On Friday, a federal judge in Baltimore issued a preliminary injunction blocking the Trump administration from terminating or altering federal contracts deemed equity-related, citing potential constitutional violations, including infringements on free speech.
Plaintiffs argued that two executive orders, Ending Radical and Wasteful Government DEI Programs and Preferencing and Ending Illegal Discrimination and Restoring Merit-Based Opportunity, exceeded presidential authority by attempting to override Congress’s exclusive power of the purse. They also contended that the orders unlawfully sought to silence those who disagreed with the administration by threatening loss of federal funding and other enforcement actions. The lawsuit specifically challenged the orders’ termination, certification, and enforcement provisions.
The judge’s ruling prohibits executive agencies from:
- Terminating or altering contracts: The government cannot pause, freeze, block, cancel, or modify any federal awards, contracts, or obligations based on the Termination Provision of the executive orders.
- Requiring compliance certifications: Agencies cannot demand that federal contractors or grantees submit new certifications under the Certification Provision.
- Enforcing penalties through legal action: The government cannot initiate enforcement actions, including False Claims Act proceedings, based on the Enforcement Threat Provision.
However, for separation of powers reasons, the court did not enjoin the Attorney General’s authority to investigate and prepare a report on DEI practices. The ruling does allow the administration to review these programs but blocks enforcement actions.
The court also found that the orders were unconstitutionally vague, leaving federal contractors and grant recipients with no clear guidance on how to bring their grants into compliance. The injunction applies nationwide, including to similarly situated non-parties.
What does this mean for your organization?
This decision does not settle the issue. First, the ruling is preliminary, meaning litigation will continue in district court. Second, the Trump administration has the right to appeal, which could lead to further legal developments. While this ruling isn’t a permanent resolution, it does buy some time for evaluating your risk and response.
Your organization should use this time to assess its programs and consider potential impacts if the executive order is ultimately upheld. Continue to refine language to focus on specific programmatic objectives and away from short-hand references that could be misconstrued, identify practices that make your programs broadly inclusive and not “discriminatory,” develop contingency plans, and evaluate risks to ensure you are prepared if and when things change.
The Scholz Nonprofit Law team:
Melissa, Jessica, Jeff, West, Tracy, Tacy, and Haley
If you have any questions,
Scholz Nonprofit Law is here for you. Please let us know how we can help by emailing Melissa, Jessica, Jeff, West, Haley, or Tracy.