In recent months, the Administration has been adding a new condition to Federal awards that ties assurances that grantees comply with long-standing Federal antidiscrimination laws to a requirement that grantees refrain from “Diversity, Equity and Inclusion” activities.  In a recent example, on April 16, 2025, the U.S. Department of Health and Human Services (“HHS”) amended its Grants Policy Statement (“HHS GPS”), which sets forth terms and conditions for federal awards, to provide a new grant term (in turn, recently eliminated) as follows:

“(2) Grant award certification. (a) By accepting the grant award, recipients are certifying that:

“(i) They do not, and will not during the term of this financial assistance award, operate any programs that advance or promote DEI [“Diversity, Equity and Inclusion”], DEIA [“Diversity, Equity, Inclusion, and Accessibility”], or discriminatory equity ideology in violation of Federal anti-discrimination laws; and

“(ii) They do not engage in, and will not during the term of this award engage in, a discriminatory prohibited boycott.

“(3) HHS reserves the right to terminate financial assistance awards and claw back all funds if the recipients, during the term of this award, operate any program in violation of Federal anti-discriminatory laws or engages in prohibited boycott.” HHS GPS (April 2025) at 18-19.

Then, with no explanation, on July 24, 2025, HHS turned around and dropped the above DEIA language in yet another Grants Policy Statement update (the second update in 4 months), providing instead:

“By applying for or accepting federal funds from HHS, recipients certify compliance with all federal antidiscrimination laws and these requirements and that complying with those laws is a material condition of receiving federal funding streams. Recipients are responsible for ensuring subrecipients, contractors, and partners also comply.”  HHS GPS (July 24, 2025) at 19.

The comparatively “watered-down” antidiscrimination language in the just-released July 2025 GPS does not necessarily mean HHS will no longer suspend or terminate grant funding on DEI grounds. DEI-language deletion notwithstanding, the underlying antidiscrimination laws the Administration cites to anchor its “DEI” grant restrictions or award terminations remain embedded in grant terms and conditions, either expressly stated in the notice of award and/or through incorporation of the HHS “Administrative and National Policy Requirements.”

While the relatively more aggressive “DEIA” language in the April 16, 2025, GPS is gone (for now), the softer approach in the July 2025 GPS does not prove the Administration has abandoned “civil rights compliance” and enforcement to pursue “anti-DEI” aims. In fact, DEI enforcement will not abate per the Attorney General’s memorandum to all federal agencies on “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination,” issued on July 29, 2025, which cautions grantees that “unlawful DEI practices” carry “legal, financial, and reputational risk.” See our Client Alert.

In this vein, there may be a range of programs and policies that present varied levels of risk to federal grantees. For example, a policy requiring employees to disclose gender identity or pronouns runs a higher risk of being deemed contrary to federal antidiscrimination laws as the Administration interprets them. However, the fact that some employees may choose independently to disclose their gender identity or include pronouns in their email signatures appears relatively low risk, so long as the grantee does not require employees to disclose such information. A determination of which policies present greater risk and which ones relatively minor risk should be based on the grantee’s best judgment in light of available guidance, documented accordingly. For illustrative purposes, the above-cited Attorney General’s guidance describes examples of “unlawful discrimination” and best practices as “non-binding suggestions” to grantees.

Feldesman LLP will continue to monitor and assess regulatory and judicial developments impacting HHS awards and grants across the federal financial assistance spectrum. Please contact Phillip Escoriaza for questions. For updates, please join Feldesman’s Monthly Briefings for Federal Grantees: Key Updates and Developments webinar. The next webinar in this series will take place on August 19, 2025.