[Federal Register Volume 77, Number 119 (Wednesday, June 20, 2012)]
[Rules and Regulations]
[Pages 36924-36932]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-14893]



Office of the Secretary

49 CFR Part 23

[Docket No. OST-2011-0101]
RIN 2105-AE10

Airport Concessions Disadvantaged Business Enterprise: Program 

AGENCY: Office of the Secretary (OST), DOT.

ACTION: Final rule.


SUMMARY: This final rule amends the Department of Transportation's 
Airport Concessions Disadvantaged Business Enterprise (ACDBE) 
regulation to conform it in several respects to the disadvantaged 
business enterprise (DBE) rule for highway, transit, and airport 
financial assistance programs. This rule also amends small business 
size limits to ensure that the opportunity for small businesses to 
participate in the ACDBE program remains unchanged after taking 
inflation into account. This final rule also provides an inflationary 
adjustment in the personal net worth (PNW) cap for owners of businesses 
seeking to participate in DOT's ACDBE program and suspends, until 
further notice, future use of the exemption of up to $3 million in an 
owner's assets used as collateral for financing a concession.

DATES: This rule's amendments to 49 CFR 23.3 and 23.35 are effective 
June 20, 2012. This rule's amendments to 49 CFR 23.29, 23.33, 23.45, 
and 23.57 are effective July 20, 2012.

[[Page 36925]]

FOR FURTHER INFORMATION CONTACT: Robert C. Ashby, Deputy Assistant 
General Counsel for Regulation and Enforcement, U.S. Department of 
Transportation, 1200 New Jersey Avenue SE., Washington, DC 20590, Room 
W94-302, 202-366-9310, [email protected] or Wilbur S. Barham, Director, 
National Airport Civil Rights Policy and Compliance, U.S. Department of 
Transportation, Federal Aviation Administration, 800 Independence 
Avenue SW., Washington, DC 20591, Room 1030, 202-385-6210, 
[email protected].

SUPPLEMENTARY INFORMATION: On January 28, 2011, the Department of 
Transportation published a Final Rule making several program 
improvements to the Department's DBE program rule (49 CFR part 26) for 
financial assistance programs (76 FR 5083). On May 27, 2011, the 
Department issued a notice of proposed rulemaking (NPRM) that proposed 
conforming amendments to the Department's companion rule for the ACDBE 
program (49 CFR part 23). The Department received a total of nine 
comments concerning the NPRM from three ACDBE firms, two consultants, 
one trade association, two airport recipients, and one individual.
    In the preamble to the proposed rule, the Department explained that 
it was not necessary to propose conforming changes to Part 23 that 
would be parallel to all of the Part 26 changes. The NPRM noted Part 23 
has existing provisions that already conform many of the amendments in 
Part 26. It cited as an example that it was not necessary to include a 
Part 23 provision parallel to the change to Sec.  26.11 concerning the 
frequency of reports, since Sec.  23.27(b) already states the 
appropriate reporting frequency for Part 23 reports.
    Additionally, the NPRM noted that there are many Part 26 amendments 
that apply automatically to Part 23 because certain sections in Part 23 
incorporate provisions of Part 26. A list of these amendments was 
provided in the NPRM, with an explanation of their applicability to the 
ACDBE program, and are listed below again for reference:
     Sec.  26.31: This amendment, requiring that the DBE 
directory include the list of each type of work for which a firm is 
eligible to be certified, applies to the ACDBE program as well.
     Sec.  26.51: Applied in the ACDBE context, this amendment 
directs recipients that originally set all race-neutral goals to start 
setting race-conscious concession-specific goals if it appears that the 
race-neutral approach was not working.
     Sec.  26.53: As applied to ACDBEs, this amended section 
sets forth the circumstances in which a prime concessionaire has good 
cause to terminate an ACDBE firm.
     Sec.  26.71: Under this amended section, the types of work 
an ACDBE firm can perform must be described in terms of the most 
specific available NAICS code for that type of work.
     Sec.  26.73: This amended section provides that 
certification of a firm may not be denied solely on the basis that it 
is a newly formed firm, has not completed projects or contracts at the 
time of its application, has not yet realized profits from its 
activities, or has not demonstrated a potential for success.
     Sec.  26.81: The requirements for Unified Certification 
Programs (UCPs) were amended to require the UCP to revise the print 
version of the Directory at least once a year.
     Sec.  26.83: The amended procedures for making 
certification decisions apply in the ACDBE context. The amendments 
include a new subsection that addresses the procedure for a 
certification decision involving an application that was withdrawn and 
then resubmitted.
     Sec.  26.84: This section was removed in the recently 
issued Part 26 Final Rule.
     Sec.  26.85: This is a section describing the process of 
interstate certification for a DBE firm. This includes the information 
the applicant must provide to the other state (``State B''), what 
actions State B must take when it receives an application, and 
appropriate reasons for making a determination that there is good cause 
to believe that the home state's, State A, certification of the firm is 
erroneous or should not apply in State B.
    Today's final rule also includes the inflationary adjustment of the 
size limits on small businesses participating in the ACDBE program. On 
April 3, 2009, the DOT adopted a final rule that required it to adjust 
the general ACDBE gross receipts caps for inflation every two years 
using the same method, and to publish a final rule to update the size 
standard numbers. This final rule updates the ACDBE gross receipts caps 
that were published on April 3, 2009, to reflect 2011 dollars through 
the fourth quarter of calendar year 2011.

