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Fairfax County Public Schools appealed to the U.S. Court of Appeals for the Fourth Circuit on Sept. 9 after a judge rejected its attempt to block federal funding conditions tied to bathroom and locker room policies.

The dispute centers on FCPS regulations governing facility use based on gender identity. The school division says the U.S. Department of Education has demanded policy changes that would conflict with Virginia and federal law. FCPS could lose as much as $167 million in federal funding if it refuses.

The appeal followed Judge Rossie D. Alston Jr.’s dismissal of the division’s lawsuit in the Eastern District of Virginia the previous week. Alston concluded that his court lacked jurisdiction to decide how the federal government allocates funding, according to FCPS.

The court also recognized that the division’s current regulations are compelled by binding Fourth Circuit precedent, FCPS said.

The school system maintains that its bathroom and locker room policies comply with Title IX and applicable state and federal laws. It argues that the Education Department has not identified evidence supporting its decision to classify FCPS as a “high-risk” entity.

FCPS said it is continuing to ask the department to reconsider that designation while pursuing the appeal.

The threatened federal money supports food and nutrition programs, cafeteria staffing, services and instruction for students with disabilities, technical education, teacher development, community education programs and efforts to improve student achievement.

The division said it remains committed to an inclusive environment for students and employees, including transgender and gender-expansive members of the school community. Students seeking greater privacy for any reason will continue to receive reasonable accommodations.