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In the July 2025 issue of the Illinois Local Government Lawyers Association Journal, Hahn Loeser attorneys Matthew K. Grashoff, Matthew F. Wagner and J. Patrick White were heavily referenced in the Director’s Column by ILGL President Patricia Johnson Lord, who also serves as Senior Assistant Attorney for the City of Naperville.

At the April 17, 2025, Nuts n Bolts Workshop, an ILGL member asked: “What steps, if any, are ILGL members taking to identify any issues for federal grant eligibility in light of the recent Executive Orders issued by President Trump on diversity, equity, and inclusion?” The question was also discussed during the May 21, 2025 ILGL Labor and Employment Special Interest Group.

An example of a recent grant condition required by the United States Environmental Protection Agency was provided:

Federal Anti-Discrimination Laws (Added 3/25/2025)
By accepting this EPA financial assistance agreement, (A) the recipient agrees 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; and (B) the recipient certifies that it does not operate any programs promoting Diversity, Equity and Inclusion that violate any applicable Federal anti-discrimination laws.

The representation required by this USEPA grant condition is the result of Executive Order 14173 issued by President Trump on January 21, 2025 entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity”. EO 14173 revoked four prior Executive Orders including Executive Order 11246 signed by President Lyndon B. Johnson in 1965 which required federal contractors to adopt affirmative action plans. Under EO 14173, federal contractors must certify that they do not operate any programs promoting DEI that violate Federal anti-discrimination laws.


The day before issuing EO 14173, President Trump issued EO 14151 titled “Ending Radical and Wasteful Government DEI Programs and Preferencing”. While EO 14151 primarily dealt with DEI programs within the federal government, it also required each agency, department, or commission head, within 60 days of issuance of the Order, and in consultation with the Attorney General, the Director of OMB, and the Director of OPM, as appropriate, to “terminate, to the maximum extent allowed by law all. . . ‘equity-related’ grants or contracts; and all DEI or DEIA performance requirements for employees, contractors, or grantees.” (EO 14151, Section 2(b))


President Trump’s Executive Orders 14173 and 114151 (and the numerous other Executive Orders he has signed since taking office for the second time) have had the effect of putting not only federal agencies into a state of confusion and uncertainty, but is also having a direct impact on local government entities.


One of the critical problems identified by those who have studied and written about these issues is the lack of clarity as to what constitutes an “equity-related” grant that would violate Federal anti-discrimination laws. Failure to find the right answer, if there is one, could result in our clients’ loss of federal grant funding as well as civil and criminal liability under the False Claims Act.

GRANT FUNDS
Public bodies that have a construction project which will use both state and federal funding will likely find themselves in a no-win situation. They will be required to comply both with President Trump’s Executive Orders and with state and federal laws and regulations regarding DEI. Since those requirements cannot typically be read to stand together, it will be difficult, if not impossible, to help our clients find a reasonable path forward.
An excellent article about Executive Order 14173 titled: “Executive Order 14173: What it Means for Federal Contractors and Subcontractors”, dated February 11, 2025, was written by Matthew K. Grashoff, and Matthew F. Wagner with the law firm of Hahn, Loeser, & Parks LLP.

The following is an excerpt from Executive Order 14173 which includes the federal contractor and subcontractor certification requirement:
Sec. 3. Terminating Illegal Discrimination in the Federal Government.
* * *
(ii) The Office of Federal Contract Compliance Programs within the Department of Labor shall immediately cease:
(A) Promoting “diversity”;
(B) Holding Federal contractors and subcontractors responsible for taking “affirmative action”; and
(C) Allowing or encouraging Federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.
(iii) In accordance with Executive Order 13279 of December 12, 2002 (Equal Protection of the Laws for Faith-Based and Community Organizations), the employment, procurement, and contracting practices of Federal contractors and subcontractors shall not consider race, color, sex, sexual preference, religion, or national origin in ways that violate the Nation’s civil rights laws.
(iv) 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; 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.

Making the certification “material” to the government’s payment decisions raises the threat of possible civil or criminal action under the False Claims Act (“FCA”) if the contractor does not comply with the vague requirements of the certification. A person found to have violated the FCA is liable for civil penalties of not less than $5,000 and not more than $10,000 plus 3 times the amount of damages sustained by the government, plus the government’s costs to bring the action. 31 U.S.C. § 3729. In addition, a claim under the FCA may be brought by private individuals on behalf of the government who may share in a portion of the government’s recovery. Criminal penalties may also be sought, including fines and/or imprisonment. 18 U.S.C. § 287.2

Concerns about the use of the False Claims Act in the context of DEI were escalated by a May 19, 2025 Memorandum issued by U.S. Department of Justice through an Assistant Attorney General titled “Civil Rights Fraud Initiative”, which states in part:

The False Claims Act is the Justice Department’s primary weapon against government fraud, waste, and abuse. Liability results in treble damages and significant penalties. It is implicated when a federal contractor or recipient of federal funds knowingly violates civil rights laws-including but not limited to Title IV, Title VI, and Title IX, of the Civil Rights Act of 1964-and falsely certifies compliance with such laws. Accordingly, a university that accepts federal funds could violate the False Claims Act when it encourages antisemitism, refuses to protect Jewish students, allows men to intrude into women’s bathrooms, or requires women to compete against men in athletic competitions. Colleges and universities cannot accept federal funds while discriminating against their students. The False Claims Act is also implicated whenever federal-funding recipients or contractors certify compliance with civil rights laws while knowingly engaging in racist preferences, mandates, policies, programs, and activities, including through diversity, equity, and inclusion (DEI) programs that assign benefits or burdens on race, ethnicity, or national origin….

