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It depends on a lot of things - if the school is public, private, etc., but also what led them to such a decision - if they have been held liable for frat/sorority conduct they may be doing this to comply with some order/settlment or to protect themselves from future liability. Just because a private school has federal funding doesn't automatically make them an "arm of the government" so they can get away with a lot more than a public school in terms of dictating what their students can or can't do - i.e. enforce a dres code, kick out a student who works at a strip club, etc. You should contact an attorney in your area or someone who knows all the facts of your situation.
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