ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA
Before: GARTH, BECKER, Circuit Judges and MUIR, District Judge*fn*
This appeal involves the Department of Education's authority to enforce Title IX of the Education Amendments of 1972,*fn1 against a college which receives no direct funds from the federal government, but whose students receive federal grants. The district court granted Grove City College's motion for summary judgment and refused to permit the termination of Basic Educational Opportunity Grants to students at the College, holding that the Title IX enforcement regulations were invalid. We reverse.
Title IX proscribes gender discrimination in education programs and activities receiving federal financial assistance. Title IX "contains two core provisions." North Haven Bd. of Educ. v. Bell, 456 U.S. 512, 102 S. Ct. 1912, 72 L. Ed. 2d 299, 50 U.S.L.W. 4501 (1982). Section 901(a) of the 1972 Act contains a program-specific ban of sex discrimination:
No person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance. . . .
20 U.S.C. § 1681 (emphasis added).
Under section 902, each agency awarding federal financial assistance "other than a contract of insurance or guaranty" to any education program or activity is authorized to promulgate regulations to insure compliance with section 901(a). If compliance cannot be secured by voluntary means, section 902 authorizes the termination of federal funds to the program in which noncompliance is found. 20 U.S.C. § 1682.*fn2
The Department of Education is the primary administrator of federal financial assistance to education.*fn3 Pursuant to its regulations, 34 C.F.R. § 106.4(a), the Department requires each recipient of federal aid to file an Assurance of Compliance as a means of securing adherence to Title IX.*fn4 Under the Assurance in use at the time of this case was filed, the recipient agreed that it would
[c]omply, to the extent applicable to it, with Title IX . . . and all requirements imposed by . . . the Department's regulation . . . the end that, in accordance with Title IX . . . no person . . . shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under any education programs or activity for which the Applicant receives or benefits from federal financial assistance. . . .*fn5
In addition, recipients provided basic information about their programs, including a "self-evaluation" under Title IX (A. 18).
Grove City College (Grove) is a private co-educational institution of higher education affiliated with the United Presbyterian Church and located in Grove City, Pennsylvania. Approximately 2,200 students attend Grove (A. 33). One hundred forty of Grove's students are eligible to receive Basic Educational Opportunity Grants (BEOGs) appropriated by Congress and allocated by the Department pursuant to 20 U.S.C. § 1070a. Three hundred forty-two of Grove's current students have obtained Guaranteed Student Loans (GSLs).*fn6 Other than through the BEOG or GSL programs, Grove receives no federal or state financial assistance.*fn7
BEOGs are paid by the Department directly to the eligible students attending Grove. Grove, however, executes the institutional section to the students' BEOG applications and certifies data involving the student applicants' costs and enrollment status so that the students might receive federal financial assistance.*fn8
In July, 1976 the Department began efforts to secure an Assurance of Compliance from Grove based upon the receipt of BEOGs and GSLs by Grove students. Grove refused to execute the Assurance, asserting that it received no federal financial assistance. The Department then initiated administrative proceedings to terminate grants and loans to students attending Grove.
After an administrative hearing, an Administrative Law Judge (ALJ) concluded that Grove was a recipient of federal financial assistance within the meaning of Title IX and that the allocation of BEOG's and GSL's could be terminated for Grove's refusal to execute an Assurance of Compliance. Since Grove conceded that it did not file an Assurance of Compliance, the ALJ entered an order prohibiting the payment of BEOG's or GSL's to students attending Grove.
On November 29, 1978, Grove, joined by four student BEOG and GSL recipients,*fn9 commenced this suit. The plaintiffs sought an order which would declare void the Department's termination of BEOG and GSL assistance. Additionally, they sought to enjoin the Department from requiring Grove to file an Assurance of Compliance as a condition of preserving its eligibility in the BEOG and GSL programs. Finally, the complaint sought a declaration that the anti-sex discrimination regulations promulgated by the Department went beyond the authority contained in Title IX, or alternatively, that those regulations were unconstitutional as applied to Grove. Cross-motions for summary judgment were filed on the basis of affidavits and the administrative record (A. 30, 101).
In an amended opinion on June 26, 1980 the district court granted Grove's motion for summary judgment and denied the cross-motion of the Department. Although the Court agreed with the Department that BEOGs and GSLs constituted "federal financial assistance" to Grove within the meaning of Title IX, it concluded that the Department could not terminate federal assistance to Grove City students because of Grove's refusal to sign an Assurance of Compliance.
The district court set forth several alternative rationales for its conclusions. First, the court held that 20 U.S.C. § 1682, which denies Title IX enforcement authority with respect to "a contract of insurance or guarantee," precluded the Department from terminating GSLs.*fn10 Second, the court concluded that the Department could not require Grove to sign an Assurance of Compliance since subpart E of the Department's regulations which prohibit discrimination in employment was held to be invalid. Alternatively, the court held that the Department had unlawfully terminated Grove's federal financial assistance based solely upon Grove's refusal to sign the Assurance. The court concluded that such a termination is authorized by Title IX only upon an actual finding of sex discrimination (A. 134-38), a finding which the Department had not made. Finally, the court held that the Department was barred by the due process clause of the fifth amendment from terminating the BEOGs without first affording hearings to all students who would be adversely affected (A. 132-133).
