WASHINGTON — As President Biden signed an executive order in his first hours in office to strengthen prohibitions against gender and sexual discrimination, a small team of officials in the Department of Education began assessing an unanswered but important question: How could the administration protect transgender athletes?

At the time, only a few states had enacted bans against transgender athletes seeking to compete in sports that matched their gender identity.

But as the education team worked — in the beginning, on pandemic-era Zoom calls — with officials on the White House Gender Policy Council, the trickle of states banning transgender athletes turned into a waterfall. By the time they had gone through multiple draft proposals to establish transgender students as protected under Title IX, the 1972 law that prohibits sex-based discrimination in federally funded schools, at least 20 states had enacted bans against them in sports.

The issue has divided activists who view barring transgender athletes as necessary to protecting fairness in sports, and others who ardently believe that blocking those athletes in any form is part of a larger assault on the civil liberties of transgender people.

The administration’s latest proposal to protect transgender people, released on Thursday, is seen by those who have studied Title IX issues as something of a compromise: It would allow schools in limited cases to block transgender athletes from competing, including to prevent sports-related injuries and to ensure fairness in competition. But it would prohibit outright bans.

It would also give the Department of Education the ability to investigate and potentially withhold federal funds from schools that violate the rule once it becomes finalized.

“I think it’s a pretty clever and thoughtful way of avoiding both extremes,” said R. Shep Melnick, a politics professor at Boston College and the author of “The Transformation of Title IX: Regulating Gender Equality in Education.” “It gives significant, and, I think, reasonable discretion back to school officials to take into account grade levels, to take into account the nature of the sport, to take into account what state of development these kids are in.”

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The proposal, the latest in a string of efforts to provide protections to transgender students that were revoked during the Trump era, broadly reflects the divisions Americans have on the issue: A poll conducted last summer by The Washington Post and the University of Maryland found that a majority of Americans — at least 55 percent — do not support transgender women and girls competing with other women and girls at professional, college and high school levels.

By the spring of 2021 the team at the Education Department — about a dozen senior officials — was busy planning for a large, virtual public hearing — the first of its kind for the department. Held that June, the hearing attracted tens of thousands of comments from parents, coaches, civil rights groups and athletes.

The team, according to a senior official who was among the participants, realized there was broad confusion about how Title IX was implemented in schools across the country. The end result, the official said, reflected the “best interpretation” of how to apply the protections of Title IX to transgender athletes and was aimed, at least, to clear up uncertainty. Conservative lawmakers who have worked to pass state bans on transgender athletes have since accused the Biden administration of overreaching. Transgender activists said they were wary of the proposal, arguing that the existing loopholes could be exploited and used for further discrimination.

Mr. Biden was a key figure in the process, officials said. In the spring of 2021, he ordered a broad review of Title IX, when only a few state legislatures around the country, including in Montana, Mississippi, and Idaho, had introduced their own legislation to bar transgender women and girls from competing on sports teams that did not match their sex at birth, according to the Movement Advancement Project, a liberal think tank that tracks the legislation.

Throughout his career, the president has shown particular willingness to engage in Title IX changes. As vice president, Mr. Biden was integral to President Barack Obama’s efforts to overhaul Title IX, in part by issuing guidance that led to aggressive investigations of schools that had mishandled sexual assault complaints and threatened them with funding cuts. Rules proposed in 2018 by Betsy DeVos, the education secretary under President Donald J. Trump, replaced that guidance.

The Biden administration’s proposal, which still needs to undergo a period of public comment and additional revision before it is finalized, will give the Education Department the ability to investigate cases of discrimination and to withhold federal funds if a school is found to be in violation of the rule. The age of the students, the level of fairness and the nature of the sport would be among the considerations schools would be required to make as they assess athlete eligibility.

Mr. Melnick said that there were still questions surrounding the proposal, including the extent to which the administration would “be trying to second-guess the decisions school officials make in this regard, because they’re going to be under pressure from multiple directions.”

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Once finalized, elements of the proposal could directly challenge several state laws, particularly those that seek to ban transgender students at all ages from participating in the sports that match their gender identity.

In a fact sheet explaining the proposal, Department of Education officials said that “elementary school students would generally be able to participate on school sports teams consistent with their gender identity and that it would be particularly difficult for a school to justify excluding students immediately following elementary school from participating consistent with their gender identity.”

At higher grade levels and at college, schools could seek to limit transgender students when the restrictions “enable the school to achieve an important educational objective, such as fairness in competition,” the document said, or preventing sports-related injuries.

About 1.4 percent of 13- to 17-year-olds and 1.3 percent of 18- to 24-year-olds identify as transgender, according to a report last year. Of that group, only a fraction play on sports teams — 12 percent of transgender girls and 14 percent of transgender boys reported being student athletes — partly out of fear of not being accepted, according to a 2017 survey conducted by the Human Rights Campaign.

“The public is much more aligned with what the Biden administration regulations calls for,” said Nancy Hogshead-Makar, a three-time Olympic gold medalist in swimming and the president of the advocacy group Champion Women, which has argued against allowing trans women and nonbinary people in women’s locker rooms in many circumstances. “When it comes to women’s sports in particular, you have to take into account safety and fairness, and that’s exactly what the regulations allow schools to do.”

Still, transgender rights activists said that the Biden administration had failed to consider that the backlash against transgender athletes could continue if the proposal still allowed for the blocking of some students.

“It’s hard to have a ‘middle ground’ when it comes to supporting human rights for trans people,” Imara Jones, the founder of TransLash Media, said in a statement, “and I can’t see how Joe Biden can straddle the fence here.”

The Biden administration’s proposal was unveiled on the same day the Supreme Court ruled that a transgender girl may compete on the girls’ cross country and track teams at her middle school in West Virginia while her appeal moved forward. Patrick Morrisey, a Republican and the attorney general of West Virginia, assailed the administration’s proposal, calling it “Washington overreach at its worst” in a statement.

“Separating teams based on biological sex is a matter of basic fairness and common sense,” Mr. Morrisey said, adding that his office “will evaluate and pursue all legal options to block this scheme.”

Governor Kristi Noem of South Dakota, a Republican who last year signed a bill banning transgender girls from playing on female sports teams into law, also threatened legal action.

“South Dakota will not allow this to stand,” Ms. Noem wrote in a tweet on Thursday after the Title IX proposal was announced. “We will lead. We will defend our laws. Only girls will play girls’ sports.”

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