding Law Enforcement, Restricting In-State Tuition, and Increasing Criminal Penalties
On February 13, 2025, Florida Governor Ron DeSantis signed into law Senate Bill (SB) 2-C and Senate Bill (SB) 4-C, immigration-related legislation that addresses a variety of matters, including in-state tuition benefits, new criminal penalties, and law enforcement structure and funding.
Quick Hits
Under recently enacted state legislation, undocumented immigrants in Florida will no longer be eligible for in-state tuition benefits at public colleges and universities.
Any undocumented immigrant convicted of a capital felony will face the death penalty.
A new State Board of Immigration Enforcement will be created, and more than $298 million will be allocated to law enforcement for immigration-targeted hiring and training, including bonuses to officers who cooperate in federal enforcement activities.
In-State Tuition Benefits
Under newly enacted SB 2-C, undocumented immigrants living in Florida will no longer be eligible for the in-state tuition rate at Florida’s public colleges and universities. Starting on July 1, 2025, students will be reevaluated for tuition eligibility.
Heightened Criminal Penalties
SB 2-C and SB 4-C provide for several new criminal penalties, including a provision in SB 4-C requiring courts to impose the death penalty for any undocumented immigrant “who is convicted or adjudicated guilty of a capital felony”—such as first-degree murder—in Florida. This provision is expected to be challenged in court.
SB 4-C also makes it a first-degree misdemeanor for undocumented immigrants who are eighteen years of age or older to “knowingly” enter or attempt to enter Florida. SB 2-C and SB 4-C enhance the penalties of all misdemeanor crimes committed by undocumented immigrants.
Under SB 2-C, undocumented immigrants who vote or aid noncitizens in voting can be charged with a third-degree felony.
Creation of the State Board of Immigration Enforcement
Senate Bill 2-C creates a State Board of Immigration Enforcement. The State Board of Immigration Enforcement will coordinate with and assist the federal government and state law enforcement agencies in enforcing “federal immigration laws and other matters related to the enforcement of federal immigration laws.”
The State Board of Immigration Enforcement will be composed of the governor and a cabinet to be appointed.
More Than $298 Million Allocated to Immigration-Focused Law Enforcement
SB 2-C allocates more than $298 million for state law enforcement agencies to carry out the state’s immigration objectives. The allocation includes funding for the hiring of fifty new law enforcement officers, a $1,000 bonus incentive program for immigration enforcement officers, and training grants.
Governor DeSantis’s signing of both bills continues his immigration objectives and follows Senate Bill 1718, which he signed into law in May 2023.
NLRB Acting GC: Student-Athletes Are Not Employees
On February 18, 2025, National Labor Relations Board Acting General Counsel William Cowen rescinded a September 2021 memorandum in which former Board General Counsel Jennifer Abruzzo declared college athletes should be considered employees under the National Labor Relations Act. This was one of many memoranda he rescinded that had been issued by his Biden-administration predecessor.
Acting General Counsel Cowen’s withdrawal of the memorandum is the latest in a series of defeats for pro-employee advocates who had hoped to designate collegiate student-athletes as “employees” under the Act.
The first was the December 2024 withdrawal of an unfair labor practice charge filed by the National College Players Association (NCPA) against the NCAA, the Pac-12 Conference, and a private university in the Los Angeles area. The NCPA’s executive director stated the charge had been withdrawn considering the rise of “name, image, and likeness” (NIL) payments to players, as well as the shift in attitude on the subject under the new Trump Administration.
The second blow to proponents of the concept that student-athletes be deemed “employees” was the January 2025 decision by Service Employees International Union (SEIU), Local 560 to withdraw its petition to represent an Ivy League university’s men’s basketball players. In February 2024, a Regional Director for the Board took the historic step of determining that the university’s men’s basketball players should be considered employees under the Act. The case was filed in September 2023 after all 15 members of the men’s basketball team signed a petition to join Local 560 of the SEIU. At the time, the Regional Director determined the university’s level of control over the players was sufficient to qualify the players as employees under Section 2(3) of the Act. The Board found that traditional “team” activities, including the university’s ability to control the players’ academic schedules and the team’s regimented schedules for home and away games, weighed heavily in favor of an employment relationship. With the petition withdrawn for now, the university’s basketball players will remain non-unionized.
