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Rule2026-19688

Disadvantaged Business Enterprise and Airport Concession Disadvantaged Business Enterprise Program Revisions

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Published

September 25, 2026

Effective

September 25, 2026

Issuing agencies

Transportation Department

Abstract

The U.S. Department of Transportation (DOT or Department) is finalizing amendments to its Disadvantaged Business Enterprise (DBE) and Airport Concession Disadvantaged Business Enterprise (ACDBE) program regulations. With few modifications, this final rule follows the interim final rule (IFR) published on October 3, 2025, which eliminated race- and sex-based presumptions that DOT determined to be unconstitutional. This action completes the transition to a system of individualized determinations of social and economic disadvantage to ensure program constitutional compliance and addresses administrative challenges identified by stakeholders during the public comment period.

Full Text

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<title>Federal Register, Volume 91 Issue 185 (Friday, September 25, 2026)</title>
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[Federal Register Volume 91, Number 185 (Friday, September 25, 2026)]
[Rules and Regulations]
[Pages 60885-60900]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-19688]

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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

49 CFR Parts 23 and 26

[Docket No. DOT-OST-2025-0897]
RIN 2105-AF33

Disadvantaged Business Enterprise and Airport Concession
Disadvantaged Business Enterprise Program Revisions

AGENCY: Office of the Secretary (OST), U.S. Department of
Transportation (DOT or the Department).

ACTION: Final rule.

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SUMMARY: The U.S. Department of Transportation (DOT or Department) is
finalizing amendments to its Disadvantaged Business Enterprise (DBE)
and Airport Concession Disadvantaged Business Enterprise (ACDBE)
program regulations. With few modifications, this final rule follows
the interim final rule (IFR) published on October 3, 2025, which
eliminated race- and sex-based presumptions that DOT determined to be
unconstitutional. This action completes the transition to a system of
individualized determinations of social and economic disadvantage to
ensure program constitutional compliance and addresses administrative
challenges identified by stakeholders during the public comment period.

DATES: This rule is effective September 25, 2026.

Electronic Access and Filing

This document, the IFR, all comments received, and all background
material may be viewed online at <a href="http://www.regulations.gov">www.regulations.gov</a> using the docket
number listed above. Electronic retrieval assistance and guidelines are
available on the website. It is available 24 hours each day, 365 days
each year. An electronic copy of this document may also be downloaded
from the Office of the Federal Register's website at
<a href="http://www.federalregister.gov">www.federalregister.gov</a> and the Government Publishing Office's website
at <a href="http://www.GovInfo.gov">www.GovInfo.gov</a>.

FOR FURTHER INFORMATION CONTACT: Allen Gutierrez, Director, Office of
Small and Disadvantaged Business Utilization, Office of the Secretary,
U.S. Department of Transportation, 1200 New Jersey Avenue SE,
Washington, DC 20590 at (202) 738-6263 or <a href="/cdn-cgi/l/email-protection#7e1f12121b1050190b0a171b0c0c1b043e1a110a50191108">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

The Department issues this final rule to finalize, with few
modifications, the October 3, 2025 IFR.\1\ The IFR was a direct
response to legal developments, including Executive Order 14151, Ending
Radical and Wasteful Government DEI Programs and Preferencing;
Executive Order 14173, Ending Illegal Discrimination and Restoring
Merit-Based Opportunity; recent developments in case law; the Attorney
General's March 21, 2025 memorandum to all Federal agencies,
Implementation of Executive Orders 14151 and 14173; Eliminating
Unlawful DEI Programs in Federal Operations; \2\ and the Solicitor
General's conclusion that the DBE program's presumptions violate the
U.S. Constitution in a June 2025 letter advising the Speaker of the
House that the U.S. Department of Justice (DOJ) would no longer defend
the presumptions.\3\ The Solicitor General's conclusion and letter
concern litigation about the race- and sex-based presumptions of the
DBE program. In that litigation, on September 23, 2024, the U.S.
District Court for the Eastern District of Kentucky determined that the
DBE program's statutory race- and sex-based presumptions likely do not
comply with the Constitution's promise of equal protection under the
law.\4\ The Court held that the Government may only use a racial
classification to ``further a compelling government interest'' and may
only use race in a ``narrowly tailored fashion.'' It held that although
courts have identified a compelling government interest in
``remediating specific, identified instance[s] of past discrimination
that violated the constitution or a statute,'' the Government did not
present evidence of such discrimination by DOT against each of the
groups covered by the DBE program's presumptions. The Court held,
moreover, that the presumptions were not narrowly tailored because
Congress used an unexplained ``scattershot'' approach in identifying
the covered groups, and because the presumptions had no ``logical end
point.'' The Court also held that the sex-based presumptions failed
heightened scrutiny. Accordingly, the Court issued a preliminary
injunction that prohibited DOT from mandating the use of presumptions
with respect to contracts on which the two plaintiff entities bid.
Following these developments, DOT determined that the race- and sex-
based presumptions of the DBE and ACDBE programs were unconstitutional.
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\1\ 90 FR 47982.
\2\ Memorandum from the Attorney General for All Federal
Agencies, Implementation of Executive Orders 14151 and 14173;
Eliminating Unlawful DEI Programs in Federal Operations (March 21,
2025), available at <a href="https://www.justice.gov/ag/media/1409556/dl?inline">https://www.justice.gov/ag/media/1409556/dl?inline</a>.
\3\ Letter from Solicitor General D. John Sauer to Hon. Mike
Johnson (June 25, 2025), <a href="https://www.justice.gov/oip/media/1404871/dl?inline">https://www.justice.gov/oip/media/1404871/dl?inline</a>.
\4\ Mid-America Milling Co. v. U.S. Dep't of Transp., No. 3:23-
cv-00072, 2024 WL 4267183 (E.D. Ky. Sept. 23, 2024).
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In light of this determination, the Department removed these
presumptions, requiring all firms to demonstrate disadvantaged
ownership through an individualized personal narrative (PN) process.
The Department expects that the minor modifications made in this final
rule will have no additional economic impacts beyond those described in
the regulatory analysis supporting the IFR, which is available in the
docket for this rulemaking. This final rule adopts, with minor
clarifications, the regulatory framework established by the IFR. The
Department's economic analysis supporting the IFR, including the
Regulatory Impact Analysis published on October 3, 2025, remains valid
and applicable to this final rule. As this final rule makes no
substantive changes to the IFR's policy framework, there are no
additional economic impacts beyond those previously analyzed. The minor

[[Page 60886]]

clarifications contained in this final rule--such as replacing
``similarly situated'' with ``non-disadvantaged individuals with
comparable qualifications'' and establishing specific reevaluation
deadlines--are administrative refinements that do not alter the
compliance costs or burden hours estimated in the IFR. Accordingly, the
Department incorporates the economic analysis performed for the IFR.
This final rule responds to the 637 public comments the Department
received in its docket for the rulemaking.

II. Background

Congress authorized the DBE program in 1983 and has since
reauthorized the DBE program numerous times, having most recently
authorized the program in Section 11101(e) of the Infrastructure
Investment and Jobs Act (Pub. L. 117-58) (November 15, 2021). Congress
codified the ACDBE program in 1987. See 49 U.S.C. 47107(e).
The DBE program requires recipients of DOT highway, transit, and
airport funding to set goals for participation by contractors that are
small businesses owned and controlled by socially and economically
disadvantaged individuals. The ACDBE program imposes similar
requirements on airport concessionaires. Congress mandated by statute
that DOT ``presume'' that members of specific groups (e.g., Black
Americans, Hispanic Americans, Native Americans, Asian-Pacific
Americans, Subcontinent Asian Americans, and women) were socially and
economically disadvantaged. Other individuals did not benefit from that
statutory presumption. This meant that two individuals with comparable
qualifications may have faced different standards for entering the
program, based solely on their race, ethnicity, or sex.
On October 3, 2025, the Department issued an IFR (90 FR 47979) that
immediately eliminated the use of these presumptions, based on the
Department's determination that the presumptions were unconstitutional.
The IFR required all firms--both applicants and currently certified
firms--to prove social and economic disadvantaged ownership through an
``individualized determination'' as described in 49 CFR 26.67. This
shift was necessary to ensure that the program is lawful.
The Department received 637 public comments on the IFR from a range
of stakeholders, including DBE firms, prime contractors, State
departments of transportation, airports, transit authorities, trade
associations, and advocacy groups. The Department has made minor
changes in this final rule to clarify some provisions in response to
comments received during the comment period. The following sections
provide a comprehensive analysis of these comments and the Department's
responses.

III. Discussion of Public Comments and Final Rule

Stakeholders expressed divided views on the IFR, its compliance
with the rulemaking process required by the Administrative Procedure
Act (APA), its removal of the rebuttable presumption, its provisions
concerning the content of PNs, the reevaluation of currently certified
firms, and the goal setting process to be used by recipients of DOT
financial assistance. Some commenters took an explicit position either
supporting or opposing the IFR, and a substantial group of commenters
also asked a variety of questions about how to implement its
provisions.

1. Removal of the Presumptions

Comments
Support for the IFR
Several advocates argued that the elimination of race- and sex-
based presumptions is necessary to align the DBE and ACDBE programs
with the Constitution. They contended that awarding contracts based on
group identity rather than merit violates the Equal Protection Clause
of the 14th Amendment and the Due Process Clause of the 5th Amendment.
These commenters frequently cited the U.S. Supreme Court's decision in
Students for Fair Admissions, Inc. v. President and Fellows of Harvard
College (SFFA),\5\ and the U.S. District Court's preliminary injunction
in Mid-America Milling,\6\ as legal mandates for the Department's
action to eliminate the presumptions.
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\5\ 600 U.S. 181 (2023).
\6\ Mid-America Milling Co. v. U.S. Dep't of Transp., No. 3:23-
cv-00072, 2024 WL 4267183 (E.D. Ky. Sept. 23, 2024).
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Commenters, principally prime contractors and non-DBE
subcontractors, argued that the previous regulatory framework distorted
market competition by favoring specific demographic groups regardless
of individual circumstances, effectively operating as a subsidy that
displaced merit-based firms and leading to the hiring of more costly
and less competent businesses. Some individual engineers and business
owners commented that the prior rules discouraged non-DBE firms from
pursuing public work because they felt excluded by what they
characterized as quotas or set-asides that did not prioritize
qualifications or value.
One advocacy group summarized both legal and policy objections to
the presumptions, saying that assuming all members of certain groups
are disadvantaged is ``grossly overinclusive.'' It supported the new
standards to ensure resources go to businesses that ``actually
demonstrate need'' relative to their peers, rather than relying on
``proxies'' that may allow wealthy or well-connected individuals to
qualify.
In addition, some commenters asserted that the IFR would reduce
waste and fraud within the program. These commenters argued that the
presumptions allowed individuals to bypass scrutiny, enabling ``pass-
through'' entities or firms owned by wealthy individuals to secure
contracts intended for the truly disadvantaged. One construction trade
association noted that the goals established under the prior program
failed to increase genuine participation and instead created
bureaucratic inefficiencies that harmed the industry. Another supporter
of the IFR opined that there was a need to ``dismantle'' the DBE
program.
Opposition to the IFR
Most commenters, including not only numerous individual small
business owners but also advocacy groups and most trade associations
and recipients commenting, strongly opposed the IFR's removal of the
presumptions. An advocacy group and a trade association argued that the
removal of presumptions ignored the legislative record and empirical
evidence, including disparity studies covering many years,
demonstrating that systemic discrimination against women and minority
groups persists in transportation contracting. They and many of the
individual small business commenters asserted that the DBE program was
Congress's specific remedy for these documented barriers and that the
IFR undermines the program's ability to level the playing field by
placing new, undue burdens on small DBE and ACDBE firms.
Many commenters argued that the Department misapplied SFFA, noting
that the decision addressed university admissions rather than
government contracting, where the Government has a distinct, compelling
interest in ensuring public funds do not finance private
discrimination. Others contended that the IFR is an ultra vires act
that effectively nullifies statutory provisions enacted by Congress via
Executive Order and DOT action,