Comments and Responses

    In an effort to ensure that the Part 26 changes made sense in the 
ACDBE context, the NPRM requested comments on the following as to 
whether there were terms or concepts in the Part 26 amendments that 
needed to be modified to conform to Part 23.

Improving Interstate Certification

    The Department received one comment from a trade association 
recommending the issuance of a guidance document to ensure that the 
objectives of improving interstate certification are achieved. In 
regards to the Sec.  26.85 process, this same association was concerned 
that the process for interstate certification for an ACDBE firm would 
not be applied consistently. They strongly recommended that training be 
provided to address the special circumstances that arise in the ACDBE 
context and that a central agency should verify certifications where 
there were disparate results among different UCPs. The association also 
strongly recommended that key certification-related elements, such as 
the certification application and Personal Net Worth (PNW) forms list 
of requested items, be used without modification.
    Another commenter believed that while improvement of interstate 
certification was a much needed initial step, DOT should adopt a 
program that recognized certifications nationally for ACDBE firms. This 
commenter identified several benefits for a national approach, 
including ease for a national prime concessionaire to solicit ACDBE 
participation in an airport concession regardless of geographic area, 
thereby increasing the availability and the participation of ACDBEs as 
sub-concessionaires. This commenter also noted that a national 
certification program would assist recipients in reporting car rental 
accomplishments, since any certified ACDBE utilized by the car rental 
companies (most of whom are national firms) could be included. The 
commenter continued by recommending that the rule be amended to allow a 
recipient to count the participation of an ACDBE firm that is certified 
in the firm's home state regardless of where the concession is located.

DOT Response

    The Department agrees that standardizing forms and interpretations 
and providing and fostering training for UCP personnel that addresses 
airport concessions and ACDBE circumstances, can improve consistency in 
the review of ACDBE applications and in the interstate certification 
process. In support of these objectives, the Department noted in the 
final Part 26 rule that it plans to issue a follow-on NPRM that will 
address improvements in the certification application and PNW forms, 
which certification agencies then would be required to use without

[[Page 36926]]

change. These changes would apply to the ACDBE program as well. 
However, the Department does not view having a central agency verify an 
ACDBE's certification status, after receiving disparate results among 
different UCPs, to be a practical solution. The purpose of the 
interstate certification process is to address the very issue of 
disagreements among certifying agencies in a consistent manner. 
Moreover, there is already an office to which a firm can appeal an 
ACDBE certification denial decision--the U.S. DOT's Departmental Office 
of Civil Rights.
    The Department had previously requested comments on the issue of 
nationwide approaches to certification and had responded to those 
comments in the May 10, 2010, NPRM to Part 26 DBE program improvements 
(75 FR 25818 (2010)). The approach the Department finally adopted was 
to first take steps to make interstate certification easier under the 
current statewide approach to certification. The Department believes 
that this approach is a significant incremental step toward nationwide 
reciprocity, which would increase the likelihood of achieving the 
benefits identified for the ACDBE program.
    Regarding the stated need for certification training, we note that 
there is a requirement in the recently enacted FAA Modernization and 
Reform Act of 2012 that the Department develop mandatory certification 
training. The Department is currently considering how best to implement 
this mandate. In doing so, we can build on existing certification 
training that the Department already provides through webinars, 
conferences, and workshops.

Fostering Small Business Participation

    Though the Department stated in the NPRM that it would not propose 
a parallel provision in Part 23 for amended Sec.  26.39 on fostering 
small business participation, we asked for comments on whether 
additional small-business-related provisions are needed in the 
concessions context. The Department explained that its current focus 
was on applying this provision to Federally-assisted contracting and 
associated issues such as ``unbundling.'' Two commenters responded with 
strong support for including a small business element in the ACDBE 
program that would unbundle large concession opportunities. They 
believed that certain business practices presented barriers to 
equitable participation by ACDBEs. The prime concessionaire model, they 
said, did not permit small-to-medium size ACDBEs to compete 
successfully for prime contract opportunities, as large firms under 
this model would be allowed to dominate the national marketplace as 
prime concessionaires. Consequently, this would create a significant 
obstacle for smaller firms trying to penetrate the market. Another 
reason given for including a small business element was that ACDBEs 
faced the same difficulties as other small businesses, such as 
obtaining loans. The association commenter stated that if a small 
business element provision was adopted for the ACDBE program, it should 
allow for a great deal of local flexibility in determining an airport's 
small business provisions, and that FAA should monitor recipients' 
programs to ensure that the new small business provision would not 
undermine the existing ACDBE program. This association also suggested 
that the FAA should review whether the SBA small business size 
standards are appropriate for ACDBEs and recommended that the FAA 
perform increased monitoring and enforcement of the good faith effort 
provisions. A commenter also suggested that FAA provide more guidance 
on this provision.