Given these developments, the window for student-athletes being deemed employees under the Act appears to be closed for the time being. With the uncertainty surrounding NIL and other issues around collegiate athletics, this area of law will need to be monitored for additional developments. In the interim, private collegiate institutions should be aware that they may face charges or petitions filed with the Board. Such filings must be treated seriously in light of the Regional Director decision discussed above.
Jackson Lewis’ Education and Collegiate Sports Group is available to assist universities, conferences, and other stakeholders in dealing with matters before the Board or otherwise involving the appropriate classification of student-athletes.
February 14 Dear Colleague Letter Signals Enforcement focus on Race-based preferences, DEI
On February 14, 2025, the U.S. Department of Education’s Office for Civil Rights (OCR) issued a Dear Colleague Letter (DCL) which, for the first time, previewed how the Education Department under the second Trump administration will scrutinize race-based preferences and DEI initiatives in K-12 and higher education.
As many college administrators have been expecting, the DCL reflects the administration’s view that any preferential treatment based on race is discriminatory. This includes some facially neutral efforts to increase on-campus racial diversity and some DEI-specific training and programming.
The DCL provides the following key insights:
The administration will seek to expand the prohibition on race-based preferences in admissions by broadly interpreting the Supreme Court’s decision in Students for Fair Admissions v. Harvard to apply to other areas of college and university operations including financial aid, hiring, training, and programming.
The administration views race-based segregation, including in dormitories, graduation ceremonies, and facilities as drawing unlawful race-based designations, even if it is voluntary.
The administration specifically listed programming that includes explicit race-consciousness, including “under the banner of DEI,” as an example of race-based discrimination, which it referred to as “toxic[]” and “indoctrinat[ion.]”
The DCL states that “DEI programs” that “teach students that certain racial groups bear unique moral burdens that others do not” are discriminatory and “stigmatize students who belong to particular racial groups.” It is unclear how the administration plan to regulate curriculum that it views as discriminatory in this way, and, if so, whether that regulation will apply to higher education.
The DCL closes by directing educational institutions to: (1) ensure that their policies and actions comply with existing civil rights law; (2) cease all efforts to circumvent prohibitions on the use of race by relying on proxies or other indirect means to accomplish such ends; and (3) cease all reliance on third-party contractors, clearinghouses, or aggregators that are being used by institutions in an effort to circumvent prohibited uses of race.
The DCL also promises that more guidance is forthcoming in a matter of weeks. Please stay tuned and call your Hunton lawyer with any concerns related to compliance with federal law or interpretation of Department of Education guidance.
The Boundaries of Chapter 93A
The scope of Chapter 93A is not unlimited, as the Appeals Court of Massachusetts recently confirmed in Beaudoin v. Massachusetts School of Law at Andover, Inc. The case involved a law student who was disenrolled from the school for not obtaining a COVID-19 vaccination, contrary to what he alleged were the school’s representations. He brought claims for breach of contract, promissory estoppel, breach of the implied covenant of good faith and fair dealing, negligent misrepresentation, Chapter 93A, and unjust enrichment. The trial court dismissed the complaint under Mass. R. Civ. P. 12(b)(6) for failure to state a claim.
