Aug. 25 Federal Update: DOJ Guidance Requires Grantees Comply with Federal Anti-Discrimination Laws 

U.S. Attorney General Pam Bondi recently issued guidance to educational institutions, state and local governments, and public and private employers reiterating the Trump administration’s January directive that all programs, policies, and activities must comply with existing federal anti-discrimination laws. 

The memorandum details that federal funding recipients may be liable for discrimination and funding revocations if they knowingly fund the unlawful practices of contractors, grantees, and other third parties. 

To minimize the legal risk of violating federal anti-discrimination laws and having federal grant funding revoked, the Department of Justice recommended the following, 

1. Ensure inclusive access to all workplace programs, activities, and resources.  
2. Document legitimate rationales to demonstrate that decisions are unrelated to protected characteristics. 
3. Avoid exclusionary training programs and ensure trainings are open to all.  
4. Include nondiscrimination clauses in contracts and specify that federal funds cannot be used for programs that discriminate.  
5. Monitor third parties that receive federal funds to ensure ongoing compliance. 
6. Establish clear anti-retaliation procedures and create safe reporting mechanisms and include these policies in employee handbooks and program guidelines. 

HHS Revives Task Force on Safer Childhood Vaccines 

The U.S. Department of Health and Human Services (HHS) announced the reinstatement of the Task Force on Safer Childhood Vaccines, a federal panel created by Congress to improve the safety, quality, and oversight of vaccines administered to children in the U.S. 

The taskforce will issue regular recommendations regarding the development, promotion, and refinement of childhood vaccines that result in fewer and less severe adverse reactions than those vaccines currently on the market. Recommendations will also center improvements in vaccine development, production, distribution, and adverse reaction reporting. HHS will transmit its first formal report to Congress within two years, with updates every two years thereafter. 

CMS Begins Oversight Process to Verify the Citizenship of Medicaid and CHIP Recipients 

The Centers for Medicare & Medicaid Services (CMS) initiated an oversight initiative to ensure that enrollees in Medicaid and the Children’s Health Insurance Program (CHIP) are U.S. citizens, U.S. nationals, or have a satisfactory immigration status.  

CMS is providing states with monthly enrollment reports, identifying individuals whose citizenship or immigration status could not be confirmed through federal databases, including the Department of Homeland Security’s Systematic Alien Verification for Entitlements (SAVE) program. States are then responsible for verifying individuals’ citizenship or immigration status and requesting additional documentation if needed. CMS has authorized states to take actions when necessary, including adjusting coverage or enforcing non-citizen eligibility rules.  

CMS began issuing the first set of reports on Aug. 19 and expects all states to have received a report within a month.  

Sector Updates from the Judiciary  

Supreme Court Temporarily Approves Grant Terminations  
Supreme Court narrowly agreed to allow the National Institutes of Health (NIH) to terminate $783 million in grants connected to diversity, equity, and inclusion (DEI) initiatives by a vote of 5 to 4. The court also upheld a lower court’s ruling, which blocked internal NIH guidance documents barring funding for research that does not align with the agency’s policy priorities. Specifically, the guidance prohibited funding for research connected to DEI, gender identity, vaccine hesitancy, COVID, and climate change. 

NIH’s grants were terminated following these executive orders: 

• Ending Radical and Wasteful Government DEI Programs and Preferencing  
• Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government 
• Ending Illegal Discrimination and Restoring Merit-Based Opportunity 

States, advocacy organizations, and researchers filed lawsuits in response, maintaining that terminating grants violates the Constitution and the Administrative Procedure Act. The District Court for the District of Massachusetts ordered the reinstatement of the grants, citing a lack of reasoned decision-making to explain the cancellations.   

However, the Supreme Court ruled that the district court lacked the authority to order the reinstatement of specific grants. The court majority opinion stated that the federal government would face “irreparable harm” if it paid the money for the grants and then was unable to recover the funds before the litigation was resolved. 