[[Page 60887]]

violating the separation of powers doctrine.
Stakeholders also expressed deep concern regarding the economic
impact of the rule. Many small business owners stated that the
immediate suspension of goals and the requirement for individualized
narratives would cause irreparable financial harm, forcing firms to lay
off employees or cease operations. One comment estimated that tens of
thousands of firms could go out of business as a result. Commenters
emphasized that the ``race-neutral'' approach ignores the reality that
economic power in the transportation contracting field is dominated by
large, established white-owned firms. The IFR effectively would
eliminate minority participation, one commenter added. Many business
owners said that it was only the DBE program as it existed prior to the
IFR that enabled them to start and grow successful businesses.
DOT Response
The Department acknowledges the variety of perspectives regarding
the IFR. The Department agrees with commenters who stated that the IFR
is necessary to ensure the DBE and ACDBE programs comply with the
Constitution. As noted in the preamble to the IFR, DOJ and DOT have
concluded that the race- and sex-based presumptions previously used in
these programs are unconstitutional considering recent Federal court
cases, including SFFA and Mid-America Milling. There is simply no room
under constitutional law for a presumption that someone is
disadvantaged just because they are a woman or a member of a minority
group. The Department has no compelling justification in authorizing
race- and sex-based presumptions under the DBE or ACDBE program.
Participation in the DBE and ACDBE programs requires clear,
individualized evidence that a firm's owner is socially and
economically disadvantaged, without reliance on unconstitutional race-
and sex-based presumptions.
Regarding comments that the IFR ignores persistent discrimination,
the Department emphasizes that the IFR does not end the DBE or ACDBE
programs, nor does it deny that discrimination exists. Rather, it
modifies the certification standards to require individualized evidence
of discrimination that caused actual social and economic harm. This
ensures that the program benefits those who have truly faced
discrimination and economic hardship, regardless of presumptions
related to their race or sex.
The Department disagrees with the assertion that the IFR
constitutes an ultra vires act. The Department is responsible for
administering its programs in a constitutional manner. When a statutory
provision is determined to be unconstitutional, the agency must take
action to cease implementation of that provision. The IFR preserves the
statutory goal of assisting socially and economically disadvantaged
individuals but removes the unconstitutional method--group-based
presumptions--used to identify them.

2. Administrative Procedure Act (APA) and Legal Authority

The Department determined that the race- and sex-based presumptions
violate the Constitution, asserting that this conclusion provided
``good cause'' under the APA to publish the IFR without prior notice
and comment.
Comments
The Department received comments challenging the way the IFR was
promulgated, as well as the underlying legal rationale for eliminating
the former rule's presumptions of disadvantage.
Good Cause Exception and Notice-and-Comment Rulemaking
Many commenters argued that the Department violated the APA by
bypassing the notice-and-comment rulemaking process. They contended
that the Department failed to demonstrate ``good cause'' under 5 U.S.C.
553(b)(B), arguing that no contingency existed to justify immediate
implementation without public input. This was particularly true,
commenters said, due not only to the alleged adverse effects of the IFR
on thousands of small businesses but also to the variety of
implementation provisions that could have benefited from public comment
before going into effect. Several commenters noted that the court cases
cited by the Department, such as the SFFA decision and the Mid-America
Milling preliminary injunction, occurred months or even years prior to
the IFR, thereby negating the claim that notice-and-comment was
``impracticable.'' Moreover, some comments asserted that SFFA dealt
with student admissions to universities, a very different subject
matter area from federally assisted contracting and therefore was not
on point.
A few comments asserted that the IFR constitutes a ``major rule''
with significant economic impact, requiring a transition period and
congressional review under the Congressional Review Act (CRA). One
legal organization argued that the ``good cause'' exception is a narrow
safety valve intended for acute safety emergencies, not for policy
shifts driven by litigation risk or executive preference.
Some commenters also made policy arguments against an immediately
effective IFR. A letter-writing campaign from over 150 engineers said
that they, contractors, and public agencies depend on stable and
clearly communicated Federal requirements to plan and design safe,
compliant projects. Sudden regulatory changes on this scale, the
letters said, can cascade through multiple stages of project delivery,
risking adverse consequences for the projects.
Many commenters opposing the IFR asked that the Department withdraw
the IFR, reinstate the pre-October 3, 2025 rule, and issue a notice of
proposed rulemaking (NPRM) seeking comment on changes in the program
before imposing the changes.
Conversely, some commenters supported the immediate effectiveness
of the rule, agreeing that continuing to enforce race- and sex-based
presumptions would perpetuate unconstitutional discrimination.
DOT Response
For the reasons stated in the IFR, the Department maintains that
``good cause'' existed to issue the IFR without prior notice and
comment. Agencies are authorized by 5 U.S.C. 553(b)(B) to publish a
final rule without first seeking public comment on a proposed rule
``when the agency for good cause finds (and incorporates the finding
and a brief statement of reasons therefor in the rules issued) that
notice and public procedure thereon are impracticable, unnecessary, or
contrary to the public interest.'' DOT notes, moreover, that the IFR
solicited public comments, and that it has fully evaluated those
comments in issuing this final rule, and thus the Administrative
Procedure Act's rulemaking requirements have been satisfied.

3. Constitutional and Statutory Authority

Comments
Commenters expressed divergent views on the constitutionality of
the DBE and ACDBE programs and the Department's authority to amend them
via the IFR.
Several commenters, including a State attorney general and some
advocacy organizations, supported the Department's determination that
the race- and sex-based presumptions are unconstitutional. These
commenters

[[Page 60888]]

argued that the Supreme Court's decision in SFFA clarified that
remedying generalized societal discrimination is not a compelling
interest sufficient to justify racial classifications. They contended
that the DBE program lacks the ``logical end point'' required by strict
scrutiny and relies on ``outdated stereotypes'' rather than
individualized evidence. Supporters emphasized that the Government has
an obligation to stop enforcing unconstitutional provisions
immediately.
As noted above, commenters opposing the IFR argued that it is based
on a misapplication of case law. They asserted that SFFA addressed
higher education admissions and did not overrule the long line of
appellate precedents (e.g., Midwest Fence Corp. v. Dep't of Transp.;
\7\ Western States Paving Co. v. Wash. State Dep't of Transp.; \8\
Adarand Constructors, Inc. v. Slater \9\) that specifically upheld the
constitutionality of the DBE program as a remedy for discrimination in
contracting. Commenters noted that the Mid-America Milling decision
resulted in the issuance of a preliminary injunction from a single
district court, applicable only to specific parties, and argued that
the Department acted prematurely by applying this ruling nationwide
before a final judgment or appellate review.
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\7\ 840 F.3d 932 (7th Cir. 2016).
\8\ 407 F.3d 983 (9th Cir. 2005).
\9\ 228 F.3d 1147 (10th Cir. 2000).
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Furthermore, numerous commenters argued that the IFR is an ultra
vires act that violates the separation of powers. They contended that
the DBE program's presumptions are mandated by statute (e.g., the
Infrastructure Investment and Jobs Act, 49 U.S.C. 47113) and that the
Executive Branch lacks authority to repeal legislation through
regulation or Executive Order without congressional action, and that
the IFR was arbitrary and capricious for APA purposes because it failed
to consider reliance interests of affected parties and did not consider
less burdensome alternatives.
DOT Response
Regarding the comments on statutory authority and ultra vires acts,
the Department acknowledges that the presumptions were codified by
Congress. However, the Executive Branch has an obligation to ensure
that all laws are implemented in a manner consistent with the
Constitution. The Department rejects the assertion that Mid-America
Milling or SFFA is irrelevant; these cases reflect the current
jurisprudence on equal protection, which prohibits the Government from
utilizing race- or sex-based classifications unless it is to further a
compelling governmental interest and it is used in a narrowly tailored
fashion, which the current presumptions fail to satisfy. The IFR
preserves the statutory DBE program to the maximum extent possible by
shifting to an individualized model of disadvantage, thereby saving the
program from total invalidation while curing its constitutional
defects.
Regarding the comments on reliance interests, the Department
acknowledges that businesses, individuals, and public agencies that
benefited from the DBE program's presumptions of disadvantage may have
expected the DBE program to continue in its prior form. However,
reliance on a program does not justify continuing to operate
unconstitutional presumptions of disadvantage within the program. The
final rule allows firms to continue participating in the program by
demonstrating eligibility through individualized evidence of
discrimination that caused actual economic harm. This approach
preserves the constitutional aspects of the DBE program and mitigates
any effects on reliance interests. To the extent that the immediate
suspension of goals implicates commenters' reliance interests, any
effects will be mitigated by firms making required submissions and
Unified Certification Programs (UCPs) completing the recertification
process as soon as possible. Immediate suspension of goals is necessary
to remedy the unconstitutional aspects of the DBE program.

4. Implementation and Transition Period

Comments
The Department received a significant number of comments expressing
concern over the immediate effective date of the IFR and the
operational disruptions caused by the transition to the new
certification standards.
A wide range of stakeholders, including trade associations, transit
agencies, and individual business owners, argued that the immediate
effective date of the IFR caused severe market disruption. As noted
above, over 150 comments were submitted by professional engineers, who
emphasized the importance of regulatory predictability for those
responsible for safe and efficient infrastructure delivery. They warned
that immediate implementation of the regulation without clear guidance
would cause administrative confusion, diverting their attention from
the core mission of protecting public safety.
Recipients and industry groups requested urgent clarification
regarding the status of contracts executed prior to the IFR's effective
date. Commenters asked whether recipients must stop counting DBE
participation on active projects toward their overall goals or if they
must modify existing contracts to remove DBE requirements. Some noted
confusion regarding whether the IFR requires the termination of DBE
subcontractors who lose certification during the reevaluation process,
warning that such actions would lead to litigation and project delays.
Other commenters pointed out inconsistencies in implementation,
noting that while some States allowed existing contracts to proceed,
others issued stop-work orders or paused payments pending Federal
guidance. An association of general contractors requested a ``safe
harbor'' for active contracts to prevent administrative bottlenecks and
protect contractors from liability due to the sudden regulatory change.
DOT Response
The Department acknowledges the challenges posed by the transition
period. The Department thanks the professional engineering community
for highlighting that safe and efficient infrastructure delivery
depends on regulatory predictability. However, the immediate effective
date was necessary to bring the program into constitutional compliance.
In response to the confusion and fears expressed by small
businesses, prime contractors, and certifying agencies following the
publication of the IFR, the Department has issued Frequently Asked
Questions (FAQs) guidance available at <a href="https://www.transportation.gov/mission/civil-rights/disadvantaged-business-enterprise/october-2025-interim-final-rule">https://www.transportation.gov/mission/civil-rights/disadvantaged-business-enterprise/october-2025-interim-final-rule</a>. The FAQs clarify how the regulatory changes to
goal-setting, counting, and termination operate in practice.

