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In January 2008, a panel of the Court of Appeals for the Sixth Circuit issued a decision in School
District of the City of Pontiac v. Secretary of the United States Department of Education. In its
decision, the court held that the No Child Left Behind (NCLB) Act failed to provide the required
“clear notice” to states and school districts regarding the requirements they must fulfill as a
condition of receiving federal funding. However, the full Sixth Circuit recently agreed to
reconsider the case. This report discusses some of the implications of the Sixth Circuit’s actions,
including information regarding the potential practical effect, procedural ramifications, and legal
impact of both the original ruling and the recent decision to rehear the case.

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Background ..................................................................................................................................... 1
The Sixth Circuit’s Decision ........................................................................................................... 2
Implications ..................................................................................................................................... 4

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Author Contact Information ............................................................................................................ 5

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The Pontiac decision arose in response to litigation surrounding § 9527(a) of the Elementary and
Secondary Education Act (ESEA), as amended by the No Child Left Behind (NCLB) Act of
2001.1 Section 9527(a)—the so-called “unfunded mandates” provision—states: “Nothing in this
Act shall be construed to authorize an officer or employee of the Federal Government to ...
mandate a State or any subdivision thereof to spend any funds or incur any costs not paid for
under this Act.”
Enacted in 2002, the NCLB Act reauthorized and revised the ESEA, which is the primary federal
law that provides financial assistance to state and local school districts for pre-collegiate
education. Perhaps the most notable feature of NCLB is the wide array of assessment and
accountability measures that seek to improve student achievement and performance, particularly
in troubled schools. For example, the act mandates that states administer annual tests in reading
and mathematics for students in grades 3-8, requires that schools make adequate yearly progress
toward improving student performance, establishes a series of required actions for schools that
fail to meet such performance standards, and adds new requirements regarding teacher
qualifications. The bulk of the new accountability requirements are tied to the Title I, Part A
program for disadvantaged students, which is the largest source of federal funding for elementary
and secondary education.2
Arguing that the costs of complying with some of the new accountability measures far outweigh
what they receive in federal funds, a number of states and school districts have protested what
they perceive as a lack of federal assistance for some of the act’s more controversial
requirements, such as the testing and school choice provisions.3 Other critics have questioned
whether mandating that states pay for the costs associated with some of the act’s requirements is
even lawful, given the language of § 9527(a). Indeed, in 2005, the National Education
Association (NEA), in conjunction with eight school districts in Michigan, Texas, and Vermont,
filed a lawsuit claiming that the Secretary of Education was violating both the “unfunded
mandates” provision and the Spending Clause of the U.S. Constitution.4 The NEA:
sought a declaratory judgment to the effect that states and school districts are not required to
spend non-NCLB funds to comply with the NCLB mandates, and that a failure to comply
with the NCLB mandates for this reason does not provide a basis for withholding any federal
funds to which they are otherwise entitled under the NCLB. Plaintiffs also sought an
injunction prohibiting the Secretary from withholding from states and school districts any
federal funds to which they are entitled under the NCLB because of a failure to comply with