Appeals Court Upholds Significant Reductions in Foreign Aid 
The U.S. Court of Appeals for the D.C. Circuit overturned a lower court ruling after a district court determined that the Trump administration cannot suspend grants that do not comply with the president’s priorities. The appeals court determined that the nonprofit that issued the lawsuit lacked standing as they were unable to demonstrate a sufficient connection to and harm from the administration’s actions. The justices maintained that only the head of the Government Accountability Office (GAO) has the authority to file the lawsuit according to the Impoundment Control Act. 

The decision lifted a lower court’s order that had required the administration to continue processing foreign aid payments with funds Congress had budgeted. However, the judges clarified that their decision does not address the question of whether pausing foreign aid violates the U.S. Constitution by infringing on the spending power of Congress. 

Although the GAO has determined impoundment has occurred in several instances, the agency has not yet filed litigation. Recently, the GAO issued a report determining that the U.S. Department of Health and Human Services’ significant reductions in the rate of disbursement for Head Start funding constituted impoundment. Additionally, the GAO found that the National Institutes of Health’s cancellation of grants and withholding of funds violated the Impoundment Control Act of 1974. Nevertheless, the reports are nonbinding without a court order compelling the agency to release funds.  

Federal Court Prohibits HHS from Sharing Medicaid Data for Immigration Enforcement Purposes 
The U.S. District Court for the Northern District of California prohibited the Department of Homeland Security and the U.S. Department of Health and Human Services from sharing Medicaid data from the plaintiff states for immigration purposes as litigation continues. The plaintiff states include California, Arizona, Delaware, Illinois, and Maine. 

Federal Court Denies Injunction Against Alabama Law Banning DEI Programs in Public Schools  
Students and faculty filed a lawsuit against the governor of Alabama and the University of Alabama’s trustees, maintaining that a recently passed state law violates their freedom of speech by placing viewpoint-based restrictions on what can be taught in classes. S. 129 prohibits public colleges from funding or sponsoring diversity, equity, and inclusion programs.  

S. 129 defines diversity, equity, and inclusion initiatives as programs, training, or other events where attendance is based on “race, sex, gender identity, ethnicity, national origin, or sexual orientation.”  Additionally, the law prohibits public colleges from requiring students to affirm or adhere to a list of so-called divisive concepts. One example is that fault, blame, or bias should be assigned to a person based on their race or sex, or that any person should acknowledge a sense of guilt, complicity, or a need to apologize because of their race, sex, or national origin. Another is that people are “inherently racist, sexist, or oppressive, whether consciously or subconsciously,” based on their personal characteristics.  

Faculty members stated that they were unsure of how to comply with the law and stressed its potential to limit instruction on other topics, like eugenics. Nevertheless, U.S. District Judge David Proctor determined that the law does not prohibit the teaching of divisive concepts, especially because of the exemptions S. 129 names. The court determined that the plaintiffs had not met the legal burden required to issue a preliminary injunction.  

District Court Determines Florida Law Restricting Pronouns Constitutes Discrimination 
U.S. District Judge Mark Walker determined H.B. 1069, a 2023 Florida law that requires teachers to use pronouns that align with their sex assigned at birth, violates federal civil rights law. Failure to comply may result in disciplinary action, which may include suspension or termination of employment.  

Further action is paused until the 11th U.S. Circuit Court of Appeals considers a lawsuit alleging a Title VII violation against a transgender employee of a Georgia sheriff’s office, Lange v. Houston County. 

District Court Extends Preliminary Injunction Against Grant Funding Conditions  
Judge Barbara J. Rothstein recently expanded a previous preliminary injunction, preventing the Trump administration from imposing funding conditions on $12 billion of grant funding. The grants were disbursed to thirty-one cities with the intention of addressing homelessness and transit infrastructure.  

The verdict temporarily prevents nearly a dozen federal agencies from enforcing new rules that would have required cities to align with elements of the Trump administration’s policy agenda to receive funding. 