An article regarding the May 19, 2025 DOJ Memorandum can be found on the Hahn, Loeser, and Parks LLP’s website. One of the issues addressed in this article is “…the fact that the Memorandum ‘strongly encourages’ private enforcement of civil rights fraud through whistleblower complaints from members of the public. Whistleblower lawsuits, also known as qui tam lawsuits, allow whistleblowers to sue on behalf of the government for fraud and receive a share of any monetary recovery as an award for coming forward.”

The article bluntly states:
The implications of the Civil Rights Fraud Initiative are that contractors and grantees are now subject to increased risk for fraud investigations for alleged civil rights violations and for falsely certifying compliance with civil rights laws.

There are several cases in litigation relative to President Trump’s Executive Orders which may or may not help local government bodies contend with the pressures of being caught between a rock and a hard place. One of them (Chicago Women in Trades v. Trump et al. 2025 U.S. Dist. LEXIS 70459 ) was brought in the Northern District of Illinois where Judge Kennelly issued a preliminary injunction preventing the U.S. Department of Labor from requiring government contractors and grant recipients to certify that they do not operate any diversity, equity, and inclusion programs that violate antidiscrimination laws. This is the subject of another HLP article found on their website and is still pending.

One Real Life Example:
A municipality in the Chicagoland area recently encountered the problem of being caught between a federal rock and a state hard place in the context of a federal grant for a road project that had both state and federal grant funding. The DCEO (the Illinois Department of Commerce and Economic Opportunity) required the municipality to sign a Business Enterprise Program (BEP) letter consistent with the Business Enterprise for Minorities, Women, and Persons with Disabilities Act (30 ILCS 575/0.01 et seq.) that sets goals for percentages of grant dollars going towards minority, women, and persons with disabilities owned businesses. The representations in that form conflicted with Executive Orders related to DEI programs per guidance provided to the municipality by the federal Office of the Assistant Secretary for Transportation Policy.
What to do? No one knows. The choices? Give up the federal funding or sign what you have to and hope for the best. Poor choices at best.

EMPLOYMENT
On March 19, 2025, the U.S. Equal Employment Opportunity Commission issued two technical assistance documents relative to DEI: “What to Do If You Experience Discrimination Related to DEI at Work” and “What You Should Know About DEI-Related Discrimination at Work.”

The introduction to “What You Should Know About DEI-Related Discrimination at Work”, which is in a Q & A format, states that:
Diversity, Equity and Inclusion (DEI) is a broad term that is not defined in Title VII of the Civil Rights Act of 1964 (Title VII). Title VII prohibits employment discrimination based on protected characteristics such as race and sex. Under Title VII, DEI initiatives, policies, programs, or practices may be unlawful if they involve an employer or other covered entity taking an employment action motivated—in whole or in part— by an employee’s or applicant’s race, sex, or another protected characteristic.

The Q & A notes that Title VII protects not only employees, but also applicants and training or apprenticeship program participants, and in some instances, interns.
The thrust of the guidance from the EEOC seems to be that DEI policies that generally recognize that there are differences among people are probably okay so long as individuals are not segregated into different groups during training or work place programs (based on race, sex, or any other protected characteristics), and so long as people are not in any way treated differently based upon any protected characteristic. The EEOC states that any employment provisions or policies which disparately treat a group of people will not be tolerated, including in hiring; firing; promotion; demotion; compensation, fringe benefits; access to or exclusion from training (including training characterized as leadership development programs); access to mentoring, sponsorship or workplace networking/networks; internships (including internships labeled as “fellowships” or “summer associate” programs); selection for interviews (including placement or exclusion from a candidate “slate” or pool); job duties or work assignments. Bottom-line: no preferential treatment in any way for anyone for any reason.

Of particular concern in the EEOC’s Q & A is the suggestion that employees may be able to allege and prove that a diversity or other DEI-related training caused a hostile work environment.


An article dated March 27, 2025 by the Jackson Walker law firm does a nice job of summarizing the EEOC’s guidance in an article is titled “DEI Under Scrutiny: What Employers Must Know About New EEOC and DOJ Guidance.” The article also makes practical recommendations as to how best to approach EEOC’s guidelines.

USSC REVERSE DISCRIMINATION CASE – AMES V. OHIO DEPARTMENT OF YOUTH SERVICES.
Indirectly related to DEI is the unanimous decision of the U.S. Supreme Court issued on Thursday, June 5, 2025 in Ames v. Ohio Department of Youth Services. 2025 U.S. LEXIS 2198;

23-1039 Ames v. Ohio Dept. of Youth Servs. (06/05/2025)

The plaintiff in Ames was a 20-year employee of the Ohio Department of Youth Services who claimed that she was the subject of reverse discrimination when she was denied a promotion, and was then demoted because she was straight. Plaintiff Ames alleged that the job she applied for and the one she was demoted from were both given to individuals who were LGBTQ.