1 P.L. 107-110, 115 Stat. 1425. Section 9527 is codified at 20 U.S.C.A. § 7907.
2 For more information on NCLB, see CRS Report RL31284, K-12 Education: Highlights of the No Child Left Behind
Act of 2001 (P.L. 107-110), by Wayne C. Riddle et al.
3 For example, “the General Accounting Office estimated that states would have to spend $1.9 billion to $5.3 billion to
develop and administer the new tests the law requires. States and federal officials disagree as to whether Congress has
appropriated enough money to help states meet those costs.” Sam Dillon, States Are Relaxing Education Standards to
Avoid Sanctions From Federal Law, N.Y. Times, May 22, 2003, at A29.
4 Sch. Dist. of Pontiac v. Sec’y of the United States Dep’t of Educ., 512 F.3d 252 (6th Cir. 2008). A similar lawsuit was
also filed by the state of Connecticut. A federal court rejected the state’s claims, although the court did not reach the
merits of the “unfunded mandates” claim. Connecticut v. Spellings, 2008 U.S. Dist. LEXIS 34434 (D. Conn. April 28,
2008); Connecticut v. Spellings, 453 F. Supp. 2d 459 (D. Conn. 2006).
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the mandates of the NCLB that is attributable to a refusal to spend non-NCLB funds to
achieve such compliance.5
In 2005, the United States District Court for the Eastern District of Michigan dismissed the NEA’s
lawsuit. In its ruling, the district court concluded that § 9527(a) should be interpreted as a
prohibition against the imposition by federal officers and employees of additional, unfunded
requirements beyond those provided for in the statute, rather than as an exemption from the
statute’s requirements when the federal government fails to fully fund the Title I program. As a
result, the court dismissed the lawsuit for failing to state a claim upon which relief can be
granted.6 The plaintiffs appealed the dismissal to the Sixth Circuit, which reversed the district
court’s decision.
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In School District of the City of Pontiac v. Secretary of the United States Department of
Education, a three-judge panel of the Sixth Circuit, in a 2-1 vote, held that the Spending Clause,7
which empowers Congress to spend money for the “general Welfare of the United States,”
requires congressionally enacted statutes to provide “clear notice to the States of their liabilities
should they decide to accept federal funding under those statutes” and that the NCLB Act “fails to
provide clear notice as to who bears the additional costs of compliance.”8 Because the court found
the statute to be ambiguous in this regard, it ruled that the plaintiffs had established a claim upon
which relief could be granted and therefore reversed the district court’s decision and remanded
the case to the district court for further proceedings consistent with the Sixth Circuit’s opinion.
In reaching its decision, the two-justice majority emphasized its view that the Spending Clause
requires “clear notice” of a state’s financial obligations. Under the clause, Congress has
frequently promoted its policy goals by conditioning the receipt of federal funds on state
compliance with certain requirements. Indeed, the Supreme Court “has repeatedly upheld against
constitutional challenge the use of this technique to induce governments and private parties to
cooperate voluntarily with federal policy.”9 Although the Court has articulated several standards
that purport to limit Congress’s discretion to place conditions on federal grants under the
spending clause, these standards generally have had little limiting effect:
First, the conditions, like the spending itself, must advance the general welfare, but the
determination of what constitutes the general welfare rests largely if not wholly with
Congress. Second, because a grant is ‘much in the nature of a contract’ offer that the states
may accept or reject, Congress must set out the conditions unambiguously, so that the states
may make an informed decision. Third, the Court continues to state that the conditions must
be related to the federal interest for which the funds are expended, but it has never found a
spending condition deficient under this part of the test. Fourth, the power to condition funds
may not be used to induce the states to engage in activities that would themselves be
unconstitutional. Fifth, the Court has suggested that in some circumstances the financial
inducement offered by Congress might be so coercive as to pass the point at which ‘pressure