5. Business Consequences

Comments
The Department received starkly contrasting comments regarding the
economic consequences of the IFR. Although certified DBEs characterized
the rule as an existential threat that will force widespread business
closures, other contractors and industry stakeholders viewed it as a
necessary correction to a market distorted by unconstitutional
preferences.
A substantial number of DBE-certified firms reported that the
immediate

[[Page 60889]]

suspension of goals and the uncertainty of the reevaluation process
have placed them in immediate financial peril. Many commenters
described the IFR not merely as a regulatory modification, but as a
``de facto suspension'' of the program that has frozen their revenue
streams. Small business owners stated that without the enforcement of
contract goals, prime contractors immediately ceased soliciting their
participation or canceled pending agreements, interpreting the IFR as a
signal that DBE participation is no longer required.
Specific data points provided by commenters illustrate the severity
of this ``market freeze.'' One DBE firm reported losing nearly $2
million in anticipated contracts immediately following the rule's
publication, representing the entirety of their revenue projection for
the coming year. A highway products supplier stated it has lost half of
its revenue since the initial injunctions began and have received
``zero'' new contracts since the IFR took effect, warning that ``my
business cannot survive this.'' Another construction equipment firm
reported that the flow of bid invitations stopped completely within
days of the rule taking effect, forcing the firm to suspend hiring
plans and consider workforce reductions to avoid insolvency. Further, a
construction firm owner reported that she had already let employees go
because primes were no longer choosing her firm for subcontracts.
These stakeholders argued that they lack the generational wealth
and capital reserves of larger, non-disadvantaged competitors.
Consequently, they contend that the administrative pause and the
removal of goals will inevitably lead to the collapse of thousands of
small businesses that operate on thin margins, resulting in layoffs and
economic damage to the communities they employ. A comment supporting
the IFR acknowledged that the end of race- and gender-conscious goals
in California in 1996 resulted in sharp reductions in minority- and
women-owned business participation in State-funded contracts.
Some commenters, including non-DBE contractors, engineers, and
policy organizations, expressed relief at the IFR, arguing that the
previous system unfairly penalized merit-based businesses and distorted
market competition. These stakeholders contended that the race- and
sex-based presumptions operated as a subsidy that displaced more
qualified and cost-effective firms.
Supporters of the IFR emphasized several key points regarding
business survival and market fairness. Business owners who previously
did not qualify for DBE status stated they had been excluded from
public work despite paying above-average wages and hiring diverse
workforces, simply because they did not fit the demographic criteria.
They viewed the IFR as leveling the playing field so that engineers and
contractors are chosen based on ``skill set and talent.''
On the topic of cost efficiency, long-time contractors argued that
the historic DBE program inflated costs for taxpayers by forcing prime
contractors to hire DBEs even when they were not the lowest bidder or
the most qualified. One commenter cited data suggesting bid prices
dropped by approximately 5.6 percent when similar preferences were
removed in California for State-funded contracts, arguing that the IFR
would result in better value for public funds. Finally, several
commenters argued that the previous system encouraged fraud, citing
instances of ``pass-through'' entities where spouses or relatives of
wealthy contractors were listed as owners solely to secure DBE
certification. These commenters asserted that the IFR would eliminate
these ``sham'' businesses, thereby restoring integrity to the market.
DOT Response
The Department acknowledges that the changes it is making regarding
eligibility for the DBE program may cause temporary losses to firms
that have participated in the program under the former criteria. The
IFR's eligibility criteria and PN process provide an avenue for firms
to remain eligible by providing evidence of discrimination that caused
actual social and economic disadvantage on an individual basis. We urge
firms to take advantage of this on-ramp by providing PNs and other
relevant information to recipients as soon as possible, and for
recipients to process these submissions in an expedited manner, so that
all eligible firms can participate in the program in the near future.
With that said, basing eligibility on race- and sex-based
presumptions of disadvantage is unconstitutional. The only
constitutionally permissible way for firm owners to establish
disadvantage is through individualized evidence of discrimination that
caused actual economic harm, as required by the Department's rule. If a
firm owner that has participated in the program via the former
presumptions cannot make this showing, participation in a program aimed
at firms owned and controlled by socially and economically
disadvantaged individuals is not possible.
The Department notes that alternative means for the participation
of small businesses in DOT-assisted contracts, even those that are not
eligible DBEs, are available. The Department encourages recipients to
utilize DBE-neutral strategies, including Small Business Elements (SBE)
under Sec. 26.39, to foster small business participation both during
the interim period before the reevaluation process is completed and in
the future.
The Department also acknowledges the comments regarding market
distortion and fraud, noting that the new individualized determination
process is designed to ensure that only those business owners who have
truly suffered social and economic disadvantage are certified, thereby
addressing some of the concerns about program integrity while
fulfilling the statutory mandate to assist disadvantaged firms.
Section-by-Section Analysis
The Department received numerous technical comments regarding
specific regulatory amendments in the IFR. The following summary
addresses comments organized by the relevant Code of Federal
Regulations (CFR) sections.

6. Definitions (Sec. Sec. 23.3 and 26.5)

Comments
Several commenters raised concerns regarding the revised definition
of ``socially and economically disadvantaged individual.'' Commenters
noted that the definition requires a certifier to find an individual
disadvantaged on a ``case-by-case basis'' but criticized the lack of a
clear standard for ``social disadvantage'' once the presumptions were
removed. Some commenters argued that the requirement to compare one's
status to ``similarly situated non-disadvantaged individuals'' is
logically flawed, asserting that a disadvantaged individual is, by
definition, not similarly situated to a non-disadvantaged one. Other
commenters requested clarification on whether the phrase ``without
regard to race or sex'' in the definition precludes any mention of race
or sex in an owner's file, or if it simply prohibits using those
characteristics as a standalone basis for eligibility.
DOT Response
The Department amended the definition to reflect the adoption of a
constitutionally neutral process based on individualized evidence of
actual social and economic disadvantage. This preamble discusses the
``similarly

[[Page 60890]]

situated'' and ``without regard to race or sex'' issues below.

7. Reporting and Recordkeeping (Sec. Sec. 26.11 and 23.27)

Comments
Commenters opposed the elimination of requirements to report the
race and sex of DBE owners, arguing that without this data, the
Department cannot monitor the program for discrimination or evaluate
its effectiveness. Recipients asked for guidance on what data to submit
in the Uniform Report during the transition, given that goals are
suspended.
DOT Response
The Department has determined that collecting race and sex data for
the purpose of administering presumptions is no longer relevant to the
program's operation under the new race- and sex-neutral eligibility
standards. Recipients should continue to report total ACDBE and DBE
participation once counting resumes. The Department will issue further
instructions on reporting mechanics going forward.

8. Goal Setting and Counting (Sec. Sec. 26.45, 26.51, 26.55, and Part
23 Equivalents)

Comments
Recipients and contractors expressed frustration with the
prohibition on setting contract goals and counting participation during
the reevaluation period (Sec. Sec. 26.51(h) and 26.55(i)). Commenters
stated that this ``pause'' has led prime contractors to drop DBE
subcontractors from teams.
Commenters questioned the continued relevance of disparity studies
given the removal of race- and sex-based presumptions. One commenter
argued that the IFR fundamentally alters the legal foundation for
disparity studies, which are designed to measure discrimination against
specific groups, not generic ``social disadvantage.''
Consultants and recipients noted that the new requirement in Sec.
26.45(c)(3) for disparity studies to provide a ``detailed capacity
analysis'' will increase costs and necessitate new economic modeling
that many current studies do not include. Some stakeholders asked if
existing disparity studies are now invalid and if recipients must
commission new ``capacity analyses'' before resuming the program.
Others asked for clarification on the requirement for ``detailed
capacity analysis'' in disparity studies, noting that existing studies
may not meet this undefined standard.
DOT Response
The Department understands that the transition to a new
certification standard can be difficult for participants, but given the
constitutional imperatives involved, we see no alternative to pausing
the goal system until only firms that meet the new requirements can
participate.
The Department disagrees that the IFR allows consideration of so-
called systemic discrimination. The Department emphasizes that
recipients must establish eligibility through individualized evidence
of discrimination that caused actual economic harm. Recipients are not
eligible if they use goals/disparity studies that are based on
presumptions regarding race or sex or are otherwise based on
generalized assertions of systemic discrimination.
Because the regulation now requires a strictly race- and sex-
neutral approach to goal setting, the sole purpose of disparity studies
in the DBE and ACDBE programs under this final rule is to ensure that
recipients' goals properly account for availability and utilization of
small businesses and the capacity of small, disadvantaged businesses
relative to non-small businesses or small, non-disadvantaged
businesses.

9. Consultation Requirements (Sec. Sec. 26.45(g)(1) and 23.43))

Comments
The IFR amends Sec. 26.45(g)(1) to remove the specific requirement
to consult with ``minority and women's contractor groups.'' Policy
centers and advocacy groups criticized this change, arguing that it
silences the very communities the program is intended to help and
obscures the reality of discrimination in the marketplace.
DOT Response
The Department removed specific references to minority and women's
groups to align the regulations with the DBE-neutral and DBE-conscious
framework of the IFR. However, recipients must still consult with
organizations that have information concerning the availability of
disadvantaged and non-disadvantaged businesses. This includes general
contractor groups, community organizations, and other individuals and
groups. Nothing in the rule prohibits recipients from consulting with
organizations that serve disadvantaged businesses, including those
serving particular constituencies, provided the overall consultation is
comprehensive and focuses on obtaining relevant evidence regarding the
availability of eligible firms. Indeed, the Department encourages such
broad-based consultation.

10. Social and Economic Disadvantage Standards (Sec. 26.67)

Numerous commenters expressed concern regarding the requirement for
all firms to submit a PN. Small business owners argued that drafting a
PN proving systemic barriers and economic harm is burdensome,
subjective, and requires legal or professional assistance they cannot
afford. One commenter noted that the compliance costs
disproportionately impact the very firms the program is meant to help.
Certifying agencies commented that they lack objective criteria or a
``rubric'' to evaluate these narratives, fearing that without
standardized guidance, determinations will be inconsistent across
States.
``Without Regard to Race or Sex''
Comments
Stakeholders urgently sought clarification on the IFR's instruction
that determinations must be made ``without regard to race or sex.''
Many commenters, including small businesses, advocacy groups,
recipients, and trade associations, argued that this phrasing suggests
owners cannot mention race or sex even as a factual cause of their
individual disadvantage. An advocacy group argued that this prohibition
conflicts with the very court decision, Mid-America Milling, the
Department used to justify the rule. It contended that Mid-America
Milling struck down the presumption of disadvantage based on group
membership, but that the court did not rule that race or sex cannot be
factual causes of disadvantage in individual cases. Moreover, a transit
authority noted that SFFA, which forms an important basis for the
Department's rationale for the IFR, explicitly stated that ``how race
affected [an applicant's] life, be it through discrimination,
inspiration, or otherwise'' fully complies with the equal protection
requirements of the Constitution. Many of these commenters recommended
that the ``without any consideration of race or sex'' language be
replaced by language saying that individual determinations would be
made ``without any presumption of disadvantage based on race or sex.''
Commenters opposing the IFR provision said that it was illogical
for a PN being able to relate adverse personal experiences related to
national origin, religion, language, sexual orientation, color,
political affiliation, and a myriad

