A federal district court in Maryland issued a preliminary nationwide injunction on February 21 that temporarily halts enforcement of elements of Executive Orders 14151 and 14173. Most notably for federal contractors and grantees, the injunction prohibits implementation of the “certification provision” of EO 14173, which directs federal agencies to require that contractors and grantees certify that they do not “operate any programs promoting DEI that violate any applicable Federal anti-discrimination law.” Note that the injunction by its terms does not prohibit the relevant federal agencies or state attorneys general from investigating allegations of or enforcing against alleged illegal DEI.
The certification provision also requires contractors and grantees to acknowledge and agree to a statement that compliance with federal anti-discrimination law is material to government payment decisions under the False Claims Act. The certification language is intended to address the materiality element of the False Claims Act, a violation of which can lead to treble damages and penalties associated with each claim for payment submitted to the government.
The injunction stems from a case filed on February 3, 2025 by the National Association of Diversity Officers in Higher Education, the American Association of University Professors, Restaurant Opportunities Centers United, and the Mayor and City Council of Baltimore. The lawsuit challenges three specific elements of the executive orders: (1) the provision in Executive Order 14151 directing all agencies to terminate all equity-related grants or contracts; (2) the “certification provision” in Executive Order 14173; and (3) the provisions in Executive Order 14173 directing the Attorney General to submit a report “containing recommendations for enforcing Federal civil-rights laws and taking other appropriate measures to end illegal discrimination and preferences” in the private sector, including “a plan of specific items to deter DEI programs or principles . . . that constitute illegal discrimination” and a list of “publicly traded corporations, large non-profit corporations or associations, [and] foundations with assets of 500 million dollars or more” for potential civil compliance investigations.
The plaintiffs argued that these provisions are unconstitutionally vague and violate their First Amendment right to free speech on matters of public concern. The district court largely agreed with those positions in its analysis of the claims. The court found that the plaintiffs had a high likelihood of success on their due process (vagueness) claim as the executive orders failed to define key terms like “DEI,” “equity-related,” and “illegal DEI and DEIA policies,” leaving the plaintiffs, and the significant percentage of employers in the United States who contract or work with the federal government, with uncertainty whether the US administration will deem the work they are doing or the speech they are engaged in to be among the activities it deems illegal. Further, the court found that the administration’s goal of “deter[ing] DEI programs or principles” was tantamount to viewpoint discrimination and unconstitutionally abridged the plaintiffs’ freedom of speech.
The preliminary injunction temporarily halts enforcement of the first two challenged provisions and elements of the third on a nationwide basis. The injunction does not prevent the Attorney General from continuing to investigate and identify potential targets for compliance actions due to “prudential and separation-of-powers reasons.” It also does not prevent the EEOC from investigating and litigating complaints under Title VII, nor does it prevent federal agencies’ civil rights offices from investigating complaints under Title VI and referring such complaints to the Department of Justice (DOJ) for enforcement action if appropriate. Similarly, the injunction does not prevent DOJ or state attorneys general from investigating potential violations of their respective False Claims Act statutes based on a good faith belief that a company may be failing to follow relevant laws and regulations.
This case is one of several challenging executive actions by the US administration in this area. A second was filed in Washington, DC by the National Urban League, the National Fair Housing Alliance, and the AIDS Foundation of Chicago on February 19. That case similarly alleges that portions of Executive Orders 14151 and 14173, along with Executive Order 14168, on “gender ideology,” violate the constitutional rights of the challenging parties.
The temporary halt in enforcement of the certification provision in Executive Order 14173 is the most important development for companies that hold federal contracts or grants. However, the government’s statutory authority to enforce federal civil rights laws—against federal contractors and other private sector actors—remains. Questions regarding the scope of prohibited DEI activities will undoubtedly continue as federal agencies seek to apply these orders and courts review them. Given the changing landscape, those who do business with the federal government and private sector actors would be well advised to continue reviewing their DEI programs for compliance with applicable laws and consult counsel as matters develop further.
Visit our US Administration Policies and Priorities resource center and subscribe to our mailing list for the latest on programming, guidance, and current legal and business developments involving the Trump-Vance administration.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact the authors or lawyers in our Culture and DEI, FCA & Qui Tam Litigation, and Government Contracts practices.