(2) Pre-qualifications;
    (3) Bonding capacity;
    (4) Equipment capability;
    (5) Recently completed projects; and
    (6) website.

    (b) You must list each type of work a DBE and/or ACDBE is eligible
to perform by using the most specific NAICS code available to describe
each type of work. Pursuant to Sec.  26.81(n)(1) and (3), your
directory must allow for NAICS codes to be supplemented with specific
descriptions of the type(s) of work the firm performs.
    (c) Your directory must permit the public to search and/or filter
for DBEs and/or using the following criteria:
    (1) Physical location;
    (2) NAICS code(s);
    (3) Keyword search of work descriptions; or
    (4) The information in paragraphs (a)(1) through (6) of this
section:
    (i) State license(s);
    (ii) Pre-qualifications;
    (iii) Bonding and maximum bonding capacity;
    (iv) Equipment type and number of each equipment type;
    (v) Dollar value of largest completed project and keyword search of
project descriptions; and
    (vi) Firms that have websites.
    (d) You must make any changes to your current directory entries by
January 1, 2024, or within [DATE 180 DAYS AFTER DATE OF PUBLICATION OF
FINAL RULE]. The directory should clearly indicate that the information
displayed pursuant to paragraphs (a)(1) through (6) of this section was
submitted by the DBE and/or ACDBE and has not been reviewed for
accuracy by the members of the UCP.
0
38. Amend Sec.  26.35 by revising paragraph (b)(2) introductory text to
read as follows:

Sec.  26.35   What role do business development and mentor-
prot[eacute]g[eacute] programs have in the DBE program?

* * * * *
    (b) * * *
    (2) In the mentor-prot[eacute]g[eacute] relationship, you must:
* * * * *
0
39. Revise Sec.  26.37 to read as follows:

Sec.  26.37   What are a recipient's responsibilities for monitoring?

    (a) You must implement appropriate mechanisms to ensure compliance
with the requirements in this part by all program participants (e.g.,
applying legal and contract remedies available under Federal, state,
and local law). You must set forth these mechanisms in your DBE
program.
    (b) Your DBE program must also include a monitoring and enforcement
mechanism to ensure that work committed to all DBEs at contract award
or subsequently, including race- neutral participation, is actually
performed by the DBEs to which the work was committed, and such work is
counted according to the requirements of Sec.  26.55. This mechanism
must include a written verification that you have reviewed contracting
records and monitored the work site to ensure the counting of each
DBE's participation is consistent with its function on the contract.
The monitoring to which this paragraph (b) refers may be conducted in
conjunction with monitoring of contract performance for other purposes.
    (c) This mechanism must also provide for running tallies of actual
DBE attainments toward the overall goal and for each DBE commitment
submitted pursuant to meeting a contract goal. Regarding the running
tally used to monitor the overall goal, this mechanism must provide a
means to compare current DBE attainments to anticipated contract awards
for the remainder of the annual reporting period. This mechanism should
ensure that contract goals are applied in accordance with Sec.
26.51(d). Regarding the running tally used to monitor the fulfillment
of each DBE commitment, this mechanism must provide a means of
comparing cumulative payments made to the DBE to the work listed for
each. This mechanism should assess whether the commitment will be
fulfilled or whether the prime contractor has demonstrated good faith
efforts, or should be required to demonstrate good faith efforts, to
address any projected shortfall per Sec.  26.53(g).

Sec.  26.39   [Amended]

0
40. Amend Sec.  26.39 in paragraph (b) introductory text by removing
the phrase ``by February 28, 2012''.
0
41. Amend Sec.  26.45 by:
0
a. Revising paragraph (a).
0
b. Removing in paragraph (c)(1) the hyperlink ``www.census.gov/epcd/cbp/view/cbpview.html'' and adding in its place the hyperlink ``https://www.census.gov/programs-surveys/cbp.html.''
0
c. Removing in paragraph (f)(1)(i) the words ``website'' and adding in
their place the word ``Web site''.
0
d. Removing in paragraph (f)(3) the text ``incuding'', ``race-
consioous'', and ``26.51(c)'' and adding in their places the text
``including'', ``race-conscious'', and ``Sec.  26.51(c)'',
respectively.
    The revision reads as follows:

Sec.  26.45   How do recipients set overall goals?

    (a) General rule. (1) Except as provided in paragraph (a)(2) of
this section, you must set an overall goal for DBE participation in
your DOT-assisted contracts.
    (2) If you are an FTA or FAA recipient who reasonably anticipates
awarding (excluding transit vehicle purchases) $670,000 or less in FTA
or $250,000 or less in FAA funds in prime contracts in a Federal fiscal
year, you are not required to develop overall goals for FTA or FAA
respectively for that fiscal year.
* * * * *

Sec.  26.47   [Amended]

0
42. Amend Sec.  26.47 in paragraph (c)(3)(i) by removing the words
``Operational Evolution Partnership Plan'' and adding in their place
the term ``CORE 30''.
0
43. Revise Sec.  26.49 to read as follows:

Sec.  26.49   What are the requirements for transit vehicle
manufactures (TVMs) and for awarding DOT-assisted contracts to TVMs?

    (a) If you are an FTA recipient, you must require in your DBE
program that each TVM, as a condition of being authorized to bid or
propose on FTA-assisted transit vehicle procurements, certify that it
has complied with the requirements of this section. You do not include
FTA assistance used in transit vehicle procurements in the base amount
from which your overall goal is calculated.
    (1) Only those TVMs listed on FTA's list of eligible TVMs, or that
have submitted a goal methodology to FTA that has been approved or has
not been disapproved, at the time of solicitation are eligible to bid.
    (2) A TVM's failure to follow the requirements of this section and
throughout this part will be deemed as non-compliant, which will result
in removal from FTA's eligible TVMs list and will become ineligible to
bid.
    (3) An FTA recipient's failure to comply with the requirements set
forth in paragraph (a) of this section may result in formal enforcement
action or appropriate sanction as determined by FTA (e.g., FTA
declining to participate in the vehicle procurement).
    (4) Within 30 days of becoming contractually obligated to procure a
transit vehicle, an FTA recipient must report to FTA:
    (i) The name of the TVM that was the successful bidder; and
    (ii) The Federal share of the contractual commitment at that time.
    (5) A contract with a transit vehicle dealership to procure
vehicles does not qualify as a contract with a TVM, notwithstanding the
manufacturer of the vehicles procured.
    (b) If you are a TVM, you must establish and submit to FTA an
annual overall percentage goal for DBE participation.

    (1) In setting your overall goal, you should be guided, to the
extent applicable, by the principles underlying Sec.  26.45. The base
from which you calculate this goal is the amount of FTA financial
assistance included in transit vehicle contracts on which you will bid
during the fiscal year in question, less the portion(s) attributable to
the manufacturing process performed entirely by your own forces.
    (i) You must consider and include in your base figure all domestic
contracting opportunities made available to non-DBEs.
    (ii) You must exclude from this base figure funds attributable to
work performed outside the United States and its territories,
possessions, and commonwealths.
    (iii) In establishing an overall goal, you must provide for public
participation. This includes consultation with interested parties
consistent with Sec.  26.45(g).
    (2) The requirements of this part with respect to submission and
approval of overall goals apply to you as they do to recipients, except
that TVMs set and submit their goals annually and not on a triennial
basis.
    (c) TVMs must comply with the reporting requirements of Sec.
26.11, including the requirement to submit the Uniform Report of DBE
Awards or Commitments and Payments, in order to remain eligible to bid
on FTA-assisted transit vehicle procurements.
    (d) TVMs must implement all other requirements of this part, except
those relating to UCPs and DBE certification procedures.
    (e) If you are an FHWA or FAA recipient, you may, with FHWA or FAA
approval, use the procedures of this section with respect to
procurements of vehicles or specialized equipment. If you choose to do
so, then the manufacturers of the equipment must meet the same
requirements (including goal approval by FHWA or FAA) that TVMs must
meet in FTA-assisted procurements.
    (f) As a recipient you may, with FTA approval, establish project-
specific goals for DBE participation in the procurement of transit
vehicles in lieu of complying with the procedures of this section.

Sec.  26.51   [Amended]

0
44. Amend Sec.  26.51 in paragraph (f)(4) by removing the words
``through the use of'' and adding in their place the word ``using.''
0
45. Amend Sec.  26.53 by revising paragraphs (b)(3)(ii), (e), and (f)
to read as follows:

Sec.  26.53   What are the good faith efforts procedures recipients
follow in situations where there are contract goals?

* * * * *
    (b) * * *
    (3) * * *
    (ii) Provided that, in a negotiated procurement, such as a
procurement for professional services, the bidder/offeror may make a
contractually binding commitment to meet the goal at the time of bid
submission or the presentation of initial proposals but provide the
information required by paragraph (b)(2) of this section before the
final selection for the contract is made by the recipient. This
paragraph (b)(3)(ii) does not apply to a design-build procurement,
which must follow the provisions in paragraph (e) of this section.
* * * * *
    (e) In a design-build contracting situation, in which the recipient
solicits proposals to design and build a project with minimal-project
details at time of letting, the recipient may set a DBE goal that
proposers must meet by submitting a DBE Performance Plan (DPP) with the
proposal. The DPP replaces the requirement to provide the information
required in paragraph (b) of this section that applies to design-bid-
build contracts. To be considered responsive, the DPP must include a
commitment to meet the goal and provide details of the types of
subcontracting work or services (with projected dollar amount) that the
proposer will solicit DBEs to perform. The DPP must include an
estimated time frame in which actual DBE subcontracts would be
executed. Once the design-build contract is awarded, the recipient must
provide ongoing monitoring and oversight to evaluate whether the
design-builder is using good faith efforts to comply with the DPP and
schedule. The recipient and the design-builder may agree to make
written revisions of the DPP throughout the life of the project, e.g.,
replacing the type of work items the design builder will solicit DBEs
to perform and/or adjusting the proposed schedule, as long as design-
builder continues to use good faith efforts to meet the goal.
    (f)(1)(i) You must require that a prime contractor not terminate a
DBE subcontractor or any portion of its work listed in response to
paragraph (b)(2) of this section (or an approved substitute DBE firm
per paragraph (g) of this section) without your prior written consent.
This includes, but is not limited to, instances in which a prime
contractor seeks to perform work originally designated for a DBE
subcontractor with its own forces or those of an affiliate, a non-DBE
firm, or with another DBE firm.
    (ii) You must include in each prime contract a provision stating
that:
    (A) The contractor must utilize the specific DBEs listed to perform
the work and supply the materials for which each is listed unless the
contractor obtains your written consent as provided in paragraph (f) of
this section; and
    (B) Unless your consent is provided under paragraph (f) of this
section, the prime contractor must not be entitled to any payment for
work or material unless it is performed or supplied by the listed DBE.
    (2) You may provide such written consent only if you agree, for
reasons stated in your concurrence document, that the prime contractor
has good cause to terminate the listed DBE or any portion of its work.
    (3) Good cause does not exist if the prime contractor seeks to
terminate a DBE it relied upon to obtain the contract so that the prime
contractor can self-perform the work for which the DBE contractor was
engaged or so that the prime contractor can substitute another DBE or
non-DBE contractor after contract award. For purposes of this paragraph
(f)(3), good cause includes the following circumstances:
    (i) The listed DBE subcontractor fails or refuses to execute a
written contract;
    (ii) The listed DBE subcontractor fails or refuses to perform the
work of its subcontract in a way consistent with normal industry
standards. Provided, however, that good cause does not exist if the
failure or refusal of the DBE subcontractor to perform its work on the
subcontract results from the bad faith or discriminatory action of the
prime contractor;
    (iii) The listed DBE subcontractor fails or refuses to meet the
prime contractor's reasonable, nondiscriminatory bond requirements;
    (iv) The listed DBE subcontractor becomes bankrupt, insolvent, or
exhibits credit unworthiness;
    (v) The listed DBE subcontractor is ineligible to work on public
works projects because of suspension and debarment proceedings pursuant
to 2 CFR parts 180, 215, and 1200 or applicable state law;
    (vi) You have determined that the listed DBE subcontractor is not a
responsible contractor;
    (vii) The listed DBE subcontractor voluntarily withdraws from the
project and provides to you written notice of its withdrawal;
    (viii) The listed DBE is ineligible to receive DBE credit for the
type of work required;
    (ix) A DBE owner dies or becomes disabled with the result that the
listed