[[Page 60891]]

of other possible sources of disadvantage while prohibiting an owner
from mentioning a personal experience of explicit race or sex
discrimination. One commenter asserted the rule's restriction on
mentioning race and sex in PNs acted as a ``gag order'' forcing owners
to ignore the reality of their experiences.
Many commenters asserted that binding certifiers to the specific
nature of the discrimination experienced renders the ``individualized
review'' impossible and effectively creates a ``presumption of non-
disadvantage.'' Conversely, some commenters supported the strict
removal of these factors, arguing that any consideration of race or sex
violates the principle of colorblindness.
Other comments noted the IFR did not define what constituted
``race'' for purposes of the rule. A Native American commenter argued
that American Indians were not a race, but rather a people identified
by history and tribal identity. Other commenters pointed out that
Hispanic Americans, while a group that was presumed disadvantaged under
the pre-October 3 rule, have never been defined as a race. Some
commenters asked whether the prohibition on considering ``sex'' would
prevent owners from discussing discrimination based on sexual
orientation or gender identity in their narratives.
DOT Response
The Department is amending Sec. 26.67(a)(1) to replace the term
``systemic barriers'' with the term ``social barriers'' This change
ensures the regulatory text remains consistent with the specific,
individual experiences required in a PN.
The Department received comments expressing uncertainty regarding
the meaning of the phrase ``without regard to race or sex'' in Sec.
26.67. Several commenters interpreted this language as prohibiting
applicants from discussing race- and sex-based discrimination in a PN
or preventing certifiers from considering such experiences as part of
an individualized determination. That was not the Department's intent.
The Department intended the IFR to eliminate race- and sex-based
presumptions of social and economic disadvantage, not to prohibit
consideration of an applicant's individual experiences. Accordingly,
the Department is revising the regulatory text to clarify that
individualized determinations must be made without reliance on race- or
sex-based presumptions of disadvantage. This clarification does not
alter the substantive framework established by the IFR. Rather, it
confirms that eligibility determinations must be based on
individualized evidence concerning the applicant's own experiences and
circumstances, including evidence of discrimination, social barriers,
denied opportunities, or other factors that the applicant contends
contributed to social and economic disadvantage. This ensures the PN
establishes disadvantage through ``individualized proof regarding
specific instances'' as required by Sec. 26.67, rather than relying on
unconstitutional group-based classifications. This clarification is
also consistent with DOT Order 2100.9, Ensuring Nondiscrimination and
Equal Opportunity in Department of Transportation Policies, Programs,
and Activities (November 10, 2025), which requires that program
eligibility determinations be based on individualized evidence rather
than presumptions or classifications based on race or sex. The relevant
inquiry is thus whether the applicant has established disadvantage
through individualized evidence of discrimination that caused actual
economic harm rather than through any presumption arising from
membership in a particular group.
In addition, the Department recognizes that the term ``Hispanic''
does not denote a ``race.'' Individuals who may fit within the broad
scope of that term may well encounter acts of discrimination based on
such factors as language, accent, color, presumed or actual national
origin, presumed legal status, etc. Such incidents could be cited in an
owner's PN.
The ``Similarly Situated'' Standard
Comments
Stakeholders heavily criticized the requirement in Sec.
26.67(a)(2) that a PN must establish economic disadvantage ``relative
to similarly situated non-disadvantaged individuals.''
Several commenters argued that this standard is ``illogical and
confusing'' because a disadvantaged individual is, by definition, not
similarly situated to a non-disadvantaged individual. They asserted
that if two individuals were truly similarly situated, neither would be
disadvantaged, rendering the comparison impossible. Commenters also
questioned why business owners must compare themselves to
``individuals'' rather than comparing their businesses to other
businesses, calling this a ``fatal flaw'' in the context of commercial
contracting. Commenters also asserted that owners lack access to the
confidential financial data of competitors required to prove that a
peer received more favorable terms, making the standard practically
impossible to satisfy.
DOT Response
To address commenter concerns that the ``similarly situated''
standard is ``illogical'' or ``impossible'' to meet without access to
proprietary data, the Department is replacing this term with ``non-
disadvantaged individuals with comparable qualifications.'' This
refinement clarifies that the evidentiary standard focuses on comparing
the owner's professional credentials and work history (such as
comparing two engineers who each hold a bachelor's degree in
engineering, and certification in the same or similar North American
Industry Classification System (NAICS) codes and similar experience in
the field), rather than current financial outcomes.
With the removal of group-based presumptions, the terms
``disadvantaged'' and ``non-disadvantaged'' are no longer tied to
specific group membership (racial, ethnic, or sex classifications). Any
individual could be considered ``non-disadvantaged,'' just as any
individual could potentially demonstrate ``disadvantage'' through an
individualized showing.
The Department disagrees with commenters who characterize the
``similarly situated'' requirement as ``illogical.'' Rather, in a
narrative context, the comparison is practical and makes sense. When an
owner describes how a specific and identifiable attribute,
characteristic, or personal circumstance negatively affected their
business experience, the ``non-disadvantaged person with comparable
qualifications'' is simply a peer who lacks that specific barrier. The
rule essentially asks the owner to demonstrate: ``Because of
[Attribute/Characteristic/Reason], I have faced barriers in my
professional field that a peer with the comparable qualifications--who
does not have [Attribute/Characteristic/Reason]--did not face.''
The DBE program evaluates the actual economic harm faced by
business owners by determining how these disadvantages limit their
competitiveness within the free enterprise system. Although the
ultimate impact is on the business, the disadvantage stems from the
individual owner's experiences with discrimination, bias, or other
barriers. The PN must, therefore, establish how the individual owner's
economic trajectory (including their work history and advancement) has
been hindered relative to a peer with comparable qualifications.

[[Page 60892]]

This rulemaking does not require owners to obtain confidential,
private financial data of their competitors to prove that they received
less favorable outcomes. The rule only requires a narrative of the
owner's disadvantage, not a financial audit of a competitor. The
Department ensures that owners can establish economic disadvantage
through a preponderance of the evidence without seeking the private
financial data of competitors.
``Economic Disadvantage in Fact'' Provision
Comments
One policy organization noted that the IFR appears to omit the
former provision at Sec. 26.67(c)(2), which previously allowed
recipients to deny certification to an individual whose personal net
worth (PNW) fell below the regulatory cap but who nonetheless was not
``economically disadvantaged in fact.'' The commenter argued that
removing this provision eliminates a critical safeguard that allowed
certifiers to prevent wealthy individuals from qualifying for the
program merely by manipulating their assets to meet the technical PNW
threshold. The commenter recommended reinstating this provision to
ensure the program serves only those with genuine economic need.
DOT Response
The Department agrees with commenters who noted that the use of the
economic disadvantage in fact requirement is important to include as a
safeguard against the fraudulent use of the program. Requiring that
firms demonstrate economic disadvantage in fact is consistent with the
Department's effort to amend the DBE and ACDBE programs to ensure that
participation in these programs remains limited to individuals that are
in fact socially and economically disadvantaged. Therefore, the final
rule amends the regulation to ensure that economic disadvantage in fact
remains a standalone requirement as part of DBE and ACDBE
certification.
Specific Group Considerations
The Department received specific comments regarding the eligibility
and processing of distinct groups that have historically interacted
with the DBE and ACDBE programs through unique statutory or regulatory
provisions, including Alaska Native Corporations (ANCs), Tribes, Native
Hawaiian Organizations (NHOs), Small Business Administration (SBA) 8(a)
participants, and Service-Disabled Veteran-Owned Small Businesses
(SDVOSBs).
Alaska Native Corporations, Indian Tribes, and Native Hawaiian
Organizations
Comments
The Department received detailed comments from ANCs, Tribal
representatives, and advocacy groups arguing that their eligibility for
the DBE program is derived from specific statutory mandates that are
legally distinct from the race- and sex-based presumptions addressed in
the IFR. One commenter noted that ANC eligibility is based on 43 U.S.C.
1626(e)(4)(C), which provides that ANCs and their subsidiaries are
``deemed'' to be socially and economically disadvantaged for purposes
of Federal law.
Commenters asserted that this eligibility is a ``political
classification'' based on the government-to-government relationship
between the United States and sovereign Tribes, recognized in Morton v.
Mancari,\10\ rather than a racial classification subject to strict
scrutiny. Consequently, these commenters argued that ANCs, as well as
Tribally owned concerns and Native Hawaiian Organizations (NHO), should
be exempt from the requirement to submit PNs. They requested immediate
guidance confirming that these entities retain their certified status
without undergoing the individualized narrative process required for
other firms.
---------------------------------------------------------------------------

\10\ 417 U.S. 535 (1974).
---------------------------------------------------------------------------

DOT Response
In order to maintain consistency with the SBA's treatment of Indian
Tribes and NHOs legally recognized under Federal and State law,
representatives of these firms are exempt from the reevaluation and
narrative requirements. However, these firms and their representatives
must comply with all other certification requirements (e.g., business
size, control, PNW) under Sec. 26.63(c)(1). This is equally applicable
to the ACDBE program, which follows the certification standards of
Sec. 26.63(c). See Sec. 23.31(a). ANCs will continue to follow the
Sec. 26.63(c)(2) process for certification, which reflects their
recognition as disadvantaged under the Alaska Native Claims Settlement
Act.
The Department emphasizes that the process for Tribally owned
concerns, NHO-owned, and ANC-owned firms is based on the fact that
these businesses are owned by sovereign entities and not by
individuals. Individuals who are Native American, Native Hawaiian, or
Alaska Native and who are seeking ACDBE or DBE certification on behalf
of their individually owned (not Tribally owned) business are required
to submit a PN and must demonstrate both social and economic
disadvantage.
SBA 8(a) Program Participants
Comments
Several commenters urged the Department to grant automatic
reciprocity or a waiver of the PN requirement for firms currently
certified under SBA's 8(a) Business Development Program (8(a)).
Commenters noted that following the Ultima Servs. Corp. v. U.S. Dep't
of Agric.\11\ decision, the SBA already required SBA 8(a) participants
to submit individual social disadvantage narratives.
---------------------------------------------------------------------------

\11\ 683 F. Supp. 3d 745 (E.D. Tenn. 2023).
---------------------------------------------------------------------------

These commenters argued that requiring these same firms to undergo
a duplicative review by DOT recipients wastes administrative resources
and imposes unnecessary burdens on small businesses that have already
proven their disadvantage to a Federal agency. A commenter specifically
recommended that the Department amend Sec. 26.111 to extend DBE
certification to SBA 8(a) firms automatically for the duration of their
program term. Conversely, some commenters noted that the SBA's post-
Ultima process allows owners to cite race as a contributing factor to
their disadvantage and sought clarification on whether DOT would accept
SBA-approved narratives given the IFR's ``without regard to race or
sex'' language.
DOT Response
The Department declines to adopt automatic reciprocity for SBA 8(a)
certified firms. Although the SBA 8(a) program and the DBE program
share similar goals, they operate under different statutory authorities
and regulatory standards.
The Department's IFR requires a PN to establish social and economic
disadvantage based on ``individualized proof regarding specific
instances of economic hardship, social barriers, and denied
opportunities.'' Sec. 26.67(a)(1). Because the SBA's evidentiary
standards and certification procedures have diverged from the
Department's requirements under the IFR, UCPs must evaluate whether a
firm meets the specific standards of the DBE program. But the
Department acknowledges that financial documentation or other evidence
prepared for SBA certification may still be relevant; owners are
encouraged to use such existing documentation to support their DBE or
ACDBE reevaluation, provided it addresses the specific criteria in
Sec. 26.67.

