Preliminary remark: The U.S. Department of Transportation recently released a long-awaited notice of proposed rulemaking to modernize the Disadvantaged Business Enterprise (DBE) program regulations. This blog is part of a series looking at some of the significant proposed changes. A copy of all proposed changes can be found here: https://www.federalregister.gov/documents/2022/07/21/2022-14586/disadvantaged-business-enterprise-and-airport-concession-disadvantaged-business – business program.
Once a company has achieved DBE certification, it must continue to qualify for certification. If the certification body considers that the company no longer meets the requirements, a decertification action will be initiated. The proposed amendments to the DBE Regulations make significant changes to this process.
Companies facing decertification are entitled to a hearing to respond to the intent to decertify. The proposed amendments make virtual hearings a permanent option after seeing the success of virtual hearings during COVID. Additionally, it would require the hearing (whether in-person or virtual) to take place within 45 days of the certifier’s Notice of Intent to Revoke.
The proposed changes also include a provision that only the socially and economically disadvantaged owner is allowed to answer questions about their control of the business at a dismissal hearing. Other representatives, including lawyers, would be permitted to attend and participate in the hearing (including answering and asking questions) on other matters. This change also clarifies that lawyers can speak, ask questions and present arguments at dismissal hearings. At present, it is not uncommon for certifiers to discourage or attempt to prohibit attorneys from fully representing their clients at revocation hearings.
Another proposed change would allow a DBE who may no longer meet certification standards after the DOT changes those standards the opportunity to remedy the lack of eligibility within 30 days of written notice.
Finally, the settlement would not require a decertification hearing for companies facing decertification due to their failure to timely submit their annual eligibility statement.
The preamble and summary of the proposed amendments also reiterate certain aspects of the decertification process that have been subject to abuse and misinterpretation over the years. For example, he notes the frequent problem of certifiers issuing Notice of Intent to Decertify forms with little articulated rationale. The preamble reiterates that this is not acceptable and in violation of Article 26.87 as it deprives the DBE of the ability to respond meaningfully and provide information demonstrating its continued eligibility.
Do you have any ideas or suggestions for the proposed rules? You can make your voice heard by offering your comment here: https://www.regulations.gov/docket/DOT-OST-2022-0051/document.
©2022 Strassburger McKenna Gutnick & GefskyNational Law Review, Volume XII, Number 229