Regulatory Alert: DOT Releases Interim Final Rule to Update DBE and ACDBE Programs

October 1, 2025

Today, the U.S. Department of Transportation (DOT) released an interim final rule that makes significant changes to the regulations governing the Disadvantaged Business Enterprise (DBE) Program and the Airport Concession Disadvantaged Business Enterprise (ACDBE) Program. Under the rule, DOT eliminated the race- and sex-based presumptions in the DBE and ACDBE Programs, a key principle for determining whether the individuals who own and control a firm are considered disadvantaged and whether the firm qualifies as a DBE or ACDBE. In addition, DOT has required that each currently certified DBE and ACDBE firm be reevaluated in accordance with newly established criteria.

We strongly encourage you to review our key takeaways below because this rule is expected to impact your DBE and ACDBE Programs when it goes into effect and while the firm reevaluations are occurring. You can read DOT’s interim final rule here. The rule goes into effect immediately upon publication in the Federal Register; however, it is unclear when that will occur given the ongoing federal government shutdown. Given the magnitude of the changes included in the rule, we would not be surprised if the rule was subject to a legal challenge. It may also be impacted by a pending decision that a federal court in Kentucky has yet to issue, as further discussed below.

Background. Airport sponsors must comply with a series of assurances as a condition for receiving a federal grant under the Airport Improvement Program or another applicable federal financial assistance program. These assurances require airport sponsors to administer DBE and ACDBE Programs in accordance with regulations outlined in 49 C.F.R. pts. 26 and 23, respectively. Under the Biden administration, DOT conducted a major rulemaking initiative that was finalized in April 2024 and made a wide range of changes to the regulations that govern both programs. The rulemaking was part of a broader effort to advance equity and expand opportunities for DBE firms in government funding programs.

Key Takeaways from DOT’s DBE/ACDBE Rule. With the announcement today, DOT is set to significantly modify a major component of the DBE and ACDBE Programs. Based on our initial review and analysis of the interim final rule, we have highlighted some key takeaways for airport sponsors:

DOT eliminated the race- and sex-based presumptions in the DBE and ACDBE Programs. DBE and ACDBE firms are small businesses that must be owned and controlled by “socially and economically disadvantaged individuals.” DOT’s rule eliminated the existing race- and sex-based presumptions in both programs, which provide that certain individuals—women and members of certain racial and ethnic groups—are presumed to be socially and economically disadvantaged. DOT asserts that the presumptions are unconstitutional.

DOT established new criteria for determining whether an individual is “socially and economically disadvantaged.” Under the rule, individuals will only be considered socially and economically disadvantaged if they can affirmatively demonstrate—through a personal narrative—the existence of “disadvantage” based on their own experiences and circumstances and without regard to race or sex. This may include specific instances of economic hardship, systemic barriers, and denied opportunities that impeded the owner’s progress or success in education, employment, or business.

DOT required each DBE and ACDBE firm to be reevaluated. DOT’s rule required each Unified Certification Program (UCP), which is responsible for certifying DBEs and ACDBEs in a given state, to reevaluate any currently certified DBE or ACDBE firm based on the new certification standards, including the criteria for determining whether the owner is a socially and economically disadvantaged individual. For each firm, the UCP must issue a written decision that it has either been recertified or decertified. UCPs must complete this reevaluation process “as quickly as practicable.”

DOT modified certain requirements for airport sponsors while the reevaluations are occurring. Under the rule, grant recipients, including airport sponsors, are not allowed to set any DBE contract goals or concession-specific goals until the appropriate UCP completes the required recertification process. Sponsors are also not able to count any DBE or ACDBE participation toward DBE or ACDBE goals, respectively, until that process is completed. DOT also indicates that the department will not enforce non-compliance with the DBE and ACDBE Programs while UCPs are conducting their reevaluations.

DOT eliminated a related reporting requirement for airport sponsors and other grant recipients. DOT’s rule eliminated the requirement for airport sponsors (and other recipients) to obtain information about the majority owner’s race and sex for all DBE, ACDBE, non-DBE, and non-ACDBE firms that seek to bid on or work on federally funded contract opportunities.

DOT made the rule effective immediately upon publication. The DBE and ACDBE Program changes go into effect when the interim final rule is published in the Federal Register. However, it is unclear when that will occur given the ongoing federal government shutdown. When the rule is published, DOT will accept comments from airport stakeholders and the public for 30 days. DOT asserts that the department does not need to provide notice-and-comment because the race- and sex-based presumptions are unconstitutional.

Potential Impacts of the Mid-America Milling Co. Case on DOT’s Rule. In Mid-America Milling Co. v. DOT, a federal court in Kentucky determined that the DBE Program’s race- and sex-based presumptions are likely unconstitutional under the Due Process Clause. In 2024, the court issued a preliminary injunction that prohibited DOT from mandating the use of the presumptions with respect to contracts on which the two plaintiffs in the case bid. In May, the Trump administration, along with the plaintiffs, requested the Kentucky court to declare that (a) the “use of DBE contract goals in a jurisdiction, where any DBE in that jurisdiction was determined to be eligible based on a race- or sex-based presumption,” violates the Due Process Clause, and (b) DOT may not approve any DOT-funded projects with DBE contract goals “where any DBE in that jurisdiction was determined to be eligible” based on the presumptions.

As of today, the Kentucky court has not issued any decision on the administration’s request. With the rule released today, DOT has effectively moved forward with amending the DBE and ACDBE Programs despite a pending decision that could affect the legality of the rule. For example, if the court were to rule against the Trump administration, DOT’s elimination of the race- and sex-based presumptions would presumably be at odds with the court’s decision because these are statutory presumptions. In other words, the outcome of the Mid-America Milling Co. case, including any expected appeals, could significantly impact the rule that DOT released today. AAAE has been closely monitoring, and will continue to monitor, the case to see how the court rules and its potential impact on airport sponsors.