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The certification provision is most directly relevant to private sector actors now. And the risks of an inaccurate certification may be great.
In the first two days of his second term, President Donald Trump issued two executive orders relating to diversity, equity and inclusion (DEI). Shortly after the executive orders were issued, in an action brought by recipients of federal grants, a federal district court judge in Baltimore issued a preliminary injunction with regard to three provisions in the executive orders. Pending appeal, the Court of Appeals for the Fourth Circuit stayed the preliminary injunction. On February 7, 2026, the appellate court vacated the preliminary injunction.
The Executive Orders
By way of background, the first executive order, "Ending Radical and Wasteful Government DEI Programs and Preferencing," contains the so-called termination provision, which directs all federal agencies, departments and commissions to:
[T]erminate, to the maximum extent allowed by law, all DEI, DEIA, and "environmental justice" offices and positions (including but not limited to "Chief Diversity Officer" positions); all "equity action plans," "equity" actions, initiatives, or programs, "equity-related" grants or contracts; and all DEI or DEIA performance requirements for employees, contractors, or grantees.
The second executive order, "Ending Illegal Discrimination and Restoring Merit-Based Opportunity," contains the so-called certification provision and enforcement threat provision.
The certification provision instructs the head of each federal agency to include in every contract or grant award:
(A) A term requiring the contractual counterparty or grant recipient to agree that its compliance in all respects with all applicable Federal antidiscrimination laws is material to the government's payment decisions for purposes of section 3729(b)(4) of title 31, United States Code; and (B) A term requiring such counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.
The enforcement threat provision orders the heads of federal agencies to prepare a report with the assistance of the attorney general within 120 days of the executive order, identifying a "plan or specific steps or measures to deter DEI programs or principles that constitute "illegal discrimination or preferences."
Analysis of Appellate Opinion
In vacating the district court's preliminary injunction on the three provisions at issue, the appellate court held that the plaintiffs were unlikely to succeed on their Fifth Amendment due process challenge that the termination provision is unconstitutionally vague. In so holding, the court emphasized that the provision does not regulate private conduct but rather was an instruction by the president to his subordinates to implement his policy priorities and that, in this context, while the instruction was vague, it was not so vague as to be unconstitutional.
The plaintiffs were further unlikely to succeed on their First Amendment challenge that the certification provision interfered with their free speech rights. In so holding, the court emphasized that the provision requires only that the plaintiffs certify compliance with federal antidiscrimination law, and that plaintiffs have no constitutional right to operate DEI programs in such a way that they violate federal antidiscrimination law.
The plaintiffs did not have standing to challenge the enforcement threat provision. In so holding, the court stated "it is difficult to see how [the plaintiffs] can be in imminent danger of an injury based on a provision that simply requires a cabinet official to issue a report at a future date."
While the court vacated the preliminary injunction based on facial challenges to the executive orders, it made clear that its opinion did not preclude challenges to the executive orders as applied to individual contractors or grantees. Such a challenge will have to be based on specific allegations that an executive order has been implemented unlawfully as to a particular contractor or grantee.
What Does This Mean for Recipients of Federal Money and Other Employers?
The certification provision is most directly relevant to private sector actors now. And the risks of an inaccurate certification may be great.
By way of reminder, on May 19, 2025, Deputy Attorney General Todd Blanche issued a memorandum concerning a "Civil Rights Fraud Initiative" and announcing it would "utilize the False Claims Act to investigate and, as appropriate, pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws." The Blanche memo encourages use of the False Claims Act (FCA) against federal contractors or grant recipients that "defraud the United States by taking its money while knowingly violating civil rights laws." According to the memo, a federal contractor or grant recipient may implicate the FCA if it "knowingly violates civil rights laws... and falsely certifies compliance with such laws." The FCA affords the government broad powers that can result in lengthy and wide-ranging investigations and enormous potential liabilities, which can include treble damages and significant per claim penalties.
To minimize their legal exposure in general, and with regard to the FCA in particular, federal contractors and grantees may benefit from auditing their DEI practices and eliminating or modifying any practices that are or may be illegal under the federal antidiscrimination laws. There are benefits to having these audits conducted under attorney-client privilege, at least initially.
Employers who do not have federal contracts or grants also should consider auditing DEI programs to eliminate any illegal discrimination that may exist with them. Equal Employment Opportunity Committee Chair Andrea Lucas has made clear that one of the top priorities for the EEOC will be to prosecute claims where there is unlawful discrimination in the context of a DEI program, whether the program is referred to as DEI or by some other name. Now that the EEOC has a quorum, we expect such prosecutions to begin. We also already have seen some challenges by the plaintiffs' bar to alleged discrimination in the context of DEI.
The EEOC has provided guidance to minimize employers' exposure, and the Department of Justice has also provided guidance.
There is a continuum for determining what is "illegal DEI": Some practices are clearly unlawful; other practices are (or at least should be) lawful; and, in between, there are practices that may pose some risk because the relevant law is still in its nascent stage. Experienced counsel can help audit DEI programs to assess the risk along the continuum, taking into account an organization's priorities and risk tolerance.
For More Information
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