[[Page 60893]]

Service-Disabled Veteran-Owned Small Businesses
Comments
Multiple commenters advocated for the inclusion of SDVOSBs in the
DBE program or suggested replacing the race-based presumptions with
preferences for veterans. Commenters argued that veterans face
significant employment and business barriers due to their service and
disability, which constitutes a race-neutral form of social
disadvantage. One commenter noted that they faced ``secondary''
disadvantage status behind race-based groups and that the elimination
of those presumptions creates an opportunity to prioritize veterans.
DOT Response
The statutory definition of ``socially and economically
disadvantaged individuals'' authorized by Congress for the DBE program
does not automatically include veterans as a presumptive group. The IFR
eliminates unconstitutional race- and sex-based presumptions and
requires all applicants to establish social and economic disadvantage
through individualized evidence. However, the Department emphasizes
that under the new case-by-case standard in Sec. 26.67, any
individual--including a veteran--may qualify as socially and
economically disadvantaged if the individual can demonstrate by a
preponderance of the evidence, that he or she has faced chronic and
substantial social disadvantage that has impeded business success. A
service-connected disability could be part of the factual basis for
such a claim of disadvantage, provided the owner meets the PNW cap and
other eligibility criteria.

11. Privacy and Confidentiality of Information (Sec. Sec. 26.109(a)
and (b), 26.68(e))

The Department received comments regarding the protection of
sensitive personal and financial information required under the new
individualized certification standards, as well as conflicting comments
advocating for the public disclosure of such information to ensure
program integrity.
Comments
Several commenters expressed concern that the IFR's PN and PNW
statement requirements significantly increase the volume of sensitive
data held by UCPs, raising the risk of unauthorized disclosure. A trade
association representing public transportation agencies noted that the
influx of personally identifiable information (PII) creates potential
disclosure risks under various State and Federal open records laws.
This association urged the Department to clarify that UCPs must
continue to safeguard PII in accordance with applicable laws to prevent
the exposure of owners' private financial and personal histories.
Other commenters echoed this concern, with one accounting firm
requesting explicit assurance from the Department that information
submitted for reevaluation would be used solely for assessment purposes
and treated as confidential. Another commenter described the
requirement to divulge personal histories of discrimination as an
``invasion of privacy.'' Similarly, a supplier argued that requiring
business owners to describe personal experiences of bias in writing
raises serious privacy concerns and risks ``re-traumatizing''
individuals who must relive harmful experiences to justify their
eligibility. This commenter warned that without clear confidentiality
standards, the process might discourage qualified owners from
participating.
Conversely, the Department received comments advocating for the
public disclosure of certification documents to deter fraud. A public
policy organization argued that the current lack of public transparency
in the certification process allows for potential abuse. This commenter
recommended that the Department amend the rule to require UCPs to post
approved PNs and PNW documents publicly on their websites with
sensitive identifiers redacted. They asserted that such transparency
would allow competing contractors to review and challenge questionable
certifications, thereby ensuring that only genuinely disadvantaged
businesses receive DBE status. Another commenter supported this view,
stating that the ability of other contractors to challenge a firm's
status is the clearest way to keep the process honest, and objected to
shielding this data from public review.
DOT Response
The Department acknowledges the privacy concerns raised by
stakeholders regarding the submission of PNs and financial
documentation. The IFR, while changing DBE eligibility standards, does
not alter the Department's longstanding commitment to protecting PII.
The Department reaffirms that UCPs are required to protect the
confidentiality of personal and financial information permitted by
Federal, State, and local law, consistent with the existing provisions
of Sec. Sec. 26.83(g) and 26.109(a)(2). Specifically, Sec.
26.109(a)(2) provides that notwithstanding any provision of State or
Federal law (e.g., Freedom of Information Act (FOIA), 5 U.S.C. 522),
certifiers must not release any information that may reasonably be
construed as confidential business information without the submitter's
written consent. This includes applications for certification and
supporting information submitted in a PN as confidential information
protected by this provision. To assist UCPs in maintaining compliance
with Federal confidentiality standards, the Department may draft
specific guidance regarding ensuring privacy of narrative information
in the future.
Regarding the requests to mandate public posting of owner
narratives and financial statements, the Department declines to adopt
this recommendation. In addition to the part 26 provisions cited above,
the Privacy Act and the FOIA generally protect personal financial
information and personnel-like files from mandatory public disclosure
to prevent unwarranted invasions of personal privacy. Publishing
redacted PNW statements and PNs of discrimination would likely deter
legitimate participation in the program due to privacy concerns, as
noted by other commenters. The Department relies on the expertise of
UCP certifiers and established oversight mechanisms, rather than public
crowdsourcing, to verify eligibility, prevent fraud, and ensure program
integrity.

12. The Reevaluation Process (Sec. Sec. 26.111 and 23.81)

Comments
Commenters raised significant practical concerns regarding the
reevaluation process. Stakeholders expressed deep concern regarding the
requirement in Sec. 26.111(c) for UCPs to complete reevaluations ``as
quickly as practicable'' without a defined deadline. Commenters argued
that this creates an indefinite period of uncertainty where firms that
meet the revised eligibility requirements are technically certified but
practically ineligible for goal credit, since the recipients' programs
would not yet be allowed to operate or utilize DBE goals. Some objected
to the provision stating that the decertification procedures of Sec.
26.87 do not apply. They argued this strips firms of due process
rights, such as notice and administrative hearing, before losing a
property interest in their certification.
Commenters noted confusion regarding firms certified in multiple
States. The FAQ guidance suggesting firms must go through the
reevaluation process in their Jurisdiction of Original

[[Page 60894]]

Certification (JOC) and then reapply for certification was described as
burdensome and contrary to the streamlining goals of the 2024 final
rule. Comments suggested that once a firm was recertified in its JOC,
all that the firm must do is notify other UCPs of that action to be
recertified there. A frequent request from commenters in many
categories was for the Department to provide standardized templates and
checklists for the PN and the PNW statement. Commenters were concerned
that without a DOT template, 53 different UCPs will develop 53
different standards, leading to chaos for interstate firms and
inconsistent determinations.
State agencies and UCPs commented that they lack the staffing and
resources to process thousands of PNs and PNW statements
simultaneously. One recipient projected that while larger agencies
might complete reviews in 60-90 days, smaller UCP members could require
6-12 months, creating a fragmented ``mosaic'' of compliance where
eligibility depends on geography rather than merit. One commenter noted
that without a deadline, some jurisdictions might delay reevaluation
indefinitely, effectively ending the program in those areas. Similarly,
a trade association expressed the concern that absent a deadline for
the submission of PNs, current DBE firms that do not submit PNs could
hold up the restart of the program for those who have already submitted
their documentation. Commenters suggested that the Department should
have allowed for a phased implementation or a ``grace period'' where
existing certifications remained valid while the new standards were
applied to applicants.
DOT Response
The Department agrees with commenters that an open-ended
reevaluation process is untenable and that a definitive deadline is
essential to prevent administrative paralysis and achieve programmatic
finality. To monitor actively the timely completion of these
reevaluations, to ensure uniformity of practice, and to reactivate the
goal setting process, the Department is codifying specific deadlines
and reporting requirements under 49 CFR 26.111(c), as well as
establishing a clear close-out mechanism for non-responsive firms under
Sec. 26.111(d).
UCPs must complete their reevaluations no later than December 24,
2026. The Department believes that December 24, 2026 is sufficient time
for UCPs to complete the reevaluation process, which has been in place
since October 3, 2025. A one-time three-month extension may be granted
by the Department for special circumstances, and only if requested in
advance of the reevaluation deadline. To apply for this extension, the
UCP must email the Department's Office of Small and Disadvantaged
Business Utilization (OSDBU) at <a href="/cdn-cgi/l/email-protection#4206000730272734232e3723362b2d2c3102262d366c252d34">[email&#160;protected]</a>.
After completing a reevaluation, each UCP must promptly email OSDBU
at <a href="/cdn-cgi/l/email-protection#f2b6b0b780979784939e8793869b9d9c81b2969d86dc959d84">[email&#160;protected]</a> and provide the following data:

1. Firms Maintaining Certification: The UCP must identify the
total number of DBEs that remain certified following the
reevaluation. In addition, the notice must include a declaration
that the UCP serves as the JOC for all retained DBEs;
2. Firms Removed for Ineligibility: The UCP must state the total
number of firms disqualified and removed from the program because
the owner failed to meet the required disadvantage criteria; and
3. Non-Responsive Firms: The UCP must report the total number of
DBE firms that were not processed during the reevaluation due to the
owner's failure to respond to the notice requiring the submission of
a PN with a PNW statement.

The Department reserves the right to review the UCP's reevaluation
process, including auditing any underlying documentation associated
with a reported firm, at its discretion.
Finally, under the newly added Sec. 26.111(d), UCPs will issue a
final written notice of nonresponse to any DBE that fails to submit its
documentation by March 24, 2027. These firms will be granted a final
90-day grace period to comply. If they fail to submit the required
documentation within this 90-day window, they will be automatically
disqualified. By codifying a 90-day grace period, paragraph (d)
resolves the administrative paralysis identified by commenters and
achieves three essential goals: due process, administrative finality,
and program resumption. First, it ensures due process by providing
under-resourced small businesses with a definitive, clearly
communicated window to submit their complex documentation, protecting
vulnerable firms from sudden, unexpected removal. Second, it guarantees
administrative finality by giving UCPs a uniform mechanism to remove
non-responsive firms automatically without enduring protracted
administrative proceedings. Third, it provides timelines to ensure that
the DBE and ACDBE programs fully resume in compliance with the revised
certification standards.
The reevaluation process does not involve a full-scale
recertification of current DBE firms. Under the rule, certified firms
must establish their owners' social and economic disadvantage through
the PN process. If an owner makes this showing successfully, it will be
retained in the certifier's program and in its directory without
change. If a firm cannot do so successfully, it will be disqualified
under the revised program.
Such a removal is not a decertification. A decertification involves
a finding that one of the elements of eligibility (e.g., business size,
ownership, control) that a firm demonstrated to obtain certification in
the first place was incorrect or overtaken by events, or that the firm
failed to cooperate with the certification process (e.g., failed to
submit a timely annual Declaration of Eligibility). A disqualification
under Sec. 26.111 is different. It reflects that a firm failed to
demonstrate that it met a new requirement established by this rule, the
same requirement that first-time applicant now must meet. Consequently,
the burden of proof and administrative due process provisions
associated with decertifications (Sec. Sec. 26.61 and 26.87) do not
apply.
The Department understands that the terminology in Sec. 26.111
created unintended ambiguity regarding the burden of proof applicable
to reevaluations and enforcement-based removals. In order to cure the
confusion regarding the burden of proof, the Department will amend
Sec. Sec. 26.111(a)(4) and 23.81(a)(4) by replacing the term
``decertified'' with ``disqualified'' and the term ``recertified'' with
``reevaluated'' thereby further clarifying that Sec. 26.87 procedures
do not apply.
The Department also adds language to Sec. Sec. 26.111(d) and
23.81(d) to clarify that UCPs must follow due process protections
outlined in Sec. 26.86(a) for disqualification decisions. Any
resulting disqualification letter must specifically detail the reasons
for the decision and include verbatim appeal instructions exactly as
they appear on the Department's web page.
The Department agrees with the commenters that requiring firms to
``reapply'' in other States after reevaluation by their JOC would be
unnecessarily burdensome and contrary to the streamlining goals of the
interstate certification process. Once the JOC reevaluates a firm under
the updated standards, other States should automatically accept that
decision upon simple notification, such as a letter or a screenshot
showing the firm's status in the JOC's updated DBE directory. The
receiving UCP must use this documentation to record and track whether
the out-of-State firm has been retained by its JOC. To prevent
bureaucratic gridlock, no further

