A three-judge panel of the U.S. Court of Appeals for the Fourth Circuit issued a ruling on Thursday that revives legal challenges brought by the Fairfax County and Arlington County school boards. The school boards are suing the U.S. Department of Education over threats to withhold federal funding due to the districts' policies regarding transgender students.

Previously, a lower court judge had dismissed the lawsuits, determining that the school boards lacked the legal standing to sue the federal government at that stage of the dispute. The appeals court panel disagreed with that assessment, effectively clearing the way for the litigation to proceed in district court. The core of the dispute centers on whether the Department of Education’s threatened enforcement actions constitute a concrete injury that allows the school districts to seek judicial intervention before funding is actually revoked.

The ruling is significant because it allows the school boards to continue their efforts to block federal oversight of their local policies. While the appeals court has now restored the lawsuits, the underlying merits of the transgender policy dispute—specifically whether the school boards' rules comply with federal civil rights requirements—remain to be litigated. The Department of Education has maintained that its guidance is necessary to protect students from discrimination, while the school boards argue that the federal government is overstepping its authority by threatening to pull funding based on local administrative decisions.