DBE contractor is unable to complete its work on the contract; and
    (x) Other documented good cause that you determine compels the
termination of the DBE subcontractor.
    (4) Before transmitting to you its request to terminate a DBE
subcontractor or any portion of its work, the prime contractor must
give notice in writing to the DBE subcontractor, with a copy to you
sent concurrently, of its intent to request to terminate and the reason
for the proposed request.
    (5) The prime contractor's written notice must give the DBE five
days to respond, advising you and the contractor of the reasons, if
any, why it objects to the proposed termination of its subcontract/or
portion thereof and why you should not approve the prime contractor's
request. If required in a particular case as a matter of public
necessity (e.g., safety), you may provide a response period shorter
than five days.
    (6) In addition to post-award terminations, the provisions of this
section apply to pre-award deletions or changes to DBEs or their listed
work put forward by offerors in negotiated procurements.
* * * * *
0
46. Amend Sec.  26.55 by:
0
a. In paragraph (c)(2), removing the words ``in order''.
0
b. In paragraph (c)(3), removing the words ``on the basis of'' and
adding in their place the word ``within''.
0
c. Revising paragraph (e).
0
d. In paragraph (f), removing the cross-reference ``Sec.  26.87(i)''
and adding in its place the cross-reference ``Sec.  26.87(j)''.
0
e. Revising paragraph (h).
    The revisions read as follows:

Sec.  26.55   How is DBE participation counted toward goals?

* * * * *
    (e) Count expenditures with DBEs for materials or supplies toward
DBE goals as provided in the following:
    (1)(i) If the materials or supplies are obtained from a DBE
manufacturer, count 100 percent of the cost of the materials or
supplies.
    (ii) For purposes of paragraph (e)(1) of this section, a
manufacturer is a firm that owns (or leases) and operates a factory or
establishment that produces, on the premises, the materials, supplies,
articles, or equipment required under the contract and of the general
character described by the specifications. Manufacturing includes
blending or modifying raw materials or assembling components to create
the product to meet contract specifications. When a DBE makes minor
modifications to the materials, supplies, articles, or equipment, the
DBE is not a manufacturer.
    (2)(i) If the materials or supplies are purchased from a DBE
regular dealer, count 60 percent of the cost of the materials or
supplies (including transportation costs).
    (ii) For purposes of this section, a regular dealer is a firm that
owns (or leases) and-operates, a store, warehouse, or other
establishment in which the materials, supplies, articles or equipment
of the general character described by the specifications and required
under the contract are bought, kept in sufficient quantities, and
regularly sold or leased to the public in the usual course of business.
    (iii) Items kept and regularly sold by the DBE are of the ``general
character'' when they share the same material characteristics and
application as the items specified by the contract.
    (iv) You should establish a system to determine that a DBE regular
dealer, over time, keeps sufficient quantities and regularly sells the
items in question. This system should ensure that each DBE supplier is
eligible for 60% credit based on its demonstrated capacity to perform a
commercially useful function (CUF) as a regular dealer. This
determination is intended to prevent overcounting at the pre-award or
subcontract approval stage and is contingent upon the outcome of a
final CUF and counting determination.
    (A) To be a regular dealer, the firm must be an established
business that engages, as its principal business and under its own
name, in the purchase and sale or lease of the products in question. A
DBE supplier performs a CUF as a regular dealer and receives credit for
60% of the cost of materials or supplies (including transportation
cost) when all, or the major portion of, the items under a purchase
order or subcontract are provided from the DBE's inventory, and when
necessary, any minor quantities delivered from and by other sources are
of the general character as those provided from the DBE's inventory.
Recipients should establish procedures to ensure that preliminary
counting determinations at the pre-award/subcontract approval stage
include an evaluation of the type and quantity of items the DBE intends
to have delivered by other sources.
    (B) A DBE may be a regular dealer in such bulk items as petroleum
products, steel, cement, gravel, stone, or asphalt without owning,
operating, or maintaining a place of business as provided in paragraph
(e)(2)(ii) of this section if the person both owns and operates
distribution equipment used to deliver the products. Any supplementing
of regular dealers' own distribution equipment must be by a long-term
operating lease and not on an ad hoc or contract-by-contract basis.
Recipients should establish procedures to make preliminary counting
determinations at the pre-award/subcontract approval stage based on the
DBE's capacity and intent to comply with the requirement of this
paragraph (e)(2)(iv)(B).
    (C) A DBE supplier of items that are not typically stocked due to
their unique characteristics (e.g., limited shelf life or specialty
items) should be considered in the same manner as a regular dealer of
bulk items per paragraph (e)(2)(iv)(B) of this section. If the DBE
supplier of these items does not own or lease distribution equipment,
as descried above, it is not a regular dealer.
    (D) Packagers, brokers, manufacturers' representatives, or other
persons who arrange, facilitate, or expedite transactions are not
regular dealers within the meaning of paragraph (e)(2) of this section.
    (3) If the materials or supplies are purchased from a DBE
distributor that neither maintains sufficient inventory nor uses its
own distribution equipment for the products in question, count 40% of
the cost of materials or supplies (including transportation costs). A
DBE distributor is an established business that engages in the regular
sale or lease of the items specified by the contract and described
under a valid distributorship agreement. A DBE distributor performs a
CUF when it operates in accordance with the terms of its
distributorship agreement; with respect to shipping, the DBE
distributor must assume risk for lost or damaged goods. You should
review the language in distributorship agreements to determine their
validity relevant to each purchase order/subcontract and the risk
assumed by the DBE. Where the DBE distributor does not assume risk or,
otherwise, does not operate in accordance with its distributorship
agreement, counting is limited to fees and commissions.
    (4) With respect to materials or supplies purchased from a DBE that
is neither a manufacturer, a regular dealer, nor a distributor, count
the entire amount of fees or commissions charged for assistance in the
procurement of the materials and supplies, or fees or transportation
charges for the delivery of materials or supplies required on a job
site, provided you determine the fees to be reasonable and not
excessive as compared with fees customarily allowed for similar
services. Do not count any portion of the cost of the

materials and supplies themselves, however.
    (5) You must determine the amount of credit awarded to a firm for
the provisions of materials and supplies (e.g., whether a firm is
acting as a regular dealer, distributor, or a transaction facilitator)
on a contract-by-contract basis.
    (6) The total allowable credit for a prime contractor's
expenditures with DBE suppliers (manufacturers, regular dealers,
distributors, and transaction facilitators) is limited to 50% of the
participation used by a prime contractor to meet a contract goal.
Exceptions to this cap for material-intensive projects may be granted
on a contract-by-contract basis with prior approval of the appropriate
OA.
* * * * *
    (h) Do not count the participation of a DBE subcontractor toward a
contractor's final compliance with its DBE obligations on a contract
until the contractor has actually paid the DBE the amount being
counted.
0
47. Revise Sec.  26.61 to read as follows:

Sec.  26.61   How are burdens of proof allocated in the certification
process?

    (a) In determining whether to certify a firm as eligible to
participate as a DBE, you must apply the standards of this subpart.
    (b) The firm seeking certification has the burden of demonstrating
to you, by a preponderance of the evidence (i.e., more likely than not)
that it meets all the certification eligibility requirements in this
subpart. In determining whether the firm has met its burden, you must
consider all the information in the record, viewed as a whole.
    (1) Exception 1. In proceedings to decertify a firm, you bear the
burden of proving, by a preponderance of the evidence, that the firm is
no longer eligible for certification under the rules of this part.
    (2) Exception 2. If you seek to rebut an individual's claim of
presumed social and/or economic disadvantage, you bear the burden of
proving, by a preponderance of the evidence, why the individual is not
entitled to the presumption of social and economic disadvantage. See
Sec.  26.67(c).
0
48. Revise Sec.  26.63 to read as follows:

Sec.  26.63   General certification rules.