5 Pontiac, 512 F.3d at 257-58.
6 Sch. Dist. v. Spellings, 2005 U.S. Dist. LEXIS 29253 (D. Mich. 2005).
7 U.S. Const. art. I, § 8, cl. 1.
8 Sch. Dist. of Pontiac v. Sec’y of the United States Dep’t of Educ., 512 F.3d 252 (6th Cir. 2008).
9 Fullilove v. Klutznick, 448 U.S. 448, 474 (1980).
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turns into compulsion,’ but again the Court has never found a congressional condition to be
coercive in this sense.10
Relying on the standard that spending conditions be set forth “unambiguously,” the Pontiac court
cited two Supreme Court precedents: Pennhurst State School & Hospital v. Halderman and
Arlington Central School District Board of Education v. Murphy.11 The Pennhurst decision
involved the Developmentally Disabled Assistance and Bill of Rights Act of 1975, which
contained a “bill of rights” provision stating that mentally disabled individuals “have a right to
appropriate treatment, services, and habilitation for such disabilities.”12 Unlike other requirements
of the act, the bill of rights provision appeared to represent a general statement of federal policy
and was not conditioned on the receipt of federal funding. As a result, the Court held that the
provision did not create enforceable obligations on the state, in part because Congress had failed
to provide clear notice to states that accepting federal funds would require compliance with the
bill of rights provision. Meanwhile, the Arlington case involved the Individuals with Disabilities
in Education Act, which authorizes a court to award “reasonable attorneys’ fees” to plaintiffs who
prevail in lawsuits brought under the act. Denying the plaintiffs’ request for reimbursement of
fees paid to a non-attorney expert, the Court held that the statute did not provide states with clear
notice that their acceptance of federal funds obligated them to compensate prevailing parties for
such expert fees.
Applying these precedents, the Pontiac court sought to determine whether the NCLB Act
provided clear notice to the states regarding their funding obligations. According to the court,
because the statute “... explicitly provides that ‘[n]othing in this Act shall be construed ... to
mandate a State or any subdivision thereof to spend any funds or incur any costs not paid for
under this Act,’ a state official would not clearly understand that obligation to exist.”13 Although
the Sixth Circuit considered alternative interpretations under which the statute could be read to
require states to comply with all NCLB requirements regardless of federal funding levels, the
court ruled that “... the only relevant question here is whether the Act provides clear notice to the
States of their obligation.” As a result, the court rejected the alternative interpretations advanced
in the case, which included (1) the district court’s view that the provision prevents officers and
employees of the federal government from imposing additional requirements on the states, and
(2) the Department of Education’s (ED) argument that the provision simply emphasizes that state
participation in NCLB is entirely voluntary. Although the Sixth Circuit acknowledged that ED’s
interpretation of the statute may ultimately be correct, the court held that neither interpretation
was sufficiently evident to provide states with clear notice of their obligation to spend additional
funds to comply with requirements that are not paid for under the act.
As noted above, the Sixth Circuit’s Pontiac decision was not unanimous. Indeed, one of the
judges vigorously objected to the majority opinion. According to the dissenting judge’s
interpretation, § 9527(a) does not render the NCLB Act ambiguous and therefore does not violate
the Spending Clause. Specifically, the dissent distinguished the cases cited as precedents and
contended that the text, operation, and structure of the act contradict the majority’s interpretation.