Federal Court Blocks ACA Religious Exemptions to Coverage for Contraception 
The US District Court for the Eastern District of Pennsylvania determined that the Trump administration cannot enforce religious and moral exemptions to an Affordable Care Act rule that requires all employer health plans to cover contraception and related services at no cost to employees. District Judge Wendy Beetlestone maintained that the rules were arbitrary, inconsistent, and an overreach of the agency’s authority. 

The rules, issued in 2018, enabled essentially all for-profit or nonprofit employers and insurers to exempt themselves from following the birth control mandate on moral and religious grounds. 

Federal Court Upholds the Constitutionality of the Medicare Drug Price Negotiation Program 
The U.S. 2nd Circuit Court of Appeals upheld a lower court ruling, determining that a pharmaceutical company could not demonstrate that Medicare drug price negotiations had caused irreparable harm. The court also upheld that the program did not violate federal law, including the Medicare Act or the Administrative Procedures Act. 

The Western District of Texas issued a similar verdict, affirming that participation is voluntary and therefore the company’s constitutional right to due process was not violated. Likewise, the Sixth Circuit Court of Appeals held that the plaintiffs lacked standing to pursue their challenge against the negotiation program in Ohio.  

The Medicare Drug Price Negotiation Program was established by the Inflation Reduction Act of 2022. The law empowers Medicare to use its considerable bargaining power to obtain lower prices for certain medicines, significantly expanding access to treatment options. 

Appeals Court Upholds Arkansas Law Banning Youth Transgender Care  
The 8th U.S. Circuit Court of Appeals upheld the Save Adolescents From Experimentation (SAFE) Act, Act 626, an Arkansas law barring doctors from providing gender-affirming care, including puberty blockers, hormones, and surgery to transgender minors. 

The decision reverses a lower court ruling and cites a similar verdict issued by the U.S. Supreme Court, which held that Tennessee’s similar law did not discriminate based on sex or transgender status. The Tennessee law, SB1, banned puberty blockers and hormone therapy for transgender teenagers.

The Circuit Court also determined the Arkansas law did not violate parents’ due process rights afforded by the Fourteenth Amendment. The judges cited a lack of historical support entitling parents to obtain medical treatment for their children that a state legislature deems inappropriate. 

Federal Court Partially Blocks Mississippi Law Restricting DEI in Practices in Public Schools 
The United States District Court for the Southern District of Mississippi blocked the implementation of certain provisions of House Bill 1193, a Mississippi state law that would have prohibited diversity, equity, and inclusion (DEI) practices in public schools.  

Specifically, the bill requires public schools to prohibit the discussion of “divisive concepts” related to race, sex, gender identity, sexual orientation, and national origin. It also requires schools to prohibit programs, courses, or offices that promote DEI, endorse divisive concepts, or ban diversity training requirements. 

However, U.S. District Judge Henry Wingate determined that the law is unconstitutionally vague, fails to treat speech in a viewpoint-neutral manner, and holds the potential to chill expression and academic freedom. As litigation continues, neither of the previously mentioned sections can be enforced. 

Nevertheless, the preliminary injunction is limited to certain provisions of the law. Schools must uphold sections of the law that prohibit preferential treatment based on race, sex, color, or national origin. Additionally, schools cannot penalize students or staff for their refusal to embrace DEI concepts. 

Federal Court Invalidates the Department of Education’s Title VI Guidance 
The U.S. District Court for the District of Maryland determined that the Education Department’s recent guidance prohibiting educational institutions from engaging with DEI initiatives was unlawful.   

The lawsuit was filed in response to guidance issued by the Department of Education. A memorandum issued Feb. 14 and a certification issued April 3 ordered schools and universities to end all “race-based decision-making” and warned of the loss of federal funding for organizations that failed to comply. 

U.S. District Judge Stephanie Gallagher determined that the memorandum and directive did not follow administrative procedure.  Judge Gallagher also ruled that the guidance violated constitutional rights by placing viewpoint-based restrictions on classroom speech. 

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