    (a) General rules. Except as otherwise provided:
    (1) The firm must be for-profit and operational.
    (2) Whether a firm performs a commercially useful function is
irrelevant to certification eligibility.
    (3) Certification cannot be conditioned on state pre-qualification
requirements for bidding on contracts.
    (4) Entering into a fraudulent transaction is disqualifying per se.
    (5) The certifier determines eligibility based on the evidence it
has at the time of its decision, not on the basis of historical or
outdated information, giving full effect to the ``curative measures''
provisions of this part.
    (b) Indirect ownership. A firm (i.e., a subsidiary, denoted S) that
socially and economically disadvantaged owners (SEDOs) own and control
indirectly is eligible, assuming it satisfies the other requirements of
this part, only under the following circumstances.
    (1) Look-through. SEDOs own at least 51 percent of S cumulatively,
as shown in the examples following.
    (2) Control. The same SEDOs control P, and P controls S.
    (3) One tier only. The SEDOs indirectly own S through a single P
and not through, for example, a parent of P (grandparent).
    (4) Examples. The following examples assume that S and its SEDOs
satisfy all other requirements in this part.
    Example 1 to paragraph (b)(4). SEDOs own 100 percent of P, and P
owns 100% of S. S is eligible for certification.
    Example 2 to paragraph (b)(4). Same facts, except P owns 51 percent
of S. S is eligible.
    Example 3 to paragraph (b)(4). SEDOs own 80 percent of P, and P
owns 70 percent of S. S is eligible because SEDOs indirectly own 56
percent of S. The calculation is 80 percent of 70 percent or .8 x .7 =
.56.
    Example 4 to paragraph (b)(4). SEDOs own and control P, and they
own 52 percent of S by operation of this part. However, a non-SEDO
controls S. S is ineligible.
    Example 5 to paragraph (b)(4). SEDOs own 60 percent of P, and P
owns 51 percent of S. S is ineligible because SEDOs own just 31 percent
of S.
    Example 6 to paragraph (b)(4). P indirectly owns and controls S and
has other affiliates. S is eligible only if its gross receipts plus
those of all of its affiliates, including those of P, do not exceed the
applicable small business size cap. Note that all of P's affiliates are
affiliates of S by virtue of P's ownership and/or control of S.
    (c) Indian tribes, NHOs, and ANCs--(1) Indian tribes and NHOs. A
firm that is owned by an Indian tribe or Native Hawaiian organization
(NHO), rather than by Indians or Native Hawaiians as individuals, is
eligible if it meets all other certification requirements in this part.
Such a firm must satisfy all requirements of this part.
    (2) Alaska Native Corporations (ANCs). (i) Notwithstanding any
other provisions of this subpart, a subsidiary corporation, joint
venture, or partnership entity of an ANC is eligible for certification
as a DBE if it meets all the following requirements:
    (A) The Settlement Common Stock of the underlying ANC and other
stock of the ANC held by holders of the Settlement Common Stock and by
Natives and descendants of Natives represents a majority of both the
total equity of the ANC and the total voting power of the corporation
for purposes of electing directors;
    (B) The shares of stock or other units of common ownership interest
in the subsidiary, joint venture, or partnership entity held by the ANC
and by holders of its Settlement Common Stock represent a majority of
both the total equity of the entity and the total voting power of the
entity for the purpose of electing directors, the general partner, or
principal officers; and
    (C) The subsidiary, joint venture, or partnership entity has been
certified by the Small Business Administration under the 8(a) or small
disadvantaged business program.
    (ii) As a certifier to whom an ANC-related entity applies for
certification, you do not use the DOT Uniform Certified Application.
You must obtain from the firm documentation sufficient to demonstrate
that the entity meets the requirements of paragraph (c)(2)(i) of this
section. You must also obtain sufficient information about the firm to
allow you to administer your program (e.g., information that would
appear in your UCP directory).
    (iii) If an ANC-related firm does not meet all the conditions of
paragraph (c)(2)(i) of this section, then it must meet the requirements
of paragraph (c)(1) of this section in order to be certified.
0
49. Revise Sec.  26.65 to read as follows:

Sec.  26.65  What rules govern business size determinations?

    (a) To be an eligible DBE, a firm (including its affiliates) must
be an existing small business, as defined by Small Business
Administration (SBA) standards. You must apply current SBA business
size standard(s) found in 13 CFR part 121 appropriate to the type(s) of
work the firm seeks to perform in DOT-assisted contracts, including the
primary industry classification of the applicant. A firm is not an
eligible DBE in any Federal fiscal year if the firm (including its
affiliates) has had average annual gross receipts, as defined in 13 CFR
121.104, over the firm's previous

five fiscal years, in excess of the applicable SBA size standard(s).
    (b) Even if it meets the requirements of paragraph (a) of this
section, a firm is not an eligible DBE for the purposes of FHWA and
FTA-assisted work in any Federal fiscal year if the firm (including its
affiliates) has had average annual gross receipts, as defined in 13 CFR
121.104, over the firm's previous three fiscal years, in excess of
$28.48 million (as of March 1, 2022). The Department will adjust this
amount for inflation on an annual basis. The adjusted amount will be
published on the Department's website in subsequent years.
0
50. Revise Sec.  26.67 to read as follows:

Sec.  26.67  What rules determine social and economic disadvantage?

    (a) Group membership--(1) General rule. Citizens of the United
States (or lawfully admitted permanent residents) who are women, Black
American, Hispanic American, Native American, Asian Pacific American,
Subcontinent Asian American, or other minorities found to be
disadvantaged by the Small Business Administration (SBA), are
rebuttably presumed to be socially and economically disadvantaged.
    (2) Evidence of group membership. To claim group membership, a firm
owner must indicate on the Declaration of Eligibility (DOE), found in
the Uniform Certification Application (UCA), in which of the group(s)
in paragraph (a)(1) of this section the owner is a member and submit
the signed and sworn DOE with the applicant firm's UCA. The DOE is the
only evidence of group membership an owner must provide with the UCA.
    (3) Questioning group membership. You may not question an
individual's claim of group membership as a matter of course. You must
not impose a disproportionate burden on members of any particular
group. Imposing a disproportionate burden on members of a particular
group could violate Title VI of the Civil Rights Act of 1964, paragraph
(b) of this section, and/or 49 CFR part 21.
    (i) If you have a well-founded reason(s) to question an
individual's claim of membership in a group in paragraph (a)(1) of this
section, you must email the individual a written explanation of your
reason(s), using the email address for the firm or individual provided
in the UCA (for applicants) or the most recent you have on file (for
certified firms). The individual bears the burden of proving, by a
preponderance of the evidence, that the individual is a member of the
group in question.
    (ii) Your written explanation must meet all the following criteria:
    (A) Specifically describe the evidence that forms the basis for
your well-founded reason(s).
    (B) Instruct the individual to submit evidence demonstrating that
the individual has held herself/himself/themself/themselves out
publicly as a member of the group for at least 5 years prior to
applying for DBE certification, and that the relevant community
considers the individual a member. You may not require the individual
to provide evidence beyond that related to group membership.
    (iii) The owner must email you the evidence described in paragraph
(a)(3)(ii)(B) of this section no later than 15 days of your written
explanation. If the owner untimely sends you information, you may use
your discretion whether to consider it; however, you must still email
the owner a final decision no later than 30 days after receiving timely
submitted evidence.
    (iv) If you determine that an individual has not demonstrated group
membership by a preponderance of the evidence, your final decision must
specifically reference the evidence in the record that formed the basis
for your conclusion and give a detailed explanation of why the evidence
submitted was insufficient. It must also inform the individual of the
right to appeal, as provided in Sec.  26.89(c), and of the right to
reapply at any time by amending the original UCA with evidence of
individual social and economic disadvantage under paragraph (d) of this
section.
    (b) Evidence and rebuttal of social disadvantage. (1) If you have a
reasonable basis to believe that an individual who is a member of a
group in paragraph (a)(1) of this section is not, in fact, socially
disadvantaged, you must initiate a proceeding to determine whether the
individual's presumption should be regarded as rebutted. Your
proceeding must fully comply with the requirements of Sec.  26.87. You
have the burden of demonstrating, by a preponderance of the evidence,
that the individual is not, in fact, socially disadvantaged. To meet
the burden, you must produce evidence that the individual has not been
subjected to racial or ethnic prejudice or cultural bias within
American society because of the individual's identity as a member of a
group in paragraph (a)(1) of this section and without regard to
individual qualities. Social disadvantage must stem from circumstances
beyond the individual's control.
    (2) If an individual's presumption of social disadvantage has been
rebutted based on a finding, by the preponderance of the evidence, that
the individual is not socially disadvantaged, your final decision must
inform the individual of the right to appeal, as provided in Sec.
26.89(c), and of the right to reapply at any time by amending the
original UCA with evidence of individual social and economic
disadvantage under paragraph (d) of this section.
    (c) Evidence and rebuttal of economic disadvantage. (1) Each
owner(s) on whom the applicant firm relies for certification
eligibility must submit the DOE found in the UCA. The owner(s) must
declare that the owner's personal net worth (PNW) does not exceed $1.60
million and corroborate the declaration by completing the PNW Statement
available at https://www.transportation.gov/civil-rights/disadvantaged-business-enterprise/ready-apply without alteration and by using the
calculation rules in Sec.  26.68. You must not attempt to rebut
presumed economic disadvantage as a matter of course.
    (i) An owner whose PNW exceeds the regulation's $1.60 million limit
is not presumed economically disadvantaged. The limit is exact.
Rounding down is impermissible.
    (ii) A certifier may require an owner to provide additional
information on a case-by-case basis to verify the accuracy and
completeness of the PNW Statement. The certifier must have a
demonstrable need for the additional information and avoid imposing an
unnecessary burden on an owner. Nor may you impose a disproportionate
burden on members of any particular group as doing so could violate
Title VI of the Civil Rights Act of 1964, paragraph (b) of this
section, and/or 49 CFR part 21.
    (2)(i) If you have a reasonable basis to believe that an individual
who submits a PNW Statement that is below the $1.60 million limit is
not economically disadvantaged, you may rebut the individual's
presumption of economic disadvantage.
    (ii) In determining whether an individual's presumption of economic
disadvantage should be rebutted, you must initiate a proceeding fully
complying with the requirements of Sec.  26.87. You have the burden of
demonstrating, by a preponderance of the evidence, that a reasonable
person would not consider the individual economically disadvantaged. To
meet the burden, you must produce evidence that demonstrates that a
reasonable person would not consider the individual economically
disadvantaged. You may consider indicators including, but not limited
to ready access to

