Contracting Chaos? How Mid-America v. US Department of Transportation is Upending DBE Certifications

Since the early 1980s, Disadvantaged Business Enterprise (DBE) programs including the one implemented by the US Department of Transportation (DOT) have been in effect. The DBE program began under Title VI of the Civil Rights Act and has been reauthorized by Congress in various bills over the years. Generally, these DBE programs have required that ten percent of federal highway construction funds be paid to small businesses controlled and owned by “socially and economically disadvantaged individuals.” Certain minority and women owned businesses have been given a presumption of disadvantage to facilitate their participation in federally‑assisted DOT contracting. While any person may qualify as socially and economically disadvantaged regardless of their race or gender, certain racial groups and women are rebuttably presumed to be disadvantaged. All other applicants seeking DBE status who are not presumed disadvantaged on the basis of their racial or female status must prove, by a preponderance of the evidence, that they are socially and economically disadvantaged.

Many states have enacted similar requirements governing state and local projects. Recently, the presumption of disadvantaged status has come under attack in Mid‑America Milling Company v. U.S. Department of Transportation[i] pending in the U.S. District Court for the Eastern District of Kentucky. The results of Mid-America represents a drastic change to the DOT’s DBE program for federal DOT contracting. 

Any contractors bidding and working on DOT and other federal and certain state projects are familiar with DBE programs and take them into account while bidding projects with DBE goals. Some have even lost contract awards to DBE firms due to not receiving the presumption of DBE status. While the long-term implications of Mid-America are not clear, it will impact DBE status and how certain federal projects are awarded.

The Mid-America case began in October 2023 when plaintiffs, Mid-America Milling, LLC and Bagshaw Trucking Inc. (Plaintiffs), who both regularly bid on DOT funded contracts impacted by DBE goals filed suit against the DOT seeking a preliminary and permanent injunction and a declaratory judgment seeking to end the DBE program. Plaintiffs claimed that the DBE program violated the equal protections afforded under the Fifth Amendment of the United States Constitution. Neither plaintiff had a presumption of disadvantage status and had lost out on federally funded contracts to DBE firms even when their bids were lower. The Plaintiffs argued that the DBE program discriminated against them.

The Court found that the DOT’s DBE program had carved out preferences for only some minority groups (race and gender), it was not tied to any foreseeable conclusion, and it failed to be narrowly tailored. For these reasons, the Court held that the Government had failed to justify its discriminatory policies and the Plaintiffs would likely prevail on the merits of their constitutional claims. Ultimately, the Court found that Plaintiffs were entitled to a preliminary injunction. Plaintiffs requested that the DOT be enjoined from implementing the DBE’s race and gender presumptions nationwide.  However, the Court denied such broad request for relief and limited the injunction to the Plaintiffs and later clarified the injunction as being applicable to any DOT contracts impacted by DBE goals upon which Plaintiffs bid in any state in which Plaintiffs bid on such contracts.[ii] In essence, the Court held that race and gender classifications and the presumption of disadvantaged status violate the Constitution’s guarantee of equal protection.[iii]

In 2025, the Government had changed its position and began to agree with Plaintiffs. The Government and Plaintiffs then submitted a Joint Motion for Entry of a Consent Order asking the Court to enter an order finding that the use of DBE goals in a jurisdiction where any DBE in that jurisdiction was determined eligible based on race or sex-based presumption violates the equal protection component of the Due Process Clause of the Fifth Amendment.[iv]  There has been no ruling on this Joint Motion as briefing on this issue is still ongoing.

In response to the rulings in the Mid-America case, the DOT issued a proposed Interim Final Rule (IFR) effective October 3, 2025, to ensure that the DOT operates its DBE program in a “nondiscriminatory fashion” and in line with the Constitution.[v] The IFR eliminates the presumption that a business is “disadvantaged” solely because of the owner’s race or gender. Similar changes are reflected in 49 CFR §26.67. DBE participation requirements are also temporarily suspended and payments will not count towards DBE participation goals until the recertification process is completed. Some states have followed the IFR by suspending DBE goals on various projects, including Missouri, Virginia, and California until recertification of DBE contractors based on the new standards is completed.