The federal District court granted defendant’s motion for summary judgment and dismissed the case. 2023 U.S. Dist. LEXIS 44979 ¶35. The dismissal was affirmed by the Sixth Circuit Court of Appeals. 87 F.4th 822 (2023).


On June 5, 2025, in a unanimous opinion by the U.S. Supreme Court written by Justice Ketanji Brown Jackson, the U.S. Supreme Court vacated the Sixth Circuit’s decision and remanded the case “for application of the proper prima facie standard.” 2025 U.S. LEXIS 2198 at ¶13. At issue in the U.S. Supreme Court’s decision was the lower courts’ application of an additional criteria required to establish a prima facie case of discrimination in an employment case by which a plaintiff who is a member of a majority group who claims reverse discrimination must also allege “background circumstances to support the suspicion that the defendant is that unusual employer who discriminates against the majority”. 2025 U.S. LEXIS 2198, ¶2.


The Ames decision will make it easier for plaintiffs to pursue claims of reverse discrimination in those federal circuits, including the Seventh Circuit, that applied the background circumstances requirement. Disposing of cases at the summary judgment stage will obviously be more difficult. It will be interesting, however, to see the ultimate outcome of the Ames case since at least some of the facts described in the District Court’s decision appear to be very strong in support of plaintiff’s claim of discrimination, most notably that the individuals who made the employment decisions plaintiff complained of had no knowledge of plaintiff’s sexual orientation or the sexual orientation of the individual who was promoted to the job she wanted.

Note from the Author: An Update on the Executive Orders Impacting DEI was the subject of one of the presentations at the ILGL Spring Seminar held online the afternoons of June 12 and June 13, 2025. This timely and very informative session was presented by J. Patrick White and Matthew Wagner of Hahn Loeser & Parks LLP. Employment issues affected by recent developments in DEI were also discussed by Marron Mahoney of Laner Muchin during the Labor and Employment Law Update presentation at the ILGL Spring Seminar.

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On June 9, 2025, the U.S. District Court for the Northern District of California issued a preliminary injunction in San Francisco A.I.D.S. Foundation, et. al. v. Trump, 25-cv-01824-JST (N.D. Cal.), enjoining three of the nine provisions of Executive Orders 14151, 14173, and 14168.  Specifically, the Court enjoined the named defendants from enforcing (1) the provision of Executive Order 14151 that requires the termination of all “equity-related” contracts and grants, and (2) provisions of Executive Order 14168 requiring the termination of all funding for any programs that “promote gender ideology.” Although this recent opinion and corresponding preliminary injunction applies narrowly to only the specific plaintiffs and the specific government agencies in the case, it provides insight into how courts are addressing challenges to these Executive Orders.

The plaintiffs in the case are a group of nonprofit organizations that provide healthcare, social services, and advocacy for LGBTQ communities—many specifically serving transgender individuals—and that rely heavily on federal funding to carry out their missions. The plaintiffs challenged Executive Order Nos. 14151 and 14173, which we have previously reported on, as well as 14168, which we do not discuss here. 

After determining that the plaintiffs lacked standing to bring some of their challenges, including to the Enforcement Threat Provision of Executive Order 14173 (EO 14173), the Court addressed the Termination Provision of Executive Order 14151 (EO 14151) and the Certification Provision of EO 14173. 

The Court found that the plaintiffs were likely to succeed on the merits of their challenge to the Termination Provision of EO 14151, which directs agencies to terminate funding for all “equity-related grants or contracts,” for being impermissibly vague under the Fifth Amendment. Under the Fifth Amendment, speakers are protected from arbitrary and discriminatory enforcement of vague standards. The Court reasoned that the vagueness of the language “equity-related” and the lack of any definition is likely to inhibit the exercise of freedom of expression because it provides no guidance to grantees as to how they can modify their expression to avoid termination or from even assessing what grants are implicated. The Court also found that the plaintiffs demonstrated a likelihood of success on their claim that the Termination Provision violates the constitutional Separation of Powers as applied to certain grants the plaintiffs receive based on the premise that only Congress has the power to rescind grant funding.

The Court declined to grant a preliminary injunction with respect to the Certification Provision of EO 14173, which requires contractors and grantees to certify that they do not operate any programs promoting DEI that violate any federal anti-discrimination laws. The Court found that the plaintiffs did not demonstrate a likelihood of success on the merits for their First Amendment claim because the Certification Provision implicates the operation of programs that both promote DEI and “violate any applicable Federal anti-discrimination laws.” The Court reasoned that, while the First Amendment may protect speech that advocates for violation of law, it does not protect activities that directly violate anti-discrimination law. The Court likewise held that the plaintiffs did not demonstrate a likelihood of success on the merits for their Fifth Amendment Due Process claim for the same reason: that the government is targeting only DEI activity that violates federal antidiscrimination laws and not DEI activity in general.   