[[Page 60895]]

requirements may be imposed by UCPs. If a firm does not seek to
reaffirm its interstate certification in another State within one year
of the date it was reevaluated by its JOC, the firm must follow the
regular Sec. 26.85 interstate certification procedure as if it were
seeking interstate certification for the first time in that State.
Consistent with the objective of minimizing bureaucratic delays,
the Department notes that during the reevaluation process, UCPs are not
permitted to refuse Uniform Certification Applications (UCA) from firms
seeking certification as a DBE or ACDBE, or pause applications that
were already in process. Nothing contained in the IFR or the final rule
provides UCP certifiers with the authority to deny the acceptance of
UCAs during the reevaluation process. Small businesses that were not
certified previously who meet the new disadvantaged criteria should not
be locked out of a program designed to assist them. Any pause or
refusal in processing UCAs prevents new competition and limits the
newly reconstituted pool of DBEs that prime contractors need to meet
future goals. The Department intends to keep the regulatory intent of
the program alive, and therefore, new applications should be
entertained by the UCP.
Certifiers are expected to process applications using the new
individualized criteria. New firms will be subject to the same
requirements as those presently in the program. They must submit a PN
and a current PNW statement. They must also complete the revised UCA
and submit all other required program documentation. The Department
maintains that a ``grace period'' allowing continued use of the race-
and sex-based presumptions would be legally indefensible given the
Department's determination that those presumptions are
unconstitutional. We agree that consistency among UCPs with respect to
firms certified in multiple States is vital, but it does not believe
that exact templates are appropriate for the PN, as the requirement
mandates an individualized presentation of unique facts and
circumstances that may not fit a rigid ``fill-in-the-blank'' format.
However, the Department will consider issuing guidance materials to
assist owners and UCPs in understanding the evidentiary standards
required. UCPs are strongly encouraged to use these Department-issued
resources to ensure a uniform standard of review and uniformity of
practice.

13. Regulatory Impact Analysis and Paperwork Reduction Act

Comments
The Department received detailed comments regarding the economic
analysis underlying the IFR, specifically challenging the estimated
costs, the calculation of paperwork burdens, and the consideration of
regulatory alternatives.
Several commenters challenged the Department's determination that
the IFR is not a ``major rule'' under the CRA. These commenters
asserted that the rule would result in an annual effect on the economy
of $100 million or more. One trade association argued that the
Department's own Regulatory Impact Analysis (RIA) estimates compliance
costs at approximately $91.9 million, and when combined with the
unquantified costs of market disruption, delayed projects, and lost
business opportunities, the total impact clearly exceeds the $100
million threshold.
Commenters also criticized the Department's cost-benefit analysis
as ``circular and arbitrary,'' arguing that the Department failed to
quantify the benefits of the rule or explain why quantification was
impossible. They contended that asserting ``constitutional compliance''
as a benefit that automatically outweighs nearly $100 million in direct
costs lacks evidentiary support and violates the principles of sound
regulatory analysis under Executive Order 12866.
Commenters specifically attacked the methodology used to estimate
the information collection burden under the PRA. One commenter noted
that the Department's estimate of 820,000 burden hours was based on
``the average of three stakeholder responses,'' arguing that a sample
size of three is statistically invalid for a population of over 40,000
firms. Small business owners stated that the Department underestimated
the time required to compile a PN and supporting documentation, with
some estimating it would take significantly longer than the
Department's projection, forcing them to hire outside consultants.
State agencies (UCPs) also commented that the IFR failed to account for
the administrative cost to States for hiring additional staff or
contractors to process the sudden influx of reevaluation submissions.
DOT Response
Several commenters challenged the cost-benefit analysis underlying
the IFR, asserting that the Department failed to quantify benefits or
justify compliance costs. The Department has reviewed these comments
and affirms that the IFR's economic analysis was sound at the time of
publication and remains valid. The cost estimates are based on the best
available data, including Bureau of Labor Statistics (BLS) wage rate
information and estimates derived from stakeholder input consistent
with standard Paperwork Reduction Act (PRA) methodology as outlined in
Section H.
The compliance costs identified in the IFR's approximately $95
million \12\ in one-time transitional costs--reflect the burden of
transitioning from the prior presumption-based system to an
individualized determination system. Those costs are accrued upon the
IFR's effective date and are attributable to the IFR, not this final
rule. This final rule imposes no additional compliance obligations and
therefore has no independent economic impact that would qualify it as a
major rule.
---------------------------------------------------------------------------

\12\ The aggregate economic impact of this rulemaking--
encompassing both the interim final rule and this final rule--
consists of approximately $95 million in one-time transitional
costs, primarily reflecting certification narrative burdens on DBE/
ACDBE firms ($91.9 million) and UCP reevaluation costs ($3.4
million), plus recurring annualized costs of approximately $1.8
million associated with ongoing reporting and program
administration. These quantified costs are more than offset by the
unquantifiable benefits of constitutional compliance, including
elimination of ongoing litigation risk, restoration of equal
protection principles in federally assisted contracting, and
improved program integrity through individualized determinations of
disadvantage.
---------------------------------------------------------------------------

Regarding the PRA burden estimates, the Department relied on the
best available data, given the need for immediate action. The
reevaluation process is a one-time event for existing firms, not a
recurring annual cost at this magnitude. The Department acknowledges
that some firms may choose to hire consultants to assist with the PN
but emphasizes that the PN is a statement of the owner's own
experiences, not a technical or legally complex document to be written
by consultants or legal experts. The Department also points out that
some DBE applicants already retain consultants to assist with their
applications, further reducing any marginal cost of consultants to
comply with this rule. The Department will monitor the actual burden
during the implementation phase and adjust future Information
Collection Requests (ICR) as necessary.

14. Alternatives Considered

Numerous commenters suggested that the Department should have
considered less disruptive alternatives to the immediate elimination of
presumptions.

[[Page 60896]]

Comments
Many stakeholders recommended that the Department transition the
DBE program to a race-neutral Small Business Enterprise (SBE) model,
similar to the existing SBE element in Sec. 26.39, which would
eliminate the need for complex social disadvantage narratives while
still aiding small firms. One commenter proposed transitioning to a
``microbusiness'' participation requirement defined by employee count
and gross receipts. Several commenters argued the Department should
have allowed existing certifications to remain valid until their
natural expiration date, applying the new standards only to applicants
to avoid market shock.
DOT Response
The Department considered these alternatives but determined that
they would not fulfill the statutory and constitutional mandates. The
statutes authorizing the DBE and ACDBE programs (e.g., the
Infrastructure Investment and Jobs Act) specifically require the
Department to assist ``socially and economically disadvantaged
individuals.'' Although the Department encourages SBE participation,
converting the entire program to a generic SBE model would ignore the
statutory requirement to address social disadvantage, which persists
independently of business size. The IFR preserves the statutory focus
on social disadvantage but requires individualized proof rather than
group presumptions. The Department rejected the option to
``grandfather'' existing certifications because doing so would allow
the Government to continue utilizing race- and sex-based presumptions
that it has determined are unconstitutional. The Department cannot
knowingly perpetuate a constitutional violation for the sake of
administrative convenience. Immediate reevaluation was necessary to
cure the constitutional defect.

15. Airport Concession DBE (ACDBE) Specific Issues (Part 23)

Comments
ACDBE stakeholders, including airports, trade associations, and law
firms representing concessionaires, raised concerns about the long-term
nature of concession leases. They noted that unlike construction
contracts, concession agreements often span many years, and abrupt
disqualifications could place concessionaires in breach of contract
regarding ACDBE participation requirements.
DOT Response
The Department recognizes the unique structure of airport
concessions. Like part 26, existing concession agreements are not
required to be modified by the IFR. However, participation by ACDBEs
that are disqualified cannot be counted toward future ACDBE goals. The
Department advises airport sponsors to work with concessionaires to
navigate the reevaluation period without penalizing firms for
regulatory changes outside their control, provided the concessionaire
acts in good faith.
Separately, the Department is making a technical correction to
change the heading of Sec. 23.35 back to ``Personal net worth,'' which
was retitled in error.
Conclusion
After careful consideration of the public comments received in
response to the IFR, the Department affirms that the immediate removal
of race- and sex-based presumptions from the DBE and ACDBE programs is
necessary to ensure these programs comply with the equal protection
guarantee of the Constitution. The Department acknowledges the
significant concerns raised by stakeholders regarding the
administrative burden of the reevaluation process, the temporary
suspension of contract goals, and the potential for market disruption
affecting small businesses. However, the Department concludes that
these transitional challenges do not outweigh the Government's
overriding obligation to eliminate unconstitutional racial and sex
classifications. The regulatory amendments implemented by the IFR, as
modified in this issuance, remain in effect with the minor
modifications described above.

IV. Regulatory Analyses and Notices

A. Executive Order 12866, 13563, and DOT Policies and Procedures

This final rule is a significant regulatory action under Executive
Order 12866, Regulatory Planning and Review, as supplemented by
Executive Order 13563, Improving Regulation and Regulatory Review.
Accordingly, the Office of Management and Budget (OMB) has reviewed it
under that Executive Order.
This final rule confirms the regulatory amendments implemented in
the IFR with only minor modifications, such as clarifying IFR concepts
like ``similarly situated,'' ``economically disadvantaged in fact,''
and deadlines for the reevaluation process. This rule is needed because
the Department's prior DBE regulations, which presumed social and
economic disadvantage based on race and sex, were determined to be
unconstitutional, necessitating regulatory action to replace
presumption-based eligibility with an individualized determination
process.
The Department analyzed the IFR in a regulatory impact analysis.
The Department's economic analysis for the IFR, available in the
rulemaking docket (DOT-OST-2025-0897), analyzed the costs and benefits
of transitioning from race- and sex-based presumptions to an
individualized determination system. That analysis remains the
operative economic assessment for the IFR. The Department received
comments questioning specific methodological choices, including the
sample size for burden hour estimates and the comparison with SBA 8(a)
program burden calculations. After review, the Department concludes
that its methodology is appropriate. The policy rationale articulated
in the IFR--that constitutional compliance benefits outweigh
transitional compliance costs--applies with equal force to this final
rule, which merely confirms the IFR with clarifying amendments.
The IFR came into force immediately upon publication in 2025. Since
then, recipients have already begun the reevaluation process and some
firms have already submitted personal narratives for this purpose.
Since the IFR is in effect, the appropriate baseline for the costs and
benefits of this final rule is today's conditions, after the IFR has
taken effect, rather than before it did. Since this final rule is no
more than a clarification and response to comments of the IFR and
therefore has no new economic impacts beyond those of the IFR, it has
negligible economic impact on its own.

B. Executive Order 14192 (``Unleashing Prosperity Through
Deregulation'')

The IFR and this final rule cumulatively will be considered one
Executive Order 14192 deregulatory action because the unquantified
benefits associated with constitutional compliance, elimination of
ongoing litigation risk, restoration of equal protection principles in
federally assisted contracting, and improved program integrity through
individualized determinations of disadvantage outweigh the quantified
costs.

C. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) of 1980 (5 U.S.C. 601, et
seq.) requires agencies to evaluate the potential effects of their
proposed and final rules on small businesses, small organizations,

[[Page 60897]]

and small governmental jurisdictions. Whenever an agency is required by
5 U.S.C. 553, or any other law, to publish general notice of proposed
rulemaking for any proposed rule, the agency must conduct and publish
for public comment a regulatory flexibility analysis. Because the
Department is not required to publish a proposed rulemaking for this
action, an analysis under the RFA is not required.

