[Federal Register Volume 70, Number 54 (Tuesday, March 22, 2005)]
[Rules and Regulations]
[Pages 14496-14519]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-5530]



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Part II





Department of Transportation





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Office of the Secretary



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49 CFR Part 23



Participation by Disadvantaged Business Enterprises in Airport 
Concessions; Final Rule and Proposed Rule

  Federal Register / Vol. 70, No. 54 / Tuesday, March 22, 2005 / Rules 
and Regulations  

[[Page 14496]]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

49 CFR Part 23

[Docket No. OST-97-2550]
RIN 2105-AC91


Participation by Disadvantaged Business Enterprises in Airport 
Concessions

AGENCY: Office of the Secretary, DOT.

ACTION: Final rule.

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SUMMARY: This rule revises and updates the Department's regulation 
concerning participation by airport concessionaire disadvantaged 
business enterprises (ACDBEs) in the concessions activities of airports 
receiving Federal financial assistance from the airport improvement 
program (AIP) of the Federal Aviation Administration (FAA). It makes 
the ACDBE concessions rule parallel in many important respects to the 
Department's DBE regulation for Federally-assisted contracts. It also 
addresses issues such as goal-setting, personal net worth and business 
size standards, and counting ACDBE participation by car rental 
companies.

DATES: Effective Date: This rule is effective April 21, 2005.

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) 366-9310 (voice), (202) 366-9313 (fax), (202) 755-
7687 (TTY), [email protected] (e-mail); and Michael Freilich, 
National External Program Manager, Office of Civil Rights, Federal 
Aviation Administration, 800 Independence Avenue, SW., Washington, DC 
20591. Phone numbers 202-267-7551 (voice), 202-267-5565 (fax).

SUPPLEMENTARY INFORMATION:

Background

    This final rule revises and updates the Department's regulation to 
ensure nondiscrimination in the provision of opportunities for 
disadvantaged business enterprises in airport concessions (49 CFR Part 
23). The regulation is mandated by 49 U.S.C. 47107(e), originally 
enacted in 1987 and amended in 1992. The current language of this 
section is the following:

    (e) Written Assurances of Opportunities for Small Business 
Concerns. (1) The Secretary of Transportation may approve a project 
grant application under this subchapter for an airport development 
project only if the Secretary receives written assurances, 
satisfactory to the Secretary, that the airport owner or operator 
will take necessary action to ensure, to the maximum extent 
practicable, that at least 10 percent of all business at the airport 
selling consumer products or providing consumer services to the 
public are small business concerns (as defined by regulations of the 
Secretary) owned and controlled by a socially and economically 
disadvantaged individual (as defined in section 47113(a) of this 
title).
    (2) An airport owner or operator may meet the percentage goal of 
paragraph (1) of this subsection by including any business operated 
through a management contract or subcontract. The dollar amount of a 
management contract or subcontract with a disadvantaged business 
enterprise shall be added to the total participation by 
disadvantaged business enterprises in airport concessions and to the 
base from which the airport's percentage goal is calculated. The 
dollar amount of the management contract or subcontract with a non-
disadvantaged business enterprise and the gross revenue of business 
activities to which the management contract or subcontract pertains 
may not be added to this base.
    (3) Except as provided in paragraph (4) of this subsection, an 
airport owner or operator may meet the percentage goal of paragraph 
(1) of this subsection by including the purchase from disadvantaged 
business enterprises of goods and services used in businesses 
conducted at the airport, but the owner or operator and the 
businesses conducted at the airport shall make good faith efforts to 
explore all available options to achieve, to the maximum extent 
practicable, compliance with the goal through direct ownership 
arrangements, including joint ventures and franchises.
    (4)(A) In complying with paragraph (1) of this subsection, an 
airport owner or operator shall include the revenues of car rental 
firms in the base from which the percentage goal in paragraph (1) is 
calculated.
    (B) An airport owner or operator may require a car rental firm 
to meet a requirement under paragraph (1) of this subsection by 
purchasing or leasing goods or services from a disadvantaged 
business enterprise. If an owner or operator requires such a 
purchase or lease, a car rental firm shall be permitted to meet the 
requirement by including purchases or leases of vehicles from any 
vendor that qualifies as a small business concern owned and 
controlled by a socially and economically disadvantaged individual.
    (C) This subsection does not require a car rental firm to change 
its corporate structure or to provide for direct ownership 
arrangement to meet the requirement of this subsection.
    (5) This subsection does not preempt--
    (A) A State or local law, regulation, or policy enacted by the 
governing body of an airport owner or operator or;
    (B) The authority of a State or local government or airport 
owner or operator to adopt or enforce a law, regulation, or policy 
related to disadvantaged business enterprises.
    (6) An airport owner or operator may provide opportunities for a 
small business concern owned and controlled by a socially and 
economically disadvantaged individual to participate through direct 
contractual agreement with that concern.
    (7) An air carrier that provides passenger or property-carrying 
services or another business that conduct aeronautical activities at 
an airport may not be included in the percentage goal of paragraph 
(1) * * *.

    .The present version of Part 23 was issued in 1992 (57 FR 18410, 
April 30, 1992) and amended in 1999 (64 FR 5126, February 2, 1999). 
There have been three proposed rules to revise Part 23: in 1993 (58 FR 
52050, October 8, 1993), 1997 (62 FR 24548, May 30, 1997), and 2000 (65 
FR 54454; September 8, 2000). This final rule responds to comments on 
the most recent of these proposals.
    In the 2000 proposal, the Department suggested making the DBE 
concessions rule a subpart of 49 CFR Part 26, the DBE rule for DOT-
assisted contracts. However, the DOT-assisted contracts and concessions 
rules are based on different statutes. They apply to different kinds of 
businesses, and concern distinct types of relationships between 
recipients of DOT financial assistance and businesses. There are a 
number of substantive differences between the two regulatory schemes 
(e.g., business size standards). For these reasons, the Department has 
decided to keep the two regulations separate. ACDBEs will continue to 
be governed by Part 23, as revised by this issuance, and DOT-assisted 
contracts DBE provisions will remain in Part 26. Keeping the regulatory 
provisions separate should help to avoid confusion.
    The Supreme Court's decision in Adarand v. Pena, which established 
the requirement that race-conscious affirmative action programs meet 
the ``strict scrutiny'' standard of review, was rendered in 1995. In 
1999, when the Department made major changes to Part 26 in order to 
meet Adarand requirements, we did not issue a comprehensive revision of 
the airport concessions DBE requirements. Consequently, one of the most 
important functions of this final rule is to ensure that the airport 
concessions requirements of Part 23 meet Adarand requirements.
    In 2003-04, the Department's Office of Inspector General (IG) 
issued two reports that addressed fraud and abuse problems in the 
Department's DBE program. Many of the IG's recommendations focused on 
the need for more effective oversight of the DBE program by state and 
local recipients and by DOT operating administrations. However, some of 
the IG's recommendations directly concerned

[[Page 14497]]

regulatory provisions governing the airport concessions DBE program. 
Probably the two most significant IG recommendations were that the 
Department expeditiously complete this rulemaking and that it include a 
specific personal net worth standard for owners of ACDBEs. The 
Department takes the IG's findings and recommendations very seriously, 
and we believe that the prevention of fraud and abuse in all portions 
of the DBE program is a very high priority. This final rule, like the 
2000 proposed rule, includes a specific personal net worth standard. 
The accompanying supplemental notice of proposed rulemaking asks for 
comment on additional steps the Department might take to prevent fraud 
and abuse.

Major Issues

    The Department identified the following issues as the most 
important in developing this final rule: Small business size standards, 
personal net worth standards, counting of ACDBE participation by car 
rental companies, and the goal-setting process. The bulk of comments on 
the 2000 NPRM concerned these issues. This portion of the preamble 
describes each of these issues, notes how the Department proposed to 
resolve it in the 2000 NPRM, summarizes comments on it, and provides a 
rationale for the Department's decision.

1. Small Business Size Standards

    Size standards in this ACDBE regulation are important for a number 
of reasons. They implement the statutory requirement that participants 
be small businesses. They provide a means to ensure that a firm's 
participation in DBE programs is not necessarily of indefinite 
duration: if a firm grows to exceed size standards, it ceases to be 
eligible for the program. They are calibrated to help meet the 
objectives of the program, including permitting ACDBE firms to compete 
in the airport concessions market.
    In Part 26, businesses seeking DBE certification must, by statute, 
meet SBA size standards and an additional cap on average annual gross 
receipts, currently set at $17.42 million and subject to periodic 
adjustments for inflation. These requirements do not apply to Part 23, 
since the ACDBE statute gives the Secretary discretion to set size 
standards for concessions. For most airport concessions, the size 
standard under current Part 23 is $30 million average annual gross 
receipts. The proper business size standard for the ACDBE program has 
been the subject of comment on all the Part 23 NPRMs that the 
Department has issued. For the reasons stated in the supplemental 
notice of proposed rulemaking (SNPRM) that we are publishing in today's 
Federal Register, the Department is seeking additional comment on a 
number of size-related issues.
    In the interim, we will maintain the status quo with respect to 
Part 23 size standards, with the two exceptions discussed below. First, 
since goods and services purchased by concessionaires from ACDBE 
businesses can count toward ACDBE goals, we think it is important to 
clarify in the regulatory text our understanding of the application of 
the rule's size standards to ACDBE goods and services providers. For 
certification purposes, a firm that provides goods and services to 
airport concessionaires is an ACDBE if, assuming it meets other 
eligibility criteria, it meets the size standards for ACDBE 
concessionaires. A firm that provides restaurant equipment to a 
restaurant at the airport, for purposes of Part 23, must meet the 
general Part 23 size standard, rather than the smaller SBA or Part 26 
standards, to be an eligible ACDBE, so that the restaurant and the 
airport can count the purchase toward DBE goals.
    Second, with respect to banks, the Department received a petition 
for rulemaking from a financial institution saying that organizations 
in its position were unable to compete against much larger institutions 
(i.e., in the hundred billion dollars in assets range) at the current 
size standard of $150 million in assets. The petitioner had been 
certified by an airport sponsor as an MBE (in a local MBE program) and 
a DBE with assets of $275 million. However, because this exceeded the 
$150 million standard, the petitioner was subsequently decertified. We 
believe that the petitioner has a fair point, with respect to the 
competitive disadvantages it faces against far larger institutions. 
Consequently, we will increase the banks and financial institutions 
size standards to $275 million, which will allow DBE financial 
institutions to participate at a level that is more competitive.
    We also note that the SBA business size standards no longer use an 
employee number standard for car dealers, but rather use a gross 
receipts standard. We believe that this approach, consistent with the 
way the Department approaches most business size standards in this 
rule, is sensible. Consequently, we are using the $30 million gross 
receipts standard for car dealers as well as for other concession-
related businesses, rather than the previous employee number standard.

2. Personal Net Worth

    In order to meet narrow tailoring requirements, it is essential 
that a DBE program not be overinclusive. The statutory scope of the 
ACDBE program is to ensure nondiscrimination for airport concession 
businesses owned and controlled by individuals who are socially and 
economically disadvantaged. To prevent the program from becoming 
overinclusive, the ACDBE program should ensure that persons who are not 
disadvantaged do not have the opportunity to participate.
    By statute, persons in certain designated groups are presumed to be 
socially and economically disadvantaged. The Department has always held 
this presumption to be rebuttable. That is, if a member of a designated 
group is shown to be non-disadvantaged, he or she would no longer be 
able to participate as an ACDBE owner. (Likewise, a person who is not 
presumed to be disadvantaged could participate if he demonstrated, on 
an individual basis, that he is socially and economically 
disadvantaged.) This rebuttable presumption feature of the existing 
rule is intended to provide a safeguard against the program becoming 
overinclusive, since a UCP (or recipient in a state where a UCP is not 
yet in effect)--on its own or in response to a complaint--has the 
authority to determine that an individual should no longer be regarded 
as disadvantaged.
    The Department has recognized, however, that in the absence of a 
specific criterion for determining whether the presumption of 
disadvantage has been rebutted, there are difficult problems of proof 
and judgment when an issue is raised concerning the application of the 
presumption to an individual. For this reason, in the 1999 revision to 
Part 26, the Department adopted a numerical standard for this purpose. 
The absence of such a specific numerical standard in Part 23 has caused 
confusion. As noted above, the Department's Office of Inspector General 
(OIG) has recommended that Part 23 include a PNW numerical standard.
    The Department agrees that Part 23 should include a PNW numerical 
standard. The question confronting the Department in this rulemaking is 
what that standard should be. In the 2000 NPRM, we proposed a $2 
million PNW standard. This was higher than the $750,000 standard of 
Part 26 in recognition of the generally accepted proposition that 
airport concession businesses are more capital intensive, higher cash 
flow businesses than many businesses working under Part 26. The

[[Page 14498]]

owners of concessions therefore need more assets in order to enter and 
thrive.
    There were a variety of comments on the PNW proposal. Many of the 
airport commenters generally said that we should not impose ``onerous'' 
requirements on ACDBEs or airports in the PNW area. They did not 
provide any specifics, however. Some airports supported the proposed $2 
million cap, while an airport trade association and other airports said 
that $2 million or an unspecified higher standard would be appropriate. 
However, other airports and a union said that the $2 million proposal 
was too high. Generally, these comments said that a cap at this level 
or higher would undermine the reason for having a PNW standard, allow 
persons into the program that were too rich, and lead to 
overinclusiveness problems. One of these commenters suggested a $1 
million standard and another suggested $750,000. Another comment said 
that whatever the PNW level was, it should be the same for concessions 
and DOT-assisted contracts.
    Many comments from ACDBEs and from an ACDBE trade association, as 
well as some airports, said that the final rule should not include any 
PNW standard or that the cap should be significantly higher (e.g., $3-
10 million). Their main argument, which some comments fleshed out with 
real-world examples, is that in order to finance business expansion in 
a capital-intensive field like concessions, lenders required very high 
asset levels on the part of owners. If a business could not expand 
without its owners accumulating enough assets to exceed the $2 million 
cap, the ACDBE program would create a glass ceiling.
    Some comments suggested ways of limiting the adverse effects of 
PNW. These included (1) making PNW a rebuttable presumption; (2) 
establishing a sliding scale for PNW, relative to the projected gross 
sales of the business; (3) having a two-tier (e.g., entry and 
retention) standard; (4) establishing some system that would reflect 
the individual situations of businesses and owners, and (5) excluding 
from the PNW calculation assets encumbered (e.g., as collateral for a 
loan) for business purposes. A number of commenters also favored 
grandfathering existing concessionaires, so they did not lose their 
certification and contracts because of a new PNW standard coming into 
being.
    Since the 2000 SNPRM, Federal courts have decided a number of cases 
upholding Part 26 as being narrowly tailored. The existence of the 
$750,000 PNW cap in Part 26 was one of the factors leading to these 
successful defenses of the regulation. This strengthens the 
Department's belief that a PNW cap of this kind is appropriate to add 
to Part 23.
    The Department has concluded that $750,000 is an appropriate 
standard for PNW. It is consistent with the Part 26 standard, and it 
has been approved by the courts in that context. Having only one PNW 
standard will avoid confusion between the Part 23 and Part 26 portions 
of the Department's DBE program. It will avoid concerns about 
overinclusiveness in the program by ensuring that persons who would 
fairly be perceived as too wealthy for a program aimed at assisting 
``disadvantaged'' individuals do not participate. It responds to the 
concerns about confusion and fraud that were the basis for the OIG's 
recommendation.
    At the same time, the Department is sensitive to the concern of 
commenters that a PNW standard at this level could inhibit 
opportunities for business owners to enter the concessions field and 
expand existing businesses.
    We do not believe that having a substantially higher PNW standard 
across the board is the best way to respond to this concern: too high a 
standard would undermine the rationale for having a PNW standard in the 
first place. It could lead to concerns about overinclusiveness and to 
the perception that the program was not appropriately focused on 
disadvantaged individuals.
    In calculating PNW, Part 26 makes reasonable exclusions for the 
business owner's equity in his or her owner's primary residence and the 
business applying for certification. In the different business context 
of concessions, the Department will add a third exclusion. Assets that 
the owner/applicant can demonstrate are necessary to obtain financing 
to enter or expand a concessions business at an airport subject to Part 
23 (e.g., by producing letters from banks to that effect) would also be 
excluded from the PNW calculation, as would assets that have in fact 
been encumbered to support existing financing for the applicant's 
business. This provision would extend only to ``recourse'' assets 
(i.e., those that were encumbered or to be encumbered in order to 
obtain financing, as in a case where an asset is used a collateral for 
a loan).
    For example, if the owner/applicant for ACDBE certification to 
operate a fast food franchise at an airport could document that 
MegaBurger Corporation requires the franchisee to have $X in assets 
before it will grant the franchise, that amount would be excluded from 
the PNW calculation. Likewise, if the owner of an ACDBE retail or 
service business who wished to expand operations to another airport 
could document that a number of financial institutions required $Y in 
personal assets to back a loan needed for the expansion, $Y would be 
excluded from the PNW calculation. Airports/UCPs would be responsible 
for verifying the documentation pertinent to this exclusion.
    Without unduly expanding the well-accepted $750,000 standard, this 
approach will take into account individual circumstances and avoid the 
``glass ceiling'' effect of an across-the-board PNW standard about 
which commenters were concerned. There will be additional information 
that owners will have to obtain and recipients and UCPs will have to 
evaluate, but we believe that this is justified in the interest of a 
narrowly tailored regulation that remains fair and flexible regulation 
that achieves the objectives of nondiscrimination and opening business 
opportunities to ACDBEs.
    To prevent the eligibility standards from becoming too open-ended, 
resulting in the participation of individuals so wealthy that it would 
be difficult to justify their inclusion in a program aimed at 
disadvantaged individuals, we are adding a $3 million cap on this third 
exclusion. This figure is consistent with many comments concerning the 
appropriate extent of a PNW threshold. That is, an applicant could 
present documentation to the certifying authority that he or she 
required a certain amount of assets to open or expand a concessions 
business. If that amount exceeded $3 million, the amount of the 
individual's net worth above $3 million would be added to the PNW 
calculation.
    Here is an example of how these provisions would work. A 
hypothetical business owner, Ms. T, has a gross PNW of $4.6 million. 
The equity in her primary residence is $400,000. Her equity in the 
business is $500,000. She produces adequate documentation from at least 
two financial institutions that they will require $3.6 million in 
assets to support their granting the loan necessary to open a 
concession business at a particular airport. (Ms. T's documentation 
would also need to justify the need for a loan of the amount referenced 
in the letters from the financial institutions, documenting the build-
out costs and other capital investment needed to begin operating the 
concession.)
    Because $3.6 million exceeds the $3 million cap on the third 
exclusion from the PNW calculation, $600,000 would count toward that 
calculation. In this case, her net PNW would be $700,000

[[Page 14499]]

($4.6 million--$3 million--$400,000--$500,000). This amount is less 
than the PNW threshold, so Ms. T would be an eligible ACDBE owner. 
However, if her gross PNW were $5 million, then her net PNW, after 
subtracting all three exclusions, would be $1.1 million, putting her 
over the PNW threshold and making her ineligible to be an ACDBE owner.
    Certifying authorities need to carefully evaluate accounting 
mechanisms that applicants may use to try to circumvent the PNW 
threshold. For example, if within two years prior to or following an 
application for certification, an applicant transfers assets (e.g., to 
a family member or to a trust), the certifying authority should regard 
those assets as continuing to count against the applicant's PNW.
    Because we often receive questions on this point, we want to 
emphasize that PNW is calculated separately for each individual who the 
applicant business claims to be a disadvantaged owner and controller of 
the business. In a situation where there is more than one disadvantaged 
individual involved in a business, PNW is not aggregated for the 
owners. It remains an individual-by-individual calculation. It is never 
necessary to obtain PNW statements from people who do not claim to be 
disadvantaged individuals for purposes of ownership or control (e.g., a 
white male who is a participant in the company).

