Quick Hits
- A federal court in Rhode Island vacated grant conditions imposed on nonprofit organizations serving unhoused individuals and survivors of domestic violence and sexual assault that required certification of compliance with executive orders targeting DEI and gender ideology.
- The court ruled the government-imposed grant conditions were arbitrary and capricious, finding the agencies had failed to provide a reasoned explanation for and consider the grantees’ reliance interests on contradictory compliance obligations.
- The ruling has implications for similar agency actions to enforce the Trump administration’s executive orders and policy priorities. The decision is the latest in a series of federal court rulings scrutinizing agency implementation of the administration’s anti-DEI policies.
In Rhode Island Coalition Against Domestic Violence v. Kennedy, U.S. District Judge Melissa R. DuBose found that the grant conditions restricting DEI initiatives were arbitrary and capricious in violation of the Administrative Procedure Act (APA). The judge granted summary judgment in favor of nearly two dozen organizations serving unhoused individuals and survivors of domestic violence and sexual assault that challenged the conditions under the APA.
The conditions required grant recipients to certify compliance with Trump administration executive orders aimed at eliminating unlawful DEI, including Executive Order (EO) 14168, “Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government,” and forbade recipients from using federal funds to promote “gender ideology” as defined under the EO. HHS specifically required recipients to certify that “complying with [federal antidiscrimination] laws is a material condition of receiving federal funding streams” and that “[r]ecipients are responsible for ensuring subrecipients, contractors, and partners also comply.”
The plaintiff groups alleged the conditions and certification requirements were unlawful and required them to certify to vague, “ill-defined” terms in the face of severe legal consequences, including the threat of False Claims Act (FCA) liability, if the government later deemed them noncompliant. They argued the conditions would thus force them to dismantle staff training, inclusive hiring practices, culturally specific programming, and other DEI-related activities.
‘Arbitrary and Capricious’ Conditions
Judge DuBose ruled that the grant conditions were arbitrary and capricious for three reasons. First, Judge DuBose found that the administrative record from HUD and HHS offered “no explanation” as to why the new conditions were imposed “beyond statements suggesting they were executed for the purpose of aligning with the executive branch’s E.O.’s.” Second, she found that the agencies had entirely failed to consider the serious reliance interests of grant recipients that had built programs around preexisting grant terms. Third, she found the agencies had neglected “important aspects of the problem,” including how grantees could simultaneously comply with contradictory obligations—such as a directive to avoid “gender ideology”—while HUD’s own regulations required them to serve individuals in accordance with their gender identity.
Importantly, the judge granted summary judgment to the organizations and vacated the conditions nationwide, not limiting her ruling to the named plaintiffs. However, the judge declined to grant the organizations’ request for a permanent injunction to block such conditions from being imposed going forward.
What It Means for Employers
The ruling has implications for similar agency actions to enforce Trump administration executive orders targeting unlawful DEI and seeking to define sex as binary and immutable, and requirements that private employers certify compliance under penalty of the FCA. Specifically, the judge found that the agencies “failed to reasonably support their decision to enact them beyond citing the various implicated E.O.s.,” suggesting that agencies’ desires to execute the president’s policy priorities are, alone, insufficient under the APA to justify grant conditions.
However, the judge did not find that the grant conditions, particularly the certification requirements, were categorically unlawful. The ruling indicates that agencies must provide reasoned explanations, consider reliance interests, and address practical compliance challenges before imposing them. The agencies could seek to impose the same or similar restrictions by conducting a more deliberative process and with a more robust administrative record, particularly one that more adequately considers the recipients’ reliance interests.
In addition, the ruling highlights how some courts have viewed the FCA certification requirements and arguably vague terms in the EOs are problematic for compliance. The court found that the recipients could not reasonably understand their obligations.
Outside of grants, this ruling may have implications for Executive Order 14398 (issued March 26, 2026), which, among other things, established a contractual compliance and monitoring framework for federal contractors—specifically prohibiting “racially discriminatory DEI activities” in contracting and requiring a new Federal Acquisition Regulation (FAR) contract clause. The Federal Acquisition Regulatory (FAR) Council issued implementation guidance on April 17, 2026, directing agencies to insert the clause in new and existing contracts. However, a group of nineteen states and the District of Columbia filed a lawsuit in June 2026 challenging the federal government’s rollout of EO 14398.
Analogous to the Rhode Island Coalition Against Domestic Violence case, that complaint asks that the FAR Council and other agency implementing actions be set aside because, “If the defendants had followed the required procedures, the plaintiff States could have alerted the FAR Council and other agencies to the myriad problems with the FAR Council memorandum and agency actions as currently formulated, and the FAR Council and other agencies could have addressed those problems.” It will also be interesting to monitor any future litigation challenging regulatory processes as agencies, including the Office of Federal Contract Compliance Programs OFCCP and the U.S. Equal Employment Opportunity Commission (EEOC), seek to quickly implement executive orders and administration priorities.
Next Steps
Employers may want to take the opportunity to audit their DEI programs for legal defensibility. Rather than a permanent reprieve, this decision may serve to guide agencies toward better-supported processes and rationales as they engage in rulemaking in accordance with the Trump administration’s priorities. Indeed, the next round of agency action, if it comes with reasoned analysis and proper process, could survive judicial review where this one did not. Further, as mentioned, employers may want to monitor parallel developments, especially if they are federal contractors or subcontractors or receive federal funds.
Ogletree Deakins’ Diversity, Equity, and Inclusion Practice Group, Government Contracting and Compliance Practice Group, and Workforce Analytics and Compliance Practice Group will continue to monitor developments and will provide updates on the Diversity, Equity, and Inclusion Compliance, Ethics / Whistleblower, Government Contracting and Compliance, 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.
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