[Federal Register Volume 64, Number 123 (Monday, June 28, 1999)]
[Unknown Section]
[Pages 34569-34570]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15866]



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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

49 CFR Parts 23 and 26

[Docket OST-97-2550]

RIN 2105-AB92


Participation by Disadvantaged Business Enterprises in Department 
of Transportation Programs

AGENCY: Office of the Secretary, DOT.

ACTION: Final rule; correction.

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SUMMARY: In its final disadvantaged business enterprise (DBE) rule, the 
Department intended to ensure the confidentiality of personal financial 
information submitted to recipients by owners of DBE firms. The 
Department inadvertently omitted the regulatory text language on this 
point. This correction document remedies this omission. In addition, 
this document corrects minor omissions concerning the threshold for 
Federal Transit Administration recipients to establish DBE programs and 
a requirement for transit vehicle manufacturers to have DBE programs, 
removes a potentially confusing word from the rule's provisions 
concerning DOT review of recipients' overall goals, clarifies language 
concerning the certification and personal net worth of airport 
concessionaires and others, and clarifies that a lease is viewed as a 
contract for purposes of the rule.

DATES: This rule is effective June 28, 1999.

FOR FURTHER INFORMATION CONTACT: Robert C. Ashby, Deputy Assistant 
General Counsel for Regulation and Enforcement, Department of 
Transportation, 400 7th Street, SW., Room 10424, Washington, DC 20590, 
phone numbers (202) 366-9306 (voice), (202) 366-9313 (fax), (202) 755-
7687 (TDD), [email protected] (email).

SUPPLEMENTARY INFORMATION:

Privacy

    In discussing the requirement of the DBE final rule that owners of 
DBE firms submit a statement of personal net worth, with supporting 
documentation, the Department addressed commenters' concerns about the 
confidentiality of the information. The preamble to the rule said the 
following:

    One of the primary concerns of DBE firms commenting about 
submitting personal financial information is ensuring that the 
information remains confidential. In response to this concern, the 
rule explicitly requires that this material be kept confidential. It 
may be provided to a third party only with the written consent of 
the individual to whom the information pertains. This provision is 
specifically intended to pre-empt any contrary application of state 
or local law (e.g., a state freedom of information act that might be 
interpreted to require a state transportation agency to provide to a 
requesting party the personal income tax return of a DBE applicant 
who had provided the return as supporting documentation for his PNW 
statement). There is one exception to this confidentiality 
requirement. If there is a certification appeal in which the 
economic disadvantage of an individual is at issue (e.g., the 
recipient has determined that he or she is not economically 
disadvantaged and the individual seeks DOT review of the decision), 
the personal financial information would have to be provided to DOT 
as part of the administrative record. The Department would treat the 
information as confidential. (64 FR 5117; February 2, 1999).

    Unfortunately, through editorial error on the Department's part, 
the regulatory text provision referred to was omitted from the final 
rule. We regret any confusion that this omission may have caused, and 
we are correcting the error by inserting the language in a new 
paragraph (a)(2)(iii) of Sec. 26.67 of the rule.

FTA Requirements for DBE Programs

    In Sec. 26.21(a)(2) of the rule, the Department states that FTA 
recipients who receive more than $250,000 in various forms of FTA 
assistance must have a DBE program. The phrase ``exclusive of transit 
vehicle purchases'' was inadvertently omitted from this paragraph. This 
omission has raised questions from some recipients, and we are 
reinserting the omitted language to avoid confusion. In addition, this 
provision did not make explicit that transit vehicle manufacturers must 
have DBE programs, so we are adding language to make this clear.

Review of Overall Goals

    While operating administrations review recipients' overall goal 
submissions, recipients are not required to obtain prior concurrence by 
operating administrations with their overall goals (see 
Sec. 26.45(f)(4)).
    However, as the result of an editorial oversight, Sec. 26.21(b)(1) 
of the rule makes a reference to overall goals being ``approved'' by 
operating administrations. Because prior concurrence is not required, 
this reference is incorrect and could be misleading. Therefore, we are 
removing it.