DOT Response

    The Department appreciates the comments that have been received on 
the question regarding additional small business-related provisions in 
the concessions context. The initial response from commenters indicates 
there may be barriers to ACDBEs in the concessions program that a small 
business element may help to alleviate. Although we are not issuing a 
small business program requirement for the ACDBE program at this time, 
we will consider these comments in deciding whether to proceed with a 
small business provision for the ACDBE program in the future. The 
Department also hopes to learn from airport recipients' implementation 
of the small business element requirement for the Part 26 program.

Adjusting the Personal Net Worth Cap

    To conform to the Part 26 inflationary adjustment in the personal 
net worth (PNW) cap, the NPRM proposed to amend Sec.  23.35 by 
substituting $1.32 million for the current $750,000 as the personal net 
worth (PNW) standard. The NPRM explained that the Part 23 PNW provision 
is separate from the PNW provision in Part 26, so a specific Part 23 
amendment was needed to maintain consistency between the two 
regulations. The ACDBE commenters strongly supported the PNW increase, 
and they applauded the Department for increasing the current standard 
to promote growth among ACDBEs and providing greater access to capital 
from financial institutions and capital markets.
    One commenter, however, disagreed with the use of the Consumer 
Price Index (CPI) for determining the PNW increase, saying that it 
presumes erroneously that an ACDBE owner has grown his or her personal 
worth at the same rate as a non-ACDBE. The commenter suggested instead 
that the Department conduct an independent analysis to arrive at a PNW 
amount. The commenter also suggested that there be a lower PNW limit 
for ACDBEs entering the program, and a higher PNW limit for ACDBEs that 
are growing and may eventually graduate from the program. Two 
commenters suggested that further rulemaking was needed to make 
automatic adjustments to the PNW for inflation. One suggestion was to 
make the adjustment at a regular interval of every two or three years.
    The Department also received several comments on the issue of 
retirement assets. Two ACDBEs, an ACDBE consultant, and an association 
strongly supported a change in the rule to exempt retirement assets 
from the disadvantaged business owner's PNW. Two commenters believed 
that it would be poor policy to discourage owners from providing for 
their retirement. They suggested that, as a minimum, certain types of 
retirement assets, such as company sponsored 401(k), profit sharing, 
and pension plans, which have capped contributions and are regulated by 
federal law, should be excluded from the PNW.

DOT Response

    The Department has adopted the Part 26 inflationary adjustment of 
the PNW cap to $1.32 million for the Part 23 program, with the 
inflationary adjustment based on the Department of Labor's consumer 
price index (CPI) calculator. In choosing the CPI, the Department 
explained in the final Part 26 rule that the CPI appeared to be the one 
approach that is most relevant to an individual's personal wealth. 
While no index is perfect, the more complex approaches suggested by 
some commenters, including the development of a DOT-specific index, do 
not appear practicable. In the Preamble to the final rule for Part 26, 
the Department announced that it was not ready at that time to decide 
the issue of retirement assets. We are still evaluating this matter.

[[Page 36927]]

PNW Third Exemption

    The NPRM also requested comments on whether the third exemption 
that is currently a part of the Part 23 PNW definition should be 
retained in the definition, deleted altogether, modified, or replaced 
with a different but more workable provision aimed to achieve a similar 
objective. This third exemption is an exemption from the PNW 
calculation for ``other assets that the individual can document as 
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.'' The NPRM summarized the 
background and rationale for the third exemption, which was added in 
the 2005 ACDBE rule (see 70 FR 14497-14499 (March 22, 2005)) to respond 
to concerns of commenters that a PNW standard of $750,000 could inhibit 
opportunities for business owners to enter the concessions field and 
expand existing businesses. The Department's decision to establish the 
third exemption was also made in order to preserve the underlying 
standard PNW for both the Part 23 and Part 26 programs while responding 
to comments that a higher standard could be justified in some cases in 
the ACDBE context. The Department also noted in the NPRM that it is 
aware that the $3 million exemption from PNW for assets used as 
collateral for a loan has been difficult to implement, and we asked for 
comments on how to improve the definition of this exemption so that if 
retained, the exemption could be implemented more effectively.
    Three commenters supported retaining the third exemption, and one 
commenter opposed it. An association noted that the uniqueness of the 
ACDBE industry required that ACDBEs have the ability to maintain 
capital to finance growth, development and expansion. One commenter 
opposed the exemption because the commenter believed it could be used 
as a tool to hide assets. This commenter was also concerned that the 
practice of an ACDBE using its personal property as collateral was not 
parallel to non-ACDBE business practices. Another commenter said the 
definition was unclear and that implementation required clarification 
since there was inconsistent application by UCPs. This commenter noted 
that the number of applicants using the third exemption was minimal and 
questioned whether there was a need to retain it. Although we did not 
receive specific suggestions for improvement, most commenters on this 
issue desired more guidance.
    Because of the very limited number of responses the Department 
received to its request for comment on this issue, the FAA engaged a 
consultant to gather additional information on the subject. (A copy of 
the consultant's report has been placed in the docket.) The consultant 
contacted all certifying agencies in the DOT database, ultimately 
receiving responses from 20 agencies which, among them, had received 16 
requests for use of the third exemption over the time the provision had 
been in effect. Thirteen requests were granted (three of which were 
approved after appeals to the Departmental Office of Civil Rights). 
Three requests were denied. There were differences among these agencies 
in terms of the documentation that they required, and most thought that 
there was a lack of clarity in the Department's requirement that called 
for additional guidance and training. Some of the ACDBE firms 
interviewed said that uncertainty about the application of the 
provision would deter them from seeking to use the third exemption. The 
ACDBEs interviewed saw value in the provision, but agreed that further 
clarification and guidance were needed.

