2024-14318. Disadvantaged Business Enterprise and Airport Concession Disadvantaged Business Enterprise Program Implementation Modifications; Corrections

AGENCY:

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

ACTION:

Correcting amendments.

SUMMARY:

The U.S. Department of Transportation (DOT or Department) is correcting a final rule that appeared in the Federal Register on April 9, 2024, concerning the Disadvantaged Business Enterprise (DBE) and Airport Concession Disadvantaged Business Enterprise (ACDBE) program regulations.

DATES:

Effective on July 3, 2024.

FOR FURTHER INFORMATION CONTACT:

For questions related to the final rule or general information about the DBE and ACDBE Program regulations, please contact Marc D. Pentino, Associate Director, Disadvantaged Business Enterprise Programs Division, Departmental Office of Civil Rights, Office of the Secretary, U.S. Department of Transportation, 1200 New Jersey Avenue SE, Room W78-302, Washington, DC 20590 at 202-366-6968/ [e-mail] or Lakwame Anyane-Yeboa, ACDBE and DBE Compliance Lead, Disadvantaged Business Enterprise Programs Division, Departmental Office of Civil Rights, Office of the Secretary, U.S. Department of Transportation, 1200 New Jersey Avenue SE, Room W78-103, Washington, DC 20590, at 202-366-9361/ [e-mail]. Questions concerning part 23 amendments should be directed to Marcus England, Office of Civil Rights, National Airport Civil Rights Policy and Compliance (ACR-4C), Federal Aviation Administration, 600 Independence Ave. SW, Washington, DC 20591 at 202-267-0487/ [e-mail] or Nicholas Giles, Office of Civil Rights, National Airport Civil Rights Policy and Compliance (ACR-4C), Federal Aviation Administration, 600 Independence Ave. SW, Washington, DC 20591, at 202-267-0201/ [e-mail]. Office hours are from 8 a.m. to 4:30 p.m., E.T., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

Background

The Department identified technical errors in the Federal Register Document 2024-05583 published in the Federal Register on April 9, 2024 (89 FR 24898); “Disadvantaged Business Enterprise and Airport Concession Disadvantaged Business Enterprise Program Implementation Modifications”. This document corrects technical/typographical errors. It also clarifies that the current personal net worth (PNW) limit as of May 9, 2024 is $2.047 million, as detailed in sections §§ 23.35(a) and 26.68(a) and as indicated in the preamble to the final rule. Adjustments to this limit will start on May 9, 2027, based on the formula in sections §§ 23.35(b), (c) and 26.68(d). For FTA-assisted programs, FTA Tier II recipients do not need to set goals if they operate a race-neutral DBE program. Additionally, this document clarifies that Good Faith Efforts are required in certain situations described in 26.53(g).

List of Subjects in 49 CFR Part 23 and 26

• Administrative practice and procedure
• Airports
• Civil Rights
• Government contracts
• Grant programs—transportation; Mass transportation
• Minority Businesses
• Reporting and recordkeeping requirements

Accordingly, 49 CFR parts 23 and 26 are corrected by making the following correcting amendments.

PART 23—PARTICIPATION OF DISADVANTAGED BUSINESS ENTERPRISE IN AIRPORT CONCESSIONS

1. The authority citation for part 23 is revised 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.

2. Revise § 23.35 to read as follows:

§ 23.35

What role do business development and mentor-protégé programs have in the DBE program?

(a) An owner whose PNW exceeds $2,047,000 is not presumed economically disadvantaged.

(b) The Department will adjust the PNW cap by May 9, 2027 by multiplying $1,600,000 by the growth in total household net worth since 2019 as described by “Financial Accounts of the United States: Balance Sheet of Households (Supplementary Table B.101.h)” produced by the Board of Governors of the Federal Reserve ( https://www.federalreserve.gov/​releases/​z1/​), and normalized by the total number of households as collected by the Census in “Families and Living Arrangements” ( https://www.census.gov/​topics/​families/​families-and-households.html) to account for population growth. The Department will adjust the PNW cap every 3 years on the anniversary of the adjustment date described in this section. The Department will post the adjustments on the Departmental Office of Civil Rights' web page, available at https://www.Transportation.gov/​DBEPNW. Each such adjustment will become the currently applicable PNW limit for purposes of this regulation.

(c) The Department will use formula 1 to this paragraph (c) to adjust the PNW limit:

Formula 1 to Paragraph (c)

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

3. The authority citation 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).

4. Revise § 26.5 section heading to read as follows:

§ 26.5

Definitions.