The Appeals Court affirmed the dismissal of the Chapter 93A claim, noting that (i) Chapter 93A, Section 2 prohibits unlawful acts and practices occurring “in the conduct of any trade or commerce” and (ii) although charitable corporations “are not immune” from Chapter 93A’s reach, in most cases, a charitable corporate’s activities in furtherance of its core mission will not be engaged in “trade or commerce” under Section 2. This decision relies on the Supreme Judicial Court’s oft-quoted decision in Linkage Corporation v. Boston Univ. Trustees (1997) and the First Circuit’s Squeri v. Mount Ida Coll. (2020). As the law student’s Chapter 93A claims focused on the alleged unfair and deceptive recruiting of students to enroll at the school, the claims arose from the nonprofit law school’s provision of education to students and, as such, the challenged acts and practices did not fall into “the conduct of any trade or commerce.” The Appeals Court, however, reversed the Trial Court’s dismissal of various common law claims.
This case demonstrates that plaintiffs and defendants alike must always consider whether challenged conduct under Chapter 93A fits the definitions required to trigger coverage and whether adding a Chapter 93A count is appropriate or will cause initial dispositive motion practice.
Trump Administration Says Title IX Does Not Apply to NIL Pay, Rescinds Recent Guidance
On February 12, 2025, the U.S. Department of Education under the Trump administration rescinded recent guidance that name, image, and likeness (NIL) payments to college athletes implicate the gender equal opportunity requirements of Title IX of the Education Amendments of 1972.
Quick Hits
The Department of Education has rescinded recent guidance that had warned NCAA schools that NIL payments could trigger the equal opportunity obligations of Title IX.
This announcement indicated that the department interprets Title IX as not applying to how revenue-generating athletics programs allocate compensation among their athletes.
On February 12, 2025, the U.S. Department of Education’s Office for Civil Rights (OCR) announced that it had rescinded the nine-page Title IX guidance on NIL payments previously issued on January 16, 2025, in the final days of the Biden administration.
“The NIL guidance, rammed through by the Biden Administration in its final days, is overly burdensome, profoundly unfair, and goes well beyond what agency guidance is intended to achieve,” Acting Assistant Secretary for Civil Rights Craig Trainor said in a statement.“Without a credible legal justification, the Biden Administration claimed that NIL agreements between schools and student athletes are akin to financial aid and must, therefore, be proportionately distributed between male and female athletes under Title IX.”
“Enacted over 50 years ago, Title IX says nothing about how revenue-generating athletics programs should allocate compensation among student athletes,” Assistant Secretary Trainor’s statement continued. “The claim that Title IX forces schools and colleges to distribute student-athlete revenues proportionately based on gender equity considerations is sweeping and would require clear legal authority to support it. That does not exist. Accordingly, the Biden NIL guidance is rescinded.”
The move comes as the National Collegiate Athletic Association (NCAA) and major college sports conferences have agreed to pay nearly $2.8 billion in back pay to former athletes as part of a proposed settlement to end NIL litigation and to establish a revenue-sharing framework to share more than $20 million annually with athletes.
The rescinded Biden-era guidance had warned NCAA schools that NIL compensation provided by a school, even if provided by private third parties, would be considered by the department as “athletic financial assistance,” which must be distributed in a nondiscriminatory manner under Title IX. The guidance had assumed that “the receipt of financial assistance does not transform students, including student-athletes, into employees,” but it opened the possibility to reevaluate that position.
The Education Department announcement also follows the NCAA’s announcement that it is banning transgender athletes from competing in women’s sports to align with President Trump’s recent executive order (EO), EO 14201, titled “Keeping Men Out of Women’s Sports.” That order directed the Secretary of Education to “take all appropriate action to affirmatively protect all-female athletic opportunities and all-female locker rooms and thereby provide the equal opportunity guaranteed by Title IX.”
Next Steps
The Department of Education’s announcement will have significant implications for NCAA schools, which have been adjusting to the quick evolution of college athletics in recent years. Changes have included the removal of restrictions on athletes earning NIL pay, loosening restrictions on athlete transfers, and the potential for revenue-sharing between schools and their athletes. Such changes have raised concerns under Title IX, particularly with potential disparities in NIL pay between athletes in men’s and women’s sports.