3. Counting ACDBE Credit for Car Rental Companies

    The issue of how to assign DBE credit to car rental companies is 
the longest-running, most divisive issue in the history of Part 23. 
Briefly stated, the issue concerns situations in which a car rental 
company purchases an often large number of cars (a ``fleet purchase'') 
from a motor vehicle manufacturer. Typically, the vehicles themselves 
are transported directly (``drop-shipped'') from the manufacturer 
(e.g., Ford or General Motors) to the car rental company's airport 
facility, never physically touching the property of a car dealer. 
However, usually because of state laws that require vehicles to be 
purchased from a car dealer, the transactions are invoiced through a 
dealer, who receives a small fee for processing the paperwork.
    If the dealer in this situation is an ACDBE, how much ACDBE credit 
is it appropriate for the car rental company to claim? Is it the entire 
value of the vehicle (many thousands of dollars) or merely the 
transaction fee that the dealer receives (perhaps $50-200)? Under 
normal DBE counting principles, such as those of Sec.  26.55, the 
answer is clearly the latter. A DBE whose commercially useful function 
is limited to processing or expediting a transaction, and who does not 
meet the rule's definition of a regular dealer with respect to the 
items in question, receives only its fee or commission for the work it 
actually does. Even if it is acting as a regular dealer, credit is 
limited to 60 percent of the value of the goods purchased.
    However, subsection (e)(4)(B) of the ACDBE statute provides that 
``a car rental firm shall be permitted to meet the [ACDBE goal] 
requirement by including purchases or leases of vehicles from any 
vendor that qualifies as'' an ACDBE. Car rental industry commenters 
have argued strongly, in response to the 2000 SNPRM and its 
predecessors, that this provision means that airports must count the 
entire value of cars purchased via ACDBE car dealers, however contrary 
such a result would be to the way DBE credit is counted in any other 
context.
    Prior to the 2000 SNPRM, trade associations for ACDBEs and car 
rental companies made a joint recommendation to DOT to resolve the 
issue. They proposed that, of the first 10 percent of an airport's 
concession-specific goal for a car rental company, 70 percent could be 
achieved by counting the full value of cars purchased through ACDBE 
dealers, with the remaining 30 percent accounted for by other purchases 
of goods and services from ACDBEs. However, for any increment of an 
airport's concession-specific goal over 10 percent, the car rental 
company could achieve all of that increment through counting the full 
value of cars purchased through ACDBE car dealers. The 2000 SNPRM 
proposed to adopt the recommendation, except for the provision calling 
for being able to meet all of the portion of a goal exceeding 10 
percent via counting the full price of cars purchased through ACDBE car 
dealers.
    Comments to the 2000 SNPRM took a variety of positions on the 
proposal. Three airports and an airport trade association opposed 
permitting car rental vehicle purchases to count toward goals. Another 
airport said that airports should get DBE participation by 
subcontracting with DBEs that directly own a concession. The airport 
trade association and four airports opposed the ``10 per cent'' 
provision of the trade associations' recommendation, which the 
Department had not included in the SNPRM. A car rental trade 
association, on the other hand, insisted that the Department must 
accept all provisions of the recommendation, including the 10 percent 
provision, and the ACDBE trade association that had joined in the 
recommendation continued to support it.
    In the SNPRM, the Department also proposed a two-goal structure, 
with separate overall goals for car rental companies and all other 
concessionaires, respectively. As discussed later in this preamble, the 
Department is adopting this proposal. This provision has the important 
benefit of preventing the often very large gross receipts of car rental 
companies and potentially very high DBE participation dollar amounts 
resulting from counting the full value of vehicles in toward DBE goals 
from overwhelming DBE goals and participation in other areas of 
concessions. Having this separate goal for car rental companies 
therefore significantly reduces the possibility of skewing the program 
and limiting opportunities to other DBEs as the result of permitting 
car rental companies to count the full value of vehicles purchased 
through ACDBE car dealers.
    For this reason, and in order to avoid any possibility of conflict 
with the statute, the Department has decided that the final rule will 
permit car rental companies to count the full value of vehicle 
purchases from ACDBE car dealers. We are not adopting the trade 
associations' recommendation. While we appreciate the associations' 
efforts to find a compromise resolution to this issue, we believe that 
there is no sound basis for mandating the proposed 70/30 division or 
for the use of the statute's aspirational 10 percent goal to play an 
operational role in determining how ACDBE credit is counted. In fact, 
we believe the use of the 10 percent goal in this way is inconsistent 
with a narrowly tailored ACDBE program.
    Nevertheless, the Department is concerned that this resolution of 
the issue could have adverse effects on ACDBEs who seek to sell 
services or goods other than vehicles to car rental companies. 
Consequently, airports would require car rental companies to document 
to the airport the good faith efforts they have made to obtain 
participation from ACDBE vendors of goods and services (other than car 
dealers). Airports would not set a numerical goal for the use of these 
vendors, and there are many ways that car rental companies could show 
good faith efforts to this end. One of these might be for a car rental 
company, as suggested by the trade associations' recommendation, to 
obtain 30 percent of its ADCBE credit from the use of ACDBE vendors of 
goods and services.

[[Page 14500]]

4. Overall Goals

    In Part 26, the Department established a data-driven overall goal-
setting mechanism that directed recipients, including airports, to 
establish a goal estimating the amount of DBE participation that they 
would expect if there were a ``level playing field'' in contracting, 
free from the effects of discrimination. Recipients were also required 
to estimate how much of that goal could be achieved through race-
neutral means. Recipients were permitted to use race-conscious means, 
such as contract goals, only to obtain that part of their overall goal 
they could not achieve through race-neutral means. The rule made clear 
that recipients were not to be penalized for not making their overall 
goal, and that the statutory 10 percent goal was an ``aspirational'' 
goal that did not affect the operation of recipients' DBE programs. 
Since Part 26 was issued, every Federal court that has considered the 
question has determined that this goal setting mechanism is consistent 
with narrow tailoring requirements of constitutional law.
    The 2000 SNPRM for Part 23 essentially proposed to adopt, in a 
somewhat shortened form, the Part 26 goal-setting concepts. In 
addition, the SNPRM proposed a two-goal structure for concessions. That 
is, airports would set one overall goal for car rental companies and 
another overall goal for all other concessions. The purpose of this 
structure was to ensure that the much larger dollar volumes and much 
broader counting rules involved in the car rental industry at many 
airports did not so skew the airport's goal that other types of DBE 
businesses could not benefit from the program. The Department also 
sought comment on the idea of having a nationwide goal for major car 
rental companies, somewhat analogous to the transit vehicle 
manufacturer goal provision of Part 26.
    Six airports, an ACDBE trade association, and an ACDBE favored, and 
one airport and a consultant opposed, separate goals for car rental and 
non-car rental activities. A car rental association gave qualified 
support to the idea, but commented that it thought that each airport 
would need to make a separate compelling need finding with respect to 
car rentals. Five airports supported and one opposed allowing an option 
for national car rental goals; ACDBE and car rental industry trade 
associations expressed doubt that the idea was workable. Another large 
airport suggested separate goals for goods and services on one hand, 
and direct ownership arrangements for car rental companies on the 
other.
    An airport trade association and nine airports asked for greater 
guidance and clarification on how the goal-setting system would work in 
the concessions area, saying that such factors as the absence of data 
comparable to the DOT-assisted contracting world and the difficulty of 
integrating goods and services, management contracts, and direct 
ownership arrangements under the same overall goal made implementation 
very burdensome and confusing. Three of these commenters plus an ACDBE 
trade association said the same point applied to the race neutral/race 
conscious split in the concessions context. One airport supported the 
NPRM as written.
    One airport wanted to use set-asides for car rentals. An airport 
trade association wanted airports to be able to set goals based on the 
number of concessions without going through a wavier procedure, and one 
airport supported the waiver process. A car rental industry trade 
association argued that race-neutral methods must be used 
chronologically before race-conscious methods could be used.
    The Department believes that it is very important to include the 
two-goal structure in the final rule. We agree that it does, to an 
extent, increase the administrative workload of airports. However, it 
recognizes the differences between the car rental industry and other 
types of concessions, a difference that is meaningful in the context of 
a narrowly tailored regulation. Most important, in light of the 
statutory provision concerning the counting of vehicle purchases as a 
means of meeting car rental companies' ACDBE goals, it avoids a 
distortion resulting from the very large dollar amounts of 
participation attributed to ACDBE car dealers that could otherwise skew 
an airport's ADCBE program. Having a separate goal for non-car rental 
activities will ensure that retail businesses, management contractors, 
and other concessionaires will have the opportunity to compete on a 
level playing field not only vis-[agrave]-vis non-ACDBE firms, but also 
vis-[agrave]-vis firms in a very different industry where ACDBE 
participation is counted very differently. Having a separate goal for 
car rental companies does not, in our view, require a localized finding 
of discrimination pertaining specifically to the car rental industries. 
There is a national determination of compelling need for the entire 
program, and a division of overall goals into two segments for 
administrative purposes does not call for additional findings of need 
for the program.
    Particularly given that courts have found that Part 26, including 
its goal-setting mechanism, meets narrow tailoring requirements, the 
Department believes it is essential to conform the Part 23 goal-setting 
provisions as closely as possible to those of Part 26. These 
requirements are spelled out in greater detail here than in the 2000 
SNPRM, which should assist airports in complying with them. We also 
give airports from 1-3 years to establish new goals, which should allow 
them time to complete the work involved. Of course, by this time, 
airports have had five years' experience in working with Part 26 goals, 
and so using a parallel mechanism in Part 23 should be an easier and 
more familiar exercise than it might have seemed in 2000. We would also 
call airports' attention to the goal-setting ``Tips'' on the 
Department's DBE Web site (http://osdbuweb.dot.gov/business/dbe/tips.html). The Department plans to develop a revised version of these 
Tips specifically pertaining to airport concessions in the near future.
    Because the Department believes it would be difficult to devise an 
overall goal based on the number of concession businesses or contracts, 
as distinct from the receipts of concession firms, the final rule does 
not include the provision allowing recipients to seek waivers to 
establish a goal on that basis, as the 2000 SNPRM proposed. However, 
airports can use the program waiver provision of Sec.  23.13 to request 
authority to use a goal-setting mechanism that differs from that of 
Subpart D of Part 23.
    While the idea of a transit vehicle manufacturer-like nationwide 
goal for large car rental companies remains intriguing, the Department 
is not sure that this approach is feasible. Therefore, rather than 
include such a provision in the final rule, we are asking for further 
comment on this subject in the SNPRM. Set-asides and quotas are not an 
appropriate part of a narrowly tailored rule, and Part 23 prohibits 
airports from using these measures.
    The argument that recipients must, in a chronological sense, use 
race-neutral methods before they can use race-conscious methods has 
been raised in litigation under Part 26. It has not prevailed. Nor does 
it make sense as policy. Airports are required to give priority to the 
use of race-neutral means, meaning that they must achieve as much as 
possible of their overall goals through race-neutral means. The utility 
of race-neutral means, or the necessity of race-conscious means, is 
likely to vary throughout the year as different sorts of business 
opportunities occur. For example, obtaining ACDBE

[[Page 14501]]

participation in one business opportunity in February of a certain year 
may require race-conscious measures, while an excellent race-neutral 
opportunity may occur in November of that year.

Section-by-Section Analysis

    This portion of the preamble discusses, in turn, each section of 
the final rule, providing, as appropriate, responses to comments, 
additional information about the Department's rationale for adopting 
individual provisions, and the Department's intent for how the 
provisions should be interpreted and implemented.

Section 23.1 What Are the Objectives of This Part?

    The objectives of this program are very similar to those stated for 
Part 26. Extensive information has been developed over the years, which 
may be found in such sources as disparity studies of which the 
Department is aware and data presented to Congress (e.g., in the 
context of the floor discussion of the 1998 reauthorization of the DBE 
program for Federal Highway Administration and Federal Transit 
Administration financial assistance) that supports the proposition that 
there is not a level playing field for small disadvantaged businesses 
in the U.S. The legislative history of the original ACDBE statute 
itself shows that Congress was very concerned that DBE firms had the 
``fair'' (i.e., nondiscriminatory) access to concession opportunities 
(see 133 Congressional Record 25986-87; October 1, 1987).
    Under Part 26, many airports have had to continue race-conscious 
methods to achieve their overall goals, which are in turn a measure of 
the level of DBE participation they could expect absent the effects of 
discrimination. There is no reason to believe, and no one has submitted 
any information to the Department's rulemakings to suggest, that 
airport concession programs are exempt from the effects of 
discrimination to which other public sector business activities at 
airports and elsewhere are subject. Race-conscious methods continue to 
be a necessary part of a narrowly tailored strategy to ensure 
nondiscrimination in concessions.

Section 23.3 What Do the Terms Used in This Part Mean?

