Disadvantaged Business Enterprise Program and Disadvantaged Business Enterprise in Airport Concessions Program Implementation Modifications

<RULE> DEPARTMENT OF TRANSPORTATION <SUBAGY>Office of the Secretary of Transportation</SUBAGY> <CFR>49 CFR Parts 23 and 26</CFR> <DEPDOC>[Docket No. DOT-OST-2025-0897]</DEPDOC> <RIN>RIN 2105-AF33</RIN> <SUBJECT>Disadvantaged Business Enterprise Program and Disadvantaged Business Enterprise in Airport Concessions Program Implementation Modifications</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Office of the Secretary of Transportation (OST), U.S. Department of Transportation (DOT). <HD SOURCE="HED">ACTION:</HD> Interim final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> This interim final rule (IFR) ensures that the U.S. Department of Transportation (DOT or Department) operates its Disadvantaged Business Enterprise (DBE) and Airport Concession Disadvantaged Business Enterprise (ACDBE) Programs (collectively, Programs) in a nondiscriminatory fashion—in line with law and the U.S. Constitution. The IFR removes race- and sex-based presumptions of social and economic disadvantage that violate the U.S. Constitution. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This IFR is effective October 3, 2025. Comments must be received on or before November 3, 2025. To the extent practicable, DOT will consider late-filed comments. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> You may submit comments identified by the docket number DOT-OST-2025-0897 by any of the following methods: • <E T="03">Federal Rulemaking Portal: http://www.regulations.gov.</E> Follow the online instructions for submitting comments. • <E T="03">Mail:</E> U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE, Washington, DC 20590. • <E T="03">Hand Delivery:</E> U.S. Department of Transportation, Docket Operations, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE, Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. <E T="03">Instructions:</E> All submissions must include the agency name, docket name, and docket number DOT-OST-2025-0897 or Regulatory Identifier Number (RIN) 2105-AF33 for this rulemaking. DOT solicits comments from the public to inform its rulemaking process. DOT posts these comments, without edit, including any personal information the commenter provides, to <E T="03">www.regulations.gov,</E> as described in the system of records notice (DOT/ALL-14 FDMS), which can be reviewed at <E T="03">www.dot.gov/privacy.</E> <E T="03">Docket:</E> For access to the docket to read background documents or comments received, go to <E T="03">http://www.regulations.gov</E> at any time or to U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE, Washington, DC 20950, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. <E T="03">Confidential Business Information:</E> Confidential Business Information (CBI) is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA; 5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this IFR contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this IFR, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” Submissions containing CBI should be sent to the individual listed in the <E T="02">For Further Information Contact</E> section below. Any commentary that OST receives that is not specifically designated as CBI will be placed in the public docket for this rulemaking. <HD SOURCE="HD1">Electronic Access and Filing</HD> A copy of the IFR, all comments received, and all background material may be viewed online at <E T="03">http://www.regulations.gov.</E> Electronic retrieval help 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 <E T="03">http://www.ofr.gov</E> and the Government Publishing Office's website at <E T="03">http://www.gpo.gov.</E> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Peter Constantine, Office of the General Counsel, Office of the Secretary, U.S. Department of Transportation, 1200 New Jersey Avenue SE, Washington, DC 20590 at (202) 658-9670 or <E T="03">peter.constantine@dot.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Introduction</HD> Spanning nearly 40 years, the Department's DBE and ACDBE programs are small business initiatives intended to level the playing field for businesses seeking to participate in federally assisted contracts and in airport concessions. Rooted in a desire to give small businesses a fair shake in the process, the Programs must balance a desire to help the small business community with an overriding government obligation to serve the public. The government must undertake all these efforts consistent with law—including constitutional nondiscrimination requirements that establish the conditions for national harmony and unity. This IFR advances the administration's goals of nondiscrimination, fairness, and excellence in serving the American public. Although the Programs aim to assist small businesses owned and controlled by “socially and economically disadvantaged individuals,” Congress has mandated by statute that DOT treat certain individuals—women and members of certain racial and ethnic groups—as “presumed” to be disadvantaged. <SU>1</SU> <FTREF/> Other individuals do not benefit from that statutory presumption. This means that two similarly situated small business owners may face different standards for entering the program, based solely on their race, ethnicity, or sex. <FTNT> <SU>1</SU>  Congress has provided that: (1) “women shall be presumed to be socially and economically disadvantaged individuals”; and (2) the term “socially and economically disadvantaged individuals” should otherwise be given the meaning given by section 8(d) of the Small Business Act and its implementing regulations. <E T="03">See</E> Infrastructure Investment and Jobs Act, Public Law 117-58, 11101(e)(2) (B) (2021) (DBE program for highway and transit funding); 49 U.S.C. 47107(e)(1) (ACDBE program); 49 U.S.C. 47113(a)(2) (DBE program for airport funding). Section 8(d) of the Small Business Act and its implementing regulations create a rebuttable presumption that “Black Americans,” “Hispanic Americans,” “Native Americans,” “Asian Pacific Americans,” and “Subcontinent Asian Americans” are disadvantaged. <E T="03">See</E> 15 U.S.C. 637(d)(3); 13 CFR 124.103(b)(1). </FTNT> 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. <SU>2</SU> <FTREF/> 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 prohibits DOT from mandating the use of presumptions with respect to contracts on which the two plaintiff entities bid. DOT has implemented the injunction by requiring funding recipients to remove DBE contract goals from any contracts on which the plaintiffs intend to bid. <FTNT> <SU>2</SU>   <E T="03">Mid-America Milling Co.</E> v. <E T="03">U.S. Dep't of Transp.,</E> No. 3:23-cv-00072, 2024 WL 4267183 (Sept. 23, 2024). </FTNT> On January 20, 2025, the President issued Executive Order 14151, <E T="03">Ending Radical and Wasteful Government DEI Programs and Preferencing,</E> which affirmed that “Americans deserve a government committed to serving every person with equal dignity and respect” and directed agencies to recommend actions to align their programs and activities with this policy. On January 21, 2025, the President issued Executive Order 14173, <E T="03">Ending Illegal Discrimination and Restoring Merit-Based Opportunity,</E> which ordered agencies to “terminate all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements.” On March 21, 2025, the Attorney General issued a memorandum to all Federal agencies on implementing these Executive Orders. <SU>3</SU> <FTREF/> The Attorney General noted that “federal policies that give preference to job applicants, employees, or contractors based on race or sex trigger heightened scrutiny under the Constitution's equal protection guarantees and can only survive in rare circumstances.” The Attorney General directed all Federal agencies immediately to “[d]iscontinue any policies that establish numerical goals, targets, or quotas based on race or sex,” and to “[r]emove any contracting or funding requirement or guidance that ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 95k characters. 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