DOT Response

    Current evidence indicates that the third exemption is not used 
frequently, and, when it is, it often appears to be the subject of 
considerable uncertainty and confusion on the part of ACDBEs and 
certifying agencies alike. It may be subject to misuse. We believe that 
further consideration is necessary to determine whether the provision 
should be retained, modified, or deleted. Further study, including 
gathering more in-depth information about how the provision has been 
used to date, would be helpful in making this determination.
    However, we recognize that deciding what modifications in the 
provision, if any, would be needed to clarify the provision, or 
developing additional guidance to clarify the existing provision, are 
likely to take a good deal of time. Moreover, this rule's inflationary 
adjustment of the underlying PNW cap to $1.32 million, which maintains 
the real dollar value of the previous $750,000 cap, may have the effect 
of mitigating what the Department saw, in 2005, as the need for 
adopting a provision of this kind. On the other hand, it is possible, 
given the comments of some program participants, that a provision of 
this kind can have continuing utility, especially with further 
clarification, guidance, and training.
    For these reasons, the Department has decided neither to continue 
the existing provision in effect nor to delete it. Rather, the 
Department is suspending the effectiveness of the provision until 
further notice. It is important to note that this suspension of the 
third exemption is prospective, not retroactive. This means that, where 
a firm applies for ACDBE certification or an existing firm obtains 
financing, a loan, or a franchise agreement after the effective date of 
this rule change, the third exemption will not apply. In such cases, 
the only exemptions from the PNW calculation will be the equity the 
disadvantaged owner of a firm has in his or her primary personal 
residence and the individual's ownership interest in the ACDBE firm in 
    However, in cases where a recipient or certifying agency has 
already calculated a firm owner's PNW, based on the third exemption 
based on financing, a loan, or a franchise agreement obtained before 
the effective date of this change, that calculation will then be 
allowed to stand. This includes situations in which an original 
calculation of PNW including the third exemption was made in the 
context of a certification that is later reviewed. Of course, as the 
owner pays down a loan, the amount of the owner's assets supporting 
that loan, and thus the assets that can be exempted from the PNW 
calculation, will decline with the loan balance. In all cases involving 
the application of the third exemption, the FAA retains the discretion 
to examine documents to ensure that the third exemption is being used 
    Meanwhile, the Department will continue to evaluate this issue and 
seek additional input from stakeholders before deciding whether 
ultimately to remove, modify, or replace the third exemption. The 
Department will also consider what guidance may be helpful in helping 
recipients to use the third exemption, or a modification of it, if and 
when its effectiveness is reinstated.

Monitoring the Work of ACDBEs

    The NPRM proposed to adopt in Sec.  23.29 the change that was made 
in Sec.  26.37 concerning enhanced monitoring of the actual performance 
of work by DBEs. The NPRM explained that airports would be responsible 
for reviewing documents and actual on-site performance to ensure that 
ACDBEs were actually performing the work committed to them during the 
concession award process, and to certify that they have done so to the 
FAA. All comments received on this issue were in favor of increased 
monitoring. An association commenter suggested that

[[Page 36928]]

the Department and FAA provide guidance on practices that airports 
might use to monitor effectively the work of ACDBEs, given available 

DOT Response

    The Department has adopted the proposed change for enhanced 
monitoring in Sec.  23.29. The FAA also plans to make available to all 
sponsors a compilation of best practices in monitoring DBE and ACDBE 
programs. This includes monitoring the work of ACDBEs as a product of 
the post award compliance reviews that it conducts of airport 
recipients' DBE and ACDBE programs, and a review of documents obtained 
from other sources. The FAA plans to develop such a compilation and 
post the results on its Web site.

Adjusting a Recipient's Overall Goal

    The NPRM also asked for comment on the provision in Sec.  23.45(i) 
concerning the requirement to submit an adjustment to a recipient's 
overall goal to the FAA if a new concession opportunity estimated to be 
$200,000 or more in estimated average annual gross revenues arose at a 
time that fell between normal submission dates for overall goals. 
Section 23.45(i) currently requires the recipient to submit its 
adjustment at least six months before executing the concession 
agreement for the new concession opportunity. The NPRM asked whether 
this provision should be retained or changed. Both airport recipient 
commenters (a large hub and a small hub) and an association commenter 
objected to the six-month submission requirement to the FAA. All 
asserted that the six-month submission would impose an undue burden on 
airport recipients, as it would create long and unacceptable lead times 
for executing new concession agreements that could result in funding 
problems for the concessionaire. The small hub airport recipient 
commenter recommended instead, that FAA require only a one to two month 
submission time, whereas the large hub airport recipient commenter 
believed that it was unnecessary to submit an adjustment at all since 
existing procedures for developing a three-year overall goal 
accommodate the identification of projected new opportunities.