Concessionaires

    In the February 2, 1999, final DBE rule, the Department removed all 
of former part 23 except the portion concerning airport 
concessionaires. The airport concession provisions were modified for 
consistency with the new 49 CFR part 26. In one respect, however, the 
amendment of the airport concessions provision failed to delete 
language concerning certification procedures that referred to the (now 
deleted) certification provisions of former part 23. While we have 
provided guidance to airports that they should follow part 26 
procedures, we believe it would be useful to delete the language 
referring to former part 23's procedures. Therefore, this rule 
eliminates two paragraphs in Sec. 23.95. Recipients should follow part 
26 certification procedures for concessionaires as well as for other 
contractors.
    Airports have expressed concern that the rule is unclear concerning 
the application to concessionaires of the $750,000 personal net worth 
(PNW) cap and PNW statement requirements of Sec. 26.67. The Department 
is currently working to complete a final rule concerning airport 
concessions. The PNW cap applicable to concessionaires is one of the 
matters being considered in this rulemaking. The PNW cap amount that 
the Department applies to concessionaires may or may not be $750,000. 
Pending completion of the final rule on airport concessions, the 
Department believes it best to resolve the current uncertainty by 
making the $750,000 cap amount and PNW statement requirement of 
Sec. 26.67 inapplicable to airport concessionaires.
    We are amending Sec. 26.67(a)(2)(i) to specify that disadvantaged 
owners of airport concessionaires are not required to submit PNW 
statements. Consequently, the rebuttal of the presumption of economic 
disadvantage based on a PNW statement an individual is required to 
submit (see Sec. 26.67(b)(1)) also does not apply to airport 
concessionaires.

Definition of ``Contract''

    The 49 CFR part 23 definition of ``contract'' specified that a 
lease was

[[Page 34570]]

viewed as a contract. The part 26 definition inadvertently omitted this 
sentence. To avoid any potential confusion on this point, this 
correction document adds a sentence on leases.

Clarification Concerning Personal Net Worth Documentation

    The Department has received a number of questions and expressions 
of concern about the documentation it is appropriate for recipients to 
require in ascertaining the personal net worth of owners of DBE firms. 
The Department believes that it is important to clarify the rule to 
state that this documentation, and the PNW statement itself, should not 
be unduly lengthy, burdensome or intrusive.
    The Department uses the Small Business Administration's 
implementation of its PNW requirements as a model for recipients' 
practices. SBA requires a two-page form, supported by two years' of 
personal and business tax returns. With respect to the information 
routinely collected from applicants or owners of currently certified 
DBEs for purposes of ascertaining PNW, the Department believes that 
recipients should not exceed the information sought by SBA in its 
programs. Consequently, while recipients are not required to use the 
SBA form verbatim, they should use a form of similar length and 
content. Recipients may appropriately collect and retain copies of two 
years' of the individuals personal and business tax returns.
    On the other hand, the Department regards as unduly lengthy, 
burdensome, or intrusive such practices as using a form significantly 
longer or more complex than the SBA form (e.g., a multipage PNW form), 
requiring inventories of personal property or appraisals of real 
property. Such practices are contrary to part 26.

Regulatory Analyses and Notices

    This set of amendments correcting part 26 is not a significant rule 
under Executive Order 12866 or the Department's Regulatory Policies and 
Procedures. The Department certifies that the amendments will not have 
significant economic impacts on a substantial number of small entities. 
This is because the amendments are technical corrections that will not 
impose costs on entities, regardless of their size. They do not have 
Federalism impacts sufficient to warrant the preparation of a 
Federalism impact statement. They do not impose information collection 
requirements.
    These amendments relate to regulatory provisions that have already 
been the subject of notice and comment (as part of the Department's May 
1997 supplemental notice of proposed rulemaking concerning the DBE 
program).
    Because the amendments merely correct accidental omissions from the 
regulatory text or remove a potentially confusing reference, we do not 
believe that additional notice and comment would be productive. 
Therefore, the Department has determined that further notice and 
comment would be impracticable, unnecessary, and contrary to the public 
interest. The Department has good cause to make the corrections 
effective immediately in order to avoid confusion and any adverse 
effects on DBEs or recipients from the absence of the omitted language.