10 Congressional Research Service, United States Constitution: Analysis and Interpretation, at http://www.crs.gov/
products/conan/Article01/topic_S8_C1_3_1_2.html (citations omitted). See also, South Dakota v. Dole, 483 U.S. 203
(1987).
11 451 U.S. 1 (1981); 548 U.S. 291 (U.S. 2006).
12 Former 42 U.S.C. § 6010.
13 Pontiac, 512 F.3d at 265.
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Asserting that state and local school officials “had a crystal clear vision of what Congress was
offering them,” the dissent characterized the majority opinion as “contrary to the way our nation’s
education has been operated and funded for centuries” and concluded that “there is no support in
the text or context of the NCLB for the proposition that Congress intended such a monumental
and unprecedented change in our nation’s education funding.”14
Ultimately, the decision reached by the three-judge panel may not be the last word in the case,
since a majority of judges on the Sixth Circuit recently agreed to rehear the Pontiac case.15
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As noted above, the Sixth Circuit’s actions in the Pontiac case—both the original ruling and the
decision to rehear the case—may have significant practical, procedural, and legal implications.
From a practical perspective, if the decision stands, the case has the potential to significantly
undermine the operation and effect of the Title I program, as well as other ESEA programs that
are subject to the “unfunded mandates” provision in § 9527(a). From a broader perspective, the
case—if not judicially or legislatively overturned—could represent a shift in the federal-state
relationship across a wide array of policy areas if the Sixth Circuit’s “clear notice” rule is
extended to other statutory schemes that are perceived to suffer from similar “ambiguities.” As a
result, the case could potentially create a degree of uncertainty across the entire landscape of
federal funding programs by encouraging legal challenges not only to other federal education
programs but also to federal funding programs operated by other federal agencies.
The Pontiac case also has numerous procedural implications. In response to the ruling, ED sought
review of the Pontiac decision by petitioning the Sixth Circuit for a rehearing en banc.16
Typically, federal appeals are heard by a panel consisting of three judges, but the term “en banc,”
which translates as “full bench,” refers to a situation in which a larger number of circuit judges
reconsider a decision made by the three-judge panel. Under the Federal Rules of Appellate
Procedure, “[a]n en banc hearing or rehearing is not favored and ordinarily will not be ordered
unless: (1) en banc consideration is necessary to secure or maintain uniformity of the court’s
decisions; or (2) the proceeding involves a question of exceptional importance.”17 Although a
court of appeals is not obligated to grant a rehearing, ED’s petition for en banc review was
successful. In its order granting the rehearing, the Sixth Circuit noted that the effect of such an
order is to vacate the panel opinion, stay further action, and restore the case as a pending appeal.18
As a result, the original Sixth Circuit opinion in the Pontiac case is no longer in effect.
Eventually, the Sixth Circuit, sitting en banc, will issue a new ruling in the Pontiac case. Once
that occurs, the losing party may decide to appeal by filing a petition for a writ of certiorari with
the Supreme Court. Because the Supreme Court is not obligated to grant such requests, however,

14 Id. at 273.
15 Sch. Dist. of Pontiac v. Sec’y of the United States Dep’t of Educ., 512 F.3d 252 (6th Cir. 2008), reh’g granted, No.
05-2708 (6th Cir. May 1, 2008), at http://www.edweek.org/media/ca6_order_granting_rehearing_en_banc.pdf.
16 Petition for Rehearing and Rehearing En Banc, Sch. Dist. of Pontiac v. Sec’y of the United States Dep’t of Educ.,
No. 05-2708 (6th Cir. filed February 5, 2008), at http://www.edweek.org/media/petitionforrehearing.pdf.
17 USCS Fed Rules App Proc R 35.
18 Sch. Dist. of Pontiac v. Sec’y of the United States Dep’t of Educ., 512 F.3d 252 (6th Cir. 2008), reh’g granted, No.
05-2708 (6th Cir. May 1, 2008), at http://www.edweek.org/media/ca6_order_granting_rehearing_en_banc.pdf.
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there is no guarantee that the litigation will continue beyond its current stage. Nevertheless, given
the reality of en banc review and the possibility of Supreme Court review, the potentially lengthy
nature of such proceedings could mean that the NCLB Act litigation may take years to resolve. As
a result, the Sixth Circuit’s original decision may have little practical effect in the near future, if
ever.
In addition to the practical and procedural ramifications, there are several important legal
implications of the Pontiac decision. First, if the decision withstands en banc review, it will
become effective only in states that fall within the jurisdiction of the Sixth Circuit. Those states
are limited to Kentucky, Michigan, Ohio, and Tennessee. Because school districts and educational
agencies in other states would not be affected by the decision, they may decide to file similar
lawsuits in other circuits. Second, Congress has the authority to override the Pontiac decision
statutorily. According to the Sixth Circuit’s decision, the states’ “obligation to spend additional
funds or incur additional costs for ... compliance is unclear,” and that lack of clear notice violates
the Spending Clause.19 If Congress disagrees with the Pontiac decision, then Congress is free to
amend the NCLB Act to clarify that states that accept NCLB funds are obligated to comply with
all of the act’s requirements, regardless of whether or not the costs of compliance are fully funded
by the federal government.

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Jody Feder

Legislative Attorney
jfeder@crs.loc.gov, 7-8088

19 Pontiac, 512 F.3d 252.
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