DOT Response

    The Department believes that many airport recipients may still 
require an adjustment to their overall goal when it has one or more new 
concession opportunities that, for whatever reason, were not projected 
in their three-year plan. Since these opportunities may be significant 
and may offer ACDBE opportunities, airports are required to conduct an 
analysis to determine ACDBE availability and whether their overall goal 
should be adjusted. The reasons for the current requirement for 
sponsors to submit an adjusted goal at least six-months before 
executing the concession agreement were to encourage the sponsor to 
obtain approval from the FAA prior to the issuance of a new concession 
opportunity that may offer ACDBE opportunities and to provide the FAA a 
reasonable amount of time to review the airport's submission. In 
response to the concerns expressed by the two airport sponsors and the 
association commenter, the Department is making two changes. In place 
of requiring an adjusted goal submission at least six months before 
executing the concession agreement, the Department will require that an 
adjusted goal be submitted to the FAA no later than 90 days prior to 
the sponsor's issuance of the solicitation. These two changes, the 
trigger event and the change in the submission deadline to the FAA, 
should help a sponsor obtain FAA's prior approval of its adjusted 
overall goal and include any ACDBE participation in the new concession 
opportunity consistent with the sponsor's approved ACDBE goal. FAA 
anticipates that it can complete its review within 45 days of receiving 
the sponsor's adjusted overall goal submission, assuming FAA has 
received all necessary information and any follow-up clarifications 
from the sponsor in a timely manner.

Accountability for Meeting Overall Goals

    The NPRM proposed to revise Sec.  23.57 to make its accountability 
provisions parallel to those of the recently amended Sec.  26.47(c). 
The rationale for doing so is the same as for Part 26. The NPRM 
requested comments on whether any further modifications of the language 
of this provision would be useful for purposes of the ACDBE program. 
Two commenters supported the accountability provision, while two 
commenters opposed it. Opponents of the accountability provision 
believed that the inability of the recipient to meet the overall goal 
was often the result of factors that were beyond their control. One 
small hub airport commenter said that revenue generation was not in the 
control of the airport and that its experience was that the 
concessionaire often did not meet its ACDBE goal, but had to show its 
good faith efforts instead. Another commenter said there were events 
and fluctuations, such as shifts in airline traffic, which were beyond 
the control of the operator and could impact achievement. This 
commenter added that there may not be new opportunities available to 
make up for shortfalls in the overall goal achievement. Another 
commenter who opposed the provision said it would produce an undue 
burden for airport recipients. The commenter said that it already had a 
process that worked to correct goal shortfalls. Two commenters 
suggested that the threshold for shortfall be clearly defined. The 
airport recipient commenters were concerned about being placed in a 
``non-compliant'' status. Due to the seriousness of being considered 
``non-compliant,'' one commenter suggested that recipients should be 
given the opportunity to make corrections before a non-compliance 
determination is made by the FAA. Another commenter suggested that it 
simply submit a report as part of its annual accomplishment report that 
would allow for a fuller explanation of why it was unable to meet its 
overall goals, rather than be judged ``non-complaint''. One commenter 
suggested that the regulation list acceptable corrective actions and 
that recipients be allowed to modify their overall goal if the analysis 
supported the modification.

DOT Response

    We agree that achievement of concession goals may vary over time, 
in part because concession receipts are driven by events that are 
beyond an airport's control. Factors of this kind may increase or 
decrease ACDBE achievements, compared to earlier projections. We do not 
believe, however, that these or other factors or any other factors 
should override the obligation of airport recipients to examine their 
concessions program in good faith and to explain and attempt to correct 
for circumstances or policies that may lead to shortfalls in meeting 
overall ACDBE goals. This examination, for example, may lead to a 
recommendation to take advantage of contract changes to negotiate for 
increased ACDBE participation that may not have been contemplated 
before, to discuss with ACDBEs and other concessionaires potential new 
opportunities, or to plan for future ACDBE participation through an 
extensive and comprehensive outreach program. When shortfalls can 
rationally be attributed specifically to factors beyond an airport's 
control, the airport would still explain it shortfall by reference to 
such factors. A requirement to report the analysis and corrective 
action called for under Sec.  23.57(b)(3) to the FAA is imposed only on 
the CORE

[[Page 36929]]

30 airports,\1\ or other airports as designated by the FAA, in order to 
limit information collection burdens on other airports.

    \1\ The 30 CORE airports presently handle 63 percent of the 
country's passengers and 68 percent of its operations.

    As we explained in the preamble to the final rule for Part 26, the 
accountability mechanism is designed to promote transparency and 
accountability, and it is not the same as a finding of non-compliance. 
An airport recipient would only be in non-compliance if it refuses to 
make an accountability assessment when it falls below its overall goal. 
We also addressed the issue of administrative burden in the previously 
mentioned preamble. We do not believe that any work needed to meet this 
requirement is ``undue,'' because the steps of an accountability review 
for recipients who fail to meet their overall goal should be a regular 
part of their program review when a key business objective is not met. 
Therefore, we are retaining the proposed accountability provision.

