As readers may be aware, two Diversity, Equity and Inclusion (“DEI”)-related Executive Orders impacting federal contractors and grantees have been challenged in the Federal District Court for the District of Maryland in the case of National Association of Diversity Officers in Higher Education, et al., v. Trump, et al., civil action case number 25-cv-333.

Current Status

On Friday, February 21, in the course of that litigation, Judge Adam B. Abelson issued a nationwide injunction against implementing key aspects of the following two Executive Orders (EOs):

▪ Ending Radical and Wasteful Government DEI Programs and Preferencing (Jan 20, 2025), which, in relevant part, asserts that federal agencies are to “terminate, to the maximum extent allowed by law, . . . all . . . ‘equity-related’ grants or contracts.”

▪ Ending Illegal Discrimination and Restoring Merit-Based Opportunity (Jan 21, 2025), which, in relevant part, calls upon federal agencies to include a term in grant and contract awards requiring grantees and contractors to: (i) certify that any DEI activities within their organizations comply with federal civil rights laws; and (ii) acknowledge that the certification is material to grant and contract payments for purposes of potential liability under the Civil False Claims Act, 31 U.S.C. § 3729 et seq.

As many grantees have experienced, a number of federal agencies have commenced grant terminations and implemented updates to standard terms and conditions in furtherance of these EOs, generally without much, if any, clarifying guidance on what constitutes impermissible conduct.

The District Court’s preliminary injunction order directs that “Defendants other than the President, and other persons who are in active concert or participation with Defendants (the ‘Enjoined Parties’) shall not:”

▪ “[P]ause, freeze, impede, block, cancel, or terminate any awards, contracts or obligations (“current Obligations”), or change the terms of any Current Obligation on the basis of the . . .” provision described above under the Ending Radical and Wasteful Government DEI Programs and Preferencing EO.

▪ “[R]equire any grantee or contractor to make any ‘certification’ or other representation pursuant to the [c]ertification [p]rovision . . .” of the Ending Illegal Discrimination and Restoring Merit-Based Opportunity EO described above.

▪ “[B]ring any False Claim Act enforcement action, or other enforcement action, pursuant to . . .” certain enforcement planning that is to be conducted internally within the federal government under the Ending Illegal Discrimination and Restoring Merit-Based Opportunity EO or based upon the specific certification requirement described above.

The Court’s memorandum opinion accompanying the preliminary injunction order conveys the Court’s reasoning.  Among other considerations, the Court focuses on the lack of clarity grantees and contractors have been provided on what conduct is specifically prohibited.  As explained in the memorandum, the injunction applies to all grantees and contractors, not merely to the plaintiffs in the case.

This case remains in its early stages and the preliminary injunction is likely to be appealed by the government.  The current implementation and enforcement pause is, by definition, a temporary matter.  As the case develops, both parties will further argue the merits, and even a final decision on the merits by the District Court will be subject to appeal to the 4th Circuit.

Federal Grantee Implications

For now, the injunction should slow agency demands for ambiguous compliance assurances and any associated stop work orders or termination notices.  For grantees and contractors that receive any of such demands or notices referencing DEI concerns in the coming weeks, this injunction is of significant importance.

For inquiries related to the Executive Orders, Administration actions, or other federal grants matters, please contact Feldesman attorney Scott S. Sheffler, Ted Waters, Phillip A. Escoriaza, Rosie Dawn Griffin, or Mindy B. Pava.