On September 30, 2025, the United States Department of Transportation (“DOT”) issued an Interim Federal Rule that removes the race and sex presumption of social and economic disadvantage from the criteria for certification under the Disadvantaged Business Enterprise (“DBE”) and the Airport Concession Disadvantaged Business Enterprise (“ACDBE”) programs (collectively, “the DBE program”). Recipients of highway, transit, and airport funding distributed by DOT, including the Maryland Department of Transportation (“MDOT”) and its Modules (State Highway Administration, Maryland Aviation Authority, Maryland Transportation Authority, Maryland Transit Administration, and Maryland Port Authority) are subject to the requirements of the DBE program. DOT as well as MDOT set goals for the utilization of DBEs in their procurements.
So, what is the DBE program? Officially a part of the Federal government’s small business programs, DBE was first established in 1983 as a way of offering opportunities for small businesses, owned and controlled by “socially and economically disadvantaged” individuals to participate in DOT procurements. Congress established, by statute, that women and members of certain racial groups are presumed to be disadvantaged.
In September of 2024, in Mid-America Milling Co. v. U.S. Dep’t of Transp., the U.S. District Court for the Eastern District of Kentucky determined that the DBE program’s presumption based on race and sex was likely in violation of the Fifth Amendment’s Due Process Clause. Despite not having a final opinion of the Court, the Trump Administration has evaluated the DBE program to be in violation of the Fifth Amendment.
In eliminating the race and sex-based presumption, the Interim Final Rule establishes new criteria for determining what socially and economically disadvantaged actually means. Instead, the new criteria will be based on the individual’s personal experiences. Owner/applicants will be required to submit a “Personal Narrative” detailing specific instances where they were denied opportunities compared to that of non-disadvantaged individuals.
DOT’s Interim Final Rule became effective upon its October 3, 2025 publication in the Federal Register. Comments are due November 3, 2025. Effective immediately Maryland and other States in receipt of DOT funding must reevaluate current DBEs under the newly established criteria and decertify entities that do not meet the new criteria. Under the Interim Final Rule, businesses will not have the usual rights to challenge or appeal their decertification.
So, what could this mean for you?
Decertified DBEs will not have an opportunity to respond to a decertification decision neither in writing nor in a formal Hearing. In addition, States cannot set DBE contract goals and count any participation toward DBE goals until the State completes its reevaluation process. All DBEs will “temporarily” lose their certification until the reevaluation process is complete.
What’s next?
- Going forward, States will be discouraged from exceeding their DBE goals.
- The State’s Minority Business Enterprise (MBE) Program is not affected by this rule change.
- At this time, it cannot be determined when Maryland will be able to complete its reevaluation process, given the sheer volume of work to be accomplished in reevaluating the thousands of current DBEs. Add to that, on October 1, 2025, the State reassigned the its MBE/DBE programs from MDOT to the new Department of Social and Economic Mobility.
- It is likely the Final Rule will be challenged as a potential violation of the Administrative Procedures Act.
Contact us
For more information about the DBE program and how the Final Rule may impact you or your business, please contact the Davis, Agnor, Rapaport & Skalny attorney with whom you typically work, or one in our Government Relations Practice Group