* * * * *

§ 26.29

[Amended]

5. In § 26.29 amend paragraph (f) by adding the word “all” before text “lower-tier subcontractors”.

§ 26.31

[Amended]

6. In § 26.31, in the second sentence of paragraph b, removing the citation “§ 26.81(n)(1) and (3)” and adding the citation “§ 26.73(a)” in its place.

7. In § 26.45, revise paragraph (a)(2) to read as follows:

§ 26.45

How do recipients set overall goals?

(a) * * *

(2) If you are an FTA Tier II recipient who intends to operate a race-neutral DBE program, or if you are an FAA recipient who reasonably anticipates awarding $250,000 or less in FAA prime contract funds in a Federal fiscal year, you are not required to develop overall goals for FTA or FAA, respectively, for that Federal fiscal year.

* * * * *

8. In § 26.53, revise paragraph (g) to read as follows:

§ 26.53

What are the good faith efforts procedures recipients follow in situations where there are contract goals?

* * * * *

(g) When a DBE subcontractor or any portion of its work is terminated by the prime contractor as provided in paragraph (f) of this section, or the firm fails to complete its work on the contract for any reason, including when work committed to a DBE is not countable or reduced due to overestimations made prior to award, the prime contractor must use good faith efforts to include additional DBE participation to the extent needed to meet the contract goal. The good faith efforts shall be documented by the contractor. If the recipient requests documentation under this provision, the contractor shall submit the documentation within 7 days, which may be extended for an additional 7 days, if necessary, at the request of the contractor, and the recipient shall provide a written determination to the contractor stating whether or not good faith efforts have been demonstrated.

* * * * *

§ 26.55

[Amended]

9. Amend § 26.55 by:

a. In paragraph (e)(2)(ii), by removing the text “and-operates” and adding the text “and operates” in its place: and

b. In paragraph (e)(2)(iv)(B), by removing the text “, operating, or maintaining” and adding the text “and operating” in its place.

10. In § 26.65, revise paragraph (b) to read as follows:

§ 26.65

Business Size Determinations.

* * * * *

(b) Statutory Cap. Even if a firm is a small business under paragraph (a) of this section, it is ineligible to perform DBE work on FHWA or FTA assisted contracts if its affiliated annual gross receipts, as defined in 13 CFR 121.104, averaged over the firm's previous three fiscal years exceed $30.72 million (as of March 1, 2024). The Department will adjust this amount annually and post the adjusted amount on its website available at https://www.transportation.gov/​ DBEsizestandards.

§ 26.67

[Amended]

11. In § 26.67, in the last sentence of paragraph (a)(3)(iv), remove the text “paragraph (e)” and add the text “paragraph (d)” in its place.

12. In § 26.68, revise paragraphs (a) and (d) to read as follows:

§ 26.68

Personal net worth.

(a) General. An owner whose PNW exceeds $2,047,000 is not presumed economically disadvantaged. The Department will adjust the PNW cap pursuant to paragraph (d) of this section.

* * * * *

(d) Regulatory adjustments. (1) The Department will adjust the PNW cap by May 9, 2027 by multiplying $1,600,000 by the growth in total household net worth since 2019 as described by “Financial Accounts of the United States: Balance Sheet of Households (Supplementary Table B.101.h)” produced by the Board of Governors of the Federal Reserve ( https://www.federalreserve.gov/​releases/​ z1 /), and normalized by the total number of households as collected by the Census in “Families and Living Arrangements” ( https://www.census.gov/​topics/​families/​families-and-households.html) to account for population growth. The Department will adjust the PNW cap every 3 years on the anniversary of the adjustment date described in this section. The Department will post the adjustments on the Departmental Office of Civil Rights' web page, available at https://www.Transportation.gov/​ DBEPNW. Each such adjustment will become the currently applicable PNW limit for purposes of this regulation.

(2) The Department will use formula 1 to this paragraph (d)(2) to adjust the PNW limit:

Formula 1 to Paragraph (d)

* * * * *

13. Amend § 26.81 by:

a. Revising section heading; and

b. In paragraph (d) removing the phrase “home state” and adding in its place the phrase “Jurisdiction of Original Certification”.

The revision reads as follows:

§ 26.81

Unified Certification Programs.