wealth; lavish lifestyle; income or assets of a type or magnitude
inconsistent with economic disadvantage; or other circumstances that
economically disadvantaged people typically do not enjoy. This inquiry
gives the Sec.  26.68 asset exclusions, and limitations on inclusions,
no effect. It disregards liabilities entirely.
    (iii) If you determine that the owner's presumption of economic
disadvantage is rebutted, your decision must inform the firm of the
right to appeal as provided in Sec.  26.89(c).
    (d) Individualized determinations of social and economic
disadvantage--(1) Burden of proof. Firms owned and controlled by
individual(s) who are not presumed SED may be eligible for DBE
certification. The firm must prove, by a preponderance of the evidence,
that the owner seeking to establish an individualized showing of social
and economic disadvantage meets the criteria in paragraphs (d)(3) and
(4) of this section.
    (i) You must consider the evidence presented as a whole. There is
no checklist of required evidence.
    (ii) An individual need not have filed a complaint of
discrimination in order to successfully demonstrate social and/or
economic disadvantage.
    (2) Individuals with disabilities. The Department acknowledges that
individuals with disabilities encounter many physical and attitudinal
barriers that individuals without disabilities do not have to overcome.
It is plausible that many individuals with disabilities--including
``invisible'' disabilities such as (but not limited to) post-traumatic
stress disorder, major depressive disorder, dyslexia, anxiety
disorder--may be socially and economically disadvantaged. As public
entities, certifiers must fully comply with Title II of the American
Disabilities Act, which includes ensuring that their DBE programs are
fully accessible to individuals with disabilities.
    (3) Individualized determination of social disadvantage. (i) An
owner seeking to establish an individualized showing of social
disadvantage must identify at least one objective distinguishing
feature that resulted in racial, ethnic, cultural, or other prejudice
within American society because of the owner's membership in a group
and without regard to individual identity.
    (ii) The owner must describe with particularity how the objective
distinguishing feature identified in paragraph (d)(3)(i) of this
section has resulted in the owner's social disadvantage. The owner may
provide evidence related to the owner's education, employment, or any
other evidence the owner considers relevant.
    Example 1 to paragraph (d)(3). A White male claiming to have
experienced disadvantage in employment must provide evidence that his
status of belonging to a particular group, e.g., persons with dyslexia,
contributed to his disadvantage, as opposed to, e.g., a nationwide
economic recession that resulted in widespread unemployment.
    (4) Individualized determination of economic disadvantage. (i) The
owner must submit the Personal Net Worth Statement, available at
https://www.transportation.gov/civil-rights/disadvantaged-business-enterprise/ready-apply, using the calculation rules in Sec.  26.68. An
owner whose PNW exceeds $1.60 million is not economically disadvantaged
under any circumstance.
    (ii) The owner must describe with particularity how the owner's
objective distinguishing feature identified in paragraph (d)(3)(i) of
this section has resulted in the owner's economic disadvantage. The
owner may provide any financial or other information that the owner
considers relevant.
0
51. Add Sec.  26.68 to read as follows:

Sec.  26.68   Personal net worth.

    (a) Calculation. (1) Exclude the SEDO's ownership interest in the
applicant or certified firm.
    (2) Exclude the SEDO's equity in the SEDO's primary residence,
without reference to state marital laws or community property rules.
Title to the property governs.
    Example 1 to paragraph (a)(2). The SEDO and their spouse hold joint
title to their primary residence, for which they paid $300,000 and are
coequal debtors on a bank mortgage and a home equity line of credit
with current combined balances of $150,000. The SEDO may exclude the
SEDO's $75,000 share of the equity. There is no exclusion when the SEDO
does not own the home or when attributable debt balances exceed the
purchase price.
    (3) One hundred percent of the contents of the SEDO's primary
residence belong to the SEDO. The total value of household contents is
at least the total amount for which they are insured, taking into
account all policies, riders, amendments, and endorsements. If the
SEDO's spouse or domestic partner cohabits with the SEDO, and the
SEDO's primary residence is also the spouse or domestic partner's
primary residence, then, subject to the following special rules, the
SEDO is deemed to own 50% of those assets.
    (4) Motor vehicles of any type belong to the natural person who
holds title.
    (5) Exclude liabilities contingent on a future event, of unfixed
value, and those not owed in full on the date of the PNW Statement.
    Example 2 to paragraph (a)(5). The SEDO may not report a projected
liability for Federal income tax unless and until the SEDO has reported
the precise amount of the SEDO's tax liability on a personal, Federal
tax return, duly signed, dated, and filed with the Internal Revenue
Service (IRS). If the SEDO has so reported to the IRS, the SEDO may
exclude from the PNW Statement only the net amount still owed to the
IRS, and not in arrears, on the latter of the regular due date (e.g.,
April 15) for the return or the date of the PNW Statement. If the SEDO
reports and documents such a tax liability, the SEDO must also provide
the SEDO's request for deferred payment and, if applicable, the IRS's
acquiescence.
    (6) A natural person's signatory (not guarantor) status on any debt
instrument determines ownership of the liability. A business entity's
debt is not the SEDO's liability at all unless:
    (i) The SEDO cosigns and is liable for 100% of the debt in the
event of default; and
    (ii) The creditor is a traditional financial institution or an
entity that sells and finances sales of equipment in the ordinary
course of its business, provided that the DBE or applicant actually
uses the equipment other than incidentally in its business and the
equipment secures the debt.
    Example 3 to paragraph (a)(6). When the SEDO and two other natural
persons are jointly and severally liable to repay the debt, the SEDO
may claim to be liable for only one third of principal and interest
presently owing.
    (7) Include assets transferred to relatives or related entities
within the two years preceding an application for certification or one
year preceding the due date for a Sec.  26.83(j) declaration, when the
assets so transferred during the period have an aggregate value of more
than $20,000. Relatives include the owner's spouse or domestic partner,
children (whether biological, adopted or stepchildren), siblings
(including stepsiblings and those of the spouse or domestic partner),
and parents (including stepparents and those of the spouse or domestic
partner). Related entities include for-profit privately held companies
of which any relative is an owner, officer, director, or equivalent;
and family or other trusts of which any relative is grantor, trustee,
or beneficiary, except when the transfer is irrevocable.

    (8) Exclude the SEDO's direct payments, on behalf of immediate
family members or their children, to unrelated providers of healthcare,
education, or legal services.
    (9) Exclude the SEDO's direct payments to providers of goods and
services directly related to a celebration of an immediate family
member or her children's significant, normally non-recurring life event
such as a christening, munj, bat mitzvah, graduation, wedding,
retirement, memorial, or culturally analogous similar commemoration.
    (10) Exclude all assets of the SEDO that are held in vested pension
plans, Individual Retirement Accounts, 401(k) accounts, or other
retirement savings or retirement investment programs.
    (b) Regulatory adjustments. The PNW cap will be adjusted by January
1, 2024, or within [DATE 180 DAYS AFTER DATE OF PUBLICATION OF FINAL
RULE]. It will be adjusted 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 and
Nonprofit Organizations'' produced by the Board of Governors of the
Federal Reserve (https://www.federalreserve.gov/releases/z1/).
Subsequent PNW adjustments will be made every 5 years on the
anniversary of the initial adjustment. The Department will post future
PNW limit adjustments on the Departmental Office of Civil Rights' web
page.
    (1) The PNW adjustment will be based on the following formula:
    [GRAPHIC] [TIFF OMITTED] TP21JY22.001

    (2) The PNW cap will not be adjusted if the future year PNW cap
determined under paragraph (b)(1) of this section is less than the
previous amount. The cap will increase each year after the Federal
Reserve releases its annual data, so long as the amount determined
under paragraph (b)(1) is greater than the previous PNW cap.
    (c) Confidentiality. Notwithstanding any provision of Federal or
state law, you must not release an individual's Personal Net Worth
Statement nor any documents pertaining to it to any third party without
the written consent of the submitter. Provided, that you must transmit
this information to DOT in any certification appeal proceeding under
Sec.  26.89 or to any other state to which the individual's firm has
applied for certification under Sec.  26.85.
0
52. Revise Sec.  26.69 to read as follows:

Sec.  26.69   What rules govern determinations of ownership?

    (a) General rule. A firm's SEDO(s) must own at least 51% of every
class of ownership. Each SEDO whose ownership is necessary to the
firm's eligibility must demonstrate that his or her ownership satisfies
the requirements of this section. If not, the firm is ineligible.
    (b) Ownership acquisition and maintenance. The SEDO's acquisition
and maintenance of his or her ownership interest makes reasonable
economic sense (RES) under the circumstances.
    (1) Acquisition. RES depends in part on the SEDO having acquired
ownership at fair value.
    (2) Continuation. The SEDO's continued ownership makes RES if he or
she does not derive undue benefit relative to other owners.
    (3) Proportionality. RES requires that neither SEDOs nor non-SEDOs
derive benefits or bear burdens that are clearly disproportionate to
their ownership shares.
    (c) Investments. The SEDO may acquire ownership by purchase,
capital contribution, or gift. Subject to the other requirements of
this section, each is considered an ``investment'' in the firm, as are
additional purchases, contributions, and gifts. All investments relied
upon for eligibility must make RES.
    (1) Irrevocability. Investments must be unconditional, irrevocable,
and at full risk of loss.
    (2) Title. Title generally determines ownership of investments. The
rule in this paragraph (c)(2) operates independently of state or local
community property, equitable distribution, or similar provisions.
Thus, the person who has title to the investment owns it in proportion
to his or her share of title.
    (3) Joint ownership. When the SEDO jointly owns an investment of
cash or property, the SEDO may claim at least a 51% ownership interest
only if the other joint owner formally transfers to the SEDO enough of
his or her ownership in the investment to bring the SEDO's investment
to at least 51% of all investments in the firm. Such transfers may be
gifts if they meet the requirements of paragraph (c)(4) of this
section.
    (4) Gifts, including by bequest or inheritance. A gift of an
ownership interest to the SEDO is an investment that makes RES when it
satisfies the following criteria:
    (i) The transferor is or immediately becomes uninvolved with the
applicant or DBE in any capacity and in any other business that
performs similar work or contracts with the firm other than as a lessor
or provider of standard support services;
    (ii) The transferor does not derive undue benefit; and
    (iii) A writing (e.g., a cancelled check when there is no better
evidence) documents the gift.
    (d) Purchases and capital contributions. (1) Purchases of ownership
interests are investments when the consideration is entirely monetary
and not a trade of property or services.
    (2) Contributed capital may be cash, tangible property, realty, or
a combination.
    (3) Contributions of expertise or intangible property are
investments when they are extraordinary, uniquely suited to the firm's
main business, and of reasonably and credibly ascertained value
documented at the time of the company's application. In addition, and
in all cases, the SEDO must have a substantial financial investment at
the time the firm applies for certification and thereafter.
    (4) Contributions of time, labor, services, and the like are not
investments.
    (5) Loans to or from the firm or a non-disadvantaged owner,
guarantees, the firm's own purchases and redemptions, and capital
contributed by others are not the SEDO's investments.
    (e) Debt-financed investments--(1) General rule. Subject to the
other provisions of this section, including the RES requirement, the
SEDO may borrow money to finance his/her/their investment entirely or
partially if the SEDO has paid, on a net basis, at least 15% of the
total value of the investment by the time the firm applies for
certification. The net payment must be from the SEDO's own, not
borrowed, money. Money that the SEDO receives as a gift or transfer
described in paragraph (c)(3) or (4) of this section is the SEDO's own.

