A panel of the United States Court of Appeals for the Fourth Circuit lifted a nationwide injunction, allowing the Trump administration to resume implementation of a pair of executive orders targeting diversity, equity, and inclusion (“DEI”) and diversity, equity, inclusion, and accessibility (“DEIA”) programs (the “Challenged Executive Orders”). On their face, the Challenged Executive Orders apply only to undefined DEI- and equity-related programs that violate existing federal anti-discrimination law, and do not purport to establish the illegality of all efforts to promote DEI. Our client alert describing those executive orders may be found here.
By way of background, as we previously wrote, on February 21, 2025, the United States District Court for the District of Maryland enjoined the Trump administration from implementing the Challenged Executive Orders.
In short, the underlying lawsuit sought to enjoin certain provisions of the Challenged Executive Orders including the provisions that: (1) directed executive agencies to terminate “equity-related” grants and contracts; and (2) directed all executive agencies to include within every federal contract or grant award a certification, enforceable through the False Claims Act, that the recipient of federal funding does not operate any programs promoting DEIA or DEI in violation of federal anti-discrimination laws (the “Challenged Provisions”). The lower court found the Challenged Provisions to be unconstitutionally vague, as well as unconstitutional content and viewpoint restrictions on speech.
On March 14, 2025, a three-judge panel of the Court of Appeals for the Fourth Circuit overturned the district court’s preliminary injunction that had enjoined key portions of the Challenged Executive Orders.
The panel all agreed that the injunction should be lifted, at least for now, while litigation over the Challenged Executive Orders’ lawfulness continues. Each member of the three-judge panel wrote a concurring opinion to explain their rationale, with two of the judges also expressing their support for principled efforts to promote diversity, equity, and inclusion. In describing why they agreed with the decision to lift the injunction, each judge noted that the underlying case does not challenge any specific agency action implementing the Challenged Executive Orders.
Accordingly, they wrote, there was not yet any basis to conclude that agencies would do so in an unconstitutional manner.
What does this mean?
- Agencies may immediately begin implementing the Challenged Executive Orders. In the near term, this will likely take the form of agencies requiring grant recipients and federal contractors to certify that they do not operate any programs promoting DEIA or DEI that violate any applicable Federal anti-discrimination laws. Importantly, as previously explained, these certifications are a potential source of False Claims Act liability for those who are found to have submitted inaccurate certifications.
- It is likely that agencies will seek to penalize federal grantees and contractors who, in the scope of their grant-funded or contract-related activity, engage in discrimination unlawful under current federal anti-discrimination law. Federal anti-discrimination law prohibits the use of preferences, quotas, and set asides, except in very limited circumstances.
- If agencies use the Challenged Executive Orders to punish grant recipients and federal contractors for engaging in all DEI or DEIA activities, including well-crafted efforts to promote employee engagement through cultivating a sense of belonging, the Challenged Executive Orders will likely again be challenged as unconstitutional violations of the First and Fifth Amendments.
Action items for grant recipients and federal contractors:
- Consider embracing a broad definition of “diversity,” to include background (socio-economic and otherwise), experiences, cultures, opinions, and the like, along with race, gender, ethnicity, and other protected characteristics.
- Review their diversity, equity, inclusion, accessibility, and belonging programs to ensure they are strategic and well-designed to foster open opportunities and ensure a level playing field for all by creating an environment and culture where everyone is respected and valued.
- Examine their diversity, equity, inclusion, accessibility, and belonging programs, including any training or rewards programs, to ensure they comply with current federal anti-discrimination laws. This would include a review to ensure that programs do not provide an advantage or award benefits to an individual based on a specific demographic trait.
- Pay close attention to DEI or DEIA-related guidance from agencies regarding how those agencies interpret the executive orders’ DEI and DEIA prohibitions.
- Merely changing some words – replacing “diversity” with “inclusivity,” or “equity” with “equality,” for example – will not make a non-compliant program compliant.
- If a decision is made to modify existing diversity, equity, inclusion, accessibility, and belonging programs, consider preparing internal communications explaining the changes and their rationale.