    Most of the comment on this section concerned the issue of whether 
advertising firms should be included in the definition of 
``concession.'' A substantial number of letters from mostly small-to-
medium sized airports supported including advertising companies. One 
large airport opposed doing so. Three of the comments favoring 
advertising suggested limitations. One said that only billboards on 
public access roads to the terminal or other facilities for travelers 
should count. Another said only in-terminal ads should count. The third 
said that only companies ``primarily'' in the business of advertising 
in terminals should be viewed as concessions (as opposed, for instance, 
to telecommunications or internet companies whose terminal ads were 
tangential to their main business).
    While the existing Part 23 does not explicitly address the issue, 
many airports have certified advertising firms as DBEs for many years. 
Advertising appears to be a field in which DBE firms have had some 
success. It is also a field in which small businesses, including 
ACDBEs, must often compete against very large corporations. The level 
playing field that Part 23 attempts to provide is of considerable 
importance to firms in that position.
    Like management contractors and some providers of 
telecommunications services, advertising firms often do not have stores 
located on the airport. Nevertheless, firms of these kinds provide 
important services to members of the public who use the airport. These 
firms have the objective of selling products to the public, and their 
existence at airports provides services to the public. They have 
financial relationships with the airport similar to those of more 
traditional food and retail concessions. We do not believe it would be 
sound policy, or required by law, to oust advertising firms from the 
ACDBE program. Consequently, to avoid confusion, we have explicitly 
included such firms in the ``concession'' definition. We do not think 
it would be useful to limit their participation to a particular 
advertising location on the airport, such as terminals or billboards 
along access roads; the legal and policy situation of one such location 
is not readily distinguishable from others.
    Consistent with the 1992 amendment to the statute, the definition 
of ``concession'' now specifically includes firms with management 
contracts or subcontracts and businesses that provide goods and 
services to other concessionaires. Of course, businesses of this kind 
must be certified as ACDBEs in order to generate ACDBE credit in this 
program.
    The definition of an ACDBE is consistent with that of Part 26. With 
some exceptions, the certification provisions of Part 26 apply to 
ACDBEs. Some comments addressed the provision of certification 
standards stating that an ACDBE must be an existing business. Four 
large airports opposed this requirement (one suggested that a firm 
could be certified based on its business plan). Their main rationale 
was that the requirement would be a barrier to new businesses. One 
large airport supported the requirement. We believe that it is 
important to retain this requirement, in order to ensure that only 
genuinely eligible businesses are certified as ACDBEs. When a business 
is still in the process of formation, it is all the more difficult to 
determine whether disadvantaged individuals really own and control it. 
It is difficult to make a site visit to a business plan. Given the 
increased emphasis on preventing DBE fraud, we believe that the 
existing business requirement is essential. At the same time, as under 
Part 26, it is not appropriate to refuse to certify a business solely 
because it is a new business, but it must exist.
    A car rental association continued to advocate the position, which 
it had taken in comments on previous proposed rules, that so-called 
``dealers in development'' (i.e., dealers participating in 
manufacturers' development programs that did not fully meet Part 23 
ownership and control criteria, such as 51 percent ownership by 
disadvantaged individuals) should be certified as ACDBEs. In the 
preambles to its 1997 and 2000 proposals, the Department had explained 
at some length why we concluded that a business that did not meet 
generally applicable DBE ownership and control criteria should not be 
certified as an ACDBE. Nothing in the comments in the docket for this 
rulemaking has provided a persuasive reason to change the Department's 
position.
    Concession businesses must serve the public on the airport. Airport 
and ACDBE trade associations, one business, and nine airports supported 
the consequent concept that businesses on airport property that do not 
primarily serve travelers should not be counted as concessions. One 
commenter suggested waiving this requirement for small airports in 
Alaska. We agree that businesses that do not primarily serve the public 
should not be viewed as concessions. If one or more small businesses or 
airports in Alaska wish to seek a waiver from this provision, they may 
apply under the provisions of Sec.  23.13.
    One commenter asked whether management contracts included contracts 
for the management of hotels on the airport. While it is not necessary 
to include this level of detail in the regulatory text, we see no 
reason to

[[Page 14502]]

believe that hotel management contracts would be treated differently 
from any other kind of management contracts. In evaluating whether a 
management contractor provides a commercially useful function and the 
amount of ACDBE credit that should be given for the contractor's work, 
an airport should scrutinize carefully the actual tasks performed by 
the ACDBE as an entity to make sure that they are consistent with the 
credit claimed.
    One large airport suggested that the joint venture definition not 
require that the DBE partner perform an independent part of the work, 
arguing that concessions joint ventures did not operate in this way. We 
have become aware that some concessions joint ventures indeed do not 
involve an ACDBE performing an independent part of the work; some of 
these have been the focus of fraud investigations by the Department's 
Inspector General and other law enforcement organizations. If the ADCBE 
participant is not required to perform independently a distinct portion 
of the joint venture's work, it becomes very easy for a prime 
concessionaire seeking to circumvent ACDBE requirements by having an 
ACDBE ``silent partner'' on its payroll. We believe that changing this 
provision would adversely affect the integrity of the program. Because 
joint ventures have become a problematic part of the ACDBE program, the 
Department is drafting additional guidance on the subject, which we 
intend to post on the DOT DBE Web site as soon as it is available.
    We also note that UCPs and airports should not certify joint 
ventures themselves as ACDBEs, and the definition makes this point 
explicit. By definition, a joint venture is an association of an ACDBE 
and another firm to carry out a single business enterprise. As noted in 
Part 26 (Sec.  26.73(e)), ``[a]n eligible DBE firm must be owned by 
individuals who are socially and economically disadvantaged * * * [A] 
firm that is not owned by such individuals, but instead is owned by 
another firm--even a DBE firm--cannot be an eligible DBE.'' Even if a 
joint venture is more than 51 percent owned by a ACDBE firm, therefore, 
the joint venture--because it is owned by other firms, not directly by 
disadvantaged individuals--cannot be an eligible ACDBE firm. (This same 
point applies to DBEs under Part 26.) We note that, given the counting 
rule for joint ventures in Parts 23 and 26, this fact should not make 
any difference in the way that ACDBE credit is counted. Credit toward 
DBE goals is awarded under both rules only for the distinct, clearly 
defined portion of the work of the joint venture performed by the DBE 
or ACDBE participant, regardless of the certification status of the 
joint venture entity. In reviewing currently certified firms (see Sec.  
23.31(c)), airports and UCPs should remove joint venture entities 
(though not certified DBE firms that participate in joint ventures) 
from their directories, consistent with this direction.
    The other definitions are consistent with those in Part 26 and have 
not changed substantively from the 2000 SNPRM. They were not the source 
of additional comment. We have added, for administrative purposes, 
definitions of small, medium, large hub, and non-hub primary airports.

Section 23.5 To Whom Does This Part Apply?

    This section recites that Part 23 applies to airports that have 
received FAA financial assistance for airport development since January 
1988, when the Department's airport concessions DBE rules first went 
into effect. Note that, under Sec.  23.21, not all airports covered by 
Part 23 are required to have an ACDBE program.

Section 23.7 How Long Do the Provisions of This Part Remain in Effect?

    The Department is introducing a ``sunset'' provision into the final 
rule as a way of addressing the durational element of narrow tailoring. 
A narrowly-tailored rule is not intended to remain in effect 
indefinitely. Rather, the rule should be reviewed periodically to 
ensure that it continues to be needed and that it remains a 
constitutionally appropriate way of implementing its objectives. 
Consequently, this provision states that this rule will terminate and 
cease being operative in five years, unless the Department extends it. 
We intend, beginning four years from now, to review the rule to 
determine whether it should be extended, modified, or allowed to 
expire. Of course, the underlying DBE statute remains in place, and its 
requirements continue to apply regardless of the status of this 
regulation, absent future Congressional action.

Section 23.9 What Are the Nondiscrimination and Assurance Requirements 
of This Part for Recipients?

    This section cross references the nondiscrimination requirements of 
Part 26 and provides the text of assurances that airports must include 
in concession agreements and management contracts in the future. The 
section does not require airports to revise existing contracts to 
include the assurance text.

Section 23.11 What Compliance and Enforcement Provisions Are Used Under 
This Part?

    This section recites that standard FAA/DOT enforcement procedures--
the same ones used for Part 26--apply to Part 23.

Section 23.13 How Does the Department Issue Guidance, Interpretations, 
Exemptions, and Waivers Pertaining to This Part?

    This section parallels Part 26, Sec.  26.15, concerning guidance, 
interpretations, exemptions and waivers. Program participants should 
note that guidance provided concerning existing Part 23 should not be 
relied upon in the future, given the many changes made in this final 
rule. The Department will issue new or revised guidance concerning the 
revised Part 23.

Section 23.21 Who Must Submit an ACDBE Program to FAA, and When?

    The basic trigger for the requirement to have an ACDBE program is 
being a primary airport and receiving FAA financial assistance. Other 
categories of airports (e.g., non-primary or general aviation airports) 
do not have to submit an ACDBE program. Airports that currently have a 
DBE program under the existing Part 23 must update their programs to 
meet the requirements of this new rule. They will do so on the same 
three-year staggered schedule provided for submission of ACDBE goals 
(i.e., next January for large and medium hubs, next year for small 
hubs, and the following year for non-hub primary airports).
    Until FAA approves revised programs, airports will continue to use 
their existing concessions DBE programs. Airports should review their 
programs immediately to ensure that they do not contain any provisions 
that are contrary to this part, however. For example, this part 
prohibits the use of set-asides. If an airport's current program 
provides for the use of set-asides, that provision should be deleted at 
once, even though the airport's revised program is not due be submitted 
to FAA until one to three years from now.

[[Page 14503]]

Section 23.23 What Administrative Provisions Must Be in a Recipient's 
ACDBE Program?

Section 23.25 What Measures Must Recipients Include in Their ACDBE 
Programs To Ensure Nondiscriminatory Participation of ACDBEs in 
Concessions?

    Section 23.23 provides a structure for a recipient's ACDBE program 
that is parallel to that for Part 26 DBE programs. Indeed, where an 
airport must have both an ACDBE program and a DBE program, the 
administrative provisions can be combined to a considerable degree.
    Section 23.25 requires goal-setting as provided in Subpart D of 
Part 26, the use of race-neutral measures by airports themselves to 
obtain DBE participation, and the use of race-conscious measures like 
concession-specific goals when race-neutral measures standing alone are 
not sufficient to meet overall goals. Airports are expected to include 
the race-neutral and, if needed, race-conscious measures they will 
implement in the ACDBE programs they submit to the FAA. The section 
notes that concession opportunities are to be sought in all areas of 
the concession industry, so that different kinds of businesses have the 
chance to participate. It is not appropriate to have a single area of 
concessions or a few firms so dominating ACDBE participation that 
others lack a realistic opportunity to help meet the overall goal.
    Section 23.25(f) is a new paragraph incorporating the last clause 
of subsection (e)(3) of the statute. Paragraph (f) provides that an 
airport's ACDBE program ``must require businesses subject to ACDBE 
goals at the airport (except car rental companies) make good faith 
efforts to explore all available options to meet goals, to the maximum 
extent practicable, through direct ownership arrangements with DBEs.'' 
Both in the statute and in paragraph (f), this requirement operates in 
the context of the ability of airport businesses to meet ACDBE goals 
through the purchase of goods and services from ACDBE vendors. While 
meeting goals through the purchase of goods and services is authorized, 
it is important for ACDBE goals to encourage the participation of 
ACDBEs in a variety of ways. It is a healthier situation for ACDBE 
programs, for example, if ACDBE participation a business or airport 
comes not only through goods and services purchases but also through 
individual concessions run by ACDBEs.
    The parenthetical ``except car rental companies'' reflects another 
provision of the statute (subsection (e)(4)(C)), which provides that 
car rental firms are not required to change their corporate structure 
to provide for direct ownership arrangements. This means, for example, 
that car rental companies that operate corporation-owned stores cannot 
be required to obtain ACDBE participation through such means as 
subleases or joint ventures. This limitation does not apply to non-car 
rental concession businesses, however. Even if a non-car rental 
business (e.g., a news and gift shop company) normally operates 
corporation-owned stores, direct ownership arrangements with ACDBEs 
that might alter or create an exception to the firm's normal way of 
doing business are among the options the business must make good faith 
efforts to explore under this provision.

Section 23.27 What Information Does a Recipient Have To Retain and 
Report About Implementation of Its ACDBE Program?

    Recipients must save compliance information for three years. 
Beginning March 1, 2006, recipients will submit a report of ACDBE 
participation (see Appendix A). The report is a modification of the 
Part 26 reporting form that the Department issued in June 2003, with 
instructions adapted for purposes of the ACDBE program.

Section 23.29 What Monitoring and Compliance Procedures Must Recipients 
Follow?

    Ensuring that participants in the ACDBE program comply with the 
requirements of this rule and preventing fraudulent activities in the 
program are among the most important responsibilities of recipients. It 
is not enough merely to set goals and award concessions; airports must 
make sure that promised ACDBE participation really occurs after award 
and that participants are not able to circumvent the requirements of 
the program to the detriment of actual ACDBE participation. Each ACDBE 
program must include the monitoring and compliance measures the airport 
will use, including levels of effort and resources devoted to this 
task. For example, the program would describe the frequency of reviews 
of records, on-site reviews of concession workplaces, etc., to 
determine whether ACDBEs are actually performing the work for which 
credit is being claimed and that participants are not circumventing 
program requirements. This kind of oversight is crucial to combating 
ACDBE fraud, and FAA will closely scrutinize this aspect of ACDBE 
programs to ensure that levels of effort are sufficient.
    In addition, if an airport includes additional provisions beyond 
what Part 23 requires (see Sec.  23.77), FAA has a responsibility to 
review such provisions and work with airports to ensure that additional 
provisions do not create policy or legal problems. FAA will reject 
program submissions that are inconsistent with Part 26.

Subpart C--Certification of ACDBEs

    Certification under Part 23 basically follows the model of Part 26, 
with the exception of those areas--such as size standards, discussed 
above--in which the Department recognizes differences in the ACDBE and 
DOT-assisted contracts marketplaces. Firms certified under Part 26 are 
eligible under Part 23 as well, provided they can control the firm with 
respect to the concession activities involved. Part 26 certification 
standards and procedures--even if not specifically referenced in Part 
23--are intended to apply to the ACDBE program except where otherwise 
provided.
    Section 23.39 mentions a number of other differences between Part 
23 and Part 26 certification. These differences are self-explanatory, 
for the most part. The reason for not applying Part 26's special 
provision for Alaska Native Corporation-owned firms is that the statute 
requiring this provision in DOT-assisted contracts does not apply in 
the ACDBE context, since this context does not involve DOT-assisted 
contracts.
    The eligibility of joint ventures has been a continuing problem 
under the DBE program, including both eligibility and operational 
issues that have called the legitimacy of joint venture arrangements 
into question. The Inspector General has pointed to situations in which 
joint ventures or similar arrangements appear to have been used as a 
subterfuge by firms seeking to evade or defraud the program. The rule's 
definition of joint ventures makes explicit that these entities should 
not be certified as DBEs in their own right. As noted above, the 
Department is planning to make available additional guidance concerning 
the use of joint ventures in the ACDBE program, including certification 
issues pertaining to joint ventures.
    When the rule says that suppliers of goods and services to 
concessionaires are to be evaluated for certification as ACDBEs 
according to the provisions of this part (Sec.  23.39(i)), we mean that 
Part 23 provisions (e.g., concerning personal net worth and business 
size) are to be used for this purpose. Firms that provide goods and 
services to concessionaires are not subject to the

[[Page 14504]]

somewhat different certification provisions of Part 26.
    In certain respects, particularly with respect to personal net 
worth, this rule changes the eligibility criteria for ACDBEs. 
Consequently, airports or UCPs, are required to review the eligibility 
of currently certified firms. These reviews must take place within 
three years of the most recent certification of the firm, or a year 
from the rule's effective date, whichever comes later. Any firm that 
loses eligibility because of the new PNW requirements would be able to 
complete work on an existing contract or other concession agreement, 
with its participation counted toward ACDBE goals. Options, extensions, 
renewals, etc., of the firm's participation beyond the termination of 
the agreement in force at the time of the firm's decertification would 
not count as DBE participation, however.
    We emphasize that Part 26 standards do apply to certifications 
under Part 23 for most aspects of ownership and control. For example, 
absentee ownership of firms raises the same control issues in a Part 23 
context as it does in a Part 26 context (see Sec.  26.71(j)). Also, as 
the definition of ``concession'' now explicitly provides, recipients 
should not certify holding companies as ACDBEs. Holding companies do 
not perform concession activities. While holding companies may play a 
narrow role in DBE and ACDBE firms (see Sec.  26.73(e)), the holding 
companies themselves are not certified in this role. Recipients should 
pay careful attention to affiliation relationships between and among 
holding companies and their concession subsidiaries. It is likely that, 
when a concession that is owned by a holding company seeks 
certification, the concession is affiliated with both the holding 
company itself and other subsidiaries of the holding company. These 
relationships can have important effects on the ability of the 
applicant firm to meet size standards.
    Recipients should also pay close attention to affiliation 
relationships that may arise in joint venture arrangements. If one 
participant in a joint venture--or other business arrangement--exerts 
too much control over the business decisions and operational activities 
of another, then there may be an affiliation relationship between the 
two and/or an issue of whether the second firm is sufficiently 
independent to be certified.
    On-site reviews are a key part of the concession certification 
process. The Department realizes that, particularly for a concession 
that does not yet have a location established on an airport, it may be 
difficult to identify a ``job site'' at which to conduct such a review. 
In this case, recipients could conduct the on-site review solely at the 
firm's headquarters or other principal place of doing business.
    At the time that this rule is being issued, not all states have 
approved unified certification programs (UCPs). Until a UCP is approved 
and in operation for a given state, individual airports in that state 
continue to have responsibility for certifying ACDBEs. Once a UCP is 
approved and in operation in a state, certification of ACDBEs becomes 
the responsibility of the UCP, rather than of individual airports.

Section 23.41 What Is the Basic Overall Goal Requirement for 
Recipients?

    Having overall goals is a basic requirement of airports' ACDBE 
programs, without which airports are not eligible for FAA financial 
assistance. Overall goals cover periods of three years, rather than one 
year as in the case of Part 26, in recognition of the longer time 
frames involved in concession relationships between businesses and 
airports. As discussed above, recipients are required to have two 
separate overall goals: One for car rentals, and one for all 
concessions other than car rentals.
    There is an important exception to this general rule, designed to 
reduce administrative burdens on airports that have little or no 
concessions activity. If an airport has less than $200,000 in 
concessions revenue (averaged over three years), in either the car 
rental or non-car rental category, then the airport does not have to 
submit an overall goal in that category. The Department believes that 
requiring airports that have little or no concession revenues to pursue 
the overall-goal setting process is likely to be unproductive, if not 
altogether futile. At the same time, this provision focuses ACDBE goal-
setting efforts on those airports where these efforts are most likely 
to result in meaningful ACDBE participation. Airports that did not have 
to set an overall goal for one or both categories would still be 
required to pursue race-neutral means to provide opportunities for 
ACDBEs in their concessions activities.
    This determination is made separately for each of the two overall 
goal categories. For example, suppose Airport X has had non-car rental 
concession revenues of $150,000, $200,000, and $175,000 in 2002, 2003, 
and 2004, respectively. Under this rule, it would not have to submit a 
non-car rental overall goal in 2005, because the average of its non-car 
rental revenues over the preceding three years was less than $200,000. 
On the other hand, if Airport X's average car rental concession 
revenues were $300,000 for the same period, it would have to submit an 
overall goal for car rentals in 2005.
    Based on recent FAA data, virtually all larger airports (large and 
medium hubs) would have to submit both overall goals. These airports 
account for the vast majority of all concession revenues in both the 
car rental and non-car rental categories. Among intermediate-size 
airports (small hubs), all but five of 69 would have to submit car 
rental goals, and 50 of the 69 would have to submit non-car rental 
goals. Among 390 small airports (non-hubs), 309 would not have to 
submit car rental goals and 233 would not have to submit non-car rental 
goals. Many of these small airports (165 with respect to car rentals, 
and 92 with respect to non-car rental concessions) report no concession 
revenues in those categories.
    As under Part 26, goals must be for DBEs in general, as opposed to 
group-specific goals for one or another subgroup of DBEs. Also as under 
Part 26, airports can apply for a program waiver of this provision if, 
based on evidence (e.g., from a disparity study) showing 
underutilization only of certain groups, they believe that use of 
group-specific goals is necessary to achieve the objectives of a 
narrowly-tailored program.