    Example 1 to paragraph (e)(1). A SEDO who borrows $9,000 of her
$10,000 investment in Applicant, Inc., must have repaid, from her own
funds, at least $500 of the loan's principal by the time of
application.
    Example 2 to paragraph (e)(1). A SEDO who finances $8,000 of a
$10,000 investment in Applicant, Inc., may apply for certification at
any time.
    (2) The SEDO must have a significant amount of the SEDO's own money
invested and at full risk of loss.
    (3) The loan must be real, enforceable, not in default, and not
offset by another agreement.
    (4) The SEDO must be the debtor.
    (5) The firm may not be party to the loan in any capacity, nor can
its property serve as collateral. The SEDO may not rely on the
company's credit to finance his or her investment.
    (6) When the creditor forgives the debt or the SEDO defaults, the
firm is no longer eligible.
    (7) The overall investment must make RES.
    (f) Curative measures. The rules of this section do not preclude
transactions that further the objectives of, and compliance with, the
provisions of this part. The SEDO or firm may enter into legitimate
transactions, alter the terms of ownership, make additional
investments, or bolster underlying documentation in a good faith effort
to correct impediments to eligibility, as long as the actions are
consistent with this part and make RES. The certifier should not hinder
the SEDO or firm when it attempts to become compliant with
certification requirements of this part.
    (g) Anti-abuse rules. (1) Transactions lacking RES or apparent
business purpose may be disregarded.
    (2) Multiple transactions occurring within any 2-year period may be
considered one transaction that leads from beginning circumstances to
end result.
    (3) Transactions that have evasive effect are null and void.
0
53. Revise Sec.  26.71 to read as follows:

Sec.  26.71   What rules govern determinations concerning control?

    (a) General rules. (1) SEDOs of at least 51% of the company must
control it.
    (2) Control determinations must consider all pertinent facts,
viewed together and in context.
    (3) A firm must have operations in the business for which it seeks
certification at the time it applies. Certifiers do not certify plans
or intentions or issue contingent or conditional certifications.
    (b) SEDO as final decision maker. The SEDO must be the ultimate
decision maker in fact, regardless of operational, policy, or
delegation arrangements.
    (c) Governance. Governance provisions may not require that the SEDO
obtain concurrence or consent from a non-SEDO or other participant to
transact business on behalf of the firm.
    (1) Highest officer position. A disadvantaged owner must hold the
highest officer position in the company (e.g., chief executive officer
or president).
    (2) Board of directors. Except as detailed in paragraph (c)(4) of
this section, the SEDO must have present control of the firm's board of
directors, or other governing body, through the number of eligible
votes.
    (i) Quorum requirements. Provisions for the establishment of a
quorum must not block the SEDO from calling a meeting to vote and
transact business on behalf of the firm.
    (ii) Shareholder actions. SEDO(s) authority to change the firm's
composition via shareholder action does not prove control within the
meaning of paragraph (c) of this section.
    (3) Partnerships. In a partnership, one or more disadvantaged
owners must serve as general partners, with control over all
partnership decisions.
    (4) Exception. Bylaws or other governing provisions that require
non-SEDO consent for extraordinary actions generally do not contravene
the rules in paragraph (c) of this section. Non-exclusive examples are
a sale of the company or substantially all of its assets, mergers, and
a sudden, wholesale change of type of business.
    (d) Expertise. The SEDO must have an overall understanding of the
business and its essential operations sufficient to make sound
managerial decisions not primarily of an administrative nature. The
requirements of this paragraph (d) vary with type of business, degree
of technological intensity, and scale. In some cases, managerial
competence suffices.
    (e) SEDO decisions. The firm must show that the SEDO critically
analyzes operational information provided to the owner by other
participants in the firm's activities and has made reasonable business
decisions based on the SEDO's independent analysis.
    (f) Delegation. The SEDO may delegate administrative activities or
operational oversight to others if the SEDO retains unilateral power to
terminate the delegate(s) and the chain of command is evident to all
participants in the company and persons associated which the firm does
business.
    (1) No non-SED participant may have power equal to or greater than
that of the SEDO, considering all the circumstances. Aggregate
magnitude and significance govern; a numerical tally does not.
    (2) Non-SED participants may not make non-routine purchases or
disbursements, enter into substantial contracts, or make decisions that
affect company viability without the SEDO's consent.
    (3) Written provisions or policies that specify the terms under
which non-SED participants may sign or act on the SEDO's behalf with
respect to recurring matters generally do not violate paragraph (f) of
this section, as long as they are consistent with the SEDO having
exclusive and ultimate responsibility for the action.
    (g) Independent business. When the firm receives from or shares
personnel, facilities, equipment, financial support, or other essential
resources, with another business or individual on other than
commercially reasonable terms, the firm must prove that it would be
viable as a going concern without the arrangement.
    (h) Franchise and license agreements. (1) A business operating
under a franchise or license agreement may be certified if it meets the
standards in this subpart and the franchiser or licenser is not
affiliated with the franchisee or licensee. In determining whether
affiliation exists, you should generally not consider the restraints
relating to standardized quality, advertising, accounting format, and
other provisions imposed on the franchisee or licensee by the franchise
agreement or license, if the franchisee or licensee has the right to
profit from its efforts and bears the risk of loss commensurate with
ownership. Alternatively, even though a franchisee or licensee may not
be controlled by virtue of such provisions in the franchise agreement
or license, affiliation could arise through other means, such as common
management or excessive restrictions on the sale or transfer of the
franchise interest or license.
    (2) A DBE must not regularly use another firm's business-critical
vehicles, equipment, machinery, or facilities to provide a product or
service under contract to the same firm or one in a substantially
similar business.
    (i) Exception 1. This paragraph (h)(2) does not preclude the firm
from providing services to a single customer or to a small number of
them, provided that the firm is not merely a conduit, captive, or
unnecessary third party acting on behalf of another firm or individual.
Similarly, providing a volume discount to such a customer does not
impair viability unless the firm

repeatedly provides the service at a significant and unsustainable
loss.
    (ii) Exception 2. A DBE may share essential resources and deal
exclusively with another firm that the SEDO 51% owns and controls.
0
54. Revise Sec.  26.73 to read as follows:

Sec.  26.73   What rules govern the assignment of NAICS codes?

    (a) You must grant certification to a firm only for specific types
of work in which the SEDOs control. To become certified in an
additional type of work, the firm must demonstrate to you only that its
SEDOs control the firm with respect to that type of work. You must not
require that the firm be recertified or submit a new application for
certification, but you must verify the disadvantaged owner's control of
the firm in the additional type of work.
    (1) The types of work a firm performs (whether on initial
certification or when a new type of work is added) must be described in
terms of the most specific available NAICS code for that type of work.
If you choose, you may also, in addition to applying the appropriate
NAICS code, apply a descriptor from a classification scheme of
equivalent detail and specificity. A correct NAICS code is one that
describes, as specifically as possible, the principal goods or services
which the firm would provide to DOT recipients. Multiple NAICS codes
may be assigned where appropriate. Program participants must rely on,
and not depart from, the plain meaning of NAICS code descriptions in
determining the scope of a firm's certification.
    (2) Firms and certifiers must check carefully to make sure that the
NAICS codes cited in a certification are kept up-to-date and accurately
reflect work which the UCP has determined the firm's owners can
control. The firm bears the burden of providing detailed company
information the certifying agency needs to make an appropriate NAICS
code designation.
    (3) If a firm believes that there is not a NAICS code that fully or
clearly describes the type(s) of work in which it is seeking to be
certified as a DBE, the firm may request that the certifying agency, in
its certification documentation, supplement the assigned NAICS code(s)
with a clear, specific, and detailed narrative description of the type
of work in which the firm is certified. A vague, general, or confusing
description is not sufficient for this purpose, and recipients should
not rely on such a description in determining whether a firm's
participation can be counted toward DBE goals.
    (4) A certifier is not precluded from changing a certification
classification or description if there is a factual basis in the
record. However, certifiers must not make after-the-fact statements
about the scope of a certification, not supported by evidence in the
record of the certification action.
    (b) [Reserved]
0
55. Amend Sec.  26.81 by:
0
a. Revising paragraphs (a)(1) and 5.
0
b. In paragraph (e), removing the word ``the'' from the first sentence.
0
c. Revising paragraph (g).
    The revisions read as follows:

Sec.  26.81   What are the requirements for Unified Certification
Programs?

    (a) * * *
    (1) You and the other recipients in your state must sign an
agreement establishing the UCP for that state and submit the agreement
to the Secretary for approval.
* * * * *
    (5) If you and the other recipients in your state fail to meet the
deadlines set forth in paragraph (a) of this section, you will have the
opportunity to make an explanation to the Secretary why a deadline
could not be met and why meeting the deadline was beyond your control.
If you fail to make such an explanation, or the explanation does not
justify the failure to meet the deadline, the Secretary will direct you
to complete the required action by a certain date. If you and the other
recipients fail to carry out this direction in a timely manner, you are
collectively in noncompliance with this part.
* * * * *
    (g) Each UCP must maintain a unified DBE directory containing, for
all firms certified by the UCP (including those from other states
certified under the provisions of this part), the information required
by Sec.  26.31. The UCP must make the directory available to the public
electronically, on the internet. The UCP must update the electronic
version of the directory by including additions, deletions, and other
changes as soon as they are made.
* * * * *
0
56. Amend Sec.  26.83 by:
0
a. Revising the section heading and paragraph (c)(1)(i), (c)(3), (h),
(i)(3), (j), (k), (l), and (m).
0
b. Adding paragraph (n).
    The revisions and addition read as follows:

Sec.  26.83   What procedures do certifiers follow in making
certification decisions?

