States Challenge USDA’s Anti-DEI Funding Conditions

Quick Hits

• Twenty states and the District of Columbia recently filed suit in the U.S. District Court for the District of Massachusetts, challenging the USDA’s new funding conditions related to anti-DEI, gender ideology, and immigration requirements.
• Similar certification requirements are emerging across federal agencies, including a certification recently proposed by the U.S. General Services Administration (GSA).
• Federal grant recipients and contractors may wish to evaluate their DEI-related programs and monitor these developments, given the potential for significant False Claims Act and criminal liability exposure.

USDA Conditions

On December 31, 2025, the USDA released an updated document outlining the terms and conditions for federal funding for various organizations. The conditions, which apply to every USDA grant, cooperative agreement, and mutual interest agreement, encompass arenas such as nutrition assistance, agricultural research, forestry and firefighting, land-grant university funding, and 4-H youth programs.

The document contains four funding conditions that are being challenged thusly:

• The antidiscrimination policy conditions require recipients to certify compliance with “all federal antidiscrimination laws, regulations, and policies,” including specific executive orders, but do not define the relevant “policies” or limit the time for compliance.
• The gender ideology condition prohibits the use of funds that “promote gender ideology,” but does not explain what activities this encompasses.
• 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,” without defining those terms.
• The immigration condition prohibits directing funds toward programs that “allow illegal aliens to obtain taxpayer-funded benefits,” without defining “benefits” or explaining the scope.

The 2026 conditions label these requirements as material “conditions of payment” going to “the essence of the federal award,” and the USDA has expressly threatened False Claims Act liability for noncompliance.

Lawsuit Details

The plaintiffs—a coalition of twenty U.S. states and the District of Columbia—have sued the USDA, asserting six causes of action arising under the Spending Clause of the U.S. Constitution and the Administrative Procedure Act (APA). The plaintiffs allege in their complaint that the conditions are vague, coercive, unrelated to the federal interest in the underlying programs, and in violation of the Constitution.

The plaintiffs also allege the conditions are arbitrary, capricious, and beyond the USDA’s statutory authority for mandatory entitlement programs (such as the Supplemental Nutrition Assistance Program (SNAP)), wherein Congress prescribed eligibility criteria, leaving no room for additional conditions. It claims the conditions were imposed without required notice-and-comment rulemaking and conflict with federal statutes such as 8 U.S.C. § 1615, which mandates school lunch eligibility, regardless of immigration status.

GSA Action

The USDA’s conditions are part of a broader, government-wide effort to embed anti-DEI compliance requirements into federal funding relationships. On February 18, 2026, the GSA released a draft revised Supporting Statement, proposing a DEI-related certification that would be added to the SAM.gov registration process for all entities receiving federal financial assistance.

The GSA certification implements Executive Order (EO) No. 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,“ and the U.S. attorney general’s July 2025 memorandum, “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination.” A parallel certification for federal contractors through the Federal Acquisition Regulation (FAR) is expected in the near future. Public comments on the GSA proposal are due by March 30, 2026.

The GSA certification shares key features with the USDA conditions. Both impose broad, anti-DEI and immigration-related compliance requirements, and both carry False Claims Act liability for noncompliance. However, the GSA certification goes further by imposing potential criminal liability on individual signatories.

There are other notable differences. While the USDA conditions use vague, undefined terms like “gender ideology” and “fair athletic opportunities,” the GSA certification provides specific examples of prohibited practices, such as race-based scholarships, preferential hiring, and “diverse slate” policies, though it focuses narrowly on race and color, omitting other protected categories. The USDA conditions were also imposed unilaterally, whereas the GSA certification is subject to a public comment period.

Both the USDA and GSA actions implement the same set of executive orders, particularly EO 14173 and EO 14168, and are illustrative of a broader trend. Federal agencies across the government are increasingly incorporating anti-DEI certification and compliance requirements into their funding agreements and procurement processes. Grant recipients and federal contractors may wish to anticipate similar conditions, regardless of which agency administers their funding.

Next Steps

It remains unclear how Judge Myong J. Joun, the U.S. district judge assigned to the case, will rule. If Judge Joun grants an injunction, the administration may appeal the order or pursue a formal rulemaking process. If the USDA conditions remain in effect, organizations may face False Claims Act exposure for certifications that contain undefined or ambiguous terms. Either way, the USDA lawsuit is just one front in a broader effort. The GSA certification process and other agency-specific implementations of EO 14173 will continue separately, and a parallel FAR certification for federal contractors is expected.

Organizations that receive funding from any federal agency or hold federal contracts may wish to consider taking the following steps:

• submitting public comments on the GSA’s proposed certification by March 30, 2026, particularly organizations in healthcare, behavioral health, social services, and other fields where grants frequently target specific populations;
• conducting privileged audits of DEI-related programs, policies, and employment practices to evaluate their compliance posture before signing any certifications, given the False Claims Act and potential criminal liability exposure;
• monitoring agency-specific implementations of EO 14173 across the federal government, as similar certification conditions are likely to appear beyond USDA and GSA; and
• assessing whether the USDA’s sports and gender conditions, the GSA’s race-focused DEI certification, or future agency requirements could conflict with state or local laws protecting against discrimination based on gender identity, sexual orientation, or other characteristics.

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.

Ogletree Deakins will present a webinar on April 7, 2026, discussing the implications of this executive order for federal contractors and subcontractors. Our speakers will include Simone R.D. Francis, a shareholder and co-chair of the firm’s Diversity, Equity, and Inclusion Compliance Practice Group, Joseph E. Ashman, a shareholder and co-chair of the firm’s Government Contracting and Reporting Practice Group, and Cameron W. Ellis, of counsel and also a member of the Government Contracting and Reporting Practice Group. Register here.

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.

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

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