The court's final amended order (1) declared that the Assurance of Compliance form (HEW Form 639A) was invalid; (2) enjoined the Department from using the Assurance of Compliance form; (3) enjoined the termination of financial assistance to the plaintiffs unless actual sex discrimination was proved at an administrative hearing with notice to all those affected by the proceeding; and (4) enjoined the termination of GSL's to students.
The Department's appeal, No. 80-2384, and Grove's cross-appeal, No. 80-2383 followed.*fn11
At the outset, we consider Grove's cross-appeal because a threshold question on this appeal is whether Grove, which has refused all federal financial assistance, nevertheless is to be considered a recipient of such assistance within the meaning of section 901(a) because its students receive federal grants.
The Department has construed the phrase "federal financial assistance" to include educational grants paid to students, and, thus, received indirectly by the schools which they attend. The regulation defines federal financial assistance in relevant part as
(1) A grant or loan of Federal financial assistance, including funds made available for:
(ii) Scholarships, loans, grants, wages or other funds extended to any entity for payment to or on behalf of students admitted to that entity, or extended directly to such students for payment to that entity.
34 C.F.R. § 106.2(g) (1) (ii).
The Department's regulations further define a "recipient" of federal financial assistance:
(h) "Recipient" means . . . any person, to whom Federal financial assistance is extended idrectly or through another recipient and which operates an education program or activity which receives or benefits from such assistance, including any subunit, successor, assignee, or transferee thereof.
Thus, the Department maintains that Grove is a "recipient" because students attending Grove receive federal monies in the form of BEOGs which monies are used to pay their educational expenses at Grove.
Grove challenges the Department's inclusion of BEOGs within the scope of "federal financial assistance" under section 901(a). According to Grove, the phrase "federal financial assistance" refers only to direct payments to institutions or educational programs, and, thus, does not include educational grants paid to students when the educational institution involved plays no role in choosing the beneficiaries or designating amounts of aid. Answering Brief for Appellants at 7, n.6. Since BEOGs are paid to students based on eligibility requirements determined by the federal government, Grove contends Title IX is not implicated.
In determining the scope of Title IX, we begin with the statutory language itself. North Haven Board of Education v. Bell, 456 U.S. 512, 102 S. Ct. 1912, 72 L. Ed. 2d 299, 50 U.S.L.W. 4501 (1982).The language of section 901(a) extends Title IX's coverage to "any education program or activity receiving Federal financial assistance. . . ." Hence, by its all inclusive terminology the statute appears to encompass all forms of federal aid to education, direct or indirect.
Grove, however, argues that the statute has no application to it. Section 901, argues Grove, applies to "any . . . program or activity receiving federal financial assistance," and it must be conceded, contends Grove, that it "receives" no such assistance. Although Grove acknowledges that it benefits from federal aid which its students receive, Grove claims that this is insufficient to bring Grove's activities within the ambit of Title IX. In effect, Grove reads the statute as pertaining only to direct aid and not to indirect assistance.
Giving Title IX the broad reading that its remedial purpose dictates, see North Haven, 50 U.S.L.W. at 4503, we cannot agree with the manner in which Grove interprets § 901(a) or with its conclusion that § 901(a) is limited solely to direct assistance.
The enactment of Title IX in 1972 was the culmination of efforts over several years to ban gender discrimination in the field of education. Patterned after Title VI of the Civil Rights Act of 1964, which proscribes discrimination by reason of race, color, religion, or national origin, "[t]he drafters of Title IX explicitly assumed that it would be interpreted and applied as Title VI had been during the preceding eight years." Cannon v. University of Chicago, 441 U.S. 677, 696, 60 L. Ed. 2d 560, 99 S. Ct. 1946 (1979).*fn12 Indeed, the legislative history reveals that Title IX was designed to fill the gap left by Title VI of the Civil Rights Act of 1964, which did not prohibit discrimination based on sex. See, e.g., 118 Cong. Rec. 5807 (1972) (Remarks of Senator Bayh).
Just as Title VI was structured so that federal monies would not be expended in any fashion*fn13 which would subsidize racial discrimination,*fn14 so too, was the use of federal funds proscribed for the support of educational institutions that discriminated on the basis of sex.
Indeed, in Cannon v. University of Chicago, 441 U.S. 677, 704, 60 L. Ed. 2d 560, 99 S. Ct. 1946 (1978), the Supreme Court recognized that Title IX, like Title VI, was designed "to avoid the use of federal resources to support discriminatory practices. . . ." The legislative history of Title IX amply supports this conclusion.
In 1971, the provisions embodying Title IX were first introduced by Senator Bay; as an amendment to S. 659, 92d Cong., 1st Sess. (1971), the Education Amendments of 1971. A major feature of S. 659 was the establishment of the Basic Educational Opportunity Grant ...