The Court’s order provides temporary relief only to the named plaintiffs in the lawsuit. All other federal government contractors and grantees remain subject to enforcement. Hahn Loeser will continue to monitor this issue closely and provide updates as they become available.

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Case Overview: Orion Mgt., Inc. v. Kaeka, 2025-Ohio-1047 (9th Dist. 2025)

In a recent Ohio Ninth District Court of Appeals decision, homeowners who experienced significant property damage from both a fallen tree and inadequate contractor work were left without the protection of Ohio’s Consumer Sales Practices Act (CSPA). In Orion Management, Inc. v. Kaeka, the court clarified how the enactment of Ohio’s Home Construction Service Suppliers Act (HCSSA) carved out a significant exception to consumer protections.

The Facts

After a tree crashed through homeowners’ newly purchased home, they hired a contractor to repair the damage. The project was delayed for over two months, during which the tarps covering the exposed roof shifted and tore, causing further water damage to the home. Frustrated by the lack of progress and worsening conditions, the homeowners instructed the contractor to halt work and provide a bill for services rendered. When the homeowners failed to pay the bill, the contractor filed a mechanic’s lien and sued for breach of contract. In response, the homeowners counterclaimed, alleging, among other things, violations of the CSPA and HCSSA.

The trial court found the CSPA did not apply because the contract involved construction services rather than a consumer transaction. At trial, the homeowners prevailed on their HCSSA counterclaim, with the jury awarding them $118,848.37 in damages.

The Ninth District Holding

On appeal, the Ninth District Court of Appeals held that the CSPA does not apply to home construction service contracts, even when the work involves rebuilding after property damage rather than new construction, and that the HCSSA exclusively applies to those contracts.[1] The court noted that the Ohio legislature enacted the HCSSA to address residential construction specifically and to provide a tailored framework for governing home construction suppliers.[2]

The Consumer Sales Practices Act

Ohio’s Consumer Sales Practices Act (CSPA), enacted in 1972, prohibits suppliers from committing unfair, deceptive, or unconscionable acts or practices in connection with consumer transactions.[3]A “consumer transaction” is broadly defined but specifically excludes “transactions involving a home construction service contract as defined in section 4722.01 of the Revised Code.”[4]

The CSPA prohibits deceptive practices such as misrepresenting goods or services[5] and unconscionable practices that take advantage of consumers’ vulnerabilities or involve excessive pricing.[6] When violations occur, consumers may recover actual economic damages plus up to $5,000 in noneconomic damages, or—if the violation was previously declared deceptive or unconscionable—rescission or treble (triple) damages (or at least $200), plus up to $5,000 in noneconomic damages, or appropriate relief through a class action.[7] Courts may also award attorney fees against suppliers who knowingly violate the CSPA.[8]

Prior to 2012, the CSPA governed residential construction contracts. However, the Ohio legislature enacted the Home Construction Service Suppliers Act (HCSSA) to establish specialized laws for construction services, removing these transactions from CSPA coverage.

The Home Construction Service Suppliers Act

Ohio’s Home Construction Service Suppliers Act (HCSSA), enacted in 2012, specifically governs contracts for home construction services equal to or exceeding $25,000.[9] It defines “home construction service” as “the construction of a residential building, including the creation of a new structure and the repair, improvement, remodel, or renovation of an existing structure.”[10]

The HCSSA generally prohibits suppliers from engaging in a wide range of deceptive, unfair, or substandard business practices.[11] It also requires that most home construction service contracts be in writing and include specific information such as the parties’ contact details, address where service is to be performed, description of the work and goods to be furnished, anticipated start and end dates, estimated costs, copy of the supplier’s certificated of insurance, and dated signatures of the parties.[12] Cost-plus contracts are exempt from many of these writing requirements.[13]

Like the CSPA, when a violation of the HCSSA occurs, the homeowner may seek recission of the contract, or actual economic damages with up to $5,000 in noneconomic damages.[14] Courts may also award attorney fees against suppliers who knowingly violate the HCSSA.[15] Importantly, homeowners suing under the HCSSA are not entitled to recover treble damages, a remedy that is available under the CSPA.

The Construction Exception’s Broad Reach

The Ninth District’s interpretation of “home construction services” was notably broad, rejecting arguments that the HCSSA should only apply to new construction.[16] The court held that restoration work after property damage constitutes “construction” within the meaning of the statute, even when rebuilding existing structures.[17] This interpretation means that homeowners dealing with a broad range of renovations and repairs may find themselves outside CSPA protection, even when contractors engage in practices that would clearly violate the CSPA in other contexts.

Practical Considerations for Homeowners

The decision highlights the importance of:

  • Careful contract drafting when working with construction contractors
  • Understanding which legal protections apply to specific transactions
  • Seeking legal counsel early when construction problems arise

While Ohio consumers retain broad CSPA protections for most transactions, home construction services costing $25,000 or more fall under the HCSSA, which offers more limited remedies. The HCSSA does not provide for treble damages, a key remedy available under the CSPA. Understanding which consumer protection laws apply to your specific situation is crucial for protecting your rights and obtaining appropriate remedies when things go wrong. Hahn Loeser’s Construction Team is well-equipped to assist contractors. For CSPA or HCSSA questions or concerns, please contact Construction Partner Aaron S. Evenchik.

