Fourth Circuit Ruling and GSA SAM Proposal Address Antidiscrimination Certifications

In January 2025, the Trump administration’s Executive Order 14173, Ending Illegal Discrimination and Restoring Merit‑Based Opportunity (hereinafter “EO 14173”), directed federal agencies to incorporate an antidiscrimination certification in every grant and contract. Since then, federal agencies have, as directed, incorporated such certifications into their grant and contract terms and conditions, often focusing on diversity, equity, and inclusion (“DEI”) programming, thereby creating concern among and uncertain risk for recipients of federal financial assistance and generating litigation as agencies apply this directive.

A recent judicial decision and pronouncements by the General Services Administration (“GSA”) signal that such certification, and the attendant threat of False Claims Act (“FCA”) liability, will remain part of grant and contract requirements for the foreseeable future. This Client Alert addresses those recent developments, with a focus on potential impacts for research universities, academic medical centers, and other federal funding recipients.

Fourth Circuit Rejects Facial Challenge to the DEI Certification

Shortly after the White House issued EO 14173, a group of plaintiffs¹ brought suit in the U.S. District Court for the District of Maryland (the “District Court”), challenging several of its provisions, including what the District Court termed the “Certification Provision,” which reads:

The head of each agency shall 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 anti‑discrimination laws is material to the government’s payment decisions for purposes of section 3729(b)(4) of title 31, United States Code [the False Claims Act]; 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.²

The District Court issued a nationwide preliminary injunction against enforcement of the Certification Provision on First Amendment grounds,³ but on March 14, 2025, the U.S. Court of Appeals for the Fourth Circuit (the “Fourth Circuit”) stayed that injunction pending the government’s appeal.⁴

On February 6, 2026, the Fourth Circuit vacated the preliminary injunction, concluding that the plaintiffs’ facial challenge to the Certification Provision was unlikely to succeed at the preliminary injunction stage and remanded the case to the District Court for further proceedings.

The Fourth Circuit held that the plaintiffs had standing to challenge the Certification Provision, as the plaintiffs pled a cognizable injury with a “lose‑lose‑lose” choice for federal award recipients: change programming to enable certification, certify and risk FCA exposure if the certification proves false, or forgo federal funds.⁵

As to the merits, the Fourth Circuit explained that the executive branch has latitude to set priorities and choose to fund some activities to the exclusion of others, subject to guardrails against suppressing ideas. Moreover, the court reasoned that the Certification Provision on its face only prohibits DEI activities that “violate any applicable federal anti-discrimination laws,” and the First Amendment does not protect illegal activities. Therefore, according to the Fourth Circuit, the plaintiffs lacked a protected speech interest. To the extent federal agencies or the president misinterpret or misapply federal antidiscrimination law in connection with a particular certification, the court underscored that regulated parties can bring specific enforcement challenges targeted at those applications.⁶

In an unusually pointed concurrence, Chief Judge Diaz emphasized the distinction between the facial challenge before the Fourth Circuit, and potential as-applied challenges:

We’re presented today with a facial challenge to two Executive Orders concerning certain DEI programming, not the legality or termination of any particular DEI program. That makes all the difference.

Defendants represented at oral argument that there is “absolutely” DEI activity that falls comfortably within the confines of the law. I hope that’s true. But the evidence cited by plaintiffs, their amici, and the district court suggests a more sinister story: important programs terminated by keyword; valuable grants gutted in the dark; worthy efforts to uplift and empower denigrated in social media posts.

Cognizant of my oath, I’ve framed the limited question before us and answered it. And I’ve (reluctantly) left others for tomorrow.⁷

Important points remain unresolved by the Fourth Circuit’s ruling. The prospect of future as-applied challenges does little to resolve the “lose-lose-lose” choice the Fourth Circuit identified as a basis for standing, as an entity may be required to certify that it does not operate any DEI programs that violate federal antidiscrimination laws as a condition of federal funding and then be forced to argue the legality of its programs in the context of high-risk FCA litigation.

