September 26, 2022

Volume XII, Number 269

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September 26, 2022

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Changes to Decertification Process? Proposed Changes to Federal DBE Program

Preliminary NoteThe U.S. Department of Transportation recently released a long-awaited Notice of Proposed Rulemaking to modernize the Disadvantaged Business Enterprise (DBE) program regulations. This blog is part of a series looking at some of the significant proposed changes. A copy of all of the proposed changes can be found here: https://www.federalregister.gov/documents/2022/07/21/2022-14586/disadvantaged-business-enterprise-and-airport-concession-disadvantaged-business-enterprise-program.

After a business obtains DBE certification, it must continue to meet the qualifications for the certification.  If the certifying agency believes that the business no longer meets the requirements, a decertification action will be initiated. The proposed changes to the DBE regulations make some significant changes in this process.

Companies that are facing decertification are entitled to a hearing to respond to the intent to decertify.  The proposed changes make virtual hearings a permanent option after seeing the success of virtual hearings during COVID.  Further, it would require the hearing (whether in person or virtual) to take place within 45 days of the certifier’s notice of intent to decertify. 

The proposed changes also include a provision that only the socially and economically disadvantaged owner be permitted to answer questions about their control of the firm during a decertification hearing.  Other representatives, including attorneys, would be permitted to attend and participate in the hearing (including answering and asking questions) on other topics.  This change also makes it clear that attorneys may speak, ask questions, and present arguments during decertification hearings. At present, it is not uncommon for certifiers to discourage or try to prohibit attorneys from fully representing their clients at decertification hearings. 

Another proposed change would allow a DBE who may no longer meet the certification standards after a change by the DOT to those standards the opportunity to cure the eligibility defect within 30 days of written notice.

Finally, the regulations would not require a decertification hearing for companies facing decertification due to their failure to timely submit their yearly Declaration of Eligibility.

The preamble and summary of the proposed changes also reiterate certain aspects of the decertification process that have been subject to abuse and misinterpretation over the years. For instance, it notes the frequent problem of certifiers issuing form notices of intent to decertify with scant justification articulated.  The preamble reiterates that this is not acceptable and in violation of Section 26.87 as it deprives the DBE of the ability to meaningfully respond and provide information demonstrating its continued eligibility. 

Have thoughts or suggestions on the proposed rules?  You can make your voice heard by offering your comment here:  https://www.regulations.gov/docket/DOT-OST-2022-0051/document.

©2022 Strassburger McKenna Gutnick & GefskyNational Law Review, Volume XII, Number 229
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About this Author

Danielle L. Dietrich SMGG Attorney Pittsburgh, PA
Shareholder

Danielle L. Dietrich, Shareholder in the Pittsburgh Office of SMGG, focuses her practice in the areas of women and diverse-owned businesses, healthcare, elder law and litigation.  She has a broad range of experience in providing legal counsel and advice to her clients (both large and small), as well as having handled a wide range of disputes and litigation in Pennsylvania, Ohio and West Virginia.

A large portion of Ms. Dietrich’s practice focuses on the representation of women and diverse-owned businesses.  That practice includes assisting these...

(412) 281-5423
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