Section 23.43 What Are the Consultation Requirements in the Development 
of Recipients' Overall Goals?

Section 23.45 What Are the Requirements for Submitting Overall Goal 
Information to the FAA?

    The process of setting overall goals includes consultation with 
stakeholders in the ACDBE program. A public comment period, as such, is 
not required, however. In the Department's experience with Part 26's 
requirement for a comment period, few comments have been received by 
most recipients. We do not believe that such a requirement would be 
productive in the concessions context, which is even more specialized 
and less likely to be the subject of meaningful comment from anyone 
except stakeholders, who are covered by the consultation requirement.
    The rule requires recipients to submit overall goals every three 
years. In order to give smaller airports more time to work with the 
goal-setting process, we are establishing the following schedule for 
submitting new overall goals and

[[Page 14505]]

new ACDBE programs: January 2006 for large and medium hubs, October 
2006 for small hubs, and the October 2007 for smaller primary airports. 
Revised goals are then due October 2008, 2009, and 2010, respectively, 
and every three years thereafter. If an airport changes status (e.g., a 
small hub increases in size to become a medium hub), it will stay on 
the original schedule. This will also mean that FAA will not have to 
focus on reviewing goals from all airports in any one year, making its 
review process more efficient. In the time before an airport has its 
first new goals under this rule approved by FAA, it must continue using 
its existing goals.
    Some airport commenters asked for additional flexibility in terms 
of submission dates for goals (e.g., with respect to airports' fiscal 
years, which differ from the Federal fiscal year in some cases). In our 
view, it is not as necessary to tie the submission of concessions goals 
to fiscal years as it may be for Part 26 goals, since the latter are 
more dependent on contracting under a particular fiscal year's Federal 
funds. However, if an airport has difficulty with the standard goal 
submission dates in the final rule, it can ask FAA for a program waiver 
to establish a different date for its submissions.

Section 23.47 What Is the Base for a Recipient's Goal for Concessions 
Other Than Car Rentals?

Section 23.49 What Is the Base for a Recipient's Goal for Car Rentals?

    Section 23. 47 concerns the base for the first of the two overall 
goals that airports must set. The base for this goal includes the gross 
receipts of all concessions at the airport, with three important 
exceptions. First, as the title of the section indicates, the receipts 
of car rental concessions are not counted in the base for this goal. 
Secondly, companies' receipts that are not generated from concession 
activities do not become part of the base. In the example provided in 
the regulatory text, the receipts generated by a restaurant in the 
terminal are added to the base, while the receipts of the same food 
service company's flight catering activities are not.
    The third exception is statutory, required by the plain language of 
49 U.S.C. 47107(e)(2). Under this statutory provision, the dollar 
amount of the management contract or subcontract with an ACDBE and the 
gross receipts of a business activity to which such a management 
contract or subcontract pertains are added to the base for this goal, 
while the dollar amount of the management contract or subcontract with 
a non-ACDBE firm and the gross receipts of business activities to which 
such a management or subcontract pertains are not.
    Section 23.49 concerns the second of the two goals, that for car 
rentals. It is straightforward: the base for this goal includes the 
total gross receipts of car rental operations at your airport, and 
nothing else. In setting car rental goals, airports may take into 
account the way in which car rental participation is counted, so that 
goals remain proportional to the type of participation submitted by the 
car rental companies.

Section 23.51 How Are a Recipient's Overall Goals Expressed and 
Calculated?

    This section concerns the very important subject of airports' 
calculation of overall goals. It applies to both the overall goal for 
car rentals and the overall goal for other concession activities. It is 
designed to parallel the goal-setting mechanism of Part 26, which has 
withstood a number of legal challenges.
    We recognize that, particularly for some large airports, it is 
possible that the market area for many types of concessions could be 
nationwide in scope. Even some of the smaller airports may have 
national or regional market areas in some or all of their concession 
categories. As the Department develops goal-setting guidance for 
airports, we will explore, in cooperation with the Census Bureau and 
airports, whether it would be possible to establish national 
availability estimates in particular categories. If this approach 
proves feasible, it would allow the Department to go ahead and set 
availability estimates in a number of industry categories, which could 
allow concerned airports to simply use those estimates with whatever 
weights are appropriate for each airport.
    We are aware of the concern some airport commenters expressed about 
the utility of existing data to set goals for concessions. In this 
context, it is important to remember that what the rules call for is 
the best available data. The rules do not demand perfect data. It is 
likely true that Census data and the NAICS codes do not specify what 
firms are willing to work in the airport context. This, of course, is 
also true in the DOT-assisted contracting context. For example, the 
NAICS codes do not tell us which florists are willing to be florists at 
airports. By the same token, the codes do not indicate which heavy 
construction firms are willing to perform heavy construction at 
airports. Despite this, we still use the NAICS codes to provide an 
indication of availability in the construction context, and we can use 
the same codes in the florist context as well.
    Looking at the Census Bureau's County Business Patterns database, 
it appears that that the primary codes most likely to be useful to 
airports will probably be 44 (Retail Trade) and 72 (Accommodation and 
food services). Both of these categories break down into 6 digit codes 
in most (even small) metropolitan areas and counties. For instance, 44 
includes tape, CD and pre-recorded music stores (451220), florists 
(453110), and gift, novelty and souvenir stores (453220). NAICS code 72 
includes, among other things, cafeterias (722212), full-service 
restaurants (722110) and drinking places (alcoholic beverages) 
(722410).
    We would point out that even some specialized types of business 
that operate as concessions have NAICS codes of their own (e.g., 812113 
for nail salons and 454210 for vending machine operators). Even 
shoeshine kiosks, which do not have a specific NAICS code, can be 
included a broader category of ``other personal services.'' The fact of 
the matter is that these categories are probably more specific than the 
categories available for construction and other activities frequently 
used under Part 26. We see no reason that the Census databases and 
NAICS codes cannot be used for goal-setting under Part 23.
    One potential problem that we would ask airports and UCPs to 
address is the potential under-representation of ACDBEs in directories. 
That is, program participants have expressed concern that, because 
concession opportunities occur less frequently than Part 26 contracting 
opportunities, and because certification offices may have been more 
focused on Part 26 contracting, fewer ACDBEs may appear on some 
certification lists. This could lead, in turn, to Step 1 relative 
availability calculations being unrealistically low. The Department 
recommends that airports and UCPs conduct outreach activities to 
encourage potential ACDBEs to seek certification. Airports could also 
augment their counts of available DBEs with firms in local MBE/WBE 
directories and Part 26 DBE directories (i.e., with respect to firms on 
those lists in concession-relevant NAICS codes), or trade association 
lists. Moreover, to the extent they have evidence of ACDBE under-
representation in directories, airports could use this evidence as part 
of a Step 2 adjustment.
    The regulatory text does not use the term ``bidders list'' that 
Part 26 uses.

[[Page 14506]]

Rather, Part 23 uses the term ``active participants list.'' This is 
because ``bidding,'' in the sense the term is used in DOT-assisted 
contracting, is often not used in the concessions context. In any case, 
the idea is to identify interested firms and build a list from that 
source. It is likely that many airports may have a strong sense of 
those firms that are likely to be interested in seeking concession 
opportunities. Their information comes from a number of sources, such 
as past experience with firms that have run concessions or sought 
concession contracts or leases, knowledge about the universe of firms 
in certain areas of retail and food and beverage service that tend to 
be interested in participating in airport concessions, and attendance 
lists from informational and outreach meetings about upcoming 
concessions opportunities. While these sources do not represent bidders 
lists in the traditional sense, they appear feasible to develop and can 
provide a good source of availability data.
    When the rule says that an airport can use the goal of another 
recipient as the basis for Step 1 of its goal-setting exercise, it 
should be noted that this concept is not necessarily limited to other 
airports in the same geographical area. For instance, suppose a large 
airport on the East Coast and a large airport on the West Coast both 
have a national market area for certain types of concessions. With 
appropriate adjustments for differences in local market areas and the 
airports' concession programs, these two airports might be able to use 
the same analysis in setting their goals.

Section 23.53 How Do Car Rental Companies Count ACDBE Participation 
Toward Their Goals?

Section 23.55 How Do Recipients Count ACDBE Participation Toward Goals 
for Items Other Than Car Rentals?

    Section 23.53 addresses the issue of counting ACDBE participation 
for car rental companies, which is discussed at length under ``major 
issues'' above. Section 23.55 is the counting provision for other types 
of concessions, and it generally follows the counting provisions of 
Part 26. For example, when an ACDBE enters into a sub-concession 
agreement or lease with a non-ACDBE, the part of the work performed by 
the non-ACDBE is not counted toward goals. One exception to this 
pattern concerns regular dealers. Under Part 26, recipients may count 
toward goals only 60 percent of the value of goods purchased from DBE 
regular dealers. Under this section, however, recipients may count 100 
percent of the value of items purchases from an ACDBE regular dealer. 
This difference is based on the greater role that goods and services 
purchases play in the concessions context and a lesser concern that 
overuse of goods and services purchases will distort opportunities for 
other contractors. In response to a question from a commenter, goods 
and services purchased from ACDBEs by management contractors would also 
count toward goals, assuming that the goods and services are used for 
the management contractor's operations at the airport. This section 
also includes a few provisions peculiar to the concessions context, 
such as a provision directing that so-called ``build out'' costs of a 
concession not be counted toward ACDBE goals.
    We wish to emphasize the provision of this section concerning 
counting the participation of ACDBE participants in joint ventures. 
Credit may be counted only for the independent, distinct portion of the 
work performed by the ACDBE with its own forces.
    It is very important to avoid overcounting the value of the ACDBE's 
participation. For example, suppose a joint venture asserts that the 
portion of its work performed by the ACDBE participant involves the 
performance of professional or back office services. The joint venture 
claims credit amounting to 30 percent of its gross receipts for this 
function. If the business sought similar legal, accounting, payroll, 
personnel administration, etc. services from an outside firm, would the 
fees paid the outside firm amount to around 30 percent of its gross 
receipts? If not, then it is likely the joint venture is overvaluing 
the contribution of the ACDBE participant, and the airport should not 
count all the DBE credit requested.
    As a policy matter, we believe it is preferable for ACDBE joint 
venture participants to actually have a defined role in the revenue-
generating activities of the business (e.g., the joint venture runs 
four food service locations in the airport, and the ACDBE is directly 
responsible for one of them). There is a greater likelihood of 
confusion, counting, and other administrative difficulties, as well as 
of abuse, when ACDBE participation is claimed for joint ventures in 
which the ACDBE participant has only a vaguely defined role in the 
entity as a whole.

Section 23.57 What Happens if a Recipient Falls Short of Meeting Its 
Overall Goals?

Section 23.59 What Is the Role of the Statutory 10 Percent Goal in the 
ACDBE Program?

Section 23.61 Can Recipients Use Quotas or Set-Asides as Part of Their 
ACDBE Programs?

    These three sections emphasize that recipients are not penalized 
for failing to meet their overall goals (i.e., failure to ``hit the 
number''), that the statutory 10 percent goal is an aspirational goal 
that does not play an operational role in airports' ACDBE programs, and 
that the use of quotas and set-asides is forbidden. All three 
provisions are taken from Part 26 (except that the prohibition on the 
use of set-asides has been strengthened), where they have been part of 
the narrowly tailored approach to the DBE program that the Federal 
courts have approved.

Section 23.71 Does a Recipient Have To Change Existing Concession 
Agreements?

    This section emphasizes that the changes in Part 23 do not require 
airports to change or abrogate existing concession agreements with 
private businesses. A few commenters had asked for reassurance on this 
point. However, airports must take advantage of opportunities that 
arise at the time of the renewal, modification, or extension of 
existing concession agreements to obtain a modified amount of ACDBE 
participation in the renewed or amended agreement.

Section 23.73 What Requirements Apply to Privately Owned or Leased 
Terminal Buildings?

    This provision is virtually identical to the version in the 1997 
and 2000 proposals. We did not receive any comments on it.

Section 23.75 Can Recipients Enter Into Long-Term, Exclusive Agreements 
With Concessionaires?

    This provision continues the long-standing requirement that long-
term, exclusive leases are prohibited, except where the airport obtains 
FAA approval. The section includes a procedure for obtaining such 
approval, including a list of information FAA needs before it can grant 
this approval. ACDBE participation is a key part of this information. 
Comments on the various proposed versions of this section generally 
favored requiring opportunities for DBE participation as part of a 
long-term, exclusive lease arrangement. Consistent with the

[[Page 14507]]

Department's prior proposals, only FAA approval under this section will 
be needed for long-term exclusive leases. DOT approval through an 
exemption process will no longer be required.
    One airport suggested making 10 years rather than 5 years the 
criterion for a long-term exclusive lease subject to this section. We 
have not adopted this comment because doing so would reduce the degree 
of oversight FAA can exercise under the rule to make sure that long-
term concession agreements include adequate ACDBE participation.
    FAA is currently working on revised guidance concerning long-term 
exclusive lease issues. FAA will issue this guidance, on the DOT DBE 
web site among other places, as soon as it is ready.

Section 23.77 Does This Part Preempt Local Requirements?

    This section restates the statutory provision that the regulation 
does not automatically preempt all local requirements. However, local 
laws, regulations, and policies may not directly conflict with this 
regulation, and airports would have to take steps to avoid situations 
where a local requirement conflicts with a Federal requirement. It 
should be noted also that this provision refers to substantive DBE and 
similar requirements of local entities, and it in no way avoids the 
need to comply with Federal requirements for confidentiality (e.g., 
with respect to information submitted in response to PNW requirements).
    A car rental trade association asked the Department to prohibit 
airports from having requirements involving such measures as bid 
preferences, preferences for the allocation of space, or good faith 
efforts pertaining to direct ownership arrangements. We have not 
adopted specific prohibitions, but have instead specified what is 
required of airports. Airports will be expected to comply with these 
Federal requirements and not impose any conflicting requirements.
    The Department is concerned, however, that additional or more 
stringent local or state requirements that go beyond the provisions of 
Part 23 could implicate the Federal ACDBE program in matters of 
questionable constitutionality. We are adding a provision directing 
airports to attach copies of any provisions additional to those needed 
to carry out Part 23 requirements to their ACDBE program submissions. 
FAA will review these provisions, and FAA will not approve an ACDBE 
program if there are ``go-beyond'' provisions that are inconsistent 
with this rule. In any case, even where FAA has reviewed a state or 
local provision and determined that it does not conflict with Part 23, 
there should be a clear firewall between the ACDBE program and such 
additional state or local requirements. There must be a separate 
program document for them, and the Federal and state/local additional 
programs, respectively, must be administered in a clearly distinct 
manner.

Section 23.79 Does This Part Permit Recipients To Use Local Geographic 
Preferences?

    The 2000 SNPRM proposed that, in some cases, airports could use 
local geographic preferences in selecting concessionaires if they 
obtained a program waiver from the FAA. On further reflection, the 
Department has decided that the disadvantages of local preferences that 
we noted in the SNPRM, such as the elimination of the benefits of wider 
competition for business opportunities and the possible loss of 
opportunities for DBEs who are not located in the locality served by an 
airport, are important enough to warrant prohibiting local preferences 
altogether. The ACDBE program is a national program, and at least some 
concession markets are national markets. In this context, a local 
preference program is out of place. It is also out of character with a 
narrowly tailored program, in that it would limit selections of ACDBEs 
to something less than their actual availability in the marketplace. 
Among commenters, one airport favored local preferences and a car 
rental trade association opposed them; there was not widespread 
interest or support for retaining local preferences, in any case.

