[Federal Register Volume 71, Number 161 (Monday, August 21, 2006)]
[Notices]
[Pages 48579-48580]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-7053]


-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

[Docket No. FTA-2006-24063]


Disadvantaged Business Enterprises; Western States Guidance for 
Public Transportation Providers

AGENCY: Federal Transit Administration (FTA), DOT.

ACTION: Notice of availability and policy guidance.

-----------------------------------------------------------------------

SUMMARY: This notice announces the Federal Transit Administration's 
(FTA) implementation of Department of Transportation guidance for 
participants of the Disadvantaged Business Enterprise (DBE) program. 
This notice solely concerns FTA implementation procedures applicable to 
FTA grantees in the states comprising the 9th Federal Judicial Circuit 
(California, Oregon, Washington, Alaska, Arizona, Idaho, Montana, 
Nevada, and Hawaii).

DATES: Effective Date: This policy takes effect on August 21, 2006.

FOR FURTHER INFORMATION CONTACT: Scheryl Portee, Attorney Advisor, 
Office of the Chief Counsel, (202) 366-4011 (telephone) and (202) 366-
3809 (fax).

SUPPLEMENTARY INFORMATION:

1. Availability of the DOT Guidance and Comments

    A copy of the Department of Transportation Guidance for 
participants of the Disadvantaged Business Enterprise (DBE) program in 
the affected States and comments received from the public are available 
for inspection or copying at the Docket Management Facility, U.S. 
Department of Transportation, Room PL-401 on the plaza level of the 
Nassif Building, 400 Seventh Street, SW., Washington, DC between 9 a.m. 
and 5 p.m., Monday through Friday, except Federal holidays. You may 
retrieve the guidance and comments online through the Document 
Management System (DMS) at: http://dms.dot.gov. Enter the docket number 
24063 in the search field. The DMS is available 24 hours each day, 365 
days each year. Electronic submission and retrieval help and guidelines 
are available under the help section of the Web site. An electronic 
copy of the document may also be downloaded by using a computer, modem 
and suitable communications software from the Government Printing 
Office's Electronic Bulletin Board Service at (202) 512-1661. Internet 
users may also reach the Office of the Federal Register's home page at: 
http://www.nara.gov/fedreg and the Government Printing Office's Web 
page at: http://www.gpoaccess.gov/fr/index.html.

2. Background

    The General Counsel of the Department of Transportation issued 
guidance concerning the effects of the Western States Paving Co. v. 
United States and Washington State Department of Transportation, 407 F. 
3d 983 (9th Cir. 2005) in January 2006. On March 23, 2006, FTA 
published a Federal Register notice requesting comments on its 
implementation of the Department's guidance (56 FR 14775).
    The guidance applies to recipients of Federal funds authorized 
under chapter 53 of Title 49 of the United States Code that are located 
within the states of Alaska, Arizona, California, Hawaii, Idaho, 
Montana, Nevada, Oregon, and Washington.
    The Court of Appeals for the 9th Circuit, like other Federal courts 
that have reviewed the Department of Transportation's DBE program, held 
that 49 CFR part 26 and the authorizing statute for the DBE program in 
TEA-21 were constitutional. The court affirmed that Congress had 
determined that there was a compelling need for the DBE program and 
part 26 was narrowly tailored. However, the 9th Circuit opinion held 
that the Washington State Department of Transportation's program for 
implementing part 26 was not narrowly tailored because the State's 
evidence of discrimination supporting the use of race conscious 
measures in the program was inadequate. The January 2006 DOT guidance 
provides information to recipients in the 9th Circuit about how to 
address the implications of the court's decision in their programs. 
This document provides further information on how FTA will administer 
the DBE program for FTA recipients in light of the court decision and 
the DOT guidance.

3. Response to Comments

    This notice responds to comments regarding the procedures that FTA 
will employ in its review process for overall goal submissions from 
grantees in 9th Circuit States for Fiscal Year 2006 (that were due 
August 1, 2005) and subsequent-year submissions. These procedures 
concern such matters as race-neutral submissions, the evidence 
gathering process to determine evidence of discrimination or its 
effects in grantees' markets, and action plans for disparity/
availability studies or other appropriate evidence gathering processes.
    FTA solicited comments on two transit-specific issues. FTA 
considered all comments and statements filed that pertained to these 
two issues. FTA responses to these comments are included in this 
section. There is no discussion by FTA of comments that addressed 
Department-wide DBE issues, the content of the January 2006 DOT 
guidance, or statutory requirements. These issues were beyond the scope 
of the FTA notice. FTA received 10 comments in response to the two 
transit-specific issues we raised. The breakdown among commenter 
categories follows:
     Nonprofits and special transit providers: 1.
     City and County transit providers: 8.
     Trade association: 1.

