Executive Orders Lay Out New Administrative Priorities

(Editor's note: This article addresses some of President Trump's recent executive orders. A future article will focus on an executive order on foreign aid.)

Executive orders (EOs) and directives issued under the initial days of the new Trump administration are affecting the grants community, and federal agencies are under new orders that could impact the pace of rulemaking.

The Department of Health and Human Services (HHS) has reportedly issued a pause on mass communications and public appearances that are not directly related to emergencies or critical to preserving health. This pause on public appearances has abruptly halted meetings of grant review panels for National Institutes of Health research grant applications. Further, an HHS memo called for staff to refrain from publicly issuing any document (e.g., regulation, notice, grant announcement) until it has been reviewed and approved by a presidential appointee.

The new administration also issued an EO, Ending Illegal Discrimination and Restoring Merit-Based Opportunity, targeting affirmative action and diversity, equity and inclusion (DEI) initiatives in the federal government. It revokes multiple previously issued labor-related EOs promoting affirmative action and other DEI policies. It creates new compliance obligations for grant recipients and will necessitate new Federal Acquisition Regulation (FAR) rules. According to a recent alert issued by the law firm of Venable LLP, grant recipients and contractors that maintain a DEI program should be especially aware that the EO directly links the maintenance of future DEI programs to False Claims Act (FCA) liability.

As stated in the alert, the EO’s key provisions include:

• A prohibition on federal contractors and subcontractors from considering “race, color, sex, sexual preference, religion or national origin in ways that violate the nation’s civil rights laws” in their employment practices. The rule is not limited to employment under a contract or grant, but will be applied across the board.
• A requirement that every contract or grant award include a “term requiring the contractual counterparty or grant recipient to agree that its compliance in all respects with all applicable federal antidiscrimination laws is material to the government’s payment decisions for purposes of section 3729(b)(4) of title 31, U.S. Code.” A grant recipient or contractor also must affirmatively “certify that it does not operate any programs promoting DEI that violate any applicable federal antidiscrimination laws.” This means that, when implemented, any grant recipient or government contractor who continues to engage in prohibited discrimination or maintains certain affirmative action programs or DEI policies — contrary to the new contract terms and affirmative certifications — will risk liability under the FCA by virtue of submitting invoices to the government for payment.

The order states that contractors may continue to comply with the existing “regulatory scheme” for 90 days, or until April 21, 2025. The Venable alert notes that this language suggests that the Office of Management and Budget (OMB) and the FAR Council will issue guidance to agencies in the coming weeks or months to reconcile the EO directives with existing FAR clauses applying to affirmative action and DEI.

Regulatory Freeze

As typical during the change of presidential administrations, the Trump administration also issued another EO installing a regulatory freeze pending administrative review. The EO prohibits agencies from submitting a final or proposed rule to the Federal Register until a department agency head appointed or designated by the president reviews and approves the rule, unless exempted by OMB to address an emergency situation or other urgent circumstance.

The action also calls for the withdrawal of any rules sent to, but not yet published in, the Federal Register so that they can be reviewed and approved by new department heads. It further requests agencies to place a two-month postponement on the effective date of any rules already published in the Federal Register that have yet to take effect, and reopen these rules to public comment. Many department heads still await congressional confirmation, including the director of OMB.

Unleashing America’s Energy

The new administration also issued an EO entitled Unleashing America’s Energy. A key portion of the order’s policy priorities, as listed in section 2 of the order, is the elimination of the “electric vehicle mandate,” as well as policies and waivers that provide a market advantage favoring electric vehicles. Section 7, entitled “Terminating the Green New Deal,” of the order states that all federal agencies “must immediately pause the disbursement of funds appropriated through the Inflation Reduction Act of 2022 (Pub. L. 117-169) and the Infrastructure Investment and Jobs Act (Pub. L. 117-58), including but not limited to funds for electric vehicle charging stations made available through the National Electric Vehicle Infrastructure Formula Program and the Charging and Fueling Infrastructure Discretionary Grant Program, and shall review their processes, policies and programs for issuing grants, loans, contracts or any other financial disbursements of such appropriated funds for consistency with the law and policy outlined in section 2 of the EO.”

Agency heads must submit a report within three months to NEC and OMB on the findings of this review. Agencies may not disburse any funds for these programs until the review of this report is complete, and it is “determined that such disbursements are consistent with any review recommendations they have chosen to adopt.”

In a related matter, the White House issued OMB Memorandum M-25-11, Guidance Regarding Section 7 of the Executive Order Unleashing American Energy, which seeks to clarify the language in section 7 of the EO. It states that “this pause only applies to funds supporting programs, projects or activities that may be implicated by the policy established in section 2 of the order. For the purposes of implementing section 7 of the order, funds supporting the ‘Green New Deal’ refer to any appropriations for objectives that contravene the policies established in section 2. Agency heads may disburse funds as they deem necessary after consulting with the OMB.”

Also in another EO, Initial Rescissions of Harmful Executive Orders and Actions, the administration revoked numerous EOs issued by the Biden administration, including EOs related to racial equity and support for underserved communities, responding to the COVID-19 pandemic, strengthening Medicaid and on other topics. The Domestic Policy Council and National Economic Council directors will review all federal actions taken in response to these previous EOs to determine steps to rescind or amend such actions as appropriate.