* * * * *

§ 26.83

[Amended]

14. Amend § 26.83 by:

a. In paragraph (c)(2), removing phrase “provided in Appendix F to this part” and adding phrase “available at https://transportation.gov/​DBEFORMS ” in its place;

b. In paragraph (d) removing the word “recipient” wherever it appears and adding the word “certifier” in its place;

c. In paragraph (i) removing the word “recipient” and adding the word “certifier” in its place; and

d. Removing paragraph (l)(2) and redesignating paragraph (l) introductory text as paragraph (l)(1) and paragraph (l)(1) as paragraph (l)(2).

§ 26.85

[Amended]

15. Amend § 26.85 by:

a. In paragraph (c)(1), removing the phrase “A cover letter with its application that specifies that the DBE is applying for interstate certification” and adding the phrase “A cover letter that specifies that the DBE is applying for interstate certification” in its place;

b. In paragraph (h)(6),

i. Removing the phrase “this paragraph (h)(6)” and adding the phrase “paragraph (h)” in its place; and

ii. Removing the text “26.87(e)(6) (failure to cooperate)” and adding the text “26.109(c) (failure to cooperate)” in its place.

16. Amend § 26.87 by revising paragraphs (h) and (j) to read as follows:

§ 26.87

Decertification.

* * * * *

(h) Status of firm during proceeding. A DBE remains certified until the certifier issues a NOD.

* * * * *

(j) Consequences. Decertification has the following effects on contract and overall goals and DBE participation:

(1) When a prime contractor has made a commitment to use a DBE, but a subcontract has not been executed before the certifier issues the NOD as provided for in paragraph (g) of this section, the committed firm does not count toward the contract goal. The recipient must direct the prime contractor to meet the contract goal with an eligible DBE or demonstrate to the recipient that it has made good faith efforts to do so.

(2) When the recipient has made a commitment to using a DBE prime contractor, but a contract has not been executed before the certifier issues the NOD, the decertified firm does not count toward the recipient's overall DBE goal.

(3) If a prime contractor has executed a subcontract with a DBE before the certifier issues the NOD, the prime contractor may continue to receive credit toward the contract goal for the firm's work. In this case, however, the prime contractor may not extend or add work to the contract without prior written consent from the recipient.

(4) If a prime contractor has executed a subcontract with a DBE before the certifier issues the NOD, the prime contractor may continue to receive credit toward the contract goal as set forth in paragraph (j)(3) of this section; however, the portion of the decertified firm's continued performance of the contract must not count toward the recipient's overall goal.

(5) If the recipient executed a prime contract with a DBE that was later decertified, the portion of the decertified firm's performance of the contract remaining after the certifier issued the NOD must not count toward an overall goal, but the DBE's performance of the contract may continue to count toward satisfying any contract goal.

(6) The following exceptions apply to this paragraph (j):

(i) If a certifier decertifies a firm solely because it exceeds the business size standard during the performance of the contract, the recipient may continue to count the portion of the decertified firm's performance of the contract remaining after the certifier issued the NOD toward the recipient's overall goal as well as toward the contract goal.

(ii) If the certifier decertifies the DBE because it was acquired by or merged with a non-DBE, the recipient may not continue to count the portion of the decertified firm's performance on the contract remaining, after the certifier issued a NOD, toward either the contract goal or the overall goal, even if a prime contractor has executed a subcontract with the firm or the recipient has executed a prime contract with the DBE that was later decertified. In this case, if eliminating the credit of the decertified firm will affect the prime contractor's ability to meet the contract goal, the recipient must direct the prime contractor to subcontract to an eligible DBE to the extent needed to meet the contract goal or demonstrate to the recipient that it has made good faith efforts to do so.

§ 26.88

[Amended]

15. Amend § 26.88 by:

a. In paragraph (d)(1)(iii), removing the phrase “lieu of or in addition to attending the hearing” and adding the phrase “in lieu of or in addition to attending the hearing” in its place;

b. Redesignating paragraph (d)(6) as paragraph (d)(5);

c. In paragraph (e)(1):

i. Removing the phrase “under paragraph (c)(5)(iv)” and adding the phrase “under paragraph (d)(4)(iv) of this section” in its place; and

ii. Removing the phrase “unless paragraph (d)(2)” and adding the phrase “unless paragraph (e)(2)” in its place; and

d. In paragraph (e)(2)(ii), removing the text “paragraph (c)(6)” and adding the text “paragraph (d)(5)” in its place.

Signed pursuant to authority delegated at 49 CFR 1.27(c) in Washington, DC.

Subash Iyer,

Acting General Counsel.