Meanwhile, the U.S. Court of Appeals for the Seventh Circuit (the “Seventh Circuit”) is weighing an appeal from a Northern District of Illinois order enjoining the Certification Provision as applied to Department of Labor grantees.⁸ At oral argument on January 30, 2026, the Seventh Circuit judges pressed the Department of Justice to define “illegal” DEI and probed whether targeting programs that promote DEI is viewpoint discriminatory and overbroad. The Seventh Circuit’s forthcoming decision could diverge from the Fourth Circuit’s facial analysis, creating conflicting compliance obligations for multi-state health care entities.

GSA Proposal to Include Broad Antidiscrimination Certifications in SAM Certifications

In a January 28, 2026 notice requesting public comment, the GSA proposed amending Financial Assistance General Representations and Certifications within the System for Award Management (“SAM”) to align with executive guidance, including EO 14173 and the Department of Justice’s Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination, a July 29, 2025 memo from the Attorney General instructing federal funding recipients to eliminate “discriminatory” practices, regardless of DEI labels, including race-based preferential treatment, use of other criteria as proxies for protected characteristics such as race, and “hostile” DEI trainings (the “DOJ Memo”).⁹

This week, GSA shared draft certification language in a supporting statement, which, among other revisions to existing certification language, requires compliance with all federal laws and “relevant” executive orders that prohibit “unlawful discrimination on the basis of race or color in the administration of federally funded programs,”¹⁰ including DEI programs or initiatives.¹¹ The supporting statement gives examples of practices that “may” violate federal antidiscrimination laws, such as (i) preferential treatment based on race or color in granting scholarships or hiring or in imposing “cultural competence” requirements and (ii) retaliation against individuals for engaging in protected activities that oppose DEI practices that they reasonably believe violate federal antidiscrimination laws. It also flags additional prohibited practices that were not addressed in GSA’s original notice, including (a) harboring or hiring an “illegal alien” and (b) engaging in illegal activities that threaten “public safety or national security.”

GSA administers SAM, and save certain limited exceptions, SAM registration and profile maintenance are required for prime recipients of federal financial assistance, whether grants, cooperative agreements, or other forms of federal financial assistance. While institutions already certify to compliance with federal laws (including antidiscrimination laws) in SAM at the point of application and renewal, GSA’s proposed inclusion of specific reference to EO 14173 and the DOJ Memo could, depending upon the ultimate certification phrasing adopted, force awardees to attest to compliance with the executive’s own interpretation of what constitutes illegal discrimination, even if such interpretation is not reflected in legislation or the courts. Notably, GSA’s current proposed language does not include an express reference to the certification being “material” for FCA purposes, and specifically states that unlawful discrimination is prohibited “in the administration of federally funded programs,” which is more limited than EO 14173’s broader language requiring recipients “to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.”

Administratively, a SAM-based certification of compliance with antidiscrimination laws would shift away from agency-by-agency implementation of antidiscrimination certifications to a uniform certification that would reach most institutions receiving federal financial assistance. Agency reliance on a single SAM certification would reduce or, potentially, eliminate the need for agency-specific implementation, and would centralize institutional compliance risk, including potential FCA exposure, at the point of SAM certification.

Recipients of federal financial assistance that would like to submit comments in response to GSA’s proposal should do so on or before March 30, 2026.

Conclusion

The Fourth Circuit’s decision narrows but does not foreclose challenges to the administration’s antidiscrimination‑related executive orders. Although it rejected the plaintiffs’ facial challenge to the Certification Provision, the Fourth Circuit left open the opportunity for legal challenges to specific enforcement actions. Future litigation is poised to turn to concrete disputes about how agencies interpret and apply antidiscrimination law in connection with particular terminations and certifications.

Relatedly, GSA’s SAM notice signals a move toward a single, government-wide certification of compliance with antidiscrimination law as a condition of award eligibility and funding. Beyond a general pledge to follow applicable statutes, recipients may need to certify compliance with a broad interpretation of unlawful discrimination. Because the exact text is not finalized and comments are due March 30, 2026, potential impacts remain unsettled, although such an approach, in any form, is likely to centralize enforcement risk at the point of SAM registration and renewal.

We will continue to monitor developments in this area. Please reach out to the authors or your usual Ropes & Gray advisors if you have any questions.