D. Executive Order 13132 (``Federalism'')

This final rule has been analyzed in accordance with the principles
and criteria contained in Executive Order 13132, Federalism, and the
rule satisfies the requirements of the Executive Order. This final rule
does not impose any requirement that: (1) has substantial direct
effects on the States, the relationship between the national government
and the States, or the distribution of power and responsibilities among
the various levels of government, (2) imposes substantial direct
compliance costs on State and local governments, or (3) preempts State
law.

E. Executive Order 13175 (``Consultation and Coordination With Indian
Tribal Governments'')

This rulemaking has been analyzed in accordance with the principles
and criteria contained in Executive Order 13175, Consultation and
Coordination with Indian Tribal Governments. Because this rulemaking
does not significantly or uniquely affect the communities of the Indian
Tribal governments or impose substantial direct compliance costs on
them, the funding and consultation requirements of Executive Order
13175 do not apply.

F. Unfunded Mandates Reform Act

The Unfunded Mandates Reform Act (UMRA) of 1995 (Pub. L. 104-4)
requires agencies to prepare a written assessment of the costs,
benefits, and other effects of proposed or final rules that include a
Federal mandate likely to result in expenditures by State, local, or
tribal governments, in the aggregate, or by the private sector, of more
than $100 million annually (adjusted annually for inflation with the
base year of 1995). This rulemaking would not result in annual State
expenditures exceeding the minimum threshold. The Department has
determined that the requirements of the Title II of the Unfunded
Mandates Reform Act of 1995 therefore do not apply to this rulemaking.

G. National Environmental Policy Act

The Department has analyzed the environmental impacts of this
action pursuant to the National Environmental Policy Act of 1969 (NEPA)
(42 U.S.C. 4321, et seq.) and has determined that it is categorically
excluded pursuant to DOT Order 5610.1D available at <a href="https://www.transportation.gov/mission/dots-procedures-considering-environmental-impacts">https://www.transportation.gov/mission/dots-procedures-considering-environmental-impacts</a>.
Categorical exclusions are actions identified in an agency's NEPA
implementing procedures that do not normally have a significant impact
on the environment and therefore do not require either an environmental
assessment (EA) or environmental impact statement (EIS). The purpose of
this rulemaking is to amend the Department's DBE and ACDBE regulations.
Section 9(f) of DOT Order 5610.1D states that a DOT Operating
Administration can use the categorical exclusions developed by another
Operating Administration. This action is covered by the categorical
exclusion listed in FTA implementing procedures, ``[p]lanning and
administrative activities that do not involve or lead directly to
construction, such as: . . . promulgation of rules, regulations,
directives . . .'' 23 CFR 771.118(c)(4). In analyzing the applicability
of a categorical exclusion, the agency must also consider whether
extraordinary circumstances are present that would warrant the
preparation of an EA or EIS. The Department does not anticipate any
environmental impacts, and there are no extraordinary circumstances
present in connection with this rulemaking.

H. Paperwork Reduction Act

The PRA of 1995 (Pub. L. 104-13, 49 U.S.C. 3501, 3507) requires
Federal agencies to obtain approval from OMB before undertaking a new
collection of information imposed on ten or more persons, or continuing
a collection previously approved by OMB that is set to expire.
This rule contains one additional modification to an information
collection requirement that was previously approved beyond the
information collections identified in the IFR, which is the MAP-21 DBE
data collection described below. The modifications to this collection
are burden reductions compared to the MAP-21 previously approved DBE
data collection and are parallel to the changes identified in the IFR
for ACDBEs identified as ``ACDBE Annual Report of percentages of ACDBEs
in various categories.'' The MAP-21 data collection does not impose any
additional reporting burdens beyond those that existed prior to the
IFR.
To ensure that the methodology for calculating cost burdens is
consistent with the most recent information collections for the DBE and
ACDBE programs, the Department is adjusting the cost burden information
for the burdens identified in the IFR. The time burdens remain
unchanged from the IFR. The Department is also modifying the time and
cost estimate under another existing information collection, the Moving
Ahead for Progress in the 21st Century Act (MAP-21) data collection for
DBEs, given that it is a parallel requirement to the information
collection entitled ``ACDBE Annual Report of percentages of ACDBEs in
various categories.'' The revised methodology for adjusting the costs
for the updated cost estimates in this final rule appears below, along
with an updated chart and itemized list of collection instruments
modified by the IFR and final rule.
The Department's cost estimates utilize NAICS codes for Business
and Financial Operations Occupations (NAICS 13-0000) for firm owner
burden calculations and Compliance Officer categories for recipient
burden calculations. These occupational categories were selected
because they most closely approximate the personnel who would undertake
the compliance activities required by this rule--specifically,
preparing personal narratives (firm owners) and reviewing certification
applications (agency compliance staff). The BLS wage data and the 1.62
multiplier for fully loaded compensation rates are consistent with
standard DOT practice for regulatory cost estimation based off of the
Bureau of Labor Statistics' Employer Costs for Employee Compensation
News Release.\13\
---------------------------------------------------------------------------

\13\ Bureau of Labor Statistics' Employer Costs for Employee
Compensation News Release (March 20, 2026), available at <a href="https://www.bls.gov/news.release/ecec.htm">https://www.bls.gov/news.release/ecec.htm</a>.
---------------------------------------------------------------------------

A recipient's employee's wage rate is based on BLS' estimate of a
Transit Agency Compliance Officer at $31.31/hour.\14\ The wage rate is
multiplied by 1.62 to get a fully loaded wage rate (i.e., compensation
rate) of $50.72 to account for the cost of employer-provided benefits.
The 1.62 loaded wage multiplier reflects the ratio of total
compensation to wages and salaries for private industry workers, as
reported in the Bureau of Labor Statistics' Employer Costs for Employee
Compensation

[[Page 60898]]

(ECEC) survey. According to the most recent ECEC data, wages and
salaries account for approximately 61.6 percent of total compensation,
implying that total compensation is roughly 1.62 times the base wage.
This multiplier accounts for employer-paid benefits including paid
leave, supplemental pay, insurance, retirement and savings
contributions, and legally required benefits such as Social Security,
Medicare, and unemployment insurance.
---------------------------------------------------------------------------

\14\ See Urban Transit Systems--May 2024 OEWS Industry-Specific
Occupational Employment and Wage Estimates available at <a href="https://www.bls.gov/oes/home.htm">https://www.bls.gov/oes/home.htm</a>.
---------------------------------------------------------------------------

The airport employee wage rate taken from BLS' estimate of a
Compliance Officer in Air Transportation at $41.95/hour.\15\ The wage
rate is multiplied by 1.62 to get a fully loaded wage rate
(compensation rate) of $67.95 to account for the cost of employer-
provided benefits.
---------------------------------------------------------------------------

\15\ See Support Activities for Air Transportation--May 2024
OEWS Industry-Specific Occupational Employment and Wage Estimates
available at <a href="https://www.bls.gov/oes/home.htm">https://www.bls.gov/oes/home.htm</a>.
---------------------------------------------------------------------------

For socially and economically disadvantaged business owners (SEDO),
this analysis uses a wage rate without additional benefits, as a SEDO
would pay the benefits to themself.

Occupational Employment and Wages, May 2024, 13-0000 Business and
Financial Operations Occupations (Major Group), Hourly Wage, 50 Percent
Median, $38.90 \16\
------------------------------------------------------------------------
Estimated cost
Requirement burden ($ Timing
million)
------------------------------------------------------------------------
Certification narratives 31.9 One-time.
(firms).
UCP reevaluations........... 4.15 One-time.
Interstate certification.... 0.16 One-time.
Bidders' list reporting..... 1.62 Annual.
ACDBE annual report......... 0.70 Annual.
MAP-21 data report.......... 0.70 Annual.
Setting overall goals....... 0.60 Every three years.
------------------------------------------------------------------------

i. Reapplication for DBE/ACDBE Certification Based on Individualized
Showing of Social Disadvantage (Certification Narratives)
---------------------------------------------------------------------------

\16\ See Occupational Employment and Wages, May 2024, 13-0000
Business and Financial Operations Occupations (Major Group), Hourly
Wage, 50 percent Median, $38.90, available at <a href="https://www.bls.gov/news.release/pdf/ocwage.pdf">https://www.bls.gov/news.release/pdf/ocwage.pdf</a>.
---------------------------------------------------------------------------

Respondents: Firms seeking to maintain their DBE/ACDBE
certification.
Estimated Number of Respondents: 41,000.
Frequency: One time per respondent.
Total Annual Burden Hours: 820,000 (one-time burden).
Total Annual Cost Burden: $31.898,000 (one-time burden).
ii. UCP Reevaluation of Applications for DBE/ACDBE Certification Based
on Individualized Showing of Social Disadvantage
Respondents: UCPs.
Estimated Number of Respondents: 53.
Frequency: One-time reevaluation of 41,000 applicant firms.
Total Annual Burden Hours: 82,000 (one-time burden).
Total Annual Cost Burden: $4,149,040 (one-time cost).
iii. Maintaining and Updating Bidders' Lists
Respondents: Federal Aviation Administration (FAA), Federal Highway
Administration (FHWA), and Federal Transit Administration (FTA) funding
recipients.
Estimated Number of Respondents: 1,639.
Frequency: 3 times per year.
Total Annual Burden Hours: 29,502.
Total Annual Cost Burden: $1,619,156.
iv. ACDBE Annual Report of Percentages of ACDBEs in Various Categories
Respondents: State Departments of Transportation, District of
Columbia, U.S. Virgin Islands, and Puerto Rico.
Estimated Number of Respondents: 53.
Frequency: Once per year.
Total Annual Burden Hours: 13,780.
Total Annual Cost Burden: $698,921.
v. Reporting Percentages of DBEs in Various Categories (MAP-21 Data
Report)
Estimated Number of Respondents: 53.
Frequency: Once per year.
Total Annual Burden Hours: 13,780.
Total Annual Cost Burden: $698,921.
vi. Setting Overall Goals for DBE Participation in DOT-Assisted
Contracts
Respondents: DOT funding recipients.
Estimated Number of Respondents: 1,639.
Frequency: Once every three years.
Total Annual Burden Hours: 10,927.
Total Annual Cost Burden: $599,987.
vii. Providing Evidence of Certification to an Additional State When a
Firm Certified in Its Home State Applies to Another State for
Certification (Interstate Certification)
Respondents: DBE/ACDBE firms applying for interstate certification.
Estimated Number of Respondents: 4,100.
Frequency: Once.
Total Annual Burden Hours: 4,100.
Total Annual Cost Burden: $159,490 (one-time cost).
Given that the modifications to the existing collection instruments
as identified in the IFR cover modifications to existing information
collections covered by OMB Control No. 2105-0585 and No. 2105-0586, the
Department's information collection request submitted in conjunction
with this final rule will cover the collection instruments from both
information collections.

I. Congressional Review Act

The Department will submit a report containing this rule and other
required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States. This
rule is not a ``major rule'' as defined by 5 U.S.C. 804(2).

List of Subjects in 49 CFR Parts 23 and 26

Administrative practice and procedure, Airports, Civil rights,
Government contracts, Grant programs--transportation, Mass
transportation, Reporting and recordkeeping requirements,
Transportation.

[[Page 60899]]

Issued at Washington, DC.
Sean P. Duffy,
Secretary of Transportation.

