First Amendment Likely Precludes Trump Administration’s Canceling DEI-Promoting Contracts, Ninth Circuit Holds

There’s a lot happening in today’s decision in Thakur v. Trump, by Ninth Circuit Judges Richard Paez, Morgan Christen, and Roopali Desai, but I thought I’d focus on the First Amendment analysis. To oversimplify, the Trump Administration canceled a wide range of academic grants “because of the recipients’ perceived expression of DEI, DEIA [diversity, equity, inclusion, and accessibility], or environmental justice viewpoints.” The grant recipients sued, arguing that such viewpoint-based cancellations are unconstitutional.

The law related to viewpoint-based conditions attached to government subsidies is complicated. On one hand, as the Court noted in Rust v. Sullivan (1991), “When Congress established a National Endowment for Democracy to encourage other countries to adopt democratic principles, it was not constitutionally required to fund a program to encourage competing lines of political philosophy such as communism and fascism.” Likewise, the government can fund a program for promoting military enlistment, or recycling, or racial equality, without having to give grants for contrary views.

On the other hand, as the Court noted in cases such as Rosenberger v. Rector (1995), the government can’t set up a generally available funding program and then exclude recipients based on viewpoint. For instance, it can’t exclude religious newspapers from a funding program for student newspapers at the University of Virginia, or excluding anti-government or racist or pro-Israel groups from the 501(c)(3) charitable tax deduction program.

Where should the line be drawn? Here’s what Thakur says:

[T]here is a critical distinction between creating or ceasing a particular program (or subsidy, or forum), on one hand, and discriminating against disfavored speaker viewpoints within a program (or subsidy, or forum), on the other. The government may impose restrictions on subsidies “to define the limits and purposes of [that] program.”  But it cannot “leverage its power to award subsidies … into a penalty on disfavored viewpoints.” Indeed, the Supreme Court has repeatedly affirmed “the requirement of viewpoint neutrality in the Government’s provision of financial benefits.” Rosenberger.

And here’s a short excerpt from the panel’s long elaboration of the matter:

The First Amendment prohibits the government from using its power “to punish or suppress disfavored expression.” … Because “viewpoint discrimination is uniquely harmful to a free and democratic society,” the government “must abstain from regulating speech when the specific motivating ideology or the opinion or perspective of the speaker is the rationale.” …

The government “can, without violating the Constitution, selectively fund a program to encourage certain activities it believes to be in the public interest” at the exclusion of other activities. Thus, the government has discretion to define subsidy programs in a way that reflects its preference to fund (or not fund) particular activities. See, e.g., Rust (1991) (rejecting challenge to regulations that permitted Health and Human Services to award grants to entities so long as no funds were used for abortion services).

{The Supreme Court has also recognized “that viewpoint-based funding decisions can be sustained in instances in which the government is itself the speaker.” Where the government “appropriates public funds to promote a particular policy” using private speakers, “it is entitled to say what it wishes.” Here, the government has not argued that the grant programs at issue use “private speakers to transmit specific information pertaining to its own program,” nor that the grant programs enable the government “to promote its own policies or to advance a particular idea.”}

“[E]ven in the provision of subsidies,” however, “the Government may not” engage in viewpoint discrimination by “aim[ing] at the suppression of dangerous ideas.” “[I]deologically driven attempts to suppress a particular point of view are presumptively unconstitutional in funding, as in other contexts.” The Supreme Court has explained that where the government establishes a subsidy program, it may not discriminate between speakers within that program to suppress viewpoints with which it disagrees. See Rosenberger (noting that where a state university offers funds to student organizations “who convey their own messages,” it “may not silence the expression of selected viewpoints” by denying funding to a religious student organization because of its religious viewpoint)….

Thus, [in NEA v. Finley (1998),] the Supreme Court upheld the constitutionality of the NEA reauthorization statute “[u]nless” it was “applied in a manner that raises concern about the suppression of disfavored viewpoints.” “If the NEA were to leverage its power to award subsidies on the basis of subjective criteria into a penalty on disfavored viewpoints,” the Court cautioned, it “would confront a different case” because “even in the provision of subsidies, the Government may not aim at the suppression of dangerous ideas.” …

The government [in this case] erroneously characterizes each individual grant as a “program” that it may choose to fund or not fund. See Rust (noting that Congress may “selectively fund a program”). But the agencies selected particular grants for termination regardless of the programs through which they were funded, and the record shows the agencies made the decisions to terminate based only on the recipients’ perceived expression of DEI, DEIA, or environmental justice viewpoints. Because the agencies’ termination of grants is aimed at the suppression of viewpoints with which the government disagrees, it likely violates the First Amendment. See Finley; Rosenberger…

[T]he important distinction between Finley and Rosenberger is not between competitive grants and generally available subsidies. Rather, the critical difference is between a facial challenge to a program that by its design excludes categories of activities or speakers (e.g., those that tend to violate general standards of decency and respect [as in Finley]), and an as-applied challenge to the government’s decision to discriminate on the basis of viewpoint in a particular funding decision (e.g., as Plaintiffs allege here)….

[T]he government insists that its funding decisions are subject to a constitutional constraint only when the government “seek[s] to leverage funding to regulate speech outside the contours of the program itself.” Supreme Court precedent defeats this argument….

To be sure, the government may violate unconstitutional-conditions principles when it imposes restrictions on speech outside the contours of a program, but the government offers no support for the assertion that this is the only constraint on the government’s funding decisions. If that were so, it would be hard to reconcile with the Supreme Court’s cautionary warning in Finley that “even in the provision of subsidies, the Government may not ‘ai[m] at the suppression of dangerous ideas.'” The government’s argument is also at odds with the Supreme Court’s decision in Rosenberger, which “reaffirmed the requirement of viewpoint neutrality in the Government’s provision of financial benefits.” …

To give an analogy that goes the other ideological direction, say that the Trump Administration creates programs aimed at “advocating for traditional family values” or “advocating for the continued existence of Israel as a Jewish state” or “advocating for the importance of fossil fuels.” And say that a future Mamdani Administration decides to cancel those programs. It sounds like Thakur v. Trump would authorize such a cancellation, since this would involve “creating or ceasing a particular program (or subsidy, or forum).”

But say that instead the Mamdani Administration decides to cancel all grants that promote an earlier Administration’s views of “traditional family values,” or that are pro-Israel or pro-fossil-fuel—in whatever program they might have been made. (For instance, say that there’s a grant program aimed at promoting crime reduction in which some of the grantees seek to reduce crime by promoting family values; a grant program aimed at promoting world peace in which some of the grantees seek to promote it by reaffirming the legitimacy of Israel; or a grant program aimed at promoting energy self-sufficiency in which some of the grantees seek to promote the goal by urging more fracking.) It sounds like Thakur v. Trump would forbid such a cancellation, since this would involve “discriminating against disfavored speaker viewpoints within a program (or subsidy, or forum), on the other.”

Finally, note that the First Amendment logic related to the impropriety of certain viewpoint-based cancellations would also generally forbid similar viewpoint-based denials of initial funding. Rosenberger, after all, itself involved such initial funding decisions.