ACDBE Gross Receipts Size Standards

    Under the current DOT rule, if the airport concessions firm's 
annual gross receipts average over the preceding three fiscal years 
exceed $52,470,000, then it is not considered a small business eligible 
to be certified as an ACDBE. This final rule makes an inflationary 
adjustment to the size standards for eligibility as an ACDBE. This 
adjustment compensates for the rise in the general level of prices over 
time from the first quarter of calendar year 2009 through the fourth 
quarter of calendar year 2011. It should be emphasized that this action 
does not increase the size standard for ACDBES in real dollar terms. It 
simply maintains the status quo, adjusting to 2011 dollars.
    In order to make an inflation adjustment to the gross receipts 
figures, the Department of Transportation uses a Department of Commerce 
price index. The Department of Commerce's Bureau of Economic Analysis 
prepares constant dollar estimates of state and local government 
purchases of goods and services by deflating current dollar estimates 
by suitable price indices.\2\ These indices include purchases of 
durable and non-durable goods, and other services. Using these price 
deflators enables the Department to adjust dollar figures for past 
years' inflation. Given the nature of the Department's ACDBE program, 
adjusting the gross receipts cap in the same manner in which inflation 
adjustments are made to the costs of state and local government 
purchases of goods and services is simple, accurate, and fair.

    \2\ See Bureau of Economic Analysis National Income and Product 
Account Table; Table 3.10.4 Price Indexes for Government Consumption 
Expenditures and General Government Gross Output.

    The inflation rate on purchases by state and local governments for 
the current year is calculated by dividing the price deflator for the 
fourth quarter of calendar year 2011 (123.622) by calendar year 2009's 
first quarter price deflator (114.971). The result of the calculation 
is 1.0752, which represents an inflation rate of 1.075% from the first 
quarter of calendar year 2009. Multiplying the $52,470,000 figure for 
small business enterprises by 1.0752 equals $ 56,415,744, which will be 
rounded off to the nearest $10,000, or $56,420,000.
    Therefore, under this final rule, if a firm's gross receipts, 
averaged over the firm's previous three fiscal years, exceeds 
$56,420,000, then it exceeds the airport concessions small business 
size limit contained in Sec.  23.33.

ACDBE Car Rental Company Size Standards

    Under the existing rule, car rental companies are not eligible to 
participate in the ACDBE program if their average gross receipts over 
the three previous fiscal years exceed $69,970,000. This final rule 
adjusts the size standard for car rental companies to reflect the 
effects of inflation on the real dollar value.
    The inflation rate on purchases by state and local governments for 
2011 is calculated by dividing the price deflator for the fourth 
quarter of calendar year 2011 (123.622) by calendar year 2009's first 
quarter price deflator (114.971). The result of the calculation is 
1.0752, which represents an inflation rate of 1.075% from the first 
quarter of calendar year 2009. Multiplying the $69,970,000 figure for 
car rental companies by 1.0752 equals $75,231,744, which will be 
rounded off to the nearest $10,000, or $75,230,000.
    Therefore, under this final rule, if a car rental company's gross 
receipts, averaged over the company's previous three fiscal years, 
exceeds $75,230,000, then it exceeds the airport concessions car rental 
company size limit contained in Sec.  23.33.

Regulatory Analyses and Notices

Administrative Procedure Act

    Under the Administrative Procedure Act (5 U.S.C. 553(b)), an agency 
may waive the normal notice and comment requirements if it finds that 
they are impracticable, unnecessary, or contrary to the public 
interest. The Department finds that notice and comment for the portion 
of the rule at Sec.  23.33 relating to inflationary adjustment of size 
limits for ACDBE eligibility is unnecessary and contrary to the public 
interest because it relates only to ministerial updates of business 
size standards to account for inflation, which does not change the 
standards in real dollar terms. These updates will assist entities 
attempting to be part of the Department's ACDBE program and should not 
be unnecessarily delayed. Accordingly, the Department finds good cause 
under 5 U.S.C. 553(b) to waive notice and opportunity for public 
comment. Other provisions of the final rule were preceded by an 
opportunity for notice and comment.
    In addition, under the Administrative Procedure Act (5 U.S.C. 
553(d)), an agency may make a final rule effective immediately upon 
publication, as distinct from the normal 30 days following publication, 
if it relieves a restriction or otherwise for good cause. The 
Department is making the amendments to Sec. Sec.  23.3 and 23.35 
effective immediately. The amendment to Sec.  23.3 suspends 
prospectively, until further notice, the ``third exemption'' from the 
definition of personal net worth. Failure to make this suspension 
effective immediately would create a clear incentive for potential 
applicants to hurry their applications to recipients in order to ``beat 
the clock.'' The Department has good cause to make the change effective 
immediately to prevent this foreseeable result of the normal 30-day 
delay in the effective date of a final rule provision.
    The amendment to Sec.  23.35 harmonizes the personal net worth 
criterion of the ACDBE (49 CFR part 23) with that of the DBE rule (49 
CFR part 26), which the Department adjusted for inflation in 2011. Both 
will now be $1.32 million. This action relieves a restriction on the 
personal net worth that may be held by an ACDBE owner, which previously 
had been limited to $750,000. The Department has good cause for making 
this change effective upon publication because failing to do would 
expose otherwise eligible firms to the denial of ACDBE certification on 
the basis of an about-to-change personal net worth criterion, 
potentially causing these firms to lose business opportunities. In 
addition, it makes sense to have this provision go into effect at the 
same time as the suspension of the third exemption.