* * * * *
    (c)(1) * * *
    (i) Perform an on-site visit, virtually or in person, to the firm's
principal place of business. You must interview the principal owners
and officers and review their r[eacute]sum[eacute]s and/or work
histories. You may interview key personnel of the firm if necessary.
You may make an audio recording of the interview. You must also perform
an on-site visit, either virtually or in-person, to job sites if there
are sites on which the firm is working at the time of the eligibility
investigation in your jurisdiction or local area;
* * * * *
    (3) You must make sure that the applicant attests to the accuracy
and truthfulness of the information on the application form. This must
be done in the form of an unsworn Declaration of Eligibility executed
under penalty of perjury of the laws of the United States.
* * * * *
    (h)(1) Once you have certified a DBE, it must remain certified
until and unless you have removed its certification, in whole or in
part (i.e, NAICS Code removal), through the procedures of Sec.  26.87.
    (2) You may not require a DBE to reapply for certification or
undergo a recertification process. However, you may conduct a
certification review of a DBE firm, including a new on-site review
(virtually or in person), if appropriate in light of changed
circumstances (e.g., of the kind requiring notice under paragraph (i)
of this section or relating to suspension of certification under Sec.
26.88), a complaint, or other information concerning the firm's
eligibility. If information comes to your attention that leads you to
question the firm's eligibility, you may conduct an on-site review
(virtually or in person) on an unannounced basis, at the firm's offices
and job sites. You may also rely upon the site visit report of any
other certifier with respect to a firm applying for certification, if
it falls within the on-site review timeframe specified in your UCP
agreement.
    (i) * * *
    (3) The notice must take the form of an unsworn Declaration of
Eligibility executed under penalty of perjury of the laws of the United
States. You must provide the written notification within 30 days of the
occurrence of the change. If you fail to make timely notification of
such a change, you will be deemed to have failed to cooperate under
Sec.  26.109(c).
    (j) If you are a DBE, you must provide to the recipient, every year
on the anniversary of the date of your certification, an unsworn
Declaration of Eligibility executed under penalty of perjury of the
laws of the United States. This declaration must affirm that there

have been no changes in the firm's circumstances affecting its ability
to meet size, disadvantaged status, ownership, or control requirements
of this part or any material changes in the information provided in its
application form, except for changes about which you have notified the
recipient under paragraph (i) of this section. The declaration must
specifically affirm that your firm continues to meet SBA business size
criteria and the overall gross receipts cap of this part, documenting
this affirmation with supporting documentation of your firm's size and
gross receipts (e.g., submission of Federal tax returns). If you fail
to provide this declaration in a timely manner, you will be deemed to
have failed to cooperate under Sec.  26.109(c).
    (k) You must advise each applicant within 30 days from your receipt
of the application whether the application is complete and suitable for
evaluation and, if not, what additional information or action is
required.
    (l) If you are a certifier, you must issue decisions on
applications for certification within 90 days of receipt of all
information required from the applicant under this part. You may extend
this time period once, for no more than an additional 30 days, upon
written notice to the firm, explaining fully and specifically the
reasons for the extension. On a case-by-case basis, the concerned OA
may allow you to further extend the deadline one time if it receives
from you a written explanation of why you need more time. Your failure
to issue a decision by the applicable deadline under this paragraph is
deemed a constructive denial of the application, on the basis of which
the firm may appeal to DOT under Sec.  26.89. You may also be subject
to noncompliance penalties described in Sec. Sec.  26.103 and 26.105.
    (m)(1) You may notify the applicant about ineligibility concerns
that you may have and allow the firm to rectify deficiencies within the
period for making a decision in paragraph (l) of this section.
    (2) If a firm takes curative measure before your decision, you must
consider any evidence it submits to you of having taken such measures.
A curative measure does not automatically equate to a firm's attempt to
circumvent the rules of this part.
    Example 1 to paragraph (m)(2). The firm may obtain proof of a
financial contribution meeting the ownership requirements in Sec.
26.69.
    Example 2 to paragraph (m)(2). The firm might revise a
disqualifying operating agreement or bylaw provision to meet the
control requirements in Sec.  26.71.
    (n) Except as otherwise provided in this paragraph (n), if an
applicant for DBE certification withdraws its application before you
have issued a decision on the application, the applicant can resubmit
the application at any time. As a recipient or UCP, you may not apply
the waiting period provided under Sec.  26.86(c) before allowing the
applicant to resubmit its application. However, you may place the
reapplication at the ``end of the line,'' behind other applications
that have been made since the firm's previous application was
withdrawn. You may also apply the waiting period provided under Sec.
26.86(c) to a firm that has established a pattern of frequently
withdrawing applications before you make a decision.
0
57. Revise Sec.  26.85 to read as follows:

Sec.  26.85   Interstate certification.

    (a) Applicability. This section applies to a DBE certified in any
state (``State A'').
    (b) General rule. When a DBE certified in State A applies to
another state (``State B'') for DBE certification, State B must accept
State A's certification of the DBE.
    (c) Application procedure. To obtain certification in State B, the
DBE must provide:
    (1) A cover letter with its application that specifies that it is
applying for interstate certification;
    (2) A copy of the certificate from State A or an electronic image
of the UCP directory of State A that shows the DBE certification; and
    (3) A DOE signed under penalty of perjury. This is the same
declaration described in Sec.  26.83(j).
    (d) Verification of eligibility. Within 10 business days of
receiving the documents required under paragraph (c) of this section,
State B must verify the certification of the DBE by reference to the
online UCP directory of State A.
    (e) Certification. If the DBE fulfils the requirements of paragraph
(c) of this section and State B affirmatively verifies the State A
certification, State B must certify the DBE without undergoing further
procedures and provide the DBE with a letter documenting its
certification in State B.
    (f) Noncompliance. Failure of State B to comply with paragraphs (d)
and (e) of this section would be considered non-compliance with this
part.
    (g) Post-interstate certification proceedings--(1) Requests for
records. After State B certifies the DBE, the UCP may request a fully
unredacted copy of all, or a portion of, the DBE's certification file
from any other UCP in which the DBE is certified.
    (2) Availability of records. A UCP must provide a complete
unredacted copy of the DBE's certification material to State B within
10 business days of receiving the request. Confidentiality requirements
of Sec. Sec.  26.83(d) and 26.109(b) do not apply.
    (3) Oversight and compliance activities related to an out-of-state
DBE. Once State B certifies a DBE through the interstate certification
process, it becomes a DBE in State B and must be treated like any other
DBE in its directory of certified firms.
    (i) The DBE must provide an annual Declaration of Eligibility with
documentation of gross receipts, under Sec.  26.83(j), to State B on
the anniversary date of the DBE's State A certification.
    (ii) State B may conduct its own certification review of a DBE
under Sec.  26.83(h), or as specified in its UCP plan.
    (iii) State B must conduct its own investigation of third-party
complaints, State A, or any other UCP where the firm holds
certification, must cooperate to the extent required by paragraph (h)
of this section and Sec.  26.109(c).
    (iv) Except as described in paragraph (j) of this section, State B
must initiate its own decertification proceedings to remove a DBE's
eligibility if it finds reasonable cause to believe that the DBE is
ineligible.
    (v) If State B decertifies a DBE for any reason, State B must email
a copy of its decision to State A and make the decision available to
any UCP upon request within 10 business days.
    (4) Joint decertification proceedings. Any UCP may join a
decertification proceeding initiated by another state, pursuant to
Sec.  26.87, on the same grounds and facts specified in the notice
proposing to remove eligibility.
    (i) The UCP joining the decertification proceeding may present
evidence at the hearing, but it cannot add additional grounds for
decertification not specified in the initiating state's notice
proposing removal.
    (ii) After a UCP(s) joins another state's decertification
proceedings, the final notice of decision applies to all states that
are a party to the action. The final notice must include the appeal
instructions in Sec.  26.86(a).
    (5) Ineligibility database. (i) When a UCP decertifies a firm, in
whole or in part (i.e., NAICS code removal), it must make an entry in
the Departmental Office of Civil Rights' (DOCR) online ineligibility
database. The UCP must enter the following information:
    (A) The name of the firm;
    (B) The name(s) of the firm's owner(s);

    (C) The type and date of the action; and
    (D) The reason for the action.
    (ii) A UCP must check DOCR's online ineligibility database at least
once every month to determine whether any DBE your UCP certified or is
applying to your UCP is in the database.
    (iii) For any such firm in paragraph (k)(2) of this section that is
on the list, a UCP must promptly request a copy of the adverse decision
from the UCP that made the decision. If the UCP receives such a
request, it must provide a copy of the decision to the requesting UCP
within 5 business days of receiving the request. The UCP receiving the
decision must then consider the information in the decision in
determining what, if any, action to take with respect to the DBE firm
or applicant.
    (6) Effect of DOT's appeal decisions. If a DBE appeals a
decertification decision, and the Department upholds the decision, the
firm will lose its DBE eligibility in every UCP in which it is
certified.
    (i) Exception. The rules of this section do not apply when the
Department upholds a decertification decision that is based on grounds
specific to a DBE's actions pertaining to a specific UCP under
Sec. Sec.  26.83(j) (Declaration of Eligibility) and 26.87(e)(6)
(failure to cooperate).
    (ii) [Reserved]
0
58. Revise Sec.  26.86 to read as follows:

Sec.  26.86   What rules govern certifiers' denials of in-state
certification applications?

    (a) When you deny a request by a firm an application for
certification, you must provide the applicant firm a written
explanation of the reasons for the denial, specifically referencing the
evidence in the record that supports each reason. You must also
include, verbatim, the following instructions for filing an appeal with
DOT:

    You may appeal this decision to the U.S. Department of
Transportation. If you want to file an appeal, you must email the
Department at [email protected] within 45 days of the date of this
decision, setting forth a full and specific statement as to why you
believe this decision is erroneous, what significant facts that you
believe we did not consider, or what provisions of the DBE program
regulation you believe we misapplied. You have the right to request
copies of all documents and other information on which this decision
is based. USDOT does not accept notices of intent to appeal, partial
appeals, or otherwise non-compliant submissions. Please include a
copy of this letter and your contact information when you file your
appeal.

    (b) You must promptly provide the applicant copies of all documents
and other information on which you based the denial if the applicant
requests them.
    (c) You must establish waiting period of no more than twelve
months. After the waiting period expires, the denied firm may reapply
to any member of the UCP that denied the application. The time period
for reapplication begins to run on the date you send the denial letter.
An applicant's appeal of your decision to the Department pursuant to
Sec.  26.89 does not extend this period. You must include this
information, including the waiting period for reapplication, in your
denial letter.
0
59. Revise Sec.  26.87 to read as follows:

Sec.  26.87   What procedures does a certifier use to remove a DBE's
certification?