Regulatory Analyses and Notices

    This rule is nonsignificant for purposes of Executive Order 12866 
and the Department of Transportation's Regulatory Policies and 
Procedures. While the rule is of considerable interest to the airport 
community and businesses that work on airports, it is essentially an 
update of a long standing, continuing program that does not break new 
policy ground in most areas. It does not impose significant new costs 
on airports or businesses. The rule does not have Federalism impacts 
sufficient to warrant the preparation of a Federalism Assessment.
    The Department certifies that this rule will not have a significant 
economic effect on a substantial number of small entities. The rule 
clearly affects small entities: ACDBEs are, by definition, small 
businesses. However, the economic effect of the rule on these small 
entities is not likely to be significant. Until the Department takes 
action based on the accompanying SNPRM, there are no changes from the 
current rule with respect to business size standards. The personal net 
worth standard may affect some existing ACDBE owners, but these effects 
are significantly mitigated by ``grandfathering'' of existing contracts 
and, more importantly, by the exclusion of documented needs to hold 
assets to support business growth. In other respects, compared to the 
existing rule, the new rule is not expected to have noticeable 
incremental economic effects on small businesses.
    A number of provisions of this rule involve information collection 
requirements subject to the Paperwork Reduction Act of 1995 (PRA). With 
some modifications, these information collection requirements of the 
rule continue existing Part 23 requirements, major elements of the 
ACDBE program that airports and concessionaires have been implementing 
since at least 1992. Overall, the Department believes the overall 
burden of these requirements will remain the same or shrink. These 
requirements are the following:
     Firms applying for DBE certification must provide 
information (including PNW data) to recipients/uniform certification 
programs (UCPs) to allow them to make eligibility decisions. Currently 
certified firms must provide information to recipients/UCPs to allow 
them to review the firms' continuing eligibility.
     When firms bid on concession opportunities that have 
concession-specific goals, they must document their ACDBE participation 
and/or the good faith efforts they have made to meet the contract 
goals.
     Recipients must calculate overall goals and transmit them 
to the FAA for approval. There are two sets of overall goals: One for 
car rentals and one for non-car rental concessions. Many smaller 
airports will not have to submit overall goals.
     Recipients must have a revised ACDBE program approved by 
the FAA. This is a one-time requirement.
     Recipients must retain ACDBE data for three years and 
submit an annual report to the FAA.

The Department estimates that these program elements will result in a 
total of approximately 41,000 annual burden hours to recipients and 
contractors, plus an additional 44,000 burden hours in the first year 
for the revision and submission of ACDBE programs.
    Both as the result of comments and what the Department learns as it 
implements the ACDBE program under Part 23, it is possible for the

[[Page 14508]]

Department's information needs and the way we meet them to change. 
Sometimes the way we collect information can be changed informally 
(e.g., by guidance telling recipients they need not repeat information 
that does not change significantly from year to year). In other 
circumstances, a technical amendment to the regulation may be needed. 
In any case, the Department will remain sensitive to situations in 
which modifying information collection requirements becomes 
appropriate.
    As required by the PRA, the Department has submitted an information 
collection approval request to OMB. You should direct comments to the 
Office of Information and Regulatory Affairs (OIRA), OMB, Room 10235, 
New Executive Office Building, Washington, DC 20503; Attention: Desk 
Officer for U.S. Department of Transportation. Because mail service to 
OIRA is very difficult because of security measures, it is preferable 
for interested persons to fax comments to OMB. The fax number for this 
purpose is 202-395-6974. You may also transmit copies of your comments 
to the Department's docket for this rulemaking.
    The Department considers comments by the public on information 
collections for several purposes:
     Evaluating the necessity of information collections for 
the proper performance of the Department's functions, including whether 
the information has practical utility.
     Evaluating the accuracy of the Department's estimate of 
the burden of the information collections, including the validity of 
the methods and assumptions used.
     Enhancing the quality, usefulness, and clarity of the 
information to be collected.
     Minimizing the burden of the collection of information on 
respondents, including through the use of electronic and other methods.

The Department points out that all the information collection elements 
discussed in this section of the preamble have not only been part of 
the Department's ACDBE program for many years, but have also been the 
subject of extensive public comment following the 1993, 1997, and 2000 
proposed rules on this subject. Among the many comments received in 
response to these notices were a number addressing administrative 
burden issues surrounding these program elements. In this final rule, 
the Department has responded to these comments.
    OMB is required to make a decision concerning information 
collections within 30-60 days of the publication of this notice. 
Therefore, for best effect, comments should be received by DOT/OMB 
within 30 days of publication. Following receipt of OMB approval, the 
Department will publish a Federal Register notice containing the 
applicable OMB approval numbers.
    There are a number of other statutes and Executive Orders that 
apply to the rulemaking process that the Department considers in all 
rulemakings. However, none of them are relevant to this rule. These 
include the Unfunded Mandates Reform Act (which does not apply to 
nondiscrimination/civil rights requirements), the National 
Environmental Policy Act, E.O. 12630 (concerning property rights), E.O. 
12988 (concerning civil justice reform), and E.O. 13045 (protection of 
children from environmental risks).

    Issued this 8th day of March, 2005, at Washington, DC.
Norman Y. Mineta,
Secretary of Transportation.


0
For the reasons stated in the preamble, the Department takes the 
following actions:

0
1. Revise part 23 to read as follows:

PART 23--PARTICIPATION OF DISADVANTAGED BUSINESS ENTERPRISE IN 
AIRPORT CONCESSIONS

Subpart A--General
Sec.
23.1 What are the objectives of this part?
23.3 What do the terms used in this part mean?
23.5 To whom does this part apply?
23.7 How long do the provisions of this part remain in effect?
23.9 What are the nondiscrimination and assurance requirements of 
this part for recipients?
23.11 What compliance and enforcement provisions are used under this 
part?
23.13 How does the Department issue guidance, interpretations, 
exemptions, and waivers pertaining to this part?
Subpart B--ACDBE programs
23.21 Who must submit an ACDBE program to FAA, and when?
23.23 What administrative provisions must be in a recipient's ACDBE 
program?
23.25 What measures must recipients include in their ACDBE programs 
to ensure nondiscriminatory participation of ACDBEs in concessions?
23.27 What information does a recipient have to retain and report 
about implementation of its ACDBE program?
23.29 What monitoring and compliance procedures must recipients 
follow?
Subpart C--Certification of ACDBEs
23.31 What certification standards and procedures do recipients use 
to certify ACDBEs?
23.33 What size standards do recipients use to determine the 
eligibility of ACDBEs?
23.35 What is the personal net worth standard for disadvantaged 
owners of ACDBEs?
23.37 Are firms certified under 49 CFR part 26 eligible to 
participate as ACDBEs?
23.39 What other certification requirements apply in the case of 
ACDBEs?
Subpart D--Goals, Good Faith Efforts, and Counting
23.41 What is the basic overall goal requirement for recipients?
23.43 What are the consultation requirements in the development of 
recipients' overall goals?
23.45 What are the requirements for submitting overall goal 
information to the FAA?
23.47 What is the base for a recipient's goals for concessions other 
than car rentals?
23.49 What is the base for a recipient's goals for car rentals?
23.51 How are a recipient's overall goals expressed and calculated?
23.53 How do car rental companies count ACDBE participation toward 
their goals?
23.55 How do recipients count ACDBE participation toward goals for 
items other than car rentals?
23.57 What happens if a recipient falls short of meeting its overall 
goals?
23.59 What is the role of the statutory 10 percent goal in the ACDBE 
program?
23.61 Can recipients use quotas or set-asides as part of their their 
ACDBE programs?
Subpart E--Other Provisions
23.71 Does a recipient have to change existing concession 
agreements?
23.73 What requirements apply to privately-owned or leased terminal 
buildings?
23.75 Can recipients enter into long-term, exclusive agreements with 
concessionaires?
23.77 Does this part preempt local requirements?
23.79 Does this part permit recipients to use local geographic 
preferences?
Appendix A to Part 23--Uniform Report of ACDBE Participation

    Authority: 49 U.S.C. 47107; 42 U.S.C. 2000d; 49 U.S.C. 322; 
Executive Order 12138.

Subpart A--General


Sec.  23.1  What are the objectives of this part?

    This part seeks to achieve several objectives:
    (a) To ensure nondiscrimination in the award and administration of 
opportunities for concessions by airports receiving DOT financial 
assistance;
    (b) To create a level playing field on which ACDBEs can compete 
fairly for opportunities for concessions;
    (c) To ensure that the Department's ACDBE program is narrowly 
tailored in accordance with applicable law;

[[Page 14509]]

    (d) To ensure that only firms that fully meet this part's 
eligibility standards are permitted to participate as ACDBEs;
    (e) To help remove barriers to the participation of ACDBEs in 
opportunities for concessions at airports receiving DOT financial 
assistance; and
    (f) To provide appropriate flexibility to airports receiving DOT 
financial assistance in establishing and providing opportunities for 
ACDBEs.


Sec.  23.3  What do the terms used in this part mean?

    Administrator means the Administrator of the Federal Aviation 
Administration (FAA).
    Affiliation has the same meaning the term has in the Small Business 
Administration (SBA) regulations, 13 CFR part 121, except that the 
provisions of SBA regulations concerning affiliation in the context of 
joint ventures (13 CFR Sec.  121.103(f)) do not apply to this part.
    (1) Except as otherwise provided in 13 CFR part 121, concerns are 
affiliates of each other when, either directly or indirectly:
    (i) One concern controls or has the power to control the other; or
    (ii) A third party or parties controls or has the power to control 
both; or
    (iii) An identity of interest between or among parties exists such 
that affiliation may be found.
    (2) In determining whether affiliation exists, it is necessary to 
consider all appropriate factors, including common ownership, common 
management, and contractual relationships. Affiliates must be 
considered together in determining whether a concern meets small 
business size criteria and the statutory cap on the participation of 
firms in the ACDBE program.
    Airport Concession Disadvantaged Business Enterprise (ACDBE) means 
a concession that is a for-profit small business concern --
    (1) That is at least 51 percent owned by one or more individuals 
who are both socially and economically disadvantaged or, in the case of 
a corporation, in which 51 percent of the stock is owned by one or more 
such individuals; and
    (2) Whose management and daily business operations are controlled 
by one or more of the socially and economically disadvantaged 
individuals who own it.
    Alaska Native Corporation (ANC) means any Regional Corporation, 
Village Corporation, Urban Corporation, or Group Corporation organized 
under the laws of the State of Alaska in accordance with the Alaska 
Native Claims Settlement Act (43 U.S.C. 1601 et seq.)
    Car dealership means an establishment primarily engaged in the 
retail sale of new and/or used automobiles. Car dealerships frequently 
maintain repair departments and carry stocks of replacement parts, 
tires, batteries, and automotive accessories. Such establishments also 
frequently sell pickup trucks and vans at retail. In the standard 
industrial classification system, car dealerships are categorized in 
NAICS code 441110.
    Concession means one or more of the types of for-profit businesses 
listed in paragraph (1) or (2) of this definition:
    (1) A business, located on an airport subject to this part, that is 
engaged in the sale of consumer goods or services to the public under 
an agreement with the recipient, another concessionaire, or the owner 
or lessee of a terminal, if other than the recipient.
    (2) A business conducting one or more of the following covered 
activities, even if it does not maintain an office, store, or other 
business location on an airport subject to this part, as long as the 
activities take place on the airport: Management contracts and 
subcontracts, a web-based or other electronic business in a terminal or 
which passengers can access at the terminal, an advertising business 
that provides advertising displays or messages to the public on the 
airport, or a business that provides goods and services to 
concessionaires.

    Example to paragraph (2): A supplier of goods or a management 
contractor maintains its office or primary place of business off the 
airport. However the supplier provides goods to a retail 
establishment in the airport; or the management contractor operates 
the parking facility on the airport. These businesses are considered 
concessions for purposes of this part.

    (3) For purposes of this subpart, a business is not considered to 
be ``located on the airport'' solely because it picks up and/or 
delivers customers under a permit, license, or other agreement. For 
example, providers of taxi, limousine, car rental, or hotel services 
are not considered to be located on the airport just because they send 
shuttles onto airport grounds to pick up passengers or drop them off. A 
business is considered to be ``located on the airport,'' however, if it 
has an on-airport facility. Such facilities include in the case of a 
taxi operator, a dispatcher; in the case of a limousine, a booth 
selling tickets to the public; in the case of a car rental company, a 
counter at which its services are sold to the public or a ready return 
facility; and in the case of a hotel operator, a hotel located anywhere 
on airport property.
    (4) Any business meeting the definition of concession is covered by 
this subpart, regardless of the name given to the agreement with the 
recipient, concessionaire, or airport terminal owner or lessee. A 
concession may be operated under various types of agreements, including 
but not limited to the following:
    (i) Leases.
    (ii) Subleases.
    (iii) Permits.
    (iv) Contracts or subcontracts.
    (v) Other instruments or arrangements.
    (5) The conduct of an aeronautical activity is not considered a 
concession for purposes of this subpart. Aeronautical activities 
include scheduled and non-scheduled air carriers, air taxis, air 
charters, and air couriers, in their normal passenger or freight 
carrying capacities; fixed base operators; flight schools; recreational 
service providers (e.g., sky-diving, parachute-jumping, flying guides); 
and air tour services.
    (6) Other examples of entities that do not meet the definition of a 
concession include flight kitchens and in-flight caterers servicing air 
carriers, government agencies, industrial plants, farm leases, 
individuals leasing hangar space, custodial and security contracts, 
telephone and electric service to the airport facility, holding 
companies, and skycap services under contract with an air carrier or 
airport.
    Concessionaire means a firm that owns and controls a concession or 
a portion of a concession.
    Department (DOT) means the U.S. Department of Transportation, 
including the Office of the Secretary and the Federal Aviation 
Administration (FAA).
    Direct ownership arrangement means a joint venture, partnership, 
sublease, licensee, franchise, or other arrangement in which a firm 
owns and controls a concession.
    Good faith efforts means efforts to achieve an ACDBE goal or other 
requirement of this part that, by their scope, intensity, and 
appropriateness to the objective, can reasonably be expected to meet 
the program requirement.
    Immediate family member means father, mother, husband, wife, son, 
daughter, brother, sister, grandmother, grandfather, grandson, 
granddaughter, mother-in-law, father-in-law, brother-in-law, sister-in-
law, or registered domestic partner.
    Indian tribe means any Indian tribe, band, nation, or other 
organized group or community of Indians, including any ANC, which is 
recognized as eligible for the special programs and services provided 
by the United States to Indians because of their status as Indians, or 
is

[[Page 14510]]

recognized as such by the State in which the tribe, band, nation, 
group, or community resides. See definition of ``tribally-owned 
concern'' in this section.
    Joint venture means an association of an ACDBE firm and one or more 
other firms to carry out a single, for-profit business enterprise, for 
which the parties combine their property, capital, efforts, skills and 
knowledge, and in which the ACDBE is responsible for a distinct, 
clearly defined portion of the work of the contract and whose shares in 
the capital contribution, control, management, risks, and profits of 
the joint venture are commensurate with its ownership interest. Joint 
venture entities are not certified as ACDBEs.
    Large hub primary airport means a commercial service airport that 
has a number of passenger boardings equal to at least one percent of 
all passenger boardings in the United States.
    Management contract or subcontract means an agreement with a 
recipient or another management contractor under which a firm directs 
or operates one or more business activities, the assets of which are 
owned, leased, or otherwise controlled by the recipient. The managing 
agent generally receives, as compensation, a flat fee or a percentage 
of the gross receipts or profit from the business activity. For 
purposes of this subpart, the business activity operated or directed by 
the managing agent must be other than an aeronautical activity, be 
located at an airport subject to this subpart, and be engaged in the 
sale of consumer goods or provision of services to the public.
    Material amendment means a significant change to the basic rights 
or obligations of the parties to a concession agreement. Examples of 
material amendments include an extension to the term not provided for 
in the original agreement or a substantial increase in the scope of the 
concession privilege. Examples of nonmaterial amendments include a 
change in the name of the concessionaire or a change to the payment due 
dates.
    Medium hub primary airport means a commercial service airport that 
has a number of passenger boardings equal to at least 0.25 percent of 
all passenger boardings in the United States but less than one percent 
of such passenger boardings.
    Native Hawaiian means any individual whose ancestors were natives, 
prior to 1778, of the area that now comprises the State of Hawaii.
    Native Hawaiian Organization means any community service 
organization serving Native Hawaiians in the State of Hawaii that is a 
not-for-profit organization chartered by the State of Hawaii, and is 
controlled by Native Hawaiians
    Noncompliance means that a recipient has not correctly implemented 
the requirements of this part.
    Nonhub primary airport means a commercial service airport that has 
more than 10,000 passenger boardings each year but less than 0.05 
percent of all passenger boardings in the United States.
    Part 26 means 49 CFR part 26, the Department of Transportation's 
disadvantaged business enterprise regulation for DOT-assisted 
contracts.
    Personal net worth means the net value of the assets of an 
individual remaining after total liabilities are deducted. An 
individual's personal net worth does not include the following: The 
individual's ownership interest in an ACDBE firm or a firm that is 
applying for ACDBE certification; the individual's equity in his or her 
primary place of residence; and other assets that the individual can 
document are necessary to obtain financing or a franchise agreement for 
the initiation or expansion of his or her ACDBE firm (or have in fact 
been encumbered to support existing financing for the individual's 
ACDBE business), to a maximum of $3 million. An individual's personal 
net worth includes only his or her own share of assets held jointly or 
as community property with the individual's spouse.
    Primary airport means a commercial service airport that the 
Secretary determines to have more than 10,000 passengers enplaned 
annually.
    Primary industry classification means the North American Industrial 
Classification System (NAICS) code designation that best describes the 
primary business of a firm. The NAICS Manual is available through the 
National Technical Information Service (NTIS) of the U.S. Department of 
Commerce (Springfield, VA, 22261). NTIS also makes materials available 
through its Web site (http://www.ntis.gov/naics).
    Primary recipient means a recipient to which DOT financial 
assistance is extended through the programs of the FAA and which passes 
some or all of it on to another recipient.
    Principal place of business means the business location where the 
individuals who manage the firm's day-to-day operations spend most 
working hours and where top management's business records are kept. If 
the offices from which management is directed and where business 
records are kept are in different locations, the recipient will 
determine the principal place of business for ACDBE program purposes.
    Race-conscious means a measure or program that is focused 
specifically on assisting only ACDBEs, including women-owned ACDBEs. 
For the purposes of this part, race-conscious measures include gender-
conscious measures.
    Race-neutral means a measure or program that is, or can be, used to 
assist all small businesses, without making distinctions or 
classifications on the basis of race or gender.
    Secretary means the Secretary of Transportation or his/her 
designee.
    Set-aside means a contracting practice restricting eligibility for 
the competitive award of a contract solely to ACDBE firms.
    Small Business Administration or SBA means the United States Small 
Business Administration.
    Small business concern means a for-profit business that does not 
exceed the size standards of Sec.  23.23 of this part.
    Small hub airport means a publicly owned commercial service airport 
that has a number of passenger boardings equal to at least 0.05 percent 
of all passenger boardings in the United States but less than 0.25 
percent of such passenger boardings.
    Socially and economically disadvantaged individual means any 
individual who is a citizen (or lawfully admitted permanent resident) 
of the United States and who is--
    (1) Any individual determined by a recipient to be a socially and 
economically disadvantaged individual on a case-by-case basis.
    (2) Any individual in the following groups, members of which are 
rebuttably presumed to be socially and economically disadvantaged:
    (i) ``Black Americans,'' which includes persons having origins in 
any of the Black racial groups of Africa;
    (ii) ``Hispanic Americans,'' which includes persons of Mexican, 
Puerto Rican, Cuban, Dominican, Central or South American, or other 
Spanish or Portuguese culture or origin, regardless of race;
    (iii) ``Native Americans,'' which includes persons who are American 
Indians, Eskimos, Aleuts, or Native Hawaiians;
    (iv) ``Asian-Pacific Americans,'' which includes persons whose 
origins are from Japan, China, Taiwan, Korea, Burma (Myanmar), Vietnam, 
Laos, Cambodia (Kampuchea), Thailand, Malaysia, Indonesia, the 
Philippines, Brunei, Samoa, Guam, the U.S. Trust Territories of the 
Pacific Islands (Republic of Palau), the Commonwealth of the Northern 
Marianas Islands,

