Court Stops USDA From Enforcing Funding Conditions Tied to DEI, Women’s Sports

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Quick Hits

• On June 5, 2026, the federal district court granted a preliminary injunction requested by twenty states and Washington, D.C., which are challenging the USDA’s conditions requiring funding recipients to certify compliance with the administration’s policies on antidiscrimination and not to use money in ways contrary to the federal government’s positions on “gender ideology,” women’s and girls’ sports, and immigration. The judge explained the decision in an opinion released on June 24, 2026.
• The court barred the USDA from enforcing the new conditions or taking adverse action against the states and Washington, D.C.
• The USDA’s funding conditions are part of a broader, governmentwide effort to embed anti-DEI compliance requirements into federal funding relationships.

Four Key Funding Conditions

The USDA’s antidiscrimination policy condition requires funding recipients to certify compliance with “all federal antidiscrimination laws, regulations, and policies,” including recent executive orders banning what the administration considers “illegal” DEI practices, specifically Executive Order 14168 and Executive Order 14173, and expressly warns that noncompliance may result in False Claims Act liability. The “gender ideology” condition prohibits the use of federal funds in ways that “promote gender ideology.” The sports condition prohibits directing funds toward programs that “deprive women and girls of fair athletic opportunities” or permit “male competitive participation in women’s sports.” The immigration condition prohibits directing funds toward programs that “allow illegal aliens to obtain taxpayer-funded benefits.”

Reasoning From the Court

In its June 24, 2026, memorandum explaining the preliminary injunction, the court found that the plaintiff states are likely to succeed on both their Spending Clause and the Administrative Procedure Act (APA) claims, and noted that the Spending Clause violations alone warranted the injunction.

On the Spending Clause, the court identified three independent grounds. First, the conditions are unconstitutionally vague. The court found that the policy condition’s requirement that recipients comply with all federal antidiscrimination “policies” fails to identify what those policies are or where they can be found, and that even the enumerated executive orders “state on their own terms that they apply only to the federal government.” The gender, sports, and immigration conditions fared no better, with the court finding the immigration condition alone “raises more questions than it answers,” including whether grantees must verify immigration status, which would conflict with federal law requiring school lunch eligibility regardless of immigration status.

Second, the conditions are not reasonably related to the federal interest in the programs they govern. When asked at oral argument how the sports condition relates to a program to eradicate invasive insects, the government argued that any prohibition on fund use would satisfy the relatedness test. The court rejected this, noting that if that argument were true, “any prohibition, no matter what the prohibition is, would be related,” which is incorrect as a matter of law. Third, the conditions are unduly coercive. The court found that the sheer scale of the threatened funding loss, $74 billion annually, crosses the constitutional line from persuasion to compulsion.

On the APA, the court found the conditions arbitrary and capricious on four independent grounds. The USDA offered no reasoned explanation connecting the conditions to the programs they govern, with the court finding that generic rationales, such as “putting America First” and “sound stewardship of taxpayer dollars” were “as circular as an Ouroboros: do as I say, because I said so.” The agency also failed to consider the conflict between the conditions and existing state and federal laws, including the Supreme Court of the United States’ holding in Bostock v. Clayton County, Georgia that firing an employee for being transgender violates federal law. The USDA failed to consider the states’ substantial reliance interests in funding they have depended upon for decades. The agency failed to consider any alternatives to an across-the-board imposition of the conditions on every program, regardless of its statutory purpose.

The court also noted that the USDA did not use notice and comment procedures before imposing the new conditions, as is typically required when an executive agency imposes a new rule. The USDA argued that its funding decisions are committed to agency discretion and not subject to APA review. The court rejected this, holding that the across-the-board imposition of the conditions, without the program-by-program balancing the agency discretion doctrine requires, is reviewable under the APA.

The conditions, while currently enjoined, apply to a variety of programs funded by the USDA, including the national school lunch and school breakfast programs, the Supplemental Nutrition Assistance Program (SNAP), and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). The USDA also funds programs for wildfire prevention, specialty crops, and agricultural research.

Next Steps

The new funding conditions will not be enforced while the case proceeds. The preliminary injunction does not extend to all USDA grant recipients and is not a final ruling on the merits of the case. The USDA could appeal the injunction ruling.

The court’s conclusion that the administration’s anti-DEI and immigration funding conditions are unconstitutionally vague and lack a reasoned basis confirms something that many employers have been navigating in practice. The administration’s policies have not drawn a clear line between lawful and unlawful DEI-related programs, hiring practices, and workforce policies, or between permissible and impermissible eligibility practices.

Employers and federal grantees may wish to consider the following steps:

• Know what you have. The injunction is temporary. Whether it holds, is reversed on appeal, or is resolved on the merits, grantees may wish to take this time to conduct a privileged audit of their DEI-related programs and employment practices.
• Map your conflicts. Employers operating across multiple jurisdictions may wish to identify where federal certification requirements conflict with state or local antidiscrimination obligations, particularly around gender identity, sexual orientation, and immigration status.
• Monitor parallel developments. The court’s analysis of what the administration’s anti-DEI and immigration funding conditions can and cannot require is likely to inform how similar conditions emerging from other federal agencies are evaluated. Employers and grantees may wish to assess those implications as agency-specific implementations continue to develop.

Ogletree Deakins’ Diversity, Equity, and Inclusion Compliance, Government Contracting and Reporting, and Workforce Analytics and Compliance practice groups will continue to monitor developments and will provide updates on the Diversity, Equity, and Inclusion Compliance, Government Contracting and Reporting, and Workforce Analytics and Compliance blogs as additional information becomes available.

This article and more information on how the Trump administration’s actions impact employers can be found on Ogletree Deakins’ Administration Resource Hub.

T. Scott Kelly is a shareholder in Ogletree Deakins’ Birmingham office, the co-chair of the firm’s Government Contracting and Reporting Practice Group, and the chair of the firm’s Workforce Analytics and Compliance Practice Group.

Nonnie L. Shivers is a shareholder in Ogletree Deakins’ Phoenix office and co-chair of the firm’s Diversity, Equity, and Inclusion Compliance Practice Group.

This article was co-authored by Leah J. Shepherd, who is a writer in Ogletree Deakins’ Washington, D.C., office.

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