    (a) Burden of proof. If you seek to decertify a DBE under the
circumstances described in paragraph (b), (c), or (d) of this section,
you bear the burden of proving, by a preponderance of the evidence,
that the firm does not meet the certification standards of this part.
    (b) Ineligibility complaint. (1) Any person may file with you a
written complaint explaining why you should decertify a certified firm.
You are not required to accept a general allegation that a firm is
ineligible or an anonymous complaint. The complaint may include any
information or arguments supporting the complainant's assertion that
the firm is ineligible and should not continue to be certified.
Confidentiality of complainants' identities must be protected as
provided in Sec.  26.109(b).
    (2) You must review your records concerning the firm, any material
provided by the firm and the complainant, and other available
information. You may request additional information from the firm or
conduct any other investigation that you deem necessary.
    (3) If you determine, based on this review, that there is
reasonable cause to believe that the firm is no longer eligible for DBE
certification, you must provide the firm written notice of your intent
to decertify it, setting forth the reasons for the proposed
determination. The written notice must offer the firm an opportunity
for an informal hearing or to submit written arguments or evidence
demonstrating its continued eligibility. If you determine that
reasonable cause for decertifying the firm does not exist, you must
notify the complainant and the firm in writing of this determination
and the reasons for it. All statements of reasons for findings on the
issue of reasonable cause must specifically reference the evidence in
the record on which each reason is based.
    (c) DOT directive. (1) If an OA determines that there is reasonable
cause to believe that a firm you or another member of your UCP
certified does not meet the eligibility criteria of this part, the OA
may direct you to initiate a proceeding to remove the firm's
certification.
    (2) The OA must provide you and the firm written notice setting
forth the reasons for the directive, including any relevant
documentation or other information.
    (3) You must immediately commence a proceeding to remove
eligibility as provided by paragraph (d) of this section.
    (d) Certifier-initiated proceeding. If you determine that you have
reasonable cause to decertify a firm, you must provide the firm written
notice of your intent (NOI) to decertify it. The NOI must state clearly
and succinctly each of the reasons for the proposed action and must
specifically identify all the information on which you base each
reason.
    (e) Grounds for decertification. Your notices of intent and final
decertification decisions must specifically identify which of the
following ground(s) you rely on:
    (1) Changes in the firm's circumstances since the certification of
the firm by you or another member of your UCP that render the firm
unable to meet the eligibility standards of this part;
    (2) The firm fails to timely submit an annual Declaration of
Eligibility per Sec.  26.83(j);
    (3) Information or evidence regarding the firm's eligibility that
was not available to you at the time the firm was certified;
    (4) Information relevant to eligibility that the firm concealed or
misrepresented;
    (5) A change in DOT's certification standards or requirements after
the firm was certified. In this instance, you must offer the firm, in
writing, an opportunity to cure any defects within 30 days. If the firm
does not do so, you may proceed with sending the firm a notice of
intent to decertify;
    (6) Your decision to certify the firm was clearly erroneous;
    (7) The firm has failed to cooperate with you under Sec.
26.109(c);
    (8) The firm has exhibited a pattern of conduct indicating its
involvement in attempts to subvert the intent or requirements of the
DBE program; or
    (9) The firm has been suspended or debarred for conduct related to
the DBE program. The notice required by paragraph (h) of this section
must include a copy of the suspension or

debarment action. A decision to remove a firm for this reason will not
be subject to the hearing procedures in paragraph (d) of this section.
    (f) Hearing. When you notify a DBE that you have reasonable cause
to decertify it, as provided in paragraph (b), (c), or (d) of this
section, you must give the firm written notification of an opportunity
for an informal hearing. The hearing must be conducted either in person
or virtually using an interactive video conference. The firm may accept
the hearing offer via properly addressed email sent by 4:30 p.m. in the
certifier's time zone by the 7th day following the date of the NOI;
failure of the firm to do so will result in the firm's forfeiture of
the hearing opportunity. You and the firm must schedule and conduct the
hearing not more than 45 business days (unless otherwise authorized by
the appropriate OA) after you notify the firm of the opportunity to
have a hearing. The firm may elect to submit written arguments or other
information in lieu of a hearing. In either situation, you bear the
same burden of proving, by a preponderance of the evidence, that the
firm is no longer eligible for participation in the DBE program. The
firm must submit the written arguments or other information no later
than 7 days prior to the hearing date.
    (1) At the hearing the SEDO may respond to the reasons for the
proposal to remove the firm's certification and provide information and
arguments concerning why it should remain certified. However, the firm
is not entitled to a hearing if the ground for decertification is the
firm's failure to timely submit a Sec.  26.83(j) annual declaration. If
the firm does not provide the annual declaration within 15 days of your
NOI, you may issue a final notice of decertification based on Sec.
26.83(j) and/or Sec.  26.109(c).
    (2) Questions related to the SEDO's control of the firm must be
answered by the SEDO. The SEDO's attorney, a non-SEDO or other
individuals involved with the firm are permitted to attend the hearing
and answer questions related to their own experience or more generally
about the firm's ownership, structure, and operations. No part of this
paragraph (f)(2) precludes the SEDO from having attorney representation
at the hearing.
    (3) You must maintain a complete and verbatim record of the
hearing, either in writing or audio (or both). If the firm appeals to
DOT under Sec.  26.89, you must provide a transcript of the hearing to
DOT and, on request, to the firm. You must retain the original record
of the hearing.
    (g) Separation of functions. You must ensure that the decision in a
proceeding to decertify a firm is made by an office and personnel that
did not take part in actions leading to or seeking to implement the
proposal to decertify the firm and are not subject, with respect to the
matter, to direction from the office or personnel who did take part in
these actions.
    (1) Your method of implementing this requirement must be made part
of your DBE program and approved by the appropriate OA.
    (2) The decisionmaker must be an individual who is knowledgeable
about the certification requirements of this part.
    (h) Notice of decision. You must send the firm a final written
decision no later than 30 days of the informal hearing and/or receiving
written arguments/evidence from the firm in response to your NOI. If
you decide to decertify the firm, you must provide the firm a written
notice of decertification (NOD).
    (1) The NOD must describe with particularity the reason(s) for your
decision, including specific references to the evidence in the record
that supports each reason. The NOD must also inform the firm of the
consequences of your decision under paragraph (j) of this section and
of its appeal rights under Sec.  26.89.
    (2) You must send copies of the NOD to the complainant in an
ineligibility complaint or to the OA that directed you to initiate the
proceeding.
    (3) When sending a copy of an NOD to a complainant other than an
OA, you must not include information reasonably construed as
confidential business information, unless you have the written consent
of the firm that submitted the information.
    (4) You must make an entry in DOCR's online ineligibility
determination database. You must enter the name of the firm, names(s)
of the firm's owner(s), date of your decision, and the reason(s) for
your action.
    (i) Status of firm during proceeding. (1) A firm remains an
eligible DBE during the pendency of your proceeding to remove its
eligibility.
    (2) The firm does not become ineligible until the issuance of the
notice provided for in paragraph (h) of this section.
    (j) Effects of removal of eligibility. When you remove a firm's
eligibility, you must take the following actions:
    (1) When a prime contractor has made a commitment to using the
ineligible firm, but a subcontract has not been executed before you
issue the decertification notice provided for in paragraph (g) of this
section, the ineligible firm does not count toward the contract goal.
You must direct the prime contractor to meet the contract goal with an
eligible DBE firm or demonstrate to you that it has made good faith
efforts to do so.
    (2) When you have made a commitment to using a DBE prime
contractor, but a contract has not been executed before you issue the
decertification notice provided for in paragraph (g) of this section,
the ineligible firm does not count toward your overall DBE goal.
    (3) If a prime contractor has executed a subcontract with the firm
before you have notified the firm of its ineligibility, the prime
contractor may continue to use the firm and may continue to receive
credit toward the DBE goal for the firm's work. In this case, however,
the prime contractor may not extend or add work to the contract after
the firm was notified of its ineligibility without prior written
concurrence from recipient.
    (4) If a prime contractor has executed a subcontract with the firm
before you have notified the firm of its ineligibility, the prime
contractor may continue to use the firm as set forth in paragraph
(j)(3) of this section; however, the portion of the ineligible firm's
continued performance of the contract must not count toward your
overall goal.
    (5) If you have executed a prime contract with a DBE that was later
ruled ineligible, the portion of the ineligible firm's performance of
the contract remaining after you issued the notice of its ineligibility
must not count toward your overall goal, but the DBE's performance of
the contract may continue to count toward satisfying the contract goal.
    (6) The following exceptions apply to paragraph (j) of this
section.
    (i) If the DBE's ineligibility is caused solely by its having
exceeded the size standard during the performance of the contract, you
may continue to count the portion of the ineligible firm's performance
of the contract remaining after you issued the notice of its
ineligibility toward your overall goal as well as toward the contract
goals.

    (ii) If the DBE's ineligibility results from its acquisition by a
non-DBE, you may not continue to count the portion of the ineligible
firm's performance on the contract remaining after you issued the
notice of its ineligibility toward either the contract goal or your
overall goal, even if a prime contractor has executed a subcontract
with the firm or you have executed a prime contract with the DBE that
was later ruled ineligible. In this case, if eliminating the credit of
the ineligible firm will affect the prime contractor's ability to meet
the contract goal, you must direct the prime contractor to subcontract
to an eligible DBE firm to the extent needed to meet the contract goal,
or demonstrate to you that it has made good faith efforts to do so.
0
60. Revise Sec.  26.88 to read as follows:

Sec.  26.88   Summary suspension of certification.

