On March 14, 2025, a three-judge panel of the U.S. Court of Appeals for the Fourth Circuit lifted a nationwide preliminary injunction that previously halted parts of two DEI-related executive orders signed by President Donald Trump — Executive Order 14151 “Ending Radical and Wasteful Government DEI Programs and Preferencing” and Executive Order 14173 “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.”
The features of the executive orders previously enjoined involved (a) the termination of all “equity-related” federal grants and contracts; (b) contractor and grantee certification of anti-discrimination law compliance; and (c) the administration’s ability to bring federal False Claims Act (FCA) enforcement actions against organizations based on the new certifications.
Background
On Feb. 20, 2025, Judge Adam Abelson of the U.S. District Court for the District of Maryland (Baltimore) issued a nationwide preliminary injunction halting enforcement of aspects of Executive Orders 14151 and 14173. Both executive orders targeted, among other things, DEI activities within the private sector as they applied to federal government contracts and grants. The provisions of the executive orders enjoined involved:
- 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.”
- 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.”
The plaintiffs in the action also sought to enjoin 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. The preliminary injunction did not enjoin the Attorney General from conducting investigations of DEI programs or producing the White House report under EO 14173. However, the ruling did enjoin the administration from bringing any related FCA enforcement actions, including FCA demands, claims or actions, premised on any certification made pursuant to the Certification Provision.
For a detailed summary of the prior district court ruling and the related injunction order, see McGuireWoods’ Feb. 25, 2025, alert.
Fourth Circuit Panel Ruling
In a March 14, 2025, opinion, a three-judge panel of the Fourth Circuit lifted Judge Abelson’s preliminary injunction, holding that the Trump administration had “satisfied the factors for a stay” of that action pending ongoing appeal.
Circuit Judge Pamela Harris explained the panel’s view that the government was likely to succeed on the appeal of the preliminary injunction, noting:
As the government explains, the challenged Executive Orders, on their face, are of distinctly limited scope. The Executive Orders do not purport to establish the illegality of all efforts to advance diversity, equity or inclusion, and they should not be so understood. Instead, the so-called “Certification” and “Enforcement Threat” provisions apply only to conduct that violates existing federal anti-discrimination law. Nor do the Orders authorize the termination of grants based on a grantee’s speech or activities outside the scope of the funded activities. Rather, the “Termination” provision directs the termination of grants, subject to applicable legal limits, based only on the nature of the grant-funded activity itself. On this understanding, the government has shown the requisite likelihood that the challenged provisions do not on their face violate the First or Fifth Amendment.
Although the decision was unanimous, two of the judges on the panel expressed approval of DEI generally, while the other judge questioned the relevance of such approval in the judicial process.
Fourth Circuit Chief Judge Albert Diaz noted in his concurring opinion that “I’m compelled to write separately to address what seems to be (at least to some) a monster in America’s closet — Diversity, Equity, and Inclusion initiatives.” Per Chief Judge Diaz:
[D]espite the vitriol now being heaped on DEI, people of good faith who work to promote diversity, equity, and inclusion deserve praise, not opprobrium. For when this country embraces true diversity, it acknowledges and respects the social identity of its people. When it fosters true equity, it opens opportunities and ensures a level playing field for all. And when its policies are truly inclusive, it creates an environment and culture where everyone is respected and valued. What could be more American than that?
Under the most basic tenets of the First Amendment, there should be room for open discussion and principled debate about DEI programs, and whether its corresponding values should guide admissions, hiring, scholarship, funding, or workplace and educational practices.
Chief Judge Diaz further caveated his opinion, noting, “Like my colleague, I too reserve judgment on how the administration enforces these executive orders, which may well implicate cognizable First and Fifth Amendment concerns.”
Circuit Judge Pamela Harris echoed Chief Judge Diaz’s comments in her concurring opinion, noting, “My vote should not be understood as agreement with the orders’ attack on efforts to promote diversity, equity, and inclusion.”
By contrast, Circuit Judge Allison Jones Rushing noted in her separate concurring opinion that:
We must not lose sight of the boundaries of our constitutional role and the imperative of judicial impartiality. Any individual judge’s view on whether certain Executive action is good policy is not only irrelevant to fulfilling our duty to adjudicate cases and controversies according to the law, it is an impermissible consideration. A judge’s opinion that DEI programs “deserve praise, not opprobrium” should play absolutely no part in deciding this case.
The underlying legal action remains on appeal with the Fourth Circuit, which ordered expedited briefing. And McGuireWoods continues to monitor the evolving legal and regulatory landscape regarding this case and other executive orders.
For questions about these executive orders and the implications on federal contracting, grants and DEI initiatives generally, contact the authors, your McGuireWoods contact, or a member of the firm’s federal contracting, affirmative action or labor and employment teams.