Executive Orders targeting DEI partially blocked by court

EO 14151 seeks to eliminate federal government DEI-related plans, programs, grants, contracts, offices, and positions, among other things. EO 14173 seeks to end “illegal DEI” by targeting DEI initiatives in the private sector, particularly with respect to federal grantees and contractors, including through the use of investigations and potential enforcement actions, such as under the False Claims Act (FCA). We previously wrote about the implications of EO 14173 on federal contractors and grantees and on DEI initiatives in the private sector, as well as its FCA implications, and we wrote about Attorney General Pam Bondi’s memo raising the specter of criminal prosecutions for illegal DEI. 

The court’s order in National Association of Diversity Officers in Higher Education v. Trump¹, at least for the time being, pauses certain aspects of the EOs.

Injunction order

The District Court addressed three specific provisions in the executive orders: 

1. A provision in EO 14151 that directs all executive agencies to “terminate…‘equity-related’ grants or contracts” (Termination Provision). 
2. A provision in EO 14173 that directs all executive agencies to include terms in every federal contract and grant award pursuant to which the contractor or grantee (a) agrees that compliance with all federal anti-discrimination laws is material for purposes of the FCA and (b) certifies that it does not operate programs “promoting DEI that violate any applicable federal anti-discrimination laws” (Certification Provision). 
3. A provision in EO 14173 that directs the Attorney General to take “appropriate measures to encourage the private sector to end illegal discrimination preferences, including DEI” to “deter” such “programs or principles,” and to “identify … potential civil compliance investigations” to accomplish such “deter[rence].” (Enforcement Threat Provision). 

The District Court agreed with the plaintiffs that the Termination Provision “is void for vagueness under the Fifth Amendment” because it fails to define “‘equity-related’ grants or contracts,” which if enforced, would invite arbitrary and discriminatory enforcement. Further, the District Court found that the vagueness of the terms does not afford affected parties the ability to correct any practices to avoid termination of their grants or contracts.

The District Court also agreed with the plaintiffs that the Certification Provision violates the First Amendment because it “is a content-based restriction on the speech rights of federal contractors and grantees,” yet is not narrowly tailored to require only certification for DEI programs that use federal funds. Rather, its “sole purpose” is for contractors and grantees to certify that they have no illegal DEI “in any aspect of their functioning, regardless of whether the DEI-related activities occur outside the scope of the federal funding.” This certification must be done “under threat of perjury and False Claims Act liability.” Such a broad requirement, as the District Court noted, is facially unconstitutional, as it is a content-based restriction on the “speech rights of federal contractors and grantees” affecting their work “whether funded by the government or not.” 

Finally, the District Court agreed with the plaintiffs that the Enforcement Threat Provision is an unlawful viewpoint-based restriction because it implicates First Amendment protections over “pure private speech” and does not place a similar restriction on anti-DEI speech or principles.

The government had argued that the Certification Provision merely requires contractors and grantees to certify that their DEI programs are not violating federal antidiscrimination laws, and the Enforcement Threat Provision merely relates to “illegal discrimination or preferences” and that “Plaintiffs have no First Amendment right to violate federal antidiscrimination laws.” The court rejected this argument, stating that there is uncertainty about which “DEI programs . . . violate federal anti-discrimination laws,” that the EOs do not provide “guidance or notice of what the government now considers ‘illegal’ DEI,” and therefore contractors and grantees “are highly likely to chill their own speech.”

The Department of Justice has already filed a Notice of Appeal. 

But for the time being, the preliminary injunction prohibits: 

1. The pausing, freezing, impeding, blocking, canceling, changing, or terminating of any awards, contracts, or obligations on the basis of the Termination Provision. 
2. Requiring any grantee or contractor to make any certification or other representation pursuant to the Certification Provision. 
3. Bringing of any enforcement action, pursuant to the Enforcement Threat Provision, including any FCA action premised on the Certification Provision. 

Notably, the District Court declined to enjoin the Attorney General from preparing the report that EO 14173 directed the Attorney General to prepare in the challenged Enforcement Threat Provision, nor did the District Court enjoin the Attorney General from engaging in DEI-related investigations. The report will, among other things, include “recommendations for enforcing Federal civil-rights laws and taking other appropriate measures to encourage the private sector to end illegal discrimination and preferences, including DEI,” and will include a strategic enforcement plan. This report may contain guidance on what the Attorney General considers to be “illegal DEI.” 

The injunction does not foreclose the possibility that federal agencies will seek to cancel or alter contracts or grants or seek certifications based on other authority, even if the appeal is ultimately unsuccessful. 

Next steps

While the District Court’s injunction reduces the risk of FCA enforcement actions in the immediate term and provides some relief for contractors and grantees, at least for now, some things remain unchanged:

• The Attorney General is still allowed under EO 14173 to take steps to create a report, monitor, and investigate DEI programs – including making recommendations on ending “illegal DEI” and identifying particular targets. 
• The government can still investigate allegations of discrimination, including so-called reverse discrimination, and can bring enforcement actions. 
• The order does not prevent putative whistleblowers (relators) from filing DEI-based qui tam FCA complaints. 
• State Attorneys General and private plaintiffs can still pursue actions, including under state antidiscrimination laws. 
• Contractors and grantees can still be denied contracts or grants, including if the agency or contracting officer believes their DEI policies and practices are illegal. 

Contractors and grantees should continue to review closely, in consultation with counsel, all certifications and representations that have been made previously and are being made in new bid documents, grant applications, contracts, and amendments. All employers, including contractors and grantees, should still continue assessing DEI-related programs (under privilege if at all possible). 

Per the February 5th Bondi Memo², a report detailing recommendations to enforce federal civil rights laws and other appropriate measures to encourage the private sector to end illegal discrimination is expected to be provided to the Associate Attorney General by March 1, 2025. 

As always, please reach out to the team identified on this alert or to any Hogan Lovells lawyer with whom you work for assistance navigating these changes and for more information about the Executive Orders.

Muhammad Burney and Olivia McCann contributed to this alert.