    (a) Definition, operation, and effect. Summary suspension is an
extraordinary remedy for lapses in compliance that cannot reasonably or
adequately be resolved by other means. A certifier may summarily
suspend a DBE's certification in the circumstances and according to the
procedures described in this section.
    (1) A firm's certification is suspended under this part as soon as
the certifier transmits electronic notice to its owner at the last
known email address.
    (2) During the suspension period, the DBE may not be considered to
meet a contract or participation goal on contracts executed during the
suspension period.
    (b) Mandatory and elective suspensions--(1) Mandatory. The
certifier must summarily suspend a DBE's certification when:
    (i) The certifier has clear and credible evidence of the DBE's or
its SEDO's involvement in fraud or other serious criminal activity.
    (ii) The OA with oversight so directs.
    (2) Elective. The certifier has discretion to suspend summarily
when:
    (i) It has clear and credible evidence that the DBE's continued
certification poses a substantial threat to program integrity; or
    (ii) An owner upon whom the firm relies for eligibility does not
timely file the declaration and gross receipts documentation that Sec.
26.83(j) requires.
    (3) Flexibilities. In most cases, an information request or notice
of intent under Sec.  26.87 to decertify is a sufficient response to
events described in paragraphs (b)(1) and (2) of this section. The
certifier should consider the burden to the DBE and to itself in
determining whether summary suspension is a more prudent and
proportionate, effective response. The certifier may elect to suspend
the same DBE just once in any 12-month period.
    (c) Procedures--(1) Notice. The certifier must notify the firm, by
email, of its summary suspension on a business day during regular
business hours. The notice must explain the action, the reason for it,
the consequences, and the evidence on which the certifier relies.
    (i) Elective summary suspensions must only provide a single reason
for the action.
    (ii) Mandatory summary suspensions may provide multiple reasons.
    (iii) In either scenario, i.e., elective or mandatory, the notice
must demand that the DBE show cause why it should remain certified and
provide the time and date of a virtual show-cause hearing at which the
firm may present information and arguments concerning why the certifier
should lift the suspension.
    (2) Other requirements. As used in this section, ``days'' refers to
calendar days unless otherwise stated. The hearing date must be on a
business day that is at least 15 but not more than 25 days after the
date of the notice. The DBE may respond in writing in lieu of or in
addition to attending the hearing; however, it will have waived its
right to a hearing if it does not confirm its attendance within 10 days
of the notice and will have forfeited its certification if it does not
acknowledge the notice within 15 days. The show-cause hearing must be
conducted as a video conference on a standard commercial platform that
the DBE may readily access at no cost.
    (3) DBE response. The DBE may provide information and arguments
concerning its continuing eligibility until the 15th day following the
suspension notice or the day of the hearing, if any, whichever is
later. The DBE may email or fax its written response or send it via
common carrier or courier. Email submissions correctly addressed are
effective when sent; faxes are effective when and to the extent
confirmed; and physical deliveries are effective when the carrier
confirms delivery. While there is no requirement that the DBE appear at
the scheduled hearing, as noted in paragraph (c)(2) of this section, it
must opt in, acknowledge, and/or respond within the time frames noted.
The certifier may permit additional submissions after the hearing, as
long as the extension is on a business day that is not more than 30
days after the notice.
    (4) Failure to cancel or appear. If the DBE confirms its attendance
at the hearing, does not cancel its confirmation at least 5 days before
the hearing, and does not appear, it forfeits its certification. If the
certifier does not hold a hearing that the DBE has accepted, it
forfeits the suspension. The parties, however, may negotiate in good
faith to reschedule to another time or business day that is no later
than 29 days from the notice of suspension.
    (5) Scope and burdens. (i) Suspension proceedings are limited to
the suspension ground specified in the notice.
    (ii) The certifier may not amend its reason for summarily
suspending certification, nor may it electively suspend the firm again
during the 12-month period following the notice.
    (iii) The DBE has the burden of producing information and/or making
arguments concerning its continued eligibility, but it need only
contest the reason cited. No other evidence is required.
    (iv) The certifier has the burden of proving its case by a
preponderance of the evidence. It must send the suspended firm a notice
of decertification (NOD) within 30 days of the suspension notice or
lift the suspension. Any NOD must rely only on the reason given in the
summary suspension notice, and it must meet requirements in Sec.
26.87(g). Such an NOD is deemed to be a final decision under Sec.
26.87(g) to remove certification.
    (v) The DBE's failure to provide information contesting the
suspension does not impair the certifier's ability to prove its case.
That is, the uncontested evidence upon which the certifier relies in
its notice will constitute a preponderance of the evidence for purposes
of the NOD, and the decertification will become final, provided that
the certifier complies with applicable rules in this part.
    (6) Duration. The DBE remains suspended during the proceedings
described in this section but in no case for more than 30 days. If the
certifier has not lifted the suspension or provided a rule-compliant
NOD by 4 p.m. in the certifier's time zone on the 45th day, then it
must lift the suspension and amend DBE lists and databases as
necessary, by 12 p.m. in the certifier's time zone the following
business day.
    (d) Remedies--(1) Appeal. The DBE may appeal a final decision under
paragraph (c)(5)(iv) of this section, as provided in Sec.  26.89(c),
but may not appeal the suspension itself, unless paragraph (d)(2) of
this section applies.
    (2) Injunctive relief. A new, elective suspension occurring within
12 months of an earlier elective suspension is null and void. The DBE
subject to such a

suspension may immediately petition the Department to enjoin its
enforcement. Similarly, a suspended DBE may request injunctive relief
when the certifier fails to act within the time specified in paragraph
(c)(6) of this section. In either case, the DBE must:
    (i) Email the request under the subject line, ``Request for
Injunctive Relief'';
    (ii) Limit the request to a one-page explanation that includes the
certifier's name and the suspension dates; contact information for the
certifier, the DBE, and the DBE's SEDO(s); and the general nature and
date of the firm's response, if any, to the second suspension notice;
and
    (iii) Attach both suspension notices.
    (3) Withdrawal. A DBE may withdraw from the program at any time
before the certifier's final decision to remove certification.
0
61. Revise Sec.  26.89 to read as follows:

Sec.  26.89   Appeals to the Department.

    (a)(1) If you are a firm that is denied certification or whose
certification is removed by a certifier, you may appeal to the
Department.
    (2) If you are a complainant in an ineligibility complaint to a
certifier (or the concerned Operating Administration in the
circumstances provided in Sec.  26.87(c)), you may appeal to the
Department if the certifier does not find reasonable cause to propose
removing the firm's certification or, following a removal of
eligibility proceeding, determines that the firm is eligible.
    (3) If you want to file an appeal, you must send a letter to the
Department within 45 days of the date of the certifier's final
decision, including information and setting forth a full and specific
statement as to why you believe the decision is erroneous, what
significant fact(s) the certifier failed to consider, or what
provisions of this part you believe the certifier did not properly
apply. The Department may accept an appeal filed later than 45 days
after the date of the decision if the Department determines that there
was good cause for the late filing of the appeal or in the interest of
justice.
    (4) You may email your appeal to [email protected] or mail or
deliver it to U.S. Department of Transportation, Departmental Office of
Civil Rights, W78-101, 1200 New Jersey Avenue SE, Washington, DC 20590-
0001.
    (b) Pending the Department's decision, the certifier's decision
remains in effect. The Department does not stay the effect of the
decision while it is considering an appeal.
    (c) When it receives an appeal, the Department requests a copy of
the certifier's complete administrative record in the matter. The
certifier must provide the administrative record, including a hearing
transcript, within 20 days of the Department's request. The Department
may extend this time period on the basis of a certifier's showing of
good cause.
    (1) If you are an appellant who is a firm which has been denied
certification, whose certification has been removed, whose owner is
determined not to be a member of a designated disadvantaged group, or
whose owner the presumption of disadvantage has been rebutted, your
letter must state the name and address of any other recipient which
currently certifies the firm, which has rejected an application for
certification from the firm or removed the firm's eligibility within
one year prior to the date of the appeal, or before which an
application for certification or a removal of eligibility is pending.
Failure to provide this information may be deemed a failure to
cooperate under Sec.  26.109(c).
    (2) If you are an appellant other than one described in paragraph
(c)(1) of this section, the Department will request, and the firm whose
certification has been questioned must promptly provide, the
information called for in paragraph (c)(1) of this section. Failure to
provide this information may be deemed a failure to cooperate under
Sec.  26.109(c).
    (d)(1) You must ensure that the administrative record is well
organized, indexed, and paginated. Records that do not comport with
these requirements are not acceptable and will be returned to you for
immediate correction. Failure to send a corrected record within seven
days of the Department's request will be deemed a failure to cooperate
under Sec.  26.109(c).
    (2) If an appeal is brought concerning one certifier's
certification decision regarding a firm, and that certifier relied on
the decision and/or administrative record of another certifier, this
requirement applies to both certifiers involved.
    (e) The Department decides only the issue(s) presented on appeal.
It does not reexamine overall eligibility, conduct a de novo review, or
hold hearings. It considers the administrative record and any
additional information it considers relevant. The Department resolves
appeals on substantive and/or procedural grounds.
    (f)(1) The Department affirms your decision if it determines that
your decision is supported by substantial evidence and is consistent
with the provisions of this part concerning certification.
    (2) The Department reverses your decision if it determines that
your decision is not supported by substantial evidence or is
inconsistent with the provisions of this part concerning certification.
The Department will direct you to certify the firm or remove its
eligibility, as appropriate. You must take the action directed by the
Department's decision immediately upon receiving written notice of it.
    (3) The Department is not required to reverse your decision if the
Department determines that a procedural error did not result in
fundamental unfairness to the appellant or substantially prejudice the
opportunity of the appellant to present its case.
    (4) If it appears that the record is incomplete or unclear with
respect to matters likely to have a significant impact on the outcome
of the case, the Department may remand the decision to you with
instructions seeking clarification and/or augmentation of the record.
The Department may also remand a case to you for further proceedings
consistent with Department instructions concerning the proper
application of the provisions of this part.
    (5) The Department does not uphold your decision based on grounds
not specified in your decision.
    (6) The Department's decision is based on the status and
circumstances of the firm as of the date of the decision being
appealed.
    (7) The Department may summarily dismiss an appeal. Reasons for
doing so may include (but are not limited to) the Department's own
initiative, a withdrawal request from the appellant, non-compliance
with paragraph (c) of this section, or a request by the certifier to
reconsider its decision.
    (g) The Department does not issue advisory opinions.
    (h) The Department provides written notice of its decision to you,
the firm, and the complainant in an ineligibility complaint. A copy of
the notice is also sent to any other certifier whose administrative
record or decision has been involved in the proceeding (see paragraph
(d) of this section).
    (i) If practicable, the Department will issue a written decision
within 180 calendar days of receiving the complete administrative
record. If the Department does not make its decision within this
period, the Department will provide written notice to concerned
parties, including a statement of the reason(s) for the delay and an
approximate date by which it will render an appeal decision.
    (j) As a certifier, when you provide supplemental information to
the

Department, you must also make this information available to the firm
and any third-party complainant involved, consistent with Federal or
applicable state laws concerning freedom of information and privacy.
The Department makes available, on request by the firm and any third-
party complainant involved, any supplemental information it receives
from any source.
    (k) All decisions under this section are administratively final and
are not subject to petitions for reconsideration.
    (l) Final decisions are normally published without redactions on
DOCR's website. Decisions will likely contain confidential business and
financial information and/or personally identifiable information.
Therefore, DOCR, within its full discretion, may publish final
decisions issued under this section with any necessary redactions.

Sec.  26.91  [Amended]

0
62. Amend Sec.  26.91 by:
0
a. Removing the words ``recipients'' and ``recipient'' wherever they
appear and adding in their places the words ``certifiers'' and
``certifier'', respectively.
0
b. In paragraph (b)(1), removing the cross-reference ``Sec.  26.87(i)''
and adding in its place the cross-reference ``Sec.  26.87(j)''.

Sec.  26.103   [Amended]

0
63. Amend Sec.  26.103 in paragraph (d)(2) by removing the words
``being in compliance'' and adding in their place the word
``complying''.

Appendix A to Part 26 [Amended]

0
64. Amend appendix A in paragraph IV.A.(1) by removing the word
``conducing'' and adding in its place the word ``conducting''.

Appendix B to Part 26 [Removed and Reserved]

0
65. Remove and reserve appendix B to part 26.

Appendices E through G to Part 26 [Removed]

0
66. Remove appendices E through G to part 26.

[FR Doc. 2022-14586 Filed 7-20-22; 8:45 am]
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