[1] Orion Mgmt., Inc. v. Kaeka, 2025-Ohio-1047, ¶ 33 (9th Dist. 2025).

[2] Orion Mgmt., Inc. v. Kaeka, 2025-Ohio-1047, ¶ 32 (9th Dist. 2025).

[3] R.C. 1345.02(A), 1345.03(A).

[4] R.C. 1345.01(A).

[5] R.C. 1345.02(B).

[6] R.C. 1345.03(B).

[7] R.C. 1345.09.

[8] R.C. 1345.09(F).

[9] R.C. 4722.01(C).

[10] R.C. 4722.01(B).

[11] See R.C. 4722.03.

[12] R.C. 4722.02(A)(1-9).

[13] R.C. 4722.02(C), 4722.03(B).

[14] R.C. 4722.08.

[15] Id.

[16] See, Orion Mgt., Inc. v. Kaeka, 2025-Ohio-1047, ¶ 25-32 (9th Dist. 2025).

[17] Id. at ¶ 33.

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The U.S. Department of Justice (DOJ) launched the Civil Rights Fraud Initiative (the “Initiative”), which was announced on May 19, 2025 via Memorandum from Deputy Attorney General, Todd Blanche, and a related press release (the “Memorandum”). The Initiative is a coordinated enforcement effort by various DOJ components and other federal agencies to investigate and prosecute alleged civil rights violations committed by recipients of federal funds.

The Memorandum announces that DOJ intends to treat civil rights noncompliance as a form of fraud giving rise to DOJ’s right to investigate and pursue claims under the False Claims Act (“FCA”). As stated in the Memorandum, the FCA is implicated when federal funding recipients or contractors knowingly violate civil rights law and falsely certify compliance with such laws. The FCA is also implicated when a federal grantee knowingly engages in racist preferences, mandates, policies, programs, and activities, including through diversity, equity, and inclusion (“DEI”) programs that assign benefits or burdens on race, ethnicity, or national origin, even if such programs are “camouflaged with cosmetic changes that disguise their discriminatory nature.” 

Executive Order 14173 (“EO 14173”), which we have previously reported on, is specifically mentioned in the Memorandum. The Certification Provision of EO 14173 requires contractors and grantees to certify that they are in compliance with all federal anti-discrimination laws and to affirm that they do not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws. It is readily apparent from the Memorandum that DOJ intends to treat violations of EO 14173’s certification requirements as the basis for fraud investigations and claims brought under the FCA.  Exposure to FCA claims raises the stakes for recipients of federal funds because, among other things, violations of civil rights laws and EO 14173’s certification requirements may subject the recipient to treble damages and significant penalties.   

Notably, the Memorandum “strongly encourages” private enforcement of civil rights fraud through whistleblower complaints from members of the public. Whistleblower lawsuits, also known as qui tam lawsuits, allow whistleblowers to sue on behalf of the government for fraud and receive a share of any monetary recovery as an award for coming forward.

The implications of the Civil Rights Fraud Initiative are that contractors and grantees are now subject to increased risk for fraud investigations for alleged civil rights violations and for falsely certifying compliance with civil rights laws. It remains unclear how DOJ will interpret alleged violations of civil rights laws and how forcefully DOJ will enforce these laws. Hahn Loeser will continue to monitor this issue closely and provide updates as they become available.

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We recently wrote about the preliminary injunction entered by the U.S. District Court for the Northern District of Illinois, blocking the Department of Labor from enforcing certain provisions of Executive Orders 14173 and 14151, both of which limit or prohibit federal grants or programs relating to “illegal,” “unlawful,” and “immoral” diversity, equity, and inclusion (“DEI”). The case in Illinois is one of several cases we have reported on that are pending in various District Courts around the country relating to Executive Orders 14173 and 14751. In light of the rapidly changing legal landscape with respect to DEI, federal contractors and grantees are asking how the various court rulings affect each other and what the current state of the law is with respect to these Orders.

We are currently tracking five lawsuits that may impact the enforcement of Executive Orders 14173 and 14151.  Each of the lawsuits challenges the constitutionality of the Executive Orders in U.S. District Courts in California, Illinois, Pennsylvania, Maryland and the District of Columbia. To date, only the courts in Maryland and Illinois have issued rulings affecting the enforcement of the Executive Orders. The remaining courts are likely to issue rulings in the coming months as those cases progress, and we will continue to provide timely updates.

In previous posts we reported on the nationwide preliminary injunction granted by the District Court in Maryland that was later stayed by the Fourth Circuit Court of Appeals. The stay allows the government to enforce the Executive Orders while the appeal of the preliminary injunction is pending before the Fourth Circuit. 

Meanwhile, the District Court in Illinois has granted a preliminary injunction that is limited to the Department of Labor. Specifically, the Department of Labor may not enforce the “Certification Provision” of Executive Order 14173, which requires a federal contractor or grantee to certify that it does not operate any programs “promoting DEI that violate any applicable Federal anti-discrimination laws.”  The preliminary injunction also enjoined the Department of Labor from enforcing the “Termination Provision” of Executive Order 14151, which requires the termination of equity-related grants, but this injunction applies only to the Plaintiff, Chicago Women in Trades, and only as to one of its five grants.  As to all other federal contractors and grantees, the Termination Provision is currently enforceable.

