The U.S. Department of Transportation (“USDOT”) issued an Interim Final Rule on September 30, 2025 making substantial changes to the Disadvantaged Business Enterprise (“DBE”) and Airport Concessions Disadvantaged Business Enterprise (“ACDBE”) programs. The revisions remove the race- and sex-based presumption of disadvantage that has historically been the primary basis for the certification of businesses as DBEs and ACDBEs and revise the regulations in 49 C.F.R. Part 23 (ACDBE) and 49 C.F.R. Part 26 (DBE). Going forward, companies desiring to be certified as ACDBEs and DBEs are required, individually, to demonstrate by a preponderance of the evidence that they are economically and socially disadvantaged. The Interim Final Rule was issued under a provision of the Administrative Procedure Act that allows for issuance of rules without notice and comment. The anticipated effective date for the Interim Final Rule is tomorrow, October 3, 2025, which is the contemplated publication in the Federal Register.

The revised regulations implement the Administration’s position in support of a proposed consent order in Mid-America Milling LLC v. United States Department of Transportation, E.D. Ky. Case No. 23-cv-00072 that has yet to be issued. While the regulations are similar to the proposed consent order, they make additional changes. In addition, in the preamble to the Interim Final Rule, USDOT stated its intent to ensure that “existing DBEs do not continue to receive any benefits as a result of their certification under the old standards.” The regulations treat DBE and ACDBE requirements alike so, for the discussion here, we will refer to DBEs.

The revised regulations maintain the structure of the existing program but revise it so that certification of DBEs must now be race- and sex-neutral. The existing provisions, which allow for a showing of non-presumptive disadvantage in 49 C.F.R. § 26.67(d) (DBE), have been retained but modified. 49 C.F.R. § 26.67(a) now states:

Non-presumptive Disadvantage. All applicants must demonstrate social and economic disadvantage (SED) affirmatively based on their own experiences and circumstances within American society, and without regard to race or sex.

Unified Certification Programs (“UCP”) are directed to review the certification of all DBEs to determine if they still qualify as DBEs under the new requirements, or whether they should be decertified. The process for this is not specified and, based on the DBE definition, will require an individualized determination including the submission of new information by every DBE. 

Federal grant recipients are instructed to pause implementation of goals under the current program, to set 0% DBE goals on all contracts, and to not enforce goals in existing contracts while the review process is undertaken by UCPs. Goals cannot be set until DBEs are certified by the relevant UCP in compliance with the new requirements.

In addition, DBE programs must be “narrowly tailored to overcome the effects of social and economic disadvantage.” Where the terms “race-based” and “race-neutral” were used, these have been replaced with “DBE-based” and “DBE-neutral.” Grant recipients must adjust their use of contract goals and meet the maximum feasible portion using DBE-neutral means. If a grant recipient can meet its goal using DBE-neutral means, then it should implement its program without setting any contract goals. This may result in the setting of fewer contract goals.

Further requirements are provided in the regulations but there is limited guidance for UCPs. We expect that it will take considerable time for UCPs to develop processes to re-evaluate existing DBEs and to admit new DBEs under the new standards. The new regulations do not make clear how the 0% goals should be implemented, including whether grant recipients must apply other requirements of the DBE and ACDBE regulations that are not tied to goals, such as prompt pay requirements for DBEs and non-DBE subcontractors.

As grant recipients, contractors, and vendors await USDOT’s guidance and criteria to enable compliance with the Interim Final Rule, they should consider taking the following steps:

1. The apparent intent of the Interim Final Rule is that, as of the effective date, there are 0 certified DBEs. 
2. Absent further federal guidance, the DBE program is required but recipients should set a 0% contract goal. Revise IFB/RFP language to comply with the new regs and explain there is no goal for this contract.  
3. On existing contracts, stop enforcing the DBE goals. Do not report to the FAA/FTA.
4. Grant recipients should use the DBE federal contract provisions, and confirm with your ADO/Regional Office contacts that such provisions should reflect the terminology in the Interim Final Rule (i.e., “DBE-neutral/DBE-conscious” language instead of “race-neutral/race conscious”). Practically speaking and until there are DBEs again, the contract provisions only apply to the extent they apply beyond DBEs. For example, the DBE subcontractor termination provision would apply but there are no DBEs to apply it to. The prompt pay/retainage payment requirement still applies because it applies to all subcontractors not just DBEs. The regulations do not require reporting DBE usage information but don’t prohibit collecting it for internal purposes.

Next steps in the short and medium term:

1. Start reviewing for revisions and communicate with your ADO/Regional Office about timing of revisions to your program documents.
2. Communicate with your UCP about its plan to recertify. No doubt they are in chaos but for those recipients that want a program, some pressure might be required.
3. Some UCPs might move forward more quickly than others but there are large numbers that will need to be recertified. The discussion seems to imply that the DBE program doesn’t start again until all existing DBEs have been revised, rather than a sufficient number for setting goals. UCPs range from state DOTs, to local jurisdictions with authority, to consortiums. That is going to be made more complicated by the 2024 revision to the regulations that allowed reciprocal certification. For instance, if a DBE is certified in Colorado, it can take that certification anywhere and the new UCP must accept it absent some evidence that it should not have been certified in the first place. That would apply to recertified DBEs also.

The new regulations have been implemented without soliciting public comment. While much remains uncertain under the new regulations, if you have questions, contact Tracy Davis or Peter Kirsch for questions about airport programs, and Allison Ishihara Fultz, Subash Iyer, or John Putnam for questions about transit programs.