With respect to DBE certifications under the prior rules, the IFR immediately suspends existing DBE certifications and requires previously certified DBE firms to submit new applications proving that they are eligible for certification under the IFR. The IFR requires each Unified Certification Program (UCP) to re-evaluate any currently certified DBE, recertify any DBE under the new certification standards, and to decertify any prior DBE that does not meet the new certification standards.[vi]

Under the IFR, to achieve certification, all applicants (new and previously certified applicants) must demonstrate by a preponderance of the evidence a social and economic disadvantage based on their own experiences and circumstances within American Society.[vii] Specifically, the IFR provides the following guidelines for an applicant seeking DBE certification:

(1) to satisfy the social and economic disadvantage requirement and ensure such determination is not based in whole or in part on race or sex, an applicant must provide a personnel narrative that establishes the existence of disadvantage by a preponderance of the evidence based on individualized proof regarding specific instances of economic hardship, systemic barriers, and denied opportunities that impeded the applicant’s progress or success in education, employment, or business,

(2) the personal narrative must state how and to what extent the impediments caused the owner economic harm, and must establish that the owner is economically disadvantaged relative to similarly situated non-disadvantaged individuals and 

(3) the applicant must attach to the personal narrative a current personal net worth statement and any other financial information he considers relevant. To succeed in the recertification process, applicants must collect and submit the required financial documentation and ensure that their personal narrative clearly outlines the specific barriers that they have faced that justify DBE status. Remember the IFR is new to all parties involved including contractors and the various certifying agencies and it is key to maintain an open line of communication.

While the IFR did not provide detailed information on how UCPs should reevaluate existing DBEs, it is presumed that UCPs will follow current standards applicable for firms that were not presumed to be disadvantaged. Currently, there is no specific deadline by which a UCP must complete its reevaluation process. In fact, 49 CFR § 26.111 simply states that a UCP must reevaluate each currently certified CBE firm “as quickly as practicable.” 

There is still a great deal of uncertainty about how the new standards in the IFR will impact DBE programs at both the federal and state levels. For Unified Certification Programs (UCPs), the required reevaluation process is entirely new, and they must interpret and apply these revised rules without delay. As a result, many UCPs are facing challenges in understanding how to administer their reevaluation responsibilities in order to avoid inconsistency and compliance issues.  Ultimately, some currently certified DBE firms may not meet the new standards.  As a result, they may be unable to participate in certain projects so that the pool of eligible DBE firms may decrease leading to a decline in DBE participation rates. 

There is no doubt that the Mid-America case and related IFR will cause disruption to contractors on certain DOT and federally funded projects, but in the long run, there could be more opportunities as the DBE participation goals will likely drop. But keep in mind that the Mid-America case will be appealed and the ultimate outcome could change.  In the interim, contractors wanting to maintain or achieve DBE status for various DOT projects should start the process of seeking certification or recertification based on the new standards established by the IFR.

Author Andrew G. Vicknair is an attorney with D'Arcy Vicknair, LLC in New Orleans, Louisiana. Andrew focuses his practice on construction litigation matters and regularly handles claims related to construction defects, payment disputes, design issues, and general disputes among subcontractors, owners, and general contractors.

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[i] Mid-Am. Milling Co., LLC v. United States DOT, 2024 U.S. Dist. LEXIS 171113, at *2 (E.D. Ky. Sep. 23, 2024).

[ii] Mid-Am. Milling Co., LLC v. United States DOT, 2024 U.S. Dist. LEXIS 198120, at *12 (E.D. Ky. Oct. 31, 2024).

[iii] Mid-Am. Milling Co., LLC v. United States DOT, 2024 U.S. Dist. LEXIS 171113, at *2 (E.D. Ky. Sep. 23, 2024).

[iv]  Mid-Am. Milling Co., LLC v. United States DOT, Rec. Doc. No. 82, filed on May 28, 2025.

[v] See Interim Final Rule at https://www.regulations.gov/document/DOT-OST-2025-0897-0001.

[vi] 49 CFR §26.111.

[vii] 49 CFR §26.67.