For the reasons stated in the preamble, the Department of
Transportation amends 49 CFR parts 23 and 26 as follows:

PART 23--PARTICIPATION OF DISADVANTAGED BUSINESS ENTERPRISE IN
AIRPORT CONCESSIONS

0
1. The authority for part 23 continues to read as follows:

Authority: 49 U.S.C. 47107 and 47113; 42 U.S.C. 2000d; 49
U.S.C. 322; E.O. 12138, 44 FR 29637, 3 CFR, 1979 Comp., p. 393.

0
2. Amend Sec. 23.3 by revising the definition of ``Socially and
economically disadvantaged individual'' to read as follows:

Sec. 23.3 What do the terms used in this part mean?

* * * * *
Socially and economically disadvantaged individual means any
individual who is a citizen (or lawfully admitted permanent resident)
of the United States and who a certifier finds to be socially and
economically disadvantaged on a case-by-case basis. A determination
that an individual is socially and economically disadvantaged must not
be based in whole or in part on a presumption based on race or sex. For
that reason, all owners may qualify as socially and economically
disadvantaged only if they meet the relevant criteria described in
Sec. 26.67 of this subtitle.
* * * * *

0
3. Amend Sec. 23.35 by revising the section heading to read as
follows:

Sec. 23.35 Personal net worth.

0
4. Amend Sec. 23.81 by:
0
a. Adding a heading to paragraph (a);
0
b. Revising paragraph (a)(4);
0
c. Adding a heading to paragraph (b);
0
d. Revising paragraph (c); and
0
e. Adding paragraph (d).
The additions and revisions read as follows:

Sec. 23.81 ACDBE reevaluation process.

(a) Reevaluation. * * *
(4) Issue a written decision to each firm reevaluated pursuant to
paragraph (a)(3) of this section, stating either that it has been
retained as an ACDBE or has been disqualified from the ACDBE program.
For disqualified firms, the decision must follow the requirements of
Sec. 26.86(a) of this subtitle.
(b) Relationship to 49 CFR 26.87. * * *
(c) Deadline for completion. Each UCP must complete the
reevaluation process required under this section no later than December
24, 2026.
(1) Extension. A UCP may request a one-time extension of up to 90
days to complete the reevaluation process. The Office of Small and
Disadvantaged Business Utilization (OSDBU) may grant this extension if
it determines that good cause exists. UCPs must request extensions in
advance of the reevaluation deadline.
(2) Notice of completion. Following the completion of the
reevaluation process, each UCP must promptly email the Department's
OSDBU at <a href="/cdn-cgi/l/email-protection#6d292f281f08081b0c01180c190402031e2d090219430a021b">[email&#160;protected]</a>. Within three business days of
emailing OSDBU, the UCP must send a copy of the email to all recipients
of DOT funding (certifying and non-certifying agencies) within its
jurisdiction. The email must provide the following data:
(i) Total ACDBEs that remain certified. The number of ACDBEs that
remained certified following the reevaluation, including a
certification that the UCP is the Jurisdiction of Original
Certification (JOC) that certified the ACDBEs;
(ii) Total ACDBEs disqualified. The number of ACDBEs disqualified
because an owner failed to meet the requirements of Sec. 26.67 of this
subtitle; and
(iii) ACDBEs not processed due to nonresponse. The number of ACDBEs
that the UCP did not reevaluate because the owner failed to respond to
the notice requiring the submission of Personal Narratives (PNs) and
PNW statements.
(3) Right of review. The Department reserves the right to review
the UCP's reevaluation process and the underlying documentation for any
firm reported under paragraph (c)(2) of this section.
(d) Nonresponsive firms. Any ACDBE that fails to submit its owner's
PN and PNW statement by the date the UCP completes its reevaluation
process, as reported to the Department under paragraph (c)(2) of this
section, must be issued a written notice of nonresponse by the UCP. The
ACDBE has until March 24, 2027 to submit the PN and PNW statement to
the UCP. If the UCP is granted an extension under paragraph (c)(1) of
this section, the ACDBE must submit the owner's PN and PNW statement
within 90 days of the UCP's extended deadline. Any firm that fails to
submit the required documentation by the applicable deadline provided
in this paragraph (d) will be automatically disqualified by the UCP
without further administrative proceedings. The UCP need only issue a
NOD, under Sec. 26.68(a) of this subtitle, informing the firm that it
has been disqualified for failure to meet the requirements of Sec.
26.67 of this subtitle.

PART 26--PARTICIPATION BY DISADVANTAGED BUSINESS ENTERPRISES IN
DEPARTMENT OF TRANSPORTATION FINANCIAL ASSISTANCE PROGRAMS

0
5. The authority for part 26 continues to read as follows:

Authority: 23 U.S.C. 304 and 324; 42 U.S.C. 2000d, et seq.; 49
U.S.C. 47113, 47123; Sec. 1101(b), Pub. L. 114-94, 129 Stat. 1312,
1324 (23 U.S.C. 101 note); Sec. 150, Pub. L. 115-254, 132 Stat. 3215
(23 U.S.C. 101 note); Pub. L. 117-58, 135 Stat. 429 (23 U.S.C. 101
note).

0
6. Amend Sec. 26.5 by revising the definition of ``Socially and
economically disadvantaged individual'' to read as follows:

Sec. 26.5 Definitions.

0
7. Amend Sec. 26.63 by revising paragraph (c)(1) to read as follows:

Sec. 26.63 General certification rules.

* * * * *
(c) * * *
(1) Indian Tribes and NHOs. A firm that is owned by an Indian Tribe
or Native Hawaiian organization (NHO), rather than by Indians or Native
Hawaiians as individuals, is eligible if the firm and its
representatives meet all other certification requirements in this part
(e.g., Size, Control, PNW). The officials that control these firms are
not required to submit a Sec. 26.67 personal narrative or participate
in the Sec. 26.111 mandatory reevaluation process.
* * * * *

0
8. Revise Sec. 26.67 to read as follows:

Sec. 26.67 Social and economic disadvantage.

(a) Non-presumptive disadvantage. Except as stated in Sec.
26.63(c), all applicable owner(s) must demonstrate

[[Page 60900]]

social and economic disadvantage (SED) affirmatively based on their own
experiences and circumstances within American society, and without any
presumptions based on race or sex.
(1) To satisfy the SED requirement and ensure all determinations of
disadvantage are not based in whole or in part on a presumption of
disadvantage based on race or sex, an owner must provide the certifier
with a Personal Narrative (PN) that establishes the existence of
disadvantage by a preponderance of the evidence based on individualized
proof regarding specific instances of economic hardship, social
barriers, or denied opportunities that impeded the owner's progress or
success in education, employment, or business, including obtaining
financing on terms available to non-disadvantaged individuals with
comparable qualifications.
(2) The PN must identify at least one objective basis for the
owner's disadvantaged status. The basis may be any identifiable status
or condition. The PN must describe this objective distinguishing
feature (ODF) in sufficient detail to justify the owner's conclusion
that it prompted economic hardship, social barriers, or denied
opportunities that the owner experienced.
(3) The PN must state how and to what extent the impediments caused
the owner economic harm, including a full description of the type and
magnitude.
(4) The owner must attach to the PN a current PNW statement and any
other financial information he considers relevant. If a certifier has a
reasonable basis to believe that an owner who submits a PNW statement
that is below the current PNW cap is not economically disadvantaged,
the certifier may determine that the individual is not economically
disadvantaged in fact under paragraph (b) of this section.
(b) Economically disadvantaged in fact. The certifier may conclude
that a reasonable person would not consider the owner economically
disadvantaged in fact (EDIF) compared to non-disadvantaged individuals
with comparable qualifications.
(1) Evidence to consider. There are no limitations or exclusions.
The certifier may consider individual's assets, income, access to
credit and capital. (e.g., disproportionately expensive homes; premium
luxury personal property; high-value stocks or retirement funds;
unearned assets; substantial trust holdings). This includes avoiding
the free use of, or ready access to, the benefits of such wealth. The
certifier need only demonstrate ``ballpark'' values based on available
evidence.
Example 1 to paragraph (b)(1): An owner of an engineering firm has,
or enjoys the benefits of, excessively high income of $X; an exorbitant
home worth approximately $Y; substantial interests in outside
businesses Q, R, and S; four rental properties of aggregate value $Z;
holds a high-value retirement account worth approximately $V.
(2) [Reserved]

0
9. Amend Sec. 26.111 by:
0
a. Adding a heading to paragraph (a);
0
b. Revising paragraph (a)(4);
0
c. Adding a heading to paragraph (b);
0
d. Revising paragraph (c); and
0
e. Adding paragraph (d).
The additions and revisions read as follows:

Sec. 26.111 The DBE reevaluation process

(a) Reevaluation. * * *
(4) Issue a written decision to each firm reevaluated pursuant to
paragraph (a)(3) of this section, stating either that it has been
retained as a DBE or has been disqualified from the DBE program. For
disqualified firms, the decision must follow the requirements of Sec.
26.86(a).
(b) Relationship to Sec. 26.87. * * *
(c) Deadline for completion. Each UCP must complete the
reevaluation process required under this section no later than December
24, 2026.
(1) Extension. A UCP may request a one-time extension of up to 90
days to complete the reevaluation process. The Office of Small and
Disadvantaged Business Utilization (OSDBU) may grant this extension if
it determines that good cause exists. UCPs must request extensions in
advance of the reevaluation deadline.
(2) Notice of completion. Following the completion of the
reevaluation process, each UCP must promptly email the Department's
OSDBU at <a href="/cdn-cgi/l/email-protection#5014121522353526313c253124393f3e2310343f247e373f26">[email&#160;protected]</a>. The email must clearly state that
the reevaluation process is complete for all UCP members, not just a
subset of certifiers. Within three business days of emailing OSDBU, the
UCP must send a copy of the email to all recipients of DOT funding
(certifying and non-certifying agencies) within its jurisdiction. The
email must provide the following data:
(i) Total DBEs that remain certified. The number of DBEs that
remained certified following the reevaluation, including a
certification that the UCP is the Jurisdiction of Original
Certification (JOC) that certified the DBEs;
(ii) Total DBEs disqualified. The number of DBEs disqualified
because an owner failed to meet the requirements of Sec. 26.67; and
(iii) DBEs not processed due to nonresponse. The number of DBEs
that the UCP did not reevaluate because the owner failed to respond to
the notice requiring the submission of Personal Narratives (PNs) and
Personal Net Worth (PNW) statements.
(3) Right of review. The Department reserves the right to review
the UCP's reevaluation process and the underlying documentation for any
firm reported under paragraph (c)(2) of this section.
(d) Non-responsive firms. Any DBE that fails to submit its owner's
PN and PNW statement by the date the UCP completes its reevaluation
process, as reported to the Department under paragraph (c)(2) of this
section, must be issued a written notice of nonresponse by the UCP. The
DBE has until March 24, 2027 to submit the PN and PNW statement to the
UCP. If the UCP is granted an extension under paragraph (c)(1) of this
section, the DBE must submit the PN and PNW statement within 90 days of
the UCP's extended deadline. Any firm that fails to submit the required
documentation by the applicable deadline provided in this paragraph (d)
will be automatically disqualified by the UCP without further
administrative proceedings. The UCP need only issue a NOD, under Sec.
26.86(a), informing the firm that it has been disqualified for failure
to meet the requirements of Sec. 26.67.

[FR Doc. 2026-19688 Filed 9-24-26; 8:45 am]
BILLING CODE 4910-9X-P

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