List of Subjects

49 CFR Part 23

    Administrative practice and procedure, Airports, Civil rights, 
Concessions, Government contracts, Grant programs--transportation, 
Minority businesses, Reporting and recordkeeping requirements.

49 CFR Part 26

    Administrative practice and procedure, Airports, Civil rights, 
Government contracts, Grant programs--transportation, Highways and 
roads, Mass transportation, Minority businesses, Reporting and 
recordkeeping requirements.

    Issued this 11th day of June, 1999, at Washington, D.C.
Rodney E. Slater,
Secretary of Transportation.

    For the reasons set forth in the preamble, the Department amends 49 
CFR parts 23 and 26 as follows:

PART 23--[AMENDED]

    1. The authority citation for part 23 continues to read as follows:

    Authority: 42 U.S.C. 200d et seq.; 49 U.S.C. 47107 and 47123; 
Executive Order 12138, 3 CFR, 1979 Comp., p. 393.


Sec. 23.95  [Amended]

    2. In Sec. 23.95, remove and reserve paragraphs (f)(2) and (f)(3).

PART 26--[AMENDED]

    3. The authority citation for part 26 is revised to read as 
follows:

    Authority: 23 U.S.C. 324; 42 U.S.C. 2000d, et seq.; 49 U.S.C 
1615, 47107, 47113, 47123; Sec. 1101(b), Pub. L. 105-178, 112 Stat. 
107, 113.

    4. In the definition of the term ``Contract'' in Sec. 26.5, add a 
sentence at the end of the definition, to read as follows:


Sec. 26.5  What do the terms used in this part mean?

* * * * *
    Contract * * * For purposes of this part, a lease is considered to 
be a contract.
* * * * *
    5. In Sec. 26.21, revise paragraph (a)(2) to read as follows:


Sec. 26.21  Who must have a DBE program?

    (a) * * *
    (2) FTA recipients that receive $250,000 in FTA planning, capital, 
and/or operating assistance in a Federal fiscal year, exclusive of 
transit vehicle purchases, and transit vehicle manufacturers who must 
submit an overall goal under Sec. 26.49;
* * * * *


Sec. 26.21  [Amended]

    5. In Sec. 26.21(b)(1), in the parenthetical phrase, remove the 
words ``and approved'' following the word ``reviewed''.


Sec. 26.45  [Amended]

    6. In Sec. 26.45(c)(5), remove the words ``Subject to the approval 
of the DOT operating administration, you'' and add ``You'' in its 
place.
    7. Amend Sec. 26.67 as follows:
    a. Revise paragraph (a)(2)(i); and
    b. Redesignate paragraph (a)(2)(ii) as paragraph (a)(2)(iii), and 
add a new paragraph (a)(2)(ii), to read as follows:


Sec. 26.67  What rules determine social and economic disadvantage?

    (a) * * *
    (2)(i) You must require each individual owner of a firm applying to 
participate as a DBE (except a firm applying to participate as a DBE 
airport concessionaire) whose ownership and control are relied upon for 
DBE certification to submit a signed, notarized statement of personal 
net worth, with appropriate supporting documentation. This statement 
and documentation must not be unduly lengthy, burdensome, or intrusive.
    (ii) Notwithstanding any provision of state law, you must not 
release an individual's personal net worth statement nor any 
documentation supporting 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 in which the disadvantaged status of the individual is in 
question.
* * * * *
[FR Doc. 99-15866 Filed 6-24-99; 8:45 am]
BILLING CODE 4910-62-P