[[Page 14511]]

Macao, Fiji, Tonga, Kirbati, Juvalu, Nauru, Federated States of 
Micronesia, or Hong Kong;
    (v) ``Subcontinent Asian Americans,'' which includes persons whose 
origins are from India, Pakistan, Bangladesh, Bhutan, the Maldives 
Islands, Nepal or Sri Lanka;
    (vi) Women;
    (vii) Any additional groups whose members are designated as 
socially and economically disadvantaged by the SBA, at such time as the 
SBA designation becomes effective.
    Recipient means any entity, public or private, to which DOT 
financial assistance is extended, whether directly or through another 
recipient, through the programs of the FAA.
    Tribally-owned concern means any concern at least 51 percent owned 
by an Indian tribe as defined in this section.
    You refers to a recipient, unless a statement in the text of this 
part or the context requires otherwise (i.e., ``You must do XYZ'' means 
that recipients must do XYZ).


Sec.  23.5  To whom does this part apply?

    If you are a recipient that has received a grant for airport 
development at any time after January 1988 that was authorized under 
Title 49 of the United States Code, this part applies to you.


Sec.  23.7  How long do the provisions of this part remain in effect?

    Unless extended by the Department, the provisions of this rule will 
terminate and become inoperative on April 21, 2010.


Sec.  23.9  What are the nondiscrimination and assurance requirements 
of this part for recipients?

    (a) As a recipient, you must meet the non-discrimination 
requirements provided in part 26, Sec.  26.7 with respect to the award 
and performance of any concession agreement, management contract or 
subcontract, purchase or lease agreement, or other agreement covered by 
this subpart.
    (b) You must also take all necessary and reasonable steps to ensure 
nondiscrimination in the award and administration of contracts and 
agreements covered by this part.
    (c) You must include the following assurances in all concession 
agreements and management contracts you execute with any firm after 
April 21, 2005:
    (1) ``This agreement is subject to the requirements of the U.S. 
Department of Transportation's regulations, 49 CFR part 23. The 
concessionaire or contractor agrees that it will not discriminate 
against any business owner because of the owner's race, color, national 
origin, or sex in connection with the award or performance of any 
concession agreement, management contract, or subcontract, purchase or 
lease agreement, or other agreement covered by 49 CFR part 23.
    (2) ``The concessionaire or contractor agrees to include the above 
statements in any subsequent concession agreement or contract covered 
by 49 CFR part 23, that it enters and cause those businesses to 
similarly include the statements in further agreements.''


Sec.  23.11  What compliance and enforcement provisions are used under 
this part?

    The compliance and enforcement provisions of part 26 (Sec. Sec.  
26.101 and 26.105 through 26.107) apply to this part in the same way 
that they apply to FAA recipients and programs under part 26.


Sec.  23.13  How does the Department issue guidance, interpretations, 
exemptions, and waivers pertaining to this part?

    (a) Only guidance and interpretations (including interpretations 
set forth in certification appeal decisions) consistent with this part 
23 and issued after April 21, 2005 have definitive, binding effect in 
implementing the provisions of this part and constitute the official 
position of the Department of Transportation.
    (b) Written interpretations and guidance are valid and binding, and 
constitute the official position of the Department of Transportation, 
only if they are issued over the signature of the Secretary of 
Transportation or if they contain the following statement:

    The General Counsel of the Department of Transportation has 
reviewed this document and approved it as consistent with the 
language and intent of 49 CFR part 23.

    (c) You may apply for an exemption from any provision of this part. 
To apply, you must request the exemption in writing from the Office of 
the Secretary of Transportation or the FAA. The Secretary will grant 
the request only if it documents special or exceptional circumstances, 
not likely to be generally applicable, and not contemplated in 
connection with the rulemaking that established this part, that make 
your compliance with a specific provision of this part impractical. You 
must agree to take any steps that the Department specifies to comply 
with the intent of the provision from which an exemption is granted. 
The Secretary will issue a written response to all exemption requests.
    (d) You can apply for a waiver of any provision of subpart B or D 
of this part including, but not limited to, any provisions regarding 
administrative requirements, overall goals, contract goals or good 
faith efforts. Program waivers are for the purpose of authorizing you 
to operate an ACDBE program that achieves the objectives of this part 
by means that may differ from one or more of the requirements of 
subpart B or D of this part. To receive a program waiver, you must 
follow these procedures:
    (1) You must apply through the FAA. The application must include a 
specific program proposal and address how you will meet the criteria of 
paragraph (d)(2) of this section. Before submitting your application, 
you must have had public participation in developing your proposal, 
including consultation with the ACDBE community and at least one public 
hearing. Your application must include a summary of the public 
participation process and the information gathered through it.
    (2) Your application must show that--
    (i) There is a reasonable basis to conclude that you could achieve 
a level of ACDBE participation consistent with the objectives of this 
part using different or innovative means other than those that are 
provided in subpart B or D of this part;
    (ii) Conditions at your airport are appropriate for implementing 
the proposal;
    (iii) Your proposal would prevent discrimination against any 
individual or group in access to concession opportunities or other 
benefits of the program; and
    (iv) Your proposal is consistent with applicable law and FAA 
program requirements.
    (3) The FAA Administrator has the authority to approve your 
application. If the Administrator grants your application, you may 
administer your ACDBE program as provided in your proposal, subject to 
the following conditions:
    (i) ACDBE eligibility is determined as provided in subpart C of 
this part, and ACDBE participation is counted as provided in Sec. Sec.  
23.53 through 23.55.
    (ii) Your level of ACDBE participation continues to be consistent 
with the objectives of this part;
    (iii) There is a reasonable limitation on the duration of the your 
modified program; and
    (iv) Any other conditions the Administrator makes on the grant of 
the waiver.
    (4) The Administrator may end a program waiver at any time and 
require you to comply with this part's provisions. The Administrator 
may also extend the waiver, if he or she determines that all 
requirements of this section continue to be met. Any such extension 
shall be for no longer than

[[Page 14512]]

period originally set for the duration of the program waiver.

Subpart B--ACDBE Programs


Sec.  23.21  Who must submit an ACDBE program to FAA, and when?

    (a) Except as provided in paragraph (e) of this section, if you are 
a primary airport that has or was required to have a concessions DBE 
program prior to April 21, 2005, you must submit a revisesd ACDBE 
program meeting the requirements of this part to the appropriate FAA 
regional office for approval.
    (1) You must submit this revised program on the same schedule 
provided for your first submission of overall goals in Sec.  23.45(a) 
of this part.
    (2) Timely submission and FAA approval of your revised ACDBE 
program is a condition of eligibility for FAA financial assistance.
    (3) Until your new ACDBE program is submitted and approved, you 
must continue to implement your concessions DBE program that was in 
effect before the effective date of this amendment to part 23, except 
with respect to any provision that is contrary to this part.
    (b) If you are a primary airport that does not now have a DBE 
concessions program, and you apply for a grant of FAA funds for airport 
planning and development under 49 U.S.C. 47107 et seq., you must submit 
an ACDBE program to the FAA at the time of your application. Timely 
submission and FAA approval of your ACDBE program are conditions of 
eligibility for FAA financial assistance.
    (c) If you are the owner of more than one airport that is required 
to have an ACDBE program, you may implement one plan for all your 
locations. If you do so, you must establish a separate ACDBE goal for 
each location.
    (d) If you make any significant changes to your ACDBE program at 
any time, you must provide the amended program to the FAA for approval 
before implementing the changes.
    (e) If you are a non-primary airport, non-commercial service 
airport, a general aviation airport, reliever airport, or any other 
airport that does not have scheduled commercial service, you are not 
required to have an ACDBE program. However, you must take appropriate 
outreach steps to encourage available ACDBEs to participate as 
concessionaires whenever there is a concession opportunity.


Sec.  23.23  What administrative provisions must be in a recipient's 
ACDBE program?

    (a) If, as a recipient that must have an ACDBE program, the program 
must include provisions for a policy statement, liaison officer, and 
directory, as provided in part 26, Sec. Sec.  26.23, 26.25, and 26.31, 
as well as certification of ACDBEs as provided by Subpart C of this 
part. You must include a statement in your program committing you to 
operating your ACDBE program in a nondiscriminatory manner.
    (b) You may combine your provisions for implementing these 
requirements under this part and part 26 (e.g., a single policy 
statement can cover both Federally-assisted airport contracts and 
concessions; the same individual can act as the liaison officer for 
both part 23 and part 26 matters).


Sec.  23.25  What measures must recipients include in their ACDBE 
programs to ensure nondiscriminatory participation of ACDBEs in 
concessions?

    (a) You must include in your ACDBE program a narrative description 
of the types of measures you intend to make to ensure nondiscriminatory 
participation of ACDBEs in concession and other covered activities.
    (b) Your ACDBE program must provide for setting goals consistent 
with the requirements of Subpart D of this part.
    (c) Your ACDBE program must provide for seeking ACDBE participation 
in all types of concession activities, rather than concentrating 
participation in one category or a few categories to the exclusion of 
others.
    (d) Your ACDBE program must include race-neutral measures that you 
will take. You must maximize the use of race-neutral measures, 
obtaining as much as possible of the ACDBE participation needed to meet 
overall goals through such measures. These are responsibilities that 
you directly undertake as a recipient, in addition to the efforts that 
concessionaires make, to obtain ACDBE participation. The following are 
examples of race-neutral measures you can implement:
    (1) Locating and identifying ACDBEs and other small businesses who 
may be interested in participating as concessionaires under this part;
    (2) Notifying ACDBEs of concession opportunities and encouraging 
them to compete, when appropriate;
    (3) When practical, structuring concession activities so as to 
encourage and facilitate the participation of ACDBEs
    (4) Providing technical assistance to ACDBEs in overcoming 
limitations, such as inability to obtain bonding or financing;
    (5) Ensuring that competitors for concession opportunities are 
informed during pre-solicitation meetings about how the recipient's 
ACDBE program will affect the procurement process;
    (6) Providing information concerning the availability of ACDBE 
firms to competitors to assist them in obtaining ACDBE participation; 
and
    (7) Establishing a business development program (see part 26, Sec.  
26.35); technical assistance program; or taking other steps to foster 
ACDBE participation in concessions.
    (e) Your ACDBE program must also provide for the use of race-
conscious measures when race-neutral measures, standing alone, are not 
projected to be sufficient to meet an overall goal. The following are 
examples of race-conscious measures you can implement:
    (1) Establishing concession-specific goals for particular 
concession opportunities.
    (i) If the objective of the concession-specific goal is to obtain 
ACDBE participation through a direct ownership arrangement with a 
ACDBE, calculate the goal as a percentage of the total estimated annual 
gross receipts from the concession.
    (ii) If the goal applies to purchases and/or leases of goods and 
services, calculate the goal by dividing the estimated dollar value of 
such purchases and/or leases from ACDBEs by the total estimated dollar 
value of all purchases to be made by the concessionaire.
    (iii) To be eligible to be awarded the concession, competitors must 
make good faith efforts to meet this goal. A competitor may do so 
either by obtaining enough ACDBE participation to meet the goal or by 
documenting that it made sufficient good faith efforts to do so.
    (iv) The administrative procedures applicable to contract goals in 
part 26, Sec.  26.51-53, apply with respect to concession-specific 
goals.
    (2) Negotiation with a potential concessionaire to include ACDBE 
participation, through direct ownership arrangements or measures, in 
the operation of the concession.
    (3) With the prior approval of FAA, other methods that take a 
competitor's ability to provide ACDBE participation into account in 
awarding a concession.
    (f) Your ACDBE program must require businesses subject to ACDBE 
goals at the airport (except car rental companies) to make good faith 
efforts to explore all available options to meet goals, to the maximum 
extent practicable, through direct ownership arrangements with DBEs.
    (g) As provided in Sec.  23.61 of this part, you must not use set-
asides and quotas as means of obtaining ACDBE participation.

[[Page 14513]]

Sec.  23.27  What information does a recipient have to retain and 
report about implementation of its ACDBE program?

    (a) As a recipient, you must retain sufficient basic information 
about your program implementation, your certification of ACDBEs, and 
the award and performance of agreements and contracts to enable the FAA 
to determine your compliance with this part. You must retain this data 
for a minimum of three years following the end of the concession 
agreement or other covered contract.
    (b) Beginning March 1, 2006, you must submit an annual report on 
ACDBE participation using the form found in appendix A to this part. 
You must submit the report to the appropriate FAA Regional Civil Rights 
Office.


Sec.  23.29  What monitoring and compliance procedures must recipients 
follow?

    As a recipient, you must implement appropriate mechanisms to ensure 
compliance with the requirements of this part by all participants in 
the program. You must include in your concession program the specific 
provisions to be inserted into concession agreements and management 
contracts, the enforcement mechanisms, and other means you use to 
ensure compliance. These provisions must include a monitoring and 
enforcement mechanism to verify that the work committed to ACDBEs is 
actually performed by the ACDBEs. Your program must describe in detail 
the level of effort and resources devoted to monitoring and 
enforcement.

Subpart C--Certification and Eligibility of ACDBEs


Sec.  23.31  What certification standards and procedures do recipients 
use to certify ACDBEs?

    (a) As a recipient, you must use, except as provided in this 
subpart, the procedures and standards of part 26, Sec. Sec.  26.61-91 
for certification of ACDBEs to participate in your concessions program. 
Your ACDBE program must incorporate the use of these standards and 
procedures and must provide that certification decisions for ACDBEs 
will be made by the Unified Certification Program (UCP) in your state 
(see part 26, Sec.  26.81).
    (b) The UCP's directory of eligible DBEs must specify whether a 
firm is certified as a DBE for purposes of part 26, an ACDBE for 
purposes of part 23, or both.
    (c) As an airport or UCP, you must review the eligibility of 
currently certified ACDBE firms to make sure that they meet the 
eligibility standards of this part.
    (1) You must complete these reviews as soon as possible, but in no 
case later than April 21, 2006 or three years from the anniversary date 
of each firm's most recent certification, whichever is later.
    (2) You must direct all currently certified ACDBEs to submit to you 
by April 21, 2006, a personal net worth statement, a certification of 
disadvantage, and an affidavit of no change.


Sec.  23.33  What size standards do recipients use to determine the 
eligibility of ACDBEs?

    (a) As a recipient, you must, except as provided in paragraph (b) 
of this section, treat a firm as a small business eligible to be 
certified as an ACDBE if its gross receipts, averaged over the firm's 
previous three fiscal years, do not exceed $30 million.
    (b) The following types of businesses have size standards that 
differ from the standard set forth in paragraph (a) of this section:
    (1) Banks and financial institutions: $275 million in assets;
    (2) Car rental companies: $40 million average annual gross receipts 
over the firm's three previous fiscal years;
    (3) Pay telephones: 1,500 employees.


Sec.  23.35  What is the personal net worth standard for disadvantaged 
owners of ACDBEs?

    The personal net worth standard used in determining eligibility for 
purposes of this part is $750,000. Any individual who has a personal 
net worth exceeding this amount is not a socially and economically 
disadvantaged individual for purposes of this part, even if the 
individual is a member of a group otherwise presumed to be 
disadvantaged.


Sec.  23.37  Are firms certified under 49 CFR part 26 eligible to 
participate as ACDBEs?

    (a) You must presume that a firm that is certified as a DBE under 
part 26 is eligible to participate as an ACDBE. By meeting the size, 
disadvantage (including personal net worth), ownership and control 
standards of part 26, the firm will have also met the eligibility 
standards for part 23.
    (b) However, before certifying such a firm, you must ensure that 
the disadvantaged owners of a DBE certified under part 26 are able to 
control the firm with respect to its activity in the concessions 
program. In addition, you are not required to certify a part 26 DBE as 
a part 23 ACDBE if the firm does not do work relevant to the airport's 
concessions program.