While the prior guidance had interpreted NIL pay as subject to Title IX, the Department of Education under the Trump administration appears to interpret NIL payments, and even potentially revenue-sharing, as outside of the typical athletic financial assistance governed by Title IX. This could open the door for more payments to athletes in the sports that tend to generate the most revenue, typically college football and men’s basketball.
The announcement further signals more potential changes by the Trump administration with the enforcement of Title IX.
However, the rescission of the prior Title IX guidance may not be the end of the road. While some are praising the decision, others continue to argue that inequitable distribution of the settlement funds between men’s and women’s sports will violate Title IX. This could result in legal challenges as schools evaluate how best to distribute the payments.
Summary of Tax Proposals in Leaked Document Detailing Policy Proposals
I. Introduction
On January 17, 2025, news sources reported that Republican members of Congress circulated a detailed list of legislative policy options, including tax proposals. This blog post summarizes some of the tax proposals and corresponding revenue estimates mentioned in the list.
II. Individuals
(a) SALT Reform Options
The $10,000 cap on the deductibility of state and local tax (“SALT”) from federal taxable income for most non-corporate taxpayers is set to expire at the end of the year. The list includes several alternative proposals for SALT deductibility going forward.
Repeal SALT Deduction: The SALT deduction would be repealed for individual and business tax filers. This would raise $1 trillion over ten years, as compared to extending the current TCJA deduction cap.
Make $10,000 SALT Cap Permanent but Double for Married Couples: The current TCJA deduction cap for individual and business tax filers would remain, but the cap would be raised for married couples to $20,000 at an estimated cost of $100-200 billion over 10 years, as compared to extending the current TCJA deduction cap.
$15,000/$30,000 SALT Cap: The current SALT deduction cap would be increased to $15,000 for individual taxpayers and $30,000 for married couples, with an estimated cost of $500 billion over 10 years, as compared to extending the current TCJA deduction cap.
Eliminate Income/Sales Tax Deduction Portion of SALT: Only property taxes would be eligible for the SALT deduction, and the deduction would not be capped. This proposal would cost $300 billion over 10 years, as compared to extending the current TCJA deduction cap.
Eliminate Business SALT Deduction: This policy option would eliminate the SALT deduction for business filers only, while maintaining the TCJA deduction cap for individuals. It would raise $310 billion over 10 years.
(b) Repeal or Reduce Mortgage Interest Deduction
The TCJA lowered the amount on which homeowners may deduct home mortgage interest to the first $750,000 ($375,000 if married filing separately) of indebtedness. One proposal would repeal the deduction on primary residences, which would raise $1.0 trillion over 10 years dollars, as compared to extending current TCJA deduction caps.A second proposal would lower the cap on the deduction to the first $500,000 of indebtedness. This proposal would raise $50 billion over 10 years, as compared to extending current TCJA deduction caps. Both savings estimates are Tax Foundation scores.
(c) Repeal Exclusion of Interest on State and Local Bonds
Under current law, interest earned on bonds issued by states and municipalities is excluded from federal taxable income.One proposal would repeal this exclusion, which would raise $250 billion over 10 years. Interest on certain “private activity bonds” is also exempt from federal income tax. A second proposal would repeal the exemption for private activity bonds, Build America bonds, and other non-municipal bonds. It would raise $114 billion over 10 years.
(d) Repeal the Estate Tax
Estates are generally subject to federal tax. The TCJA raised the estate tax exclusion to $13,990,000 in 2025. The list includes a complete repeal of the estate tax. The proposal would cost $370 billion over 10 years.
(e) Exempt Americans Abroad from Income Tax
The foreign earned income exclusion allows U.S. citizens who are residents of a foreign country or countries for an uninterrupted tax year to exclude up to $130,000 in foreign earnings from U.S. taxable income in 2025. The list suggests the limit could be raised, or that all foreign earned income could be exempted from U.S. tax. The Tax Foundation has estimated that the cost is $100 billion over 10 years, though it is not clear which proposal the estimate is related to. This is a Tax Foundation Score.
