That gets us back to the Gavin Grimm case. In the lower courts, Grimm's lawyers had urged the courts to give "Auer deference" to the Obama administration's guidance. See Auer v. Robbins, 519 U.S. 452 (1997). Auer deference means that if a federal regulation is ambiguous, the agency in charge of the regulation gets to decide how it applies. It's similar to the more-familiar Chevron deference, which is the same idea but for ambiguous acts of Congress. The District Court had declined to grant deference to the 2016 guidance because it thought that the regulation clearly referred to "sex" as distinct from gender identity. G.G. v. Gloucester County School Board, 132 F.Supp.3d 736, 746 (E.D.Va. 2015). As such, the regulation was unambiguous and needed no Guidance to interpret it. The 4th circuit reversed and granted Auer deference. In other words, it said that the Obama administration's 2016 guidance was controlling—the beginning and end of the analysis. G.G. Ex. Rel. Grimm v. Gloucester County School Board, 822 F.3d 709, 719–23 (4th Cir. 2016).
In the School Board's certiorari petition, it invited the Supreme Court to reconsider Auer entirely—that is, to decide that agencies would no longer get deference to interpret their own regulations. The Supreme Court had declined that invitation, but had agreed to hear the case on two specific questions. The first was whether Auer deference should attach to "an unpublished agency letter that does not carry the force of law and was adopted in the context of the very dispute in which deference is sought?" The second question was whether the Obama administration's interpretation of Title IX should be given effect, either because of Auer deference or because of the Court's own judgment. Even under Auer deference, the Obama administration's guidance might not be controlling if an exception to Auer deference applied, or if the regulation was held to be unambiguous.
Now, the guidance on which the 4th circuit hung its hat has been reversed. The new Trump administration guidance doesn't actually take any position on how Title IX applies to transgender students—it just says that the Obama administration guidance is withdrawn and rescinded for further study. This changes everything, though. Grimm had argued that the courts should follow the Department of Education's guidance, but that guidance has now been reversed! Even if the Trump administration guidance affirmatively said, "Title IX doesn't protect transgender students," one of the exceptions to Auer deference is if the challenged guidance is "inconsistent with prior agency practice." See G.G., 822 F.3d at 722. It seems pretty clear that the Trump/DeVos guidance (or lack of guidance) reversing the Obama/Duncan guidance is inconsistent with prior agency practice. The absence of a consistent agency interpretation pretty much kills any hope of Auer deference, thus throwing the interpretation back to the courts.
Now, lawyers and court-watchers know that the Supreme Court hates being the first appellate court to decide an issue in a case—they really want a district court and a federal appellate court to have weighed in before they even decide whether to get involved. In fact, they'd really prefer if multiple appellate courts have heard the same issue in different cases and didn't agree about how to resolve it. Here, the change in agency practice has completely upended the case. The district court issued its own interpretation of Title IX because it thought Auer deference didn't apply in the first case, but the Fourth Circuit never did—its opinion was all about Auer. So, rather than using its precious resources to take a first look at an issue of regulatory interpretation, the Supreme Court sent the case back to the Fourth Circuit for reconsideration.
Now the Fourth circuit will take a second look at the case. Instead of deciding whether Auer deference applies, which is all they did before, they now must decide whether Auer deference still applies—and assuming it doesn't, they must decide whether the school's policy violates Title IX. Then, whichever side loses the new round can ask SCOTUS to take up the case again. Of course, it's also possible that the Trump Administration will promulgate new regulations to address the question directly. If they do, the Title IX issue is moot—the statute gives the government broad discretion to regulate, and the entire case has been about how the existing regulations apply. Grimm's legal team also made an Equal Protection argument, but the courts below have largely avoided that question. To make matters more complicated, Gavin Grimm will graduate high school in May of 2017. However, since his complaint seeks damages for past harm as well as injunctive relief, his graduation should not render the case moot.
What happens if the case goes back before the Supreme Court now that Neil Gorsuch is a justice? Well, if the Auer question is still in play, Gorsuch is pretty solidly on record as hating Chevron and Auer deference, so we would expect him to oppose any ruling that the deference applies. However, that issue will very likely be out of the case by the time it returns to the court. On the substantive issue, Gorsuch is in a minority of federal appellate judges in having held that a trans woman could be fired for vague "safety concerns" involving her use of the women's restroom. See Kastl v. Maricopa County Community College Dist., 325 F.Appx. 492, 494 (2009). That's probably bad news for his vote in a hypothetical G.G. II.