Last year I blogged (#139) about the constitutionality of federal set-asides for disadvantaged contractors and the preliminary ruling in Mid-America Milling Co. v. U.S. Department of Transportation, 2024 WL 4267183 (E.D. Ky. Sept. 23, 2024). The Biden-era case suggested that long-standing federal programs favoring the awarding of contracts to businesses classified as disadvantaged or minority-owned was likely unconstitutional because they presumed that women and minorities are “socially and economically disadvantaged individuals.”
The Trump Administration’s war on Diversity, Equity and Inclusion has now seized on this case in leading its troops into battle. First, the USDOT decided to stop contesting the case in court and instead proposed a consent order barring USDOT approval of federally-funded projects where any DBE’s eligibility was based on a race- or sex-based presumption. When intervening disadvantaged business groups contested the entry of a consent order as collusive, the Administration decided not to wait for a ruling:
On October 3, 2025, the U.S Department of Transportation published an Interim Final Rule – purportedly in response to the Mid-America Milling case – announcing that henceforth its Disadvantaged Business Enterprise (DBE) programs for federally assisted contracts will operate in what it calls “a nondiscriminatory fashion,” by removing “race- and sex-based presumptions of social and economic disadvantage that violate the U.S. Constitution.”
The new rule was issued without first seeking public comment – an unusual move signaling the Administration’s haste to end DEI in the expenditure of federal funds. While there is a 30-day public comment period ending on November 3, 2025, the rule is already in effect, and you can bet it won’t be changed as a result of public comments. “Interim” is euphemistic. The regulation expressly overrides Congressional policy at odds with the Administration’s agenda:
“Congress has mandated by statute that DOT treat certain individuals—women and members of certain racial and ethnic groups—as ‘‘presumed’’ to be disadvantaged. . . . On September 23, 2024, the U.S. District Court for the Eastern District of Kentucky determined that the DBE program’s statutory race- and sex-based presumptions likely do not comply with the Constitution’s promise of equal protection under the law. . . . DOT and DOJ, consistent with the ruling of the District Court, have determined that the race- and sex-based presumptions of DOT’s DBE programs are unconstitutional.”
The curious statement that DOT and DOJ “have determined that the race- and sex-based presumptions of DOT’s DBE programs are unconstitutional” raises some eyebrows. Normally it is up to the courts, not administrative agencies, to determine the constitutionality of federal statutory programs. Johnson v. Robison, 415 U.S. 361, 368 (1974) (“Adjudication of the constitutionality of congressional enactments has generally been thought beyond the jurisdiction of administrative agencies.”). But the political world is different today.
A preliminary ruling by a Kentucky District Court is a rather slim reed on which to rest DOT’s constitutional law pronouncement. When courts rule on constitutionality they don’t do so in the context of a preliminary injunction, where the standard is mere likelihood of success in establishing unconstitutionality. That was the setting for the ruling in Mid-America Milling, which has never issued a final ruling on the merits.
Bottom line: Women, Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, and Subcontinent Asian Americans are no longer presumed to be socially and economically disadvantaged. DBE applicants must now prove specific instances of individualized economic hardship, systemic barriers and denied opportunities that impeded the applicant’s progress or success in education, employment, or business, including obtaining financing on terms available to similarly situated, non-disadvantaged individuals. As the Mid-America Milling opinion candidly acknowledged, this is “a high hurdle.”
New Hampshire’s DOT, which is in charge of the certification of DBE eligibility for federally funded projects in the Granite State, will need to retool its application forms. If your business has been certified before – well, get working on your personal narrative!
[Update: On December 1, 2025, DOT published some guidance.]
The Trump Administration’s war on Diversity, Equity and Inclusion has now seized on this case in leading its troops into battle. First, the USDOT decided to stop contesting the case in court and instead proposed a consent order barring USDOT approval of federally-funded projects where any DBE’s eligibility was based on a race- or sex-based presumption. When intervening disadvantaged business groups contested the entry of a consent order as collusive, the Administration decided not to wait for a ruling:
On October 3, 2025, the U.S Department of Transportation published an Interim Final Rule – purportedly in response to the Mid-America Milling case – announcing that henceforth its Disadvantaged Business Enterprise (DBE) programs for federally assisted contracts will operate in what it calls “a nondiscriminatory fashion,” by removing “race- and sex-based presumptions of social and economic disadvantage that violate the U.S. Constitution.”
The new rule was issued without first seeking public comment – an unusual move signaling the Administration’s haste to end DEI in the expenditure of federal funds. While there is a 30-day public comment period ending on November 3, 2025, the rule is already in effect, and you can bet it won’t be changed as a result of public comments. “Interim” is euphemistic. The regulation expressly overrides Congressional policy at odds with the Administration’s agenda:
“Congress has mandated by statute that DOT treat certain individuals—women and members of certain racial and ethnic groups—as ‘‘presumed’’ to be disadvantaged. . . . On September 23, 2024, the U.S. District Court for the Eastern District of Kentucky determined that the DBE program’s statutory race- and sex-based presumptions likely do not comply with the Constitution’s promise of equal protection under the law. . . . DOT and DOJ, consistent with the ruling of the District Court, have determined that the race- and sex-based presumptions of DOT’s DBE programs are unconstitutional.”
The curious statement that DOT and DOJ “have determined that the race- and sex-based presumptions of DOT’s DBE programs are unconstitutional” raises some eyebrows. Normally it is up to the courts, not administrative agencies, to determine the constitutionality of federal statutory programs. Johnson v. Robison, 415 U.S. 361, 368 (1974) (“Adjudication of the constitutionality of congressional enactments has generally been thought beyond the jurisdiction of administrative agencies.”). But the political world is different today.
A preliminary ruling by a Kentucky District Court is a rather slim reed on which to rest DOT’s constitutional law pronouncement. When courts rule on constitutionality they don’t do so in the context of a preliminary injunction, where the standard is mere likelihood of success in establishing unconstitutionality. That was the setting for the ruling in Mid-America Milling, which has never issued a final ruling on the merits.
Bottom line: Women, Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, and Subcontinent Asian Americans are no longer presumed to be socially and economically disadvantaged. DBE applicants must now prove specific instances of individualized economic hardship, systemic barriers and denied opportunities that impeded the applicant’s progress or success in education, employment, or business, including obtaining financing on terms available to similarly situated, non-disadvantaged individuals. As the Mid-America Milling opinion candidly acknowledged, this is “a high hurdle.”
New Hampshire’s DOT, which is in charge of the certification of DBE eligibility for federally funded projects in the Granite State, will need to retool its application forms. If your business has been certified before – well, get working on your personal narrative!
[Update: On December 1, 2025, DOT published some guidance.]
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