Federal Government Settles Funding Dispute with Maine Over Transgender Student Athletes Policy

05.12.2025

On May 2, 2025, the United States Department of Agriculture (“USDA”) entered into a settlement agreement with the State of Maine to end a dispute regarding the USDA’S withholding of federal funds after the Trump Administration announced the Maine Department of Education (“MDOE”) student athletics policy violated Title IX of the Education Amendments Act of 1972 (“Title IX”) by allowing transgender athletes to compete in girls’ sports and use girls’ facilities. The settlement comes weeks after a federal court restored federal funding to Maine’s Child Nutrition Program, finding the United States Department of Agriculture (“USDA”) likely violated federal law and administrative regulations regarding its Title IX enforcement.

Notably, the settlement agreement only involved the dispute between the federal government and the State of Maine about federal funding, and did not address the substantive question of whether the MDOE’s student athletics policies violated Title IX.

USDOE Investigation into Maine Department of Education

On February 5, 2025, the White House issued Executive Order 14201 (“Keeping Men Out of Women’s Sports”) (“Executive Order”). The Executive Order states Title IX prohibits educational institutions receiving federal funding from denying women an equal opportunity to participate in sports.”[1] The Executive Order also directs federal executive agencies to rescind federal funding for programs that fail to comply with the Executive Order.

On February 21, 2025, following the Executive Order, the Office for Civil Rights (“OCR”) of the United States Department of Education (“USDOE”) launched an investigation into the MDOE regarding “allegations that it continues to allow male athletes to compete in girls’ interscholastic athletics and that it has denied female athletes female-only intimate facilities, thereby violating antidiscrimination law.” On March 19, 2025, OCR communicated its findings that MDOE had “violated federal antidiscrimination law by allowing boys to compete in girls’ sports and boys to occupy girls’ intimate facilities,” and warned that if MDOE did not comply with Title IX, USDOE would begin the process of revoking federal funding. On March 31, 2025, OCR issued a “final warning letter” to MDOE, once again directing it to comply with Title IX.

On April 2, 2025, based on OCR’s findings that MDOE had violated Title IX, the USDA announced it was pausing funding for “certain administrative and technological functions” in the state’s schools. In a letter to Maine’s Governor Janet Mills, USDA Secretary Brooke Rollins stated, “[i]n order to continue to receive taxpayer dollars from USDA, the state of Maine must demonstrate compliance with Title IX’s protection of female student athletes from having to compete with or against or having to appear unclothed before males.”[2] Federal funding and grants supporting several of Maine’s Child Nutrition Program initiatives became unavailable the following day.

Federal District Court Grants Temporary Restraining Order Restoring Funding

On April 7, 2025, Maine filed a federal lawsuit and motion for a Temporary Restraining Order (“TRO”) against USDA and Secretary Rollins, seeking to enjoin the agency from freezing and withholding federal funding without following the process set forth by Title IX.

Maine asserted, and the district court agreed, that USDA had not complied with various federal procedural requirements prior to freezing federal funding after OCR’s finding that it had failed to comply with Title IX. Further, the district court explained USDA’s decision to freeze federal funding was based on the determination that Maine’s “student athletic programs, particularly those involving female student athletes, were in violation of Title IX.” However, the funding restricted by USDA was for food assistance programs and unrelated to student athletics. Finding that Maine was likely to succeed on its claims, and that it had met the other requirements of a TRO, the district court ordered USDA to “immediately unfreeze and release to the state of Maine any federal funding that they have frozen or failed or refused to pay because of the State’s alleged failure to comply with the requirements of Title IX.”

Settlement Agreement between Maine and USDA

The TRO was extended to remain in effect until May 9, 2025. However, on May 2, 2025, Maine and USDA entered into the settlement agreement, whereby USDA agreed to “refrain from freezing, terminating, or otherwise interfering with the State of Maine’s access to [USDA] funds allocated to any official, agency, or department of the State of Maine based on alleged violations of Title IX without first following all legally required procedures” and Maine agreed to dismiss its lawsuit against USDA. The settlement does not bar USDA from seeking to withhold federal funding from Maine after following the proper procedures, though it may still face legal challenges if the funding withheld is unrelated to student athletics.

Notably, the federal government has filed a separate lawsuit against Maine, seeking a court order directing the state to prohibit transgender girls from participating in female sports. Separately, on April 11, 2025, the USDOE announced it was referring its Title IX investigation into the MDOE to the U.S. Department of Justice for an enforcement action. AALRR is tracking these legal procedures and will provide updates as they develop.

Impacts on California Educational Agencies

As noted in our previous Alert,[3] Executive Order 14201 appears to conflict with California law. Specifically, Education Code section 221.5(f) states: “A pupil shall be permitted to participate in sex-segregated school programs and activities, including athletic teams and competitions, and use facilities consistent with his or her gender identity, irrespective of the gender listed on the pupil’s records.”

Maine’s TRO against, and settlement agreement with, USDA do not clarify the apparent conflict between California law and the Executive Order regarding transgender girls’ participation in girls’ sports. However, the legal battle between the federal government and Maine demonstrates that the federal government must follow the detailed and lengthy process required by federal law before withholding federal funding for alleged violations of Title IX.

The Executive Order is the subject of ongoing litigation. AALRR attorneys will continue to monitor executive, administrative, judicial, and legislative actions regarding the Executive Order and participation of transgender athletes in athletics. If your educational agency has questions about the contents of this Alert, please contact the authors of this Alert or your usual AALRR counsel.