In late September, a federal judge entered a preliminary injunction to partially blog the United States Department of Transportation’s Disadvantaged Business Enterprise (“DBE”) program. A copy of my blog on that decision can be found here. On October 31, 2024, the federal judge in Kentucky expanded and clarified that preliminary injunction. My blog post covering that decision can be found here.
Of course, these decisions led to widespread concern and confusion over the status of the DBE program. On November 18, 2024, the Federal Highway Administration’s Office of Civil Rights issued a memorandum providing general guidance on how the FHA will be complying with the preliminary injunction.
The memorandum provided a background of the situation and details about the injunction. It also provided an explanation of the process that the Department of Justice negotiated with plaintiffs for implementing the preliminary injunction.
The FHA advised that “federally-assisted contracts on which Plaintiffs intend to submit a quote in any state must have DBE goals set at zero percent.” The FHA shared that the plaintiffs in the lawsuit identified 25 states in which they operate or plan to bid on federally funded State contracts with DBE goals: Alabama, Arkansas, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, New Jersey, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and West Virginia. However, they could expand this list to include other states. As of the date of the memorandum, the plaintiffs had identified specific contracts in Illinois, Indiana, Kentucky, Michigan, Ohio, Oklahoma, Tennessee, Virginia, and West Virginia.
Once a contract is properly identified by the plaintiffs as one that they will submit a quote on, the state must set the contract DBE goal to 0%. To the extent that the reduction of DBE goals on certain projects reduces progress towards the overall annual DBE goal, the state must still make a good faith effort to meet those goals. If the state has a shortfall in their goal, they must submit a shortfall analysis.
For other contracts, the DBE program will continue to operate pursuant to the regulations, and that includes implementing contract goals for contracts other than ones identified by the plaintiffs in the litigation.
To be sure, the DBE program is part of a rapidly changing landscape that will be faced with much uncertainty in the coming months and potentially years. The FHA will issue further memorandum as necessary regarding the DBE program and pending litigation, and I will be sure to cover any further guidance or developments in this blog.