[[Page 36930]]

Executive Orders 12866 and 13422 and DOT Regulatory Policies and 

    This is a non-significant regulation for purposes of Executive 
Orders 12866 13422 and the Department of Transportation's Regulatory 
Policies and Procedures. The provisions in the rule involve 
administrative modifications to several provisions of a long-existing 
and well-established program, designed to improve the program's 
implementation and to harmonize these provisions with parallel 
provisions in the January 2011 amendments to 49 CFR part 26, the 
Department's DBE rule for financial assistance programs, which was 
itself a non-significant rulemaking. These portions of the rule do not 
alter the direction of the program, make major policy changes, or 
impose significant new costs or burdens.
    One provision of the rule concerns a ministerial adjustment for 
inflation of a small business size standard that does not change the 
standard in real dollar terms. This provision will not impose burdens 
on any regulated parties. In addition, this provision would not create 
inconsistency with any other agency's action or materially alter the 
budgetary impact of any entitlements, grants, user fees, or loan 
programs. Consequently, a full regulatory evaluation is not required 
for the rule.

Regulatory Flexibility Act

    A number of provisions of the rule reduce small business burdens or 
increase opportunities for small businesses. The personal net worth 
change would allow some small businesses to remain in the ACDBE program 
for a longer period of time. Small airport recipients would not be 
required to prepare or transmit reports concerning the reasons for 
overall goal shortfalls and corrective action steps to be taken as 
stated in Sec.  23.57. Only a limited number of large airports would 
have to file these reports. These provisions of the rule do not make 
major policy changes that would cause recipients to expend significant 
resources on program modifications. With regard to the provision on 
inflationary adjustment of ACDBE size limits, we have evaluated the 
effects of this action on small entities and have determined that the 
only effect of this portion of the rule on small entities is to allow 
some small businesses to continue to participate in the ACDBE program 
by adjusting for inflation. For these reasons, the Department certifies 
that the rule does not have a significant economic effect on a 
substantial number of small entities.


    A rule has implications for federalism under Executive Order 13132, 
Federalism, if it has a substantial direct effect on State or local 
governments and would either preempt State law or impose a substantial 
direct cost of compliance on them. We have analyzed this rule under the 
Order and have determined that it does not have significant 
implications for Federalism, since it merely makes administrative 
modifications to an existing program, and updates the dollar limits and 
size limits to define small businesses for the Department's ACDBE 
program. It does not change the relationship between the Department and 
State or local governments, preempt State law or State regulation, 
affect the States' ability to discharge traditional State governmental 
functions, or impose substantial direct compliance costs on those 

Unfunded Mandates Reform Act of 1995

    Since this rule pertains to a nondiscrimination requirement and 
affects only Federal financial assistance programs, the Unfunded 
Mandates Act does not apply.

Paperwork Reduction Act

    As required by the Paperwork Reduction Act of 1995, DOT has 
submitted the Information Collection Requests (ICRs) below to the 
Office of Management and Budget (OMB). Before OMB decides whether to 
approve these proposed collections of information and issue a control 
number, the public must be provided 30 days to comment. Organizations 
and individuals desiring to submit comments on the collections of 
information in this rule should direct them to the Office of Management 
and Budget, Attention: Desk Officer for the Office of the Secretary of 
Transportation, Office of Information and Regulatory Affairs, 
Washington, DC 20503. OMB is required to make a decision concerning the 
collection of information requirements contained in this rule between 
30 and 60 days after publication of this document in the Federal 
Register. The Department's NPRM included the requisite PRA information. 
OMB did not submit comments to the rulemaking docket. As provided in 5 
CFR 1320.11(h), the Department will submit relevant material to OMB in 
order to receive an OMB control number for the information collections. 
The Department will publish a Federal Register notice concerning the 
assignment of a control number when that occurs.
    We will respond to any OMB or public comments on the information 
collection requirements contained in this rule. The Department will not 
impose a penalty on persons for violating information collection 
requirements which do not display a current OMB control number, if 
    For the information of interested persons we estimate that the 
total incremental annual burden hours for the information collection 
requirements in this rule is 13,101 hours.
    The following is the incremental collection requirement in this 
Certification of Monitoring: (49 CFR 23.29)
    Each recipient would certify that it had conducted post-award 
monitoring of contracts which would be counted for ACDBE credit to 
ensure that ACDBEs had done the work for which credit was claimed. The 
certification is for the purpose of ensuring accountability for 
contract monitoring which the regulation already requires.
    Respondents: 301 (i.e., airports with covered concessions).
    Frequency: 1,311 non-car rental contracts to ACDBEs; 691 car rental 
concession contracts to ACDBEs, for a total of 2,002, or an average of 
6.7 ACDBE contracts per airport.
    Estimated Burden per Response: \1/2\ hour.
    Estimated Total Annual Burden: 1,001 hours.
Accountability Mechanism (49 CFR 23.57)
    If a recipient failed to meet its overall goal in a given year, it 
would have to determine the reason for its failure and establish 
corrective steps. Of the 301 airports covered by this rule, 30 of the 
largest recipients would transmit this analysis to DOT if their overall 
goal was not achieved; smaller recipients would perform the analysis 
but would not be required to submit it to DOT. We estimate that about 
half of the recipients (150) would be subject to this requirement in a 
given year, and 20 of the 30 largest airports would have to submit 
their reports to the FAA in a given year.
    Respondents: 150.
    Estimated Average Burden per Response: 80 hours + 5 additional 
hours for recipients sending report to DOT. Total number of recipients 
sending report to DOT: 20.
    Estimated Total Annual Burden: 12,100 hours.

