Fourth Circuit Allows Implementation of DEI Executive Orders to Proceed

On February 6, 2026, The U.S. Court of Appeals for the Fourth Circuit issued a final published opinion vacating the district court’s preliminary injunction against several elements of Executive Order 14151, Ending Radical and Wasteful Government DEI Programs and Preferencing and Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity, which imposed certain requirements on federal contractors and grantees of federal funds regarding DEI. Recipients of federal grants brought this action based on a claim that the requirements were unconstitutional on their face. While the Fourth Circuit’s decision does not preclude future challenges to the administration’s views as to what constitutes unlawful DEI or when contracts or grants may be terminated, the court has held that such challenges will have to be based on specific allegations that the executive orders are being implemented unlawfully. This means that federal contractors and grant recipients must continue to live, at least for now, with substantial uncertainty as to what it means to “certify” that they are not operating any programs promoting DEI that violate applicable federal anti-discrimination laws.

Enforcement Threat Provision

With respect to EO 14151’s so-called “Enforcement Threat Provision” (the president’s directive that the attorney general submit a report with recommendations for enforcing federal civil rights laws and deterring DEI programs that constitute illegal discrimination or preferences), the Fourth Circuit found that the plaintiffs lacked standing to bring a claim. 

Plaintiffs had argued that they feared retribution by the Trump administration so that they would be forced to restrict “their speech and conduct in support of diversity, equity, and inclusion” or face penalties. The Fourth Circuit, however, found that these allegations overstated the Enforcement Threat Provision’s text. In particular, the court reasoned that the Enforcement Threat Provision would harm plaintiffs only if: 

(1) the Attorney General includes in her report a plan or strategy of cutting funds for organizations that engage in DEI, even though the [P]rovision does not mention funding; (2) the President adopts that aspect of the proposed strategic enforcement plan; (3) the plan, however finalized, includes [p]laintiffs (or at least one of them) within the scope of the funding-cut strategy; and (4) some government actor enforces that part of the approved plan and slashes funding.

The court found that this “multi-tiered speculation” was inconsistent with standing.

Termination and Certification Provisions

With regard to EO 14151’s so-called Termination Provision (requiring termination of all “equity-related” grants or contracts) and EO 14173’s Certification Provision (mandating that federal contracts and grants include terms requiring compliance with federal anti-discrimination laws and certification that no DEI programs violate these laws), the Fourth Circuit held that the plaintiffs had standing and that their claims were constitutionally ripe. 

The court then noted that the plaintiffs were challenging these provisions on their face and that “[f]acial invalidation is, manifestly, strong medicine that has been employed by [courts] sparingly and only as a last resort.” According to the court, in order to prevail, plaintiffs would have to show that the provisions are unconstitutional in all of their applications or that they lack any “plainly legitimate sweep.” 

The court held that the plaintiffs could not make such a showing with regard to the Termination Provision because the EO does not ask anything of plaintiffs or regulate private conduct but only “instructs the President’s subordinates to act, and then only ‘to the maximum extent allowed by law.’” In other words, the “Provision, at this stage at least, is nothing more than ‘an outward-facing’ policy directive from the President to his agents.” As the president clearly has authority to determine policy priorities and instruct his agents to make funding decisions based on those priorities, it is not for the courts to determine whether such policy is sound. The only issue for the courts is whether the policy is unconstitutionally vague for funding recipients.

Applying the Supreme Court’s decision in National Endowment for the Arts v. Finley, the Fourth Circuit found that the policy here, while perhaps vague, was not unconstitutionally vague: “when the Government is acting as patron rather than as sovereign, the consequences of imprecision are not constitutionally severe.”

The court also rejected plaintiffs’ First Amendment Challenge to the Certification Provision. The court first noted that, on its face, the Provision only requires compliance with existing federal laws which plaintiffs have not challenged. According to the court, 

What plaintiffs are really asking us to do is read subtext into the Provision’s text. And what they’re really challenging is how the Administration and its agency actors interpret antidiscrimination law in relation to plaintiffs’ DEI programming. Neither is fertile ground for a facial attack against the Certification Provision.

Instead, we’re bound by the text. If the President, his subordinates, or another grantor misinterprets federal antidiscrimination law, plaintiffs “can challenge that interpretation in a specific enforcement action.” But we can’t conclude today that a “substantial number of the [Certification Provision’s] applications” will be unconstitutional. 

Next Steps

In light of the Fourth Circuit’s decision, federal contractors and grant recipients should carefully review all contract terms regarding compliance with federal non-discrimination laws or DEI practices and, before agreeing to such provisions, should consider potential risks. Federal contractors and grant recipients that then choose to agree to such provisions should carefully audit their policies and practices on an ongoing basis to ensure that they are complying, in good faith, with their representations.