III. Businesses
(a) Corporate Income Tax
The current corporate income tax rate is 21%. The list posits reductions in the rate to either 15% (at a cost of $522 billion over 10 years) or 20% (at a cost of $73 billion over 10 years).
(b) Repeal the Corporate Alternative Minimum Tax
The Inflation Reduction Act of 2022 (“IRA”) imposed a 15% corporate alternative minimum tax (“CAMT”) on the adjusted financial statement of certain very large corporations. One proposal would repeal the CAMT, at a cost of $222 billion over 10 years.
(c) Repeal Green Energy Tax Credits
The IRA enacted various “green” tax credits, including for clean vehicles, clean energy, efficient building and home energy, carbon sequestration, sustainable aviation fuels, environmental justice and biofuel. These tax credits are proposed to be repealed. The repeal would save up to $796 billion over 10 years.
(d) End Employee Retention Tax Credit
The Employee Retention Tax Credit (“ERTC”) was established under the Coronavirus Aid, Relief, and Economic Security Act in 2020. The ERTC provided “Eligible Employers” with a refundable tax credit for wages paid between March 12, 2020 and January 1, 2021 for keeping employees on payroll despite economic hardship related to COVID-19.The proposal would extend the current moratorium on processing claims for credits, eliminate the credit for claims submitted after January 31, 2024 and impose stricter penalties for fraud related to the credit at an estimated savings of $70-75 billion over 10 years.
IV. Nonprofits
(a) Endowment Tax Expansion for Private Colleges and Universities
The TCJA imposed a 1.4% excise tax on total net investment income of private colleges and universities with endowment assets valued at $500,000 or more per student (other than assets used directly in carrying out the institution’s exempt purpose). One proposal would increase the excise tax to 14%, which would raise $10 billion over 10 years. A related but separate proposal would change the counting mechanism for the per student endowment calculation to include only students who are U.S. citizens, permanent residents or are able to provide evidence of being in the country with the intention of becoming a citizen or permanent resident. This proposal would raise $275 million over 10 years.
(b) Repeal Nonprofit Status for Hospitals
Generally, hospitals are eligible for federal tax-exempt status. The list proposes to eliminate tax-exempt status for hospitals. The Committee for a Responsible Federal Budget has estimated that the proposal would raise $260 billion over 10 years.
V. Enforcement
Repeal IRA’s IRS Enforcement Funding
The IRA resulted in supplemental funding to the IRS, for enforcement purposes. The list states that if this funding is repealed, outlays would be reduced by $20 billion and revenues by $66.6 billion, for a net cost of $46.6 billion over 10 years.
Mary McNicholas and Amanda H. Nussbaum also contributed to this article.
Utah Introduces New Bill With “Unique” Definition for Ultra-Processed Foods in Schools
On February 4, 2025, Utah’s state legislature introduced H.B. 402, “Foods Available at Schools Amendments,” a bill aimed at amending the types of foods available in public schools. This bill specifically targets the prohibition of certain food additives, utilizing a unique definition of “ultra-processed foods” (UPFs), a category of foods yet to be formally defined by law or regulation.
The bill attempts to define UPFs as foods or beverages containing one or more of the following ingredients: brominated vegetable oil, potassium bromate, propylparaben, titanium dioxide, and various artificial dyes such as blue dye 1, blue dye 2, green dye 3, red dye 3, red dye 40, yellow dye 5, and yellow dye 6. We note that both bromated vegetable oil and red dye 3 have had their market authorizations revoked by FDA.
—The definition of UPFs as presented is entirely focused on artificial dyes and a few specific additives that does not encompass the broader range of ingredients and processes that typically characterize UPFs under the academic classifications that are in circulation.
The bill’s definition seems to reduce UPFs to a list of artificial dyes and a few other additives, demonstrating the confusion surrounding this issue, and the potential for policymaking not grounded in science.
