A coalition of 19 Democratic-led states and Washington, D.C., has launched a legal challenge against the Trump administration, arguing that federal agencies unlawfully imposed new restrictions on diversity, equity and inclusion (DEI) initiatives in government contracts without clearly defining what conduct is prohibited.
The lawsuit, filed in federal court in Maryland, targets the implementation of President Donald Trump’s executive order directing agencies to eliminate what the administration describes as “racially discriminatory DEI activities.” According to the states, more than two dozen federal agencies have already begun inserting new language into contracts and grant agreements, despite offering little explanation of how the restrictions should be interpreted.
State attorneys general contend that the federal government moved too quickly and failed to follow the procedures required under federal law. They argue that agencies neither sought public feedback nor provided sufficient guidance before introducing the new contract provisions, leaving contractors and state agencies uncertain about compliance requirements.
Massachusetts Attorney General Andrea Joy Campbell, one of the officials backing the case, accused the administration of creating confusion rather than clarity. She argued that the policy rollout has generated uncertainty for organizations that depend on federal funding and contracting relationships.
The lawsuit highlights the broad reach of the administration’s directive. State officials note that the participating states collectively hold billions of dollars in federal contracts and grants. They also point to federal estimates suggesting that hundreds of thousands of contracts and subcontracts nationwide could be affected by the new requirements.
At the center of the dispute is the question of what qualifies as a prohibited DEI activity. The states argue that agencies have introduced sweeping contractual obligations without spelling out where the legal boundaries lie, exposing contractors to potential penalties while offering little practical guidance.
The legal challenge seeks to block federal agencies from enforcing the new contract language, alleging violations of the Administrative Procedure Act. The states claim the agencies acted arbitrarily and failed to comply with rulemaking requirements before imposing the restrictions.
The case arrives amid a wider national battle over DEI programs. Supporters of such initiatives argue they are designed to address longstanding barriers faced by women, racial minorities, LGBTQ individuals and other underrepresented groups. Critics, including Trump and many conservatives, maintain that DEI policies can create unfair advantages and undermine merit-based decision-making.
Since returning to office, Trump has made dismantling DEI programs a major policy priority. His administration has issued a series of directives aimed at curbing DEI efforts across federal agencies, educational institutions, contractors and grant recipients. The president also rescinded a decades-old executive order that had required federal contractors to take affirmative steps to expand employment opportunities for women and minority groups.
The lawsuit marks the latest courtroom clash over the administration’s campaign against DEI programs and could become a significant test of how far federal agencies can go in reshaping contracting requirements without formal rulemaking.