List of Subjects in 49 CFR Part 23

    Administrative practice and procedure, Airports, Civil rights,

[[Page 36931]]

Concessions, Government contracts, Grant programs--transportation, 
Minority businesses, Reporting and recordkeeping requirements.

    Issued this 7th Day of June 2012 at Washington DC.
Ray LaHood,
Secretary of Transportation.

    For the reasons set forth in the preamble, the Department of 
Transportation amends 49 CFR part 23 as follows:


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

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

2. In Sec.  23.3, revise the definition of ``personal net worth'' to 
read as follows:

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

* * * * *
    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 (PNW) does not include the following:
    (1) The individual's ownership interest in an ACDBE firm or a firm 
that is applying for ACDBE certification; (2) The individual's equity 
in his or her primary place of residence; and (3) 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. The 
effectiveness of this paragraph (3) of this definition is suspended 
with respect to any application for ACDBE certification made or any 
financing or franchise agreement obtained after June 20, 2012.
* * * * *

3. Revise Sec.  23.29 to read as follows:

Sec.  23.29  What monitoring and compliance procedures must recipients 

    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 setting forth 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. This mechanism must include a 
written certification that you have reviewed records of all contracts, 
leases, joint venture agreements, or other concession-related 
agreements and monitored the work on-site at your airport for this 
purpose. The monitoring to which this paragraph refers may be conducted 
in conjunction with monitoring of concession performance for other 

4. Revise Sec.  23.33 to read as follows:

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 $56.42 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: $1 billion in assets;
    (2) Car rental companies: $75.23 million average annual gross 
receipts over the firm's three previous fiscal years, as adjusted by 
the Department for inflation every two years from April 3, 2009.
    (3) Pay telephones: 1,500 employees;
    (4) Automobile dealers: 350 employees.
    (c) The Department adjusts the numbers in paragraphs (a) and (b)(2) 
of this section using the Department of Commerce price deflators for 
purchases by State and local governments as the basis for this 
adjustment. The Department publishes a Federal Register document 
informing the public of each adjustment.

Sec.  23.35  [Amended]

5. In Sec.  23.35, remove the number ``$750,000'' and add in its place 
``$1.32 million''.

6. Revise Sec.  23.45(i) to read as follows:

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

* * * * *
    (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 no later than 90 days before issuing the 
solicitation for the new concession opportunity.

7. Revise Sec.  23.57(b) and (c) to read as follows:

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

* * * * *
    (b) If the awards and commitments shown on your Uniform Report of 
ACDBE Participation (found in Appendix A to this Part) at the end of 
any fiscal year are less than the overall goal applicable to that 
fiscal year, you must do the following in order to be regarded by the 
Department as implementing your ACDBE program in good faith:
    (1) Analyze in detail the reasons for the difference between the 
overall goal and your awards and commitments in that fiscal year;
    (2) Establish specific steps and milestones to correct the problems 
you have identified in your analysis and to enable you to meet fully 
your goal for the new fiscal year;
    (3) (i) If you are a CORE 30 airport or other airport designated by 
the FAA, you must submit, within 90 days of the end of the fiscal year, 
the analysis and corrective actions developed under paragraphs (b)(1) 
and (2) of this section to the FAA for approval. If the FAA approves 
the report, you will be regarded as complying with the requirements of 
this section for the remainder of the fiscal year.
    (ii) As an airport not meeting the criteria of paragraph (b)(3)(i) 
of this section, you must retain analysis and corrective actions in 
your records for three years and make it available to the FAA, on 
request, for their review.
    (4) The FAA may impose conditions on the recipient as part of its 
approval of the recipient's analysis and corrective actions including, 
but not limited to, modifications to your overall goal methodology, 
changes in your race-conscious/race-neutral split, or the introduction 
of additional race-neutral or race-conscious measures.
    (5) You may be regarded as being in noncompliance with this part, 
and therefore subject to the remedies in Sec.  23.11 of this part and 
other applicable regulations, for failing to implement your ACDBE 
program in good faith if any of the following things occur:
    (i) You do not submit your analysis and corrective actions to FAA 
in a timely manner as required under paragraph (b)(3) of this section;
    (ii) FAA disapproves your analysis or corrective actions; or
    (iii) You do not fully implement:

[[Page 36932]]

    (A) The corrective actions to which you have committed, or
    (B) Conditions that FAA has imposed following review of your 
analysis and corrective actions.
    (c) If information coming to the attention of FAA demonstrates that 
current trends make it unlikely that you, as an airport, will achieve 
ACDBE awards and commitments that would be necessary to allow you to 
meet your overall goal at the end of the fiscal year, FAA may require 
you to make further good faith efforts, such as modifying your race-
conscious/race-neutral split or introducing additional race-neutral or 
race-conscious measures for the remainder of the fiscal year.

[FR Doc. 2012-14893 Filed 6-19-12; 8:45 am]