The current status of Executive Order 14173 is that it is fully enforceable by the federal government except only that the Department of Labor may not require a contractor or grantee to make certification that it does not operate any programs “promoting DEI that violate any applicable Federal anti-discrimination laws.”  The Order included a 90-day period in which contractors were allowed to continue under the prior regulations, but that 90-day period has now expired. Federal contractors should expect updated guidance from the Office of Federal Contract Compliance Programs (OFCCP), but currently no guidance has been published.

For now, federal contractors and grantees should be prepared to comply with the Executive Orders and direction from OFCCP as it comes out. Hahn Loeser & Parks will continue to monitor this issue and provide updates as they become available

US Department of Justice - Washington DC
The United States Department of Justice, also known as the Justice Department, is a federal executive department of the United States government tasked with the enforcement of federal law and administration of justice in the United States.

On April 23, 2025, the United States Department of Justice announced that it is rescinding the January 31, 2022 Notice of Report on Lawful Uses of Race or Sex in Federal Contracting Programs (the “2022 Report”). The April 23 announcement (the “Announcement”) does not clarify what practices or activities constitute inappropriate DEI programs.  Rather, the Announcement functions to remove the 2022 Report as a citable resource that litigants and federal agencies can rely upon in support of sex- and race-based considerations.

Background: the 2022 report

On January 31, 2022, the Justice Department issued a report of its review of substantial evidence – including research studies and evidence given at Congressional hearings – that demonstrated pervasive discriminatory barriers that “impede the full and fair participation of businesses owned by women and people of color in government contracting.” Of special significance to federal contractors, the 2022 Report found that a “substantial body of statistical evidence … [demonstrated] significant disparities in the amount of public contracting dollars going to businesses owned by women or people of color as compared to their availability for such contracts.” The 2022 Report (which is available here) found that the evidence supported the “compelling interest in the continued use of federal programs that contain remedial measures to eliminate discriminatory barriers to contracting opportunities for businesses owned by women and people of color.”

The April 23, 2025 Announcement

Effective as of April 23, 2025, the Justice Department has rescinded the 2022 Report.  According to the Announcement, which was issued on April 10 but not published until April 23, 2025, the 2022 Report “is no longer considered an accurate reflection of the current laws, executive orders, and federal court jurisprudence concerning the constitutionality of using race or sex in federal government programs.”  The Announcement also states that the rescission is consistent with Executive Order 14151 (“Ending Radical and Wasteful Government DEI Programs and Preferencing”) and Executive Order 14173 (“Ending Illegal Discrimination and Restoring Merit-Based Opportunity”), which directed the immediate termination of unlawful “DEI” programs throughout the federal government, including in contracts with the federal government and contracts supported by federal grants.

The Announcement does not make any changes to existing federal law or regulations. However, the effect of the Announcement is to eliminate the 2022 Report as evidence that courts and governmental agencies can rely on to support eliminating discriminatory barriers in federal contracting. 

Hahn Loeser will continue to monitor this issue closely and provide updates as they become known. 

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On April 2, we reported that Judge Matthew Kennelly of the U.S. District Court for the Northern District of Illinois had issued a temporary restraining order blocking the Department of Labor from enforcing certain provisions of Executive Orders 14173 and 14151, both of which limit or prohibit federal grants or programs relating to “illegal,” “unlawful,” and “immoral” diversity, equity, and inclusion (“DEI”). Earlier this week, Judge Kennelly granted a preliminary injunction in that case, barring the Department of Labor from (1) requiring the plaintiff, Chicago Women in Trades (CWIT), to make certain certifications required by Executive Order 14173, and (2) terminating certain federal grants to CWIT as required by Executive Order 14151.

Certification Requirement

First, the Court enjoined the Department of Labor from requiring any grantee or contractor to make a certification that it does not operate any programs “promoting DEI that violate any applicable Federal anti-discrimination laws,” as required by section 3(b)(iv) of Executive Order 14173 (the “Certification Provision”). At oral argument, the government conceded that the Certification Provision attempts to regulate grantees’ speech outside of their federally funded programs. Moreover, the Court found that the Executive Order’s express reference to “programs promoting DEI” is fairly read to be an express reference to speech and advocacy protected by the First Amendment. The Court found that CWIT demonstrated that it was likely to succeed on the merits of its claim challenging the Certification Provision on the basis that the provision violated CWIT’s rights to freedom of speech and advocacy under the First Amendment.

Grant Termination

The Court also enjoined the Department of Labor from terminating the Women in Apprenticeship and Nontraditional Occupations (WANTO) grant, one of the five grants that CWIT receives from the government. The Court held that CWIT was likely to succeed in its claim that the provision of Executive Order 14151 requiring agencies to terminate grants and contracts with organizations that promote DEI violated the separation of powers established by the U.S. Constitution because the Spending Clause of Article 1 of the Constitution gives the “power of the purse” – the power to appropriate funds – to Congress. The Court reasoned that the Spending Clause of the Constitution does not grant the Executive branch authority to add conditions to the disbursement of grants based on political priorities.  Through the WANTO Act, Congress requires the Department of Labor to award grants to, among other things, projects benefitting women. The Court found that, by expressly requiring agencies and departments to terminate all equity-related grants based on conditions that the Executive branch does not have authority to impose, Executive Order 14151 would likely run afoul of the WANTO Act and thereby violate the separation of powers established by the Constitution.