Sec.  23.39  What other certification requirements apply in the case of 
ACDBEs?

    (a) The provisions of part 26, Sec. Sec.  26.83 (c)(2) through 
(c)(6) do not apply to certifications for purposes of this part. 
Instead, in determining whether a firm is an eligible ACDBE, you must 
take the following steps:
    (1) Obtain the resumes or work histories of the principal owners of 
the firm and personally interview these individuals;
    (2) Analyze the ownership of stock of the firm, if it is a 
corporation;
    (3) Analyze the bonding and financial capacity of the firm;
    (4) Determine the work history of the firm, including any 
concession contracts or other contracts it may have received;
    (5) Obtain or compile a list of the licenses of the firm and its 
key personnel to perform the concession contracts or other contracts it 
wishes to receive;
    (6) Obtain a statement from the firm of the type(s) of 
concession(s) it prefers to operate or the type(s) of other contract(s) 
it prefers to perform.
    (b) In reviewing the affidavit required by part 26, Sec.  26.83(j), 
you must ensure that the ACDBE firm meets the applicable size standard 
in Sec.  23.33.
    (c) For purposes of this part, the term prime contractor in part 
26, Sec.  26.87(i) includes a firm holding a prime contract with an 
airport concessionaire to provide goods or services to the 
concessionaire or a firm holding a prime concession agreement with a 
recipient.
    (d) With respect to firms owned by Alaska Native Corporations 
(ANCs), the provisions of part 26, Sec.  26.73(i) do not apply under 
this part. The eligibility of ANC-owned firms for purposes of this part 
is governed by Sec.  26.73(h).
    (e) When you remove a concessionaire's eligibility after the 
concessionaire has entered a concession agreement, because the firm 
exceeded the small business size standard or because an owner has 
exceeded the personal net worth standard, and the firm in all other 
respects remains an eligible DBE, you may continue to count the 
concessionaire's participation toward DBE goals during the remainder of 
the current concession agreement. However, you must not count the 
concessionaire's participation toward DBE goals beyond the termination 
date for the concession agreement in effect at the time of the 
decertification (e.g., in a case where the agreement is renewed or 
extended, or an option for continued participation beyond the current 
term of the agreement is exercised).
    (f) When UCPs are established in a state (see part 26, Sec.  
26.81), the UCP, rather than individual recipients,

[[Page 14514]]

certifies firms for the ACDBE concession program.
    (g) You must use the Uniform Application Form found in appendix F 
to part 26. However, you must instruct applicants to take the following 
additional steps:
    (1) In the space available in section 2(B)(7) of the form, the 
applicant must state that it is applying for certification as an ACDBE.
    (2) With respect to section 4(C) of the form, the applicant must 
provide information on an attached page concerning the address/
location, ownership/lease status, current value of property or lease, 
and fees/lease payments paid to the airport.
    (3) The applicant need not complete section 4(I) and (J). However, 
the applicant must provide information on an attached page concerning 
any other airport concession businesses the applicant firm or any 
affiliate owns and/or operates, including name, location, type of 
concession, and start date of concession.
    (h) Car rental companies and private terminal owners or lessees are 
not authorized to certify firms as ACDBEs. As a car rental company or 
private terminal owner or lessee, you must obtain ACDBE participation 
from firms which a recipient or UCPs have certified as ACDBEs.
    (i) You must use the certification standards of this part to 
determine the ACDBE eligibility of firms that provide goods and 
services to concessionaires.

Subpart D--Goals, Good Faith Efforts, and Counting


Sec.  23.41  What is the basic overall goal requirement for recipients?

    (a) If you are a recipient who must implement an ACDBE program, you 
must, except as provided in paragraph (b) of this section, establish 
two separate overall ACDBE goals. The first is for car rentals; the 
second is for concessions other than car rentals.
    (b) If your annual car rental concession revenues, averaged over 
the three-years preceding the date on which you are required to submit 
overall goals, do not exceed $200,000, you are not required to submit a 
car rental overall goal. If your annual revenues for concessions other 
than car rentals, averaged over the three years preceding the date on 
which you are required to submit overall goals, do not exceed $200,000, 
you are not required to submit a non-car rental overall goal.
    (c) Each overall goal must cover a three-year period. You must 
review your goals annually to make sure they continue to fit your 
circumstances appropriately. You must report to the FAA any significant 
adjustments that you make to your goal in the time before your next 
scheduled submission.
    (d) Your goals established under this part must provide for 
participation by all certified ACDBEs and may not be subdivided into 
group-specific goals.
    (e) If you fail to establish and implement goals as provided in 
this section, you are not in compliance with this part. If you 
establish and implement goals in a way different from that provided in 
this part, you are not in compliance with this part. If you fail to 
comply with this requirement, you are not eligible to receive FAA 
financial assistance.


Sec.  23.43  What are the consultation requirements in the development 
of recipients' overall goals?

    (a) As a recipient, you must consult with stakeholders before 
submitting your overall goals to FAA.
    (b) Stakeholders with whom you must consult include, but are not 
limited to, minority and women's business groups, community 
organizations, trade associations representing concessionaires 
currently located at the airport, as well as existing concessionaires 
themselves, and other officials or organizations which could be 
expected to have information concerning the availability of 
disadvantaged businesses, the effects of discrimination on 
opportunities for ACDBEs, and the recipient's efforts to increase 
participation of ACDBEs.


Sec.  23.45  What are the requirements for submitting overall goal 
information to the FAA?

    (a) You must submit your overall goals to the appropriate FAA 
Regional Civil Rights Office for approval. Your first set of overall 
goals meeting the requirements of this subpart are due on the following 
schedule:
    (1) If you are a large or medium hub primary airport on April 21, 
2005, by January 1, 2006. You must make your next submissions by 
October 1, 2008.
    (2) If you are a small hub primary airport on April 21, 2005, by 
October 1, 2006.
    (3) If you are a nonhub primary airport on April 21, 2005, by 
October 1, 2007.
    (b) You must then submit new goals every three years after the date 
that applies to you.
    (c) Timely submission and FAA approval of your overall goals is a 
condition of eligibility for FAA financial assistance.
    (d) In the time before you make your first submission under 
paragraph (a) of this section, you must continue to use the overall 
goals that have been approved by the FAA before the effective date of 
this part.
    (e) Your overall goal submission must include a description of the 
method used to calculate your goals and the data you relied on. You 
must ``show your work'' to enable the FAA to understand how you 
concluded your goals were appropriate. This means that you must provide 
to the FAA the data, calculations, assumptions, and reasoning used in 
establishing your goals.
    (f) Your submission must include your projection of the portions of 
your overall goals you propose to meet through use of race-neutral and 
race-conscious means, respectively, and the basis for making this 
projection (see Sec.  23.51(d)(5))
    (g) FAA may approve or disapprove the way you calculated your goal, 
including your race-neutral/race-conscious ``split,'' as part of its 
review of your plan or goal submission. Except as provided in paragraph 
(h) of this section, the FAA does not approve or disapprove the goal 
itself (i.e., the number).
    (h) If the FAA determines that your goals have not been correctly 
calculated or the justification is inadequate, the FAA may, after 
consulting with you, adjust your overall goal or race-conscious/race-
neutral ``split.'' The adjusted goal represents the FAA's determination 
of an appropriate overall goal for ACDBE participation in the 
recipient's concession program, based on relevant data and analysis. 
The adjusted goal is binding on you.
    (i) If a new concession opportunity the estimated average annual 
gross revenues of which are anticipated to be $200,000 or greater 
arises at a time that falls between normal submission dates for overall 
goals, you must submit an appropriate adjustment to your overall goal 
to the FAA for approval at least six months before executing the 
concession agreement for the new concession opportunity.


Sec.  23.47  What is the base for a recipient's goal for concessions 
other than car rentals?

    (a) As a recipient, the base for your goal includes the total gross 
receipts of concessions, except as otherwise provided in this section.
    (b) This base does not include the gross receipts of car rental 
operations.
    (c) The dollar amount of a management contract or subcontract with 
a non-ACDBE and the gross receipts of business activities to which a 
management or subcontract with a

[[Page 14515]]

non-ACDBE pertains are not added to this base.
    (d) This base does not include any portion of a firm's estimated 
gross receipts that will not be generated from a concession.

    Example to paragraph (d): A firm operates a restaurant in the 
airport terminal which serves the traveling public and, under the 
same lease agreement, provides in-flight catering service to air 
carriers. The projected gross receipts from the restaurant are 
included in the overall goal calculation, while the gross receipts 
to be earned by the in-flight catering services are not.


Sec.  23.49  What is the base for a recipient's goal for car rentals?

    Except in the case where you use the alternative goal approach of 
Sec.  23.51(c)(5)(ii), the base for your goal is the total gross 
receipts of car rental operations at your airport. You do not include 
gross receipts of other concessions in this base.


Sec.  23.51  How are a recipient's overall goals expressed and 
calculated?

    (a) Your objective in setting a goal is to estimate the percentage 
of the base calculated under Sec. Sec.  23.47-23.49 that would be 
performed by ACDBEs in the absence of discrimination and its effects.
    (1) This percentage is the estimated ACDBE participation that would 
occur if there were a ``level playing field'' for firms to work as 
concessionaires for your airport.
    (2) In conducting this goal setting process, you are determining 
the extent, if any, to which the firms in your market area have 
suffered discrimination or its effects in connection with concession 
opportunities or related business opportunities.
    (3) You must complete the goal-setting process separately for each 
of the two overall goals identified in Sec.  23.41 of this part.
    (b)(1) Each overall concessions goal must be based on demonstrable 
evidence of the availability of ready, willing and able ACDBEs relative 
to all businesses ready, willing and able to participate in your ACDBE 
program (hereafter, the ``relative availability of ACDBEs'').
    (2) You cannot simply rely on the 10 percent national aspirational 
goal, your previous overall goal, or past ACDBE participation rates in 
your program without reference to the relative availability of ACDBEs 
in your market.
    (3) Your market area is defined by the geographical area in which 
the substantial majority of firms which seek to do concessions business 
with the airport are located and the geographical area in which the 
firms which receive the substantial majority of concessions-related 
revenues are located. Your market area may be different for different 
types of concessions.
    (c) Step 1. You must begin your goal setting process by determining 
a base figure for the relative availability of ACDBEs. The following 
are examples of approaches that you may take toward determining a base 
figure. These examples are provided as a starting point for your goal 
setting process. Any percentage figure derived from one of these 
examples should be considered a basis from which you begin when 
examining the evidence available to you. These examples are not 
intended as an exhaustive list. Other methods or combinations of 
methods to determine a base figure may be used, subject to approval by 
the FAA.
    (1) Use DBE Directories and Census Bureau Data. Determine the 
number of ready, willing and able ACDBEs in your market area from your 
ACDBE directory. Using the Census Bureau's County Business Pattern 
(CBP) data base, determine the number of all ready, willing and able 
businesses available in your market area that perform work in the same 
NAICS codes. (Information about the CBP data base may be obtained from 
the Census Bureau at their Web site, http://www.census.gov/epcd/cbp/view/cbpview.html.) Divide the number of ACDBEs by the number of all 
businesses to derive a base figure for the relative availability of 
ACDBEs in your market area.
    (2) Use an Active Participants List. Determine the number of ACDBEs 
that have participated or attempted to participate in your airport 
concessions program in previous years. Determine the number of all 
businesses that have participated or attempted to participate in your 
airport concession program in previous years. Divide the number of 
ACDBEs who have participated or attempted to participate by the number 
for all businesses to derive a base figure for the relative 
availability of ACDBEs in your market area.
    (3) Use data from a disparity study. Use a percentage figure 
derived from data in a valid, applicable disparity study.
    (4) Use the goal of another recipient. If another airport or other 
DOT recipient in the same, or substantially similar, market has set an 
overall goal in compliance with this rule, you may use that goal as a 
base figure for your goal.
    (5) Alternative methods. (i) You may use other methods to determine 
a base figure for your overall goal. Any methodology you choose must be 
based on demonstrable evidence of local market conditions and be 
designed to ultimately attain a goal that is rationally related to the 
relative availability of ACDBEs in your market area.
    (ii) In the case of a car rental goal, where it appears that all or 
most of the goal is likely to be met through the purchases by car 
rental companies of vehicles or other goods or services from ACDBEs, 
one permissible alternative is to structure the goal entirely in terms 
of purchases of goods and services. In this case, you would calculate 
your car rental overall goal by dividing the estimated dollar value of 
such purchases from ACDBEs by the total estimated dollar value of all 
purchases to be made by car rental companies.
    (d) Step 2. Once you have calculated a base figure, you must 
examine all relevant evidence reasonably available in your jurisdiction 
to determine what adjustment, if any, is needed to the base figure in 
order to arrive at your overall goal.
    (1) There are many types of evidence that must be considered when 
adjusting the base figure. These include, but are not limited to:
    (i) The current capacity of ACDBEs to perform work in your 
concessions program, as measured by the volume of work ACDBEs have 
performed in recent years; and
    (ii) Evidence from disparity studies conducted anywhere within your 
jurisdiction, to the extent it is not already accounted for in your 
base figure.
    (2) If your base figure is the goal of another recipient, you must 
adjust it for differences in your market area and your concessions 
program.
    (3) If available, you must consider evidence from related fields 
that affect the opportunities for ACDBEs to form, grow and compete. 
These include, but are not limited to:
    (i) Statistical disparities in the ability of ACDBEs to get the 
financing, bonding and insurance required to participate in your 
program;
    (ii) Data on employment, self-employment, education, training and 
union apprenticeship programs, to the extent you can relate it to the 
opportunities for ACDBEs to perform in your program.
    (4) If you attempt to make an adjustment to your base figure to 
account for the continuing effects of past discrimination, or the 
effects of an ongoing ACDBE program, the adjustment must be based on 
demonstrable evidence that is logically and directly related to the 
effect for which the adjustment is sought.
    (5) Among the information you submit with your overall goal (see 
23.45(e)), you must include description

[[Page 14516]]

of the methodology you used to establish the goal, including your base 
figure and the evidence with which it was calculated, as well as the 
adjustments you made to the base figure and the evidence relied on for 
the adjustments. You should also include a summary listing of the 
relevant available evidence in your jurisdiction and an explanation of 
how you used that evidence to adjust your base figure. You must also 
include your projection of the portions of the overall goal you expect 
to meet through race-neutral and race-conscious measures, respectively 
(see Sec. Sec.  26.51(c)).
    (e) You are not required to obtain prior FAA concurrence with your 
overall goal (i.e., with the number itself). However, if the FAA's 
review suggests that your overall goal has not been correctly 
calculated, or that your method for calculating goals is inadequate, 
the FAA may, after consulting with you, adjust your overall goal or 
require that you do so. The adjusted overall goal is binding on you.
    (f) If you need additional time to collect data or take other steps 
to develop an approach to setting overall goals, you may request the 
approval of the FAA Administrator for an interim goal and/or goal-
setting mechanism. Such a mechanism must:
    (1) Reflect the relative availability of ACDBEs in your local 
market area to the maximum extent feasible given the data available to 
you; and
    (2) Avoid imposing undue burdens on non-ACDBEs.


Sec.  23.53  How do car rental companies count ACDBE participation 
toward their goals?

    (a) As a car rental company, you may, in meeting the goal the 
airport has set for you, include purchases or leases of vehicles from 
any vendor that is a certified ACDBE.
    (b) As a car rental company, if you choose to meet the goal the 
airport has set for you by including purchases or leases of vehicles 
from an ACDBE vendor, you must also submit to the recipient 
documentation of the good faith efforts you have made to obtain ACDBE 
participation from other ACDBE providers of goods and services.
    (c) While this part does not require you to obtain ACDBE 
participation through direct ownership arrangements, you may count such 
participation toward the goal the airport has set for you.
    (d) The following special rules apply to counting participation 
related to car rental operations:
    (1) Count the entire amount of the cost charged by an ACDBE for 
repairing vehicles, provided that it is reasonable and not excessive as 
compared with fees customarily allowed for similar services.
    (2) Count the entire amount of the fee or commission charged by a 
ACDBE to manage a car rental concession under an agreement with the 
concessionaire toward ACDBE goals, provided that it is reasonable and 
not excessive as compared with fees customarily allowed for similar 
services.
    (3) Do not count any portion of a fee paid by a manufacturer to a 
car dealership for reimbursement of work performed under the 
manufacturer's warranty.
    (e) For other goods and services, count participation toward ACDBE 
goals as provided in part 26, Sec.  26.55 and Sec.  23.55 of this part. 
In the event of any conflict between these two sections, Sec.  23.55 
controls.
    (f) If you have a national or regional contract, count a pro-rated 
share of the amount of that contract toward the goals of each airport 
covered by the contract. Use the proportion of your applicable gross 
receipts as the basis for making this pro-rated assignment of ACDBE 
participation.

    Example to paragraph (f): Car Rental Company X signs a regional 
contract with an ACDBE car dealer to supply cars to all five 
airports in a state. The five airports each account for 20 percent 
of X's gross receipts in the state. Twenty percent of the value of 
the cars purchased through the ACDBE car dealer would count toward 
the goal of each airport.


Sec.  23.55  How do recipients count ACDBE participation toward goals 
for items other than car rentals?