Issues

1. Commitment To Conduct Disparity Studies

    On the two matters posed for comment regarding FTA's implementation 
of the Western States guidance, there were limited comments on the 
first issue, that FTA may require recipients to certify that they will 
conduct or participate in a disparity or availability study. Those that 
did respond expressed concern that the Regional Civil Rights Office may 
require this certification.
    FTA Response: DBE compliance is a condition of the FTA Master 
Agreement for all applicable recipients. The Regional Civil Rights 
Officer, in its review of DBE goal submissions, will work with 
grantees. In some cases, this will result in grantees having to commit 
to conducting disparity studies or similar evidence gathering efforts.
    The Department's Guidance explicitly states that if a recipient 
does not currently have sufficient evidence of discrimination or its 
effects, then an all

[[Page 48580]]

race-neutral overall goal for Fiscal Year 2006 would be submitted, 
along with a statement concerning the absence of adequate evidence and 
a description of plans to conduct a study or other appropriate evidence 
gathering process, an action plan, and time lines for its completion. 
The Regional Civil Rights Office review of the annual goal submissions 
will determine whether evidence of discrimination or its effects has 
been provided.
    Under part 26, any recipient, wherever located, would submit an all 
race-neutral overall goal if it concluded, based on the information 
used in the goal-setting process, that it could meet its overall goal 
without any use of race conscious measures like contract goals. If a 
recipient in the 9th Circuit presents an analysis making this showing, 
then the recipient need not submit an action plan for conducting a 
disparity study or similar evidence gathering effort. However, if a 9th 
Circuit recipient's Part 26 goal-setting analysis concludes that race 
conscious measures would be necessary to meet part of its overall goal 
and that the recipient does not have sufficient evidence to meet the 
requirements of the Western States decision, the recipient would submit 
a race-neutral overall goal and an action plan for a disparity study or 
similar evidence gathering effort. In some cases, it may be necessary 
for grantees who have already submitted Fiscal Year 2006 goals to 
rework their submissions to address these matters.

2. Costs of Disparity Studies

    A common thread was noted in comments responding to the second 
issue concerning funding of disparity studies. Commenters stated that 
additional targeted funding for disparity studies is needed to avoid 
reducing the current pressing service-related needs. Commenters also 
noted the financial limitations of small transit operators with respect 
to conducting such studies.
    FTA Response: FTA is aware of the costs involved in conducting 
disparity studies or availability studies. For recipients in the 9th 
Circuit states whose goal-setting processes would lead to the use of 
race conscious means, but for the effects of the Western States 
decision, a disparity study or similar evidence gathering effort is 
essential, and consistent with DOT's guidance, is a condition of FTA's 
approval of a race-neutral overall goal. As noted in the General 
Counsel's DBE guidance, funding of disparity studies is reimbursable 
from Federal program funds, subject to the availability of those funds 
and under the FTA statute, this is an eligible capital expense. 
Recipients that propose to undertake a study may wish to consider joint 
studies within their locale or participate in studies that will be 
undertaken by other transit properties in the local market. The 
Regional Civil Rights Office will review the overall goal submissions 
and work with recipients to respond to local circumstances and to 
achieve compliance with the overall objectives of the DBE program.
    FTA also suggests that recipients communicate with the State DOT to 
determine what preparations are being undertaken for a statewide study 
and whether participation in the study is feasible. Per the guidance, 
this is occurring and some recipients are complying with the guidance 
by submission of a race-neutral overall goal and participation in 
studies currently underway rather than conducting their own study.

3. Group-Specific Goals

    One commenter asked about an apparent inconsistency between Part 26 
and the DOT guidance concerning group-specific goals.
    FTA Response: Part 26 prohibits group-specific goals. Following the 
completion of a disparity study, a recipient might conclude that it had 
evidence of discrimination with respect to some, of the groups presumed 
to be disadvantaged under the rule. In such a case, the recipient 
should apply for a program waiver under Sec.  26.15 of the rule. This 
opportunity is not limited to recipients in the 9th Circuit or to FTA 
grantees. For example, Colorado DOT applied for and was granted such a 
waiver on the basis of its disparity study for its Fiscal Year 2000 
overall goal.
    FTA will continue to work with recipients in the 9th Circuit to 
meet the requirements of a ``narrowly tailored'' DBE program in light 
of the recent developments in case law.

    Dated: August 15, 2006.
Sandra K. Bushue,
Deputy Administrator.
[FR Doc. 06-7053 Filed 8-18-06; 8:45 am]
BILLING CODE 4910-57-M