GRAND CANYON UNIVERSITY V. MIGUEL CARDONA

• Court: Court of Appeals for the Ninth Circuit
• Decided: December 28, 2022
• Docket: 21-17113
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS DEC 28 2022 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

GRAND CANYON UNIVERSITY, No. 21-17113

Plaintiff-Appellant, D.C. No. 2:21-cv-00566-DLR

v. MEMORANDUM* MIGUEL A. CARDONA, in his official capacity as Secretary of the United States Department of Education; U.S. DEPARTMENT OF EDUCATION,

Defendants-Appellees.

Appeal from the United States District Court for the District of Arizona Douglas L. Rayes, District Judge, Presiding

Submitted December 5, 2022** Phoenix, Arizona

Before: WARDLAW and BUMATAY, Circuit Judges, and SCHREIER,*** District Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). *** The Honorable Karen E. Schreier, United States District Judge for the District of South Dakota, sitting by designation. Grand Canyon University (GCU) appeals the dismissal of its complaint

against the Department of Education (the “Department”), which sought to obtain

COVID-19 emergency relief funds established for nonprofit institutions of higher

education (IHEs). We review de novo the grant of a motion to dismiss. See Faulkner

v. ADT Sec. Servs., Inc., 706 F.3d 1017, 1019 (9th Cir. 2013). Dismissal is proper

“if the complaint fails to plead enough facts to state a claim to relief that is plausible

on its face.” Koessler v. CVS Health Corp., 977 F.3d 803, 807 (9th Cir. 2020)

(simplified). We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

GCU is a private, Christian university located in Phoenix. In 2004, after 55

years as a nonprofit institution, GCU’s Board of Trustees approved its sale to a for-

profit corporation to raise money to keep the University operating. The Department

now classifies GCU as a for-profit “proprietary institution of higher education”

under § 102(b) of the Higher Education Act (HEA), see 20 U.S.C. § 1002(b), as

opposed to a § 101 “nonprofit” IHE, see 20 U.S.C. § 1001(a)(4). Through the

Higher Education Emergency Relief Funds (HEERF) II and III, Congress allocated

the vast majority of relief funds for “institutions of higher education as defined in

[HEA] section 101” and a smaller amount to “institutions of higher education as

defined in section 102(b) of the HEA.” See Coronavirus Response and Relief

Appropriations Act (CRRSAA), Pub. L. No. 116-260, § 314(a)(1), (a)(4), 134 Stat.

1909, 1932–33 (2020); accord American Rescue Plan Act (ARPA), Pub. L. No.

2 117-2, § 2003(1), (4), 135 Stat. 4, 23–24 (2021).1

GCU argues that it qualifies for § 101 nonprofit relief funds under HEERF II

and III. The university relies heavily on the fact that, in 2018, it was purchased by

a company that the Internal Revenue Service (IRS) recognized as a 501(c)(3)

nonprofit. But HEA § 101 nonprofit status requires more than the IRS’s recognition

of 501(c)(3) status under 26 U.S.C. § 501(c)(3). See 34 C.F.R. § 600.2 (defining a

HEA § 101 nonprofit); see also HEA § 103(13), 20 U.S.C. § 1003(13) (same). In

2019, and again in 2021, the Department determined that GCU failed to satisfy the

definition of a “nonprofit” IHE under the HEA. That determination is not challenged

in this action.2 Because GCU is not a recognized HEA § 101 nonprofit, it is not

entitled to funds reserved for such IHEs under HEERF II and III.

Despite the Department’s rejection of GCU's § 101 nonprofit status, GCU

contends that it is still entitled to nonprofit HEERF relief funds under Department

regulations. GCU specifically relies on a Department regulation that allows an

applicant to prove it is a “nonprofit organization” for “some programs” based on

501(c)(3) status. See 34 C.F.R. § 75.51(b)(1). But these regulations apply only “to

1 Congress also allocated funds to IHEs under HEA § 102(c)—a classification not relevant here. CRRSAA § 314(a)(1); ARPA § 2003. 2 GCU challenged that determination in a separate lawsuit against the Department and lost. See Grand Canyon Univ. v. Rosenfelt, No. 2:21-cv-177 (D. Ariz.). The district court granted the Department’s Cross-Motion for Summary Judgment on December 1, 2022.

3 the extent [they are] consistent with the authorizing statute.” Id. § 75.1(b). Here,

the authorizing statutes expressly allocate the nonprofit funds to “institution[s] of

higher education as defined in [HEA] section 101.” See CRRSAA § 314(a)(1);

accord ARPA § 2003. Consequently, we agree with the district court that

Department regulations, which do not purport to determine a school’s HEA status,

are inapplicable here.

AFFIRMED.