Judge Kennelly’s preliminary injunction largely keeps in place the restrictions imposed in his March 27, 2025 temporary restraining order, narrowing the scope only with respect to termination of grants under Executive Order 14151, pending the outcome of the case in which CWIT seeks permanent relief.

What Is Next?

The District Court in Illinois will next determine whether to issue a permanent injunction that could permanently extend the restrictions on the Department of Labor unless overturned or modified on appeal.  Judge Kennelly has requested that the parties confer and provide a proposed schedule for further proceedings by April 24, 2025. Hahn Loeser & Parks will continue to monitor this issue and provide updates as they become available. 

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he year 2025 is shaping up to be quite the challenging year for the construction industry.  From the President’s executive order nos. 14151 and 14174 (signed January 20 and 21, 2025, respectively) seeking to end DEI-related programs in federal contracts (including construction), to the tariffs that have been instituted on construction materials such as steel, aluminum, and lumber, uncertainty abounds for 2025. 

This article will discuss how project participants can better understand, account for, and allocate the risks associated with delays or cost increases that may result from these types of government actions.

The Three Most Common Types of Delay Provisions Found in Construction Contracts

Delays or price escalations are nothing new to the construction industry.  Indeed, it is commonplace for construction contracts to address how the risk of delays and added costs are to be allocated among the parties, and how any claims stemming therefrom are to be raised and resolved among the contracting parties.  Generally speaking, there are three types of contractual provisions that address delays.  They are:  (1) excusable, compensable delays; (2) excusable, non-compensable delays; and (3) non-excusable delays.

Excusable, compensable delays are delays that are not caused by the contractor, entitling them to both an adjustment of the contract’s time to perform and price.  A classic example of an excusable, compensable delay is an owner-directed design change.  Excusable, non-compensable delays are delays that entitle the contractor to an extension of the contract’s time to perform, but no corresponding adjustment to the contract price.  These types of delays are often addressed in the contract’s force majeure clause and are often caused by factors outside the control of any of the contracting parties.  Oftentimes (but not always), government actions that disrupt or delay construction projects are categorized as an excusable, non-compensable delay.  Finally, non-excusable delays are delays caused by or within the control of the contractor.  Because such delays are within the contractor’s control, the contractor is not entitled to an adjustment of the time to perform or the contract price.

Strategies for Dealing with the Current Governmental and Economic Climate

One need only watch the news for a few minutes to understand the constant state of flux concerning enforcement of executive orders and tariffs.  Indeed, as recently as March 14, 2025, a federal appellate court granted the government’s request to stay a nationwide preliminary injunction that blocked enforcement of certain parts of executive order nos. 14151 and 14173 – representing yet another twist in the battle to enforce (or render void) these orders.  It is expected that this landscape will continue to change over the next several months, and that additional tariffs may be imposed (whether on additional materials or in differing amounts; as of the writing of this article, imported steel and aluminum are subject to a 25 percent tariff, with no exceptions for large trading partners like Mexico or Canada).

The best way to address this uncertainty is to make certain how such delays (and any corresponding cost increases)—should they occur—will be treated by the project participants.  In other words, the parties need to address these issues up front in their contract.  And above all else, one rule reigns supreme for crafting forward-looking contract clauses like delay and cost escalation provisions:  clarity is king.  If it is the project owner, and not the contractor, who will bear the increased costs of materials due to tariffs, then the contract needs to clearly place that risk on the owner (or vice versa).  The same is true for delays (recall that last time tariffs were implemented, supply chain issues ensued as well):  will the contract price be adjusted to account for the delays or just the time to perform?  Allocating these risks upfront, using clear and unambiguous language, will ensure that these issues are handled promptly and cost-effectively, which will in turn help to keep projects on schedule (or to minimize the impact of delays).  But the clarity does not begin and end with the contract – contractors and subcontractors should be clear in their bids and proposals what assumptions they rely upon (such as tariffs remaining constant at 25 percent) or what is excluded from their bid.  Again, doing this will ensure that all project participants are aware of and in agreement with how the risk of government-caused delays and cost increases are allocated.  In these uncertain times, clear risk allocation in contracts becomes that much more critical as it will help to reduce uncertainty.

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On March 27, 2025, Judge Matthew Kennelly of the U.S. District Court for the Northern District of Illinois issued a temporary restraining order blocking the Department of Labor from enforcing certain provisions of Executive Orders 14173 and 14151, both of which limited or prohibited federal grants or programs relating to “illegal,” “unlawful,” and “immoral” diversity, equity, and inclusion (“DEI”). The plaintiff in the case, Chicago Women in Trades (“CWIT”), is a non-profit organization that prepares women to enter and remain in skilled trades and that receives federal funding from the Department of Labor. CWIT’s lawsuit challenged the DEI-related Executive Orders on various grounds, including that the Orders violate CWIT’s rights under the First and Fifth Amendments to the Constitution. CWIT requested a temporary restraining order preventing the enforcement of the Executive Orders and alleging that their enforcement would cause it irreparable harm. 

