On Feb. 20, 2025, Judge Adam B. Abelson of the U.S. District Court for the District of Maryland (Baltimore) issued a preliminary injunction enjoining aspects of the enforcement of two executive orders signed by President Donald Trump. Both executive orders — among the first the President signed after his inauguration — sought to curb diversity, equity and inclusion (DEI) initiatives among government contractors, large corporations, nonprofits and other entities. In light of the court’s action, certain federal agencies and “other persons who are in active concert or participation with” them are restricted from implementing several key provisions of the executive orders — for now.
The two executive orders at issue are Executive Order 14151 “Ending Radical and Wasteful Government DEI Programs and Preferencing” and Executive Order 14173 “Ending Illegal Discrimination and Restoring Merit-Based Opportunity).” Both executive orders targeted, among other things, DEI activities within the private sector as they applied to government contracts. After issuance of the orders, plaintiffs sought to enjoin enforcement of three key provisions:
1. The “Termination Provision” from EO 14151, providing that every agency, department or commission head, in consultation with the U.S. Attorney General, the U.S. Office of Management and Budget (OMB) and the U.S. Office of Personnel Management, as appropriate, must “terminate, to the maximum extent allowed by law, … all … ‘equity-related’ grants or contracts.”
2. The “Certification Provision” from EO 14173, providing that each agency must include two specific provisions in every contract or grant award:
- A term requiring that the contractual counterparty or grant recipient agrees that its “compliance in all respects with all applicable Federal anti-discrimination laws” is material to the government’s payment decisions
- A term requiring the counterparty or recipient to certify that it “does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws”
3. The “Enforcement Threat Provision” from EO 14173, which requires the U.S. Attorney General — in consultation with agencies and the OMB — to submit a report to the White House containing recommendations for enforcing federal civil rights laws and taking other measures to encourage the private sector to end illegal discrimination and preferences, including DEI. As part of this plan, each agency must identify “up to nine potential civil compliance investigations of publicly traded corporations, large non-profit corporations or associations, foundations with assets of 500 million dollars or more, State and local bar and medical associations, and institutions of higher education with endowments over 1 billion dollars.”
As a result of the preliminary injunction, the administration is blocked from enforcing both the Termination Provision and the Certification Provision. Accordingly, agencies may not pause, freeze or otherwise terminate any obligations on the basis of the Termination Provision, nor may any agency require a grantee or contractor to make a certification pursuant to the Certification Provision.
As for the Enforcement Threat Provision, the preliminary injunction does not enjoin the Attorney General from conducting investigations of DEI programs or producing the White House report under EO 14173. However, the ruling does enjoin the administration from bringing any related federal False Claims Act (FCA) enforcement actions, including FCA demands, claims or actions, premised on any certification made pursuant to the Certification Provision. Notably, the extent to which a preliminary injunction such as the one in question can provide FCA liability “cover” if it is later dissolved is an open issue in federal courts.
Further, even before the executive orders in question were issued, selected federal contracts and grants, including for educational institutions, already require compliance with applicable federal anti-discrimination laws as a term and condition of receiving federal funds. The Department of Justice may accordingly assert that such pre-existing certifications were not made as a result of the enjoined provision of EOs 14151 and 14173.
McGuireWoods continues to monitor the rapidly evolving legal and regulatory landscape in the early months of the new administration. For questions about these executive orders or any related FCA inquiries, contact the authors, your McGuireWoods contact, or a member of the firm’s federal contracting, affirmative action or labor and employment teams.