    (a) You count only ACDBE participation that results from a 
commercially useful function. For purposes of this part, the term 
commercially useful function has the same meaning as in part 26, Sec.  
26.55(c), except that the requirements of Sec.  26.55(c)(3) do not 
apply to concessions.
    (b) Count the total dollar value of gross receipts an ACDBE earns 
under a concession agreement and the total dollar value of a management 
contract or subcontract with an ACDBE toward the goal. However, if the 
ACDBE enters into a subconcession agreement or subcontract with a non-
ACDBE, do not count any of the gross receipts earned by the non-ACDBE.
    (c) When an ACDBE performs as a subconcessionaire or subcontractor 
for a non-ACDBE, count only the portion of the gross receipts earned by 
the ACDBE under its subagreement.
    (d) When an ACDBE performs as a participant in a joint venture, 
count a portion of the gross receipts equal to the distinct, clearly 
defined portion of the work of the concession that the ACDBE performs 
with its own forces toward ACDBE goals.
    (e) Count the entire amount of fees or commissions charged by an 
ACDBE firm for a bona fide service, provided that, as the recipient, 
you determine this amount to be reasonable and not excessive as 
compared with fees customarily allowed for similar services. Such 
services may include, but are not limited to, professional, technical, 
consultant, legal, security systems, advertising, building cleaning and 
maintenance, computer programming, or managerial.
    (f) Count 100 percent of the cost of goods obtained from an ACDBE 
manufacturer. For purposes of this part, the term manufacturer has the 
same meaning as in part 26, Sec.  26.55(e)(1)(ii).
    (g) Count 100 percent of the cost of goods purchased or leased from 
a ACDBE regular dealer. For purposes of this part, the term ``regular 
dealer'' has the same meaning as in part 26, Sec.  26.55(e)(2)(ii).
    (h) Count credit toward ACDBE goals for goods purchased from an 
ACDBE which is neither a manufacturer nor a regular dealer as follows:
    (1) Count the entire amount of fees or commissions charged for 
assistance in the procurement of the goods, provided that this amount 
is reasonable and not excessive as compared with fees customarily 
allowed for similar services. Do not count any portion of the cost of 
the goods themselves.
    (2) Count the entire amount of fees or transportation charges for 
the delivery of goods required for a concession, provided that this 
amount is reasonable and not excessive as compared with fees 
customarily allowed for similar services. Do not count any portion of 
the cost of goods themselves.
    (i) If a firm has not been certified as an ACDBE in accordance with 
the standards in this part, do not count the firm's participation 
toward ACDBE goals.
    (j) Do not count the work performed or gross receipts earned by a 
firm after its eligibility has been removed toward ACDBE goals. 
However, if an ACDBE firm certified on April 21, 2005 is decertified 
because one or more of its disadvantaged owners do not meet the 
personal net worth criterion or the firm exceeds business size 
standards of this part during the performance of a contract or other 
agreement, the firm's participation may continue to be counted toward 
ACDBE goals for the remainder of the term of the contract or other 
agreement (but not extensions or

[[Page 14517]]

renewals of such contracts or agreements).
    (k) Do not count costs incurred in connection with the renovation, 
repair, or construction of a concession facility (sometimes referred to 
as the ``build-out'').
    (l) Do not count the ACDBE participation of car rental companies 
toward your ACDBE achievements toward this goal.


Sec.  23.57  What happens if a recipient falls short of meeting its 
overall goals?

    (a) You cannot be penalized, or treated by the Department as being 
in noncompliance with this part, simply because your ACDBE 
participation falls short of your overall goals. You can be penalized 
or treated as being in noncompliance only if you have failed to 
administer your ACDBE program in good faith.
    (b) If your ACDBE participation falls short of your overall goals, 
FAA may require you to submit to the FAA a statement of the reasons why 
you were unable to meet it and the steps you are taking to meet your 
overall goals or to adjust them based on changed circumstances.
    (c) In response to your submission, FAA may require you to 
implement appropriate remedial measures,


Sec.  23.59  What is the role of the statutory 10 percent goal in the 
ACDBE program?

    (a) The statute authorizing the ACDBE program provides that, except 
to the extent the Secretary determines otherwise, not less than 10 
percent of concession businesses are to be ACDBEs.
    (b) This 10 percent goal is an aspirational goal at the national 
level, which the Department uses as a tool in evaluating and monitoring 
DBEs' opportunities to participate in airport concessions.
    (c) The national 10 percent aspirational goal does not authorize or 
require recipients to set overall or concession-specific goals at the 
10 percent level, or any other particular level, or to take any special 
administrative steps if their goals are above or below 10 percent.


Sec.  23.61  Can recipients use quotas or set-asides as part of their 
ACDBE programs?

    You must not use quotas or set-asides for ACDBE participation in 
your program.

Subpart E--Other Provisions


Sec.  23.71  Does a recipient have to change existing concession 
agreements?

    Nothing in this part requires you to modify or abrogate an existing 
concession agreement (one executed before April 21, 2005) during its 
term. When an extension or option to renew such an agreement is 
exercised, or when a material amendment is made, you must assess 
potential for ACDBE participation and may, if permitted by the 
agreement, use any means authorized by this part to obtain a modified 
amount of ACDBE participation in the renewed or amended agreement.


Sec.  23.73  What requirements apply to privately-owned or leased 
terminal buildings?

    (a) If you are a recipient who is required to implement an ACDBE 
program on whose airport there is a privately-owned or leased terminal 
building that has concessions, or any portion of such a building, this 
section applies to you.
    (b) You must pass through the applicable requirements of this part 
to the private terminal owner or lessee via your agreement with the 
owner or lessee or by other means. You must ensure that the terminal 
owner or lessee complies with the requirements of this part.
    (c) If your airport is a primary airport, you must obtain from the 
terminal owner or lessee the goals and other elements of the ACDBE 
program required under this part. You must incorporate this information 
into your concession plan and submit it to the FAA in accordance with 
this part.
    (d) If the terminal building is at a non-primary commercial service 
airport or general aviation airport or reliever airport, you must 
ensure that the owner complies with the requirements in Sec.  23.21(e).


Sec.  23.75  Can recipients enter into long-term, exclusive agreements 
with concessionaires?

    (a) Except as provided in paragraph (b) of this section, you must 
not enter into long-term, exclusive agreements for concessions. For 
purposes of this section, a long-term agreement is one having a term 
longer than five years.
    (b) You may enter into a long-term, exclusive concession agreement 
only under the following conditions:
    (1) Special local circumstances exist that make it important to 
enter such agreement, and
    (2) The responsible FAA regional office approves your plan for 
meeting the standards of paragraph (c) of this section.
    (c) In order to obtain FAA approval of a long-term-exclusive 
concession agreement, you must submit the following information to the 
FAA regional office:
    (1) A description of the special local circumstances that warrant a 
long-term, exclusive agreement.
    (2) A copy of the draft and final leasing and subleasing or other 
agreements. This long-term, exclusive agreement must provide that:
    (i) A number of ACDBEs that reasonably reflects their availability 
in your market area, in the absence of discrimination, to do the types 
of work required will participate as concessionaires throughout the 
term of the agreement and account for at a percentage of the estimated 
annual gross receipts equivalent to a level set in accordance with 
Sec. Sec.  23.47 through 23.49 of this part.
    (ii) You will review the extent of ACDBE participation before the 
exercise of each renewal option to consider whether an increase or 
decrease in ACDBE participation is warranted.
    (iii) An ACDBE concessionaire that is unable to perform 
successfully will be replaced by another ACDBE concessionaire, if the 
remaining term of the agreement makes this feasible. In the event that 
such action is not feasible, you will require the concessionaire to 
make good faith efforts during the remaining term of the agreement to 
encourage ACDBEs to compete for the purchases and/or leases of goods 
and services to be made by the concessionaire.
    (3) Assurances that any ACDBE participant will be in an acceptable 
form, such as a sublease, joint venture, or partnership.
    (4) Documentation that ACDBE participants are properly certified.
    (5) A description of the type of business or businesses to be 
operated (e.g., location, storage and delivery space, ``back-of-the-
house facilities'' such as kitchens, window display space, advertising 
space, and other amenities that will increase the ACDBE's chance to 
succeed).
    (6) Information on the investment required on the part of the ACDBE 
and any unusual management or financial arrangements between the prime 
concessionaire and ACDBE.
    (7) Information on the estimated gross receipts and net profit to 
be earned by the ACDBE.


Sec.  23.77  Does this part preempt local requirements?

    (a) In the event that a State or local law, regulation, or policy 
differs from the requirements of this part, the recipient must, as a 
condition of remaining eligible to receive Federal financial assistance 
from the DOT, take such steps as may be necessary to

[[Page 14518]]

comply with the requirements of this part.
    (b) You must clearly identify any State or local law, regulation, 
or policy pertaining to minority, women's, or disadvantaged business 
enterprise concerning airport concessions that adds to, goes beyond, or 
imposes more stringent requirements than the provisions of this part. 
FAA will determine whether such a law, regulation, or policy conflicts 
with this part, in which case the requirements of this part will 
govern.
    (c) If not deemed in conflict by the FAA, you must write and 
administer such a State or local law, policy, or regulation separately 
from the ACDBE program.
    (d) You must provide copies of any such provisions and the legal 
authority supporting them to the FAA with your ACDBE program 
submission. FAA will not approve an ACDBE program if there are such 
provisions that conflict with the provisions of this part.
    (e) However, nothing in this part preempts any State or local law, 
regulation, or policy enacted by the governing body of a recipient, or 
the authority of any State or local government or recipient to adopt or 
enforce any law, regulation, or policy relating to ACDBEs, as long as 
the law, regulation, or policy does not conflict with this part.


Sec.  23.79  Does this part permit recipients to use local geographic 
preferences?

    No. As a recipient you must not use a local geographic preference. 
For purposes of this section, a local geographic preference is any 
requirement that gives an ACDBE located in one place (e.g., your local 
area) an advantage over ACDBEs from other places in obtaining business 
as, or with, a concession at your airport.

Appendix A to Part 23--Uniform Report of ACDBE Participation

Instructions for Uniform Report of ACDBE Participation

    1. Insert name of airport receiving FAA financial assistance and 
AIP number.
    2. Provide the name and contact information (phone, fax, e-mail) 
for the person FAA should contact with questions about the report.
    3a. Provide the annual reporting period to which the report 
pertains (e.g., October 2005-September 2006).
    3b. Provide the date on which the report is submitted to FAA.
    4. This block and blocks 5 and 6 concern non-car rental goals 
and participation only. In this block, provide the overall non-car 
rental percentage goal and the race-conscious (RC) and race-neutral 
(RN) components of it. The RC and RN percentages should add up to 
the overall percentage goal.
    5. For purposes of this block and blocks 6, 8, and 9, the 
participation categories listed at the left of the block are the 
following: ``Prime Concessions'' are concessions who have a direct 
relationship with the airport (e.g., a company who has a lease 
agreement directly with the airport to operate a concession). A 
``subconcession'' is a firm that has a sublease or other agreement 
with a prime concessionaire, rather than with the airport itself, to 
operate a concession at the airport. A ``management contract'' is an 
agreement between the airport and a firm to manage a portion of the 
airport's facilities or operations (e.g., manage the parking 
facilities). ``Goods/services'' refers to those goods and services 
purchased by the airport itself or by concessionaires and management 
contractors from certified DBEs.
    Block 5 concerns all non-car rental concession activity covered 
by 49 CFR part 23 during the reporting period, both new or 
continuing.
    In Column A, enter the total concession gross revenues for 
concessionaires (prime and sub) and purchases of goods and services 
(ACDBE and non-ACDBE combined) at the airport. In Column B, enter 
the number of lease agreements, contracts, etc. in effect or taking 
place during the reporting period in each participation category for 
all concessionaires and purchases of goods and services (ACDBE and 
non-ACDBE combined).
    Because, by statute, non-ACDBE management contracts do not count 
as part of the base for ACDBE goals, the cells for total management 
contract participation and ACDBE participation as a percentage of 
total management contracting dollars are not intended to be filled 
in blocks 5, 6, 8, and 9.
    In Column C, enter the total gross revenues in each 
participation category (ACDBEs) only. In Column D, enter the number 
of lease agreements, contracts, etc., in effect or entered into 
during the reporting period in each participation category for all 
concessionaires and purchases of goods and services (ACDBEs only).
    Columns E and F are subsets of Column C: break out the total 
gross revenues listed in Column C into the portions that are 
attributable to race-conscious and race-neutral measures, 
respectively. Column G is a percentage calculation. It answers the 
question, what percentage of the numbers in Column A is represented 
by the corresponding numbers in Column C?
    6. The numbers in this Block concern only new non-car rental 
concession opportunities that arose during the current reporting 
period. In other words, the information requested in Block 6 is a 
subset of that requested in Block 5. Otherwise, this Block is filled 
out in the same way as Block 5.
    7. Blocks 7-9 concern car rental goals and participation. In 
Block 7, provide the overall car rental percentage goal and the 
race-conscious (RC) and race-neutral (RN) components of it. The RC 
and RN percentages should add up to the overall percentage goal.
    8. Block 8 is parallel to Block 5, except that it is for car 
rentals. The instructions for filling it out are the same as for 
Block 5.
    9. Block 9 is parallel to Block 6, except that it is for car 
rentals. The information requested in Block 9 is a subset of that 
requested in Block 8. The instructions for filling it out are the 
same as for Block 6.
    10. Block 10 instructs recipients to bring forward the 
cumulative ACDBE participation figures from Blocks 5 and 8, breaking 
down these figures by race and gender categories. Participation by 
non-minority women-owned firms should be listed in the ``non-
minority women'' column. Participation by firms owned by minority 
women should be listed in the appropriate minority group column. The 
``other'' column should be used to reflect participation by 
individuals who are not a member of a presumptively disadvantaged 
group who have been found disadvantaged on a case-by-case basis.
    11. This block instructs recipients to attach five information 
items for each ACDBE firm participating in its program during the 
reporting period. If the firm's participation numbers are reflected 
in Blocks 5-6 and/or 8-9, the requested information about that firm 
should be attached in response to this item.

Uniform Report of ACDBE Participation

    1. Name of Recipient and AIP Number:
    2. Contact Information:
    3a. Reporting Period:
    3b. Date of Report:
    4. Current Non-Car Rental ACDBE Goal: Race Conscious Goal ----% 
Race Neutral Goal ----% Overall Goal ----%

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     A Total      B Total    C Total to  D Total to    E RC to     F RN to      G % of
         5. Non-car rental Cumulative ACDBE participation            dollars       number      ACDBEs      ACDBEs      ACDBEs      ACDBEs     dollars to
                                                                    (everyone)   (everyone)   (dollars)   (number)    (dollars)   (dollars)     ACDBEs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prime Concessions................................................
Subconcessions...................................................
Management Contracts.............................................     XXXXXXX      XXXXXXX   ..........  ..........  ..........  ..........      XXXXXX
Goods/Services...................................................
    Totals.......................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 14519]]


--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     A Total      B Total    C Total to  D Total to    E RC to     F RN to      G % of
     6. Non-Car rental  New ACDBE participation  this period         dollars       number      ACDBEs      ACDBEs      ACDBEs      ACDBEs     dollars to
                                                                    (everyone)   (everyone)   (dollars)   (number)    (dollars)   (dollars)     ACDBEs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prime Concessions................................................
Subconcessions...................................................
Management Contracts.............................................     XXXXXXX      XXXXXXX   ..........  ..........  ..........      XXXXXX  ...........
Goods/Services...................................................
    Totals.......................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------

    7. Current Car Rental ACDBE Goal: Race Conscious Goal ----% Race 
Neutral Goal ----% Overall Goal ----%

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     A Total      B Total    C Total to  D Total to    E RC to     F RN to      G % of
          8. Car rental  Cumulative ACDBE participation              dollars       number      ACDBEs      ACDBEs      ACDBEs      ACDBEs     dollars to
                                                                    (everyone)   (everyone)   (dollars)   (number)    (dollars)   (dollars)     ACDBEs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prime Concessions................................................
Subconcessions...................................................
Goods/Services...................................................
    Totals.......................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
                                                                     A Total      B Total    C Total to  D Total to    E RC to     F RN to      G % of
        9. Car rental New ACDBE participation this period            dollars       number      ACDBEs      ACDBEs      ACDBEs      ACDBEs     dollars to
                                                                    (everyone)   (everyone)   (dollars)   (number)    (dollars)   (dollars)     ACDBEs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prime Concessions................................................
Subconcessions...................................................
Goods/Services...................................................
    Totals.......................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
                                                                                  C Asian-    D Asian-                 F Non-
  10. Cumulative ACDBE participation by race/gender      A Black     B Hispanic    Pacific     Indian     E Native    minority     G Other     H Totals
                                                        Americans    Americans    Americans   Americans   Americans     Women
--------------------------------------------------------------------------------------------------------------------------------------------------------
Car Rental...........................................
Non-Car Rental.......................................
    Totals...........................................
--------------------------------------------------------------------------------------------------------------------------------------------------------

    11. On an attachment, list the following information for each 
ACDBE firm participating in your program during the period of this 
report: (1) Firm name; (2) Type of business; (3) Beginning and 
expiration dates of agreement, including options to renew; (4) Dates 
that material amendments have been or will be made to agreement (if 
known); (5) Estimated gross receipts for the firm during this 
reporting period.

[FR Doc. 05-5530 Filed 3-16-05; 3:20 pm]
BILLING CODE 4910-62-P