The NIH IDC – Where Are We Now
On February 7, the National Institutes of Health (“NIH”) issued a Notice (NOT-OD-25-068) entitled “Supplemental Guidance to the 2024 NIH Grants Policy Statement: Indirect Cost Rates” (the “Notice”), though which NIH announced the adoption of a uniform indirect cost rate (“IDC Rate”) of 15% applicable to all new grants, and to existing grants awarded to Institutions of Higher Education (“IHEs”) – encompassing the vast majority of postsecondary educational institutions in the United States – as of the date the Notice was issued (February 7, 2025). The Notice also indicates the policy will apply for “all current grants for go forward expenses from February 10, 2025 as well as for all new grants issued.”
The Notice, as written and supported by underlying regulations, appears to apply the 15% IDC Rate to existing awards only for IHE recipients (see the Notice’s acknowledgment that “NIH may deviate from the negotiated rate both for future grant awards and, in the case of grants to institutions of higher education (“IHEs”), for existing grant awards. See 45 CFR Appendix III to Part 75, § C.7.a; see 45 C.F.R. 75.414(c)(1).” (emphasis added)). However, there is some ambiguity in the wording and existing non-IHE awardees should be prepared for a possibly broader read by the NIH. The IDC Rate covers “facilities” and “administration” costs of the grantee institution. As a general matter, an institution’s IDC Rate is pre-negotiated and although the NIH cited 27-28% as the average negotiated IDC Rate, it has been reported that many institutions negotiate upwards of 50-60%, with some even as high as 75%.
The NIH justified its action under 45 C.F.R. § 75.414(c)(1), pursuant to which “[a]n HHS awarding agency may use a rate different from the negotiated rate for a class of Federal awards or a single Federal award only when required by Federal statute or regulation, or when approved by a Federal awarding agency head or delegate based on documented justification as described in paragraph (c)(3) of this section.” Paragraph (c)(3) goes on to require that “[t]he HHS awarding agency must implement, and make publicly available, the policies, procedures and general decision-making criteria that their programs will follow to seek and justify deviations from negotiated rates.” Presumably the NIH is taking the position that this Notice serves as the publication of the criteria it will follow (and is following in real time through the Notice) to seek and justify this likely downward deviation from already negotiated rates held by grantee institutions for existing awards.
The NIH Notice was challenged in two different motions for temporary restraining orders (“TRO”): one filed by a collection of State Attorneys General (see Commonwealth of Massachusetts vs. National Institutes of Health, Case # 1:25-cv-10338) and the other by the Association of American Medical Colleges and other similar associations (Case # 1:25-cv-10340). The motions are based on several similar arguments: (1) the indirect rate change is arbitrary and capricious, (2) the rate change violates Section 224 of the Further Consolidated Appropriations Act, 2024, (3) NIH failed to comply with its own regulations for indirect cost rates, (4) NIH has no authority to make retroactive changes to indirect cost rates, and (5) notice and comment procedures are required because this is a substantive change because it imposes a new obligation that did not exist previously.
On February 10, the District Court for the District of Massachusetts granted the State Attorneys General’s request and entered a TRO blocking the implementation, application, and enforcement of the Notice within the Plaintiff States (i.e., within Massachusetts, Illinois, Michigan, Arizona, California, Connecticut, Colorado, Delaware, Hawaii, Maine, Maryland, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Washington and Wisconsin) until further order is issued by the Court. A hearing date has been set for February 21, 2025 at 10 a.m.
