Court declines to block federal contractor DEI order, emphasizes limits on its reach

A federal court rejected a challenge to Executive Order (EO) 14398, “Addressing DEI Discrimination by Federal Contractors.” The court concluded the EO’s prohibition targets only unlawful intentional discrimination and applies to work performed under a specific contract containing the required clause.

In the October 14, 2026, opinion in National Association of Diversity Officers in Higher Education v. Trump, No. 26-cv-1532 (D. Md.), the court declined to temporarily block the EO and denied preliminary relief against the Federal Acquisition Regulatory (FAR) Council’s implementing memorandum. Importantly, the ruling addresses preliminary relief but doesn’t resolve the case.

Background

Issued March 26, 2026, EO 14398 directs agencies to include a clause in federal contracts prohibiting what it describes as racially discriminatory diversity, equity, and inclusion (DEI) activities. Unlike its predecessor EO 14151, which arguably didn’t clearly define prohibited DEI activities, EO 14398 defines the prohibited activities as “disparate treatment based on race or ethnicity in recruitment, employment (e.g., hiring, promotions), contracting (e.g., vendor agreements), program participation, or allocation or deployment of an entity’s resources.” Violations may lead to contract termination, ineligibility for future contracts, or False Claims Act enforcement.

Five associations challenged the EO, arguing, in part, that it restricts protected speech and is impermissibly vague. They sought a preliminary injunction blocking enforcement of the EO.