Judge Kennelly found that the provision of EO 14173 requiring federal contractors and grant recipients to certify that they do not operate any programs “promoting DEI that violate any applicable Federal anti-discrimination laws,” likely violates the First Amendment of the U.S. Constitution and that its enforcement would cause irreparable harm to the plaintiff. Judge Kennelly’s ruling with respect to the certification provision of EO 14173 applies only to contracts and grants issued by the Department of Labor and not to all federal agencies. 

Additionally, the ruling restricts the Department of Labor from enforcing the provision of EO 14151 requiring agencies to terminate grants and contracts with agencies that promote DEI, but only with respect to CWIT and not to any other federal contractors or grantees.

What is Next?

The District Court in Illinois will next determine whether to issue a preliminary injunction which could extend the restrictions on the Department of Labor while the case is pending before the court.  A hearing will be held on April 10, 2025 on the preliminary injunction, and a ruling can be expected shortly thereafter. Less than two weeks ago in a similar case, the Fourth Circuit Court of Appeals granted the government’s request to stay a nationwide preliminary injunction that had blocked the same provisions of the Executive Orders allowing the government to enforce the Executive Orders while the appeal is pending. The government may file a similar request in the CWIT case. Hahn Loeser & Parks will continue to monitor this issue and provide updates as they become available.

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The Federal Government’s recent imposition of tariffs appears designed largely to bring manufacturing back inside the United States. News reports indicate the Government understands that tariffs may initially cause pain but accepts that trade-off to press investment in future growth of U.S. manufacturing. As such, there may be increased opportunities for construction companies who build manufacturing facilities. Contracts for manufacturing require special planning and thinking. Key provisions needed to consider include:

  • Confirming adequate funding exists to construct the facility. Often projects are started before all funding is in place. Funding for these projects is often a mix of manufacturer cash, lender funds, and government grants. In instances where projects are started before all funding is confirmed, projects can be broken into phases, with separate milestone dates triggered by funding confirmation on a phase-by-phase basis. This can reduce risk of non-payment to the contractor. However, for owners it risks new pricing with each phase, especially if there is a delay in obtaining financing.
  • Construction projects involving federal grants are now subject to new requirements governing “DEI” programs under Executive Order 14173. Beginning on April 21, contractors on projects receiving federal funding must certify that they do not operate any programs “promoting DEI that violate any applicable Federal anti-discrimination laws.”  Failure to meet this certification requirement could result in liability under the False Claims Act. The Government has not yet published formal guidance on what constitutes unlawful “DEI” programs. However, informal guidance from the U.S. Equal Employment Opportunity Commission (EEOC) suggests that an employment action may be considered unlawful if it is “motivated—in whole or in part—by race, sex, or another protected characteristic.” Under this informal guidance, as an example, an apprentice or mentoring program that takes into account race or sex would be considered unlawful. Contractors are advised to consult with legal counsel to assist in evaluating whether any of their hiring practices might violate current laws prohibiting unlawful DEI programs. Moreover, contract provisions may require contractors to adhere to these strict limits.
  • Late completion of a project can sometimes expose contractors to liquidated damages. The amount of liquidated damages can account for costs the manufacturer may incur on additional financing interest, taxes, or even rent at an existing facility. But these liquidated damages should be proportional to the damage that the manufacturer might actually suffer.  As such, contractors should consider watching for manufacturer overreach on pricing the liquidated damages. The liquidated damages should not attempt to compensate the manufacturer for lost costs related to late start of manufacturing, lost sales, lost profits and the like. Contractors can insist on a fair liquidated damage amount as well as a waiver of consequential damages. After all, contractors are in the business of constructing buildings, and not the business of insuring against manufacturing losses.
  • When a contractor serves in the design-build capacity, the contractor may press the owner to provide a clear and well-defined program for the contractor to design around. Time spent up front defining and explicitly writing up the owner’s program will enable the contractor to achieve clear requirements and reduces disputes later on. Unclear goals are hard to achieve and lead to unnecessary claims and litigation.
  • Contracts should specify who carries risks associated with an uncertain and quickly-changing economic environment driven in part by political forces. Tariffs are currently being imposed and then removed or revised quickly, and it may take time for the markets to pressure the Government to make final decisions that manufacturers can rely on to make investment decisions. Because changes in the government’s policies and in the economic landscape will affect the cost, need, or future of a project, construction contracts should strongly consider addressing who carries the risk of those changes and their effects on the cost of a project. Contractors need to know they will be paid for the work, even if the project is suspended or no longer needed. Contractors also should not bear the risk of increased tariffs. Owners, conversely, will want the right to stop a project quickly should policies change that reduce the viability or need for the project.

Contract Details

When it comes to any contract, parties should consider how to negotiate and detail who owns the various risks and benefits. Clear contracts significantly reduce later disputes. Time spent up front is well invested to reduce the risk of disputes, extra costs, or other business issues.