In a separate ongoing litigation, State of New York v. Trump (C.A. No. 25-cv-39-JJM-PAS), the District Court of Rhode Island issued a TRO on January 31, 2025, prohibiting the Defendants from freezing federal funding based on the Trump administration’s Executive Orders or the OMB Memorandum M-24-13 dated January 27, 2025 (“Temporary Pause of Agency Grant, Loan, and Other Financial Assistance Programs”). On February 10, 2025, the same day as the motions to block the NIH’s uniform IDC, the judge in that matter, Chief Judge John J. McConnell, Jr. issued an Order to enforce the funding-freeze TRO in response to Plaintiff’s emergency motion, indicating that the Defendants must take certain steps to both restore funding and refrain from further violation of the TRO. Some media outlets have reported this Order as also blocking the NIH’s Notice related to IDCs. It is unclear at this time whether the NIH’s action in the Notice could be deemed to fall within the scope of the Executive Orders or the OMB Memo, and it does not appear this argument was made in the two motions for TROs brought against the NIH on February 10, 2025. That said, it is possible a cognizable claim could be made that the NIH’s actions constitute an attempt to cut off funding under another “name or title,” which was explicitly incorporated into the TRO issued by Judge McConnell (“Defendants shall also be restrained and prohibited from reissuing, adopting, implementing, or otherwise giving effect to the OMB Directive under any other name or title or through any other Defendants (or agency supervised, administered, or controlled by any Defendant), such as the continued implementation identified by the White House Press Secretary’s statement of January 29, 2025.”).
Given the NIH’s Notice and the various ongoing litigations, Institutions will also have to carefully evaluate their approach to submitting new grant applications and administering current awards.
How NCAA Changes to Transgender Policy Following President Trump’s Executive Order Impact Schools
Takeaways
President Trump signed executive order “Keeping Men out of Women’s Sports,” barring transgender women from competing in women’s sports and citing fairness, safety, and privacy concerns. Schools that do not comply with the new federal policy risk losing federal funding under Title IX enforcement.
In response, the NCAA immediately revised its transgender participation policy, restricting competition in women’s sports to athletes assigned female at birth.
Legal challenges are expected, as some states and advocacy groups argue the policy is discriminatory and violates previous Title IX interpretations.
Background
On Feb. 5, 2025, President Donald Trump signed executive order “Keeping Men Out of Women’s Sports,” which prohibits transgender women from participating in female athletic categories at federally funded educational institutions. The order also directed the State Department to demand changes within the International Olympic Committee. The Committee has left eligibility rules up to the global federations that govern different sports.
The Trump Administration has made a push to redefine sex-based legal protections under Title IX of the Education Amendments of 1972, emphasizing biological sex as the deciding factor for athletic eligibility. Previously, on Jan. 20, 2025, the Administration issued an executive order declaring the federal government would recognize only two sexes, male and female, for all legal and regulatory purposes.
The NCAA has over 530,000 student-athletes, fewer than 10 of whom are transgender, according to a statement the NCAA’s president, Charlie Baker had provided to a Senate panel in December. In January, Baker called for greater legal clarity on the issue from regulators.
Finding that clarity in the form of the new executive order, in response, the NCAA Board of Governors voted to amend its transgender participation policy the day after Trump’s executive order was issued.
The new policy states that eligibility for NCAA women’s sports is now strictly limited to athletes assigned female at birth. Transgender men (those assigned female at birth but who have begun a medical transition) may still participate in men’s sports without restriction. However, an athlete taking testosterone for gender transition may only practice with a women’s team and is prohibited from competing in official NCAA-sanctioned events. If a team allows an ineligible athlete to compete, the entire team will be disqualified from NCAA championships.
Legal and Institutional Challenges
The executive order immediately ignited controversy as several states and legal groups vowed to challenge the order.
Pushback is expected, particularly in states like California, Connecticut, Massachusetts, and New York, where laws expressly protect transgender rights. Schools in these states now face a dilemma: Whether to comply with federal regulations or uphold state laws that recognize gender identity protections for student-athletes. Schools in these states may risk severe financial consequences if they refuse to comply with the new federal mandate, potentially losing millions in federal education funding.
More than two dozen states already bar transgender athletes from participating in school sports, whether in K-12 schools or at the collegiate level. In January, the House passed a bill barring transgender women and girls from sports programs for female students nationwide (the bill is not likely to pass in the Senate).
What Comes Next?
Some key questions remain:
Will federal courts uphold or strike down the new Title IX interpretation?
How will schools in certain states navigate the conflict between the executive order and new NCAA policy and state laws?