The U.S. Department of Transportation Disadvantaged Business Enterprise Program: Status Update on Mid-America Milling vs. DOT and Reevaluation Requirements for DBEs with Certifications in Kentucky

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By Douglas Brent, Procurement Consultant, The Kentucky APEX Accelerator

To assist small business formation and growth, Congress enacted the U.S. Department of Transportation’s (DOT) Disadvantaged Business Enterprise (DBE) program in 1983 and reauthorized it in each subsequent surface and aviation authorization.

The DOT DBE program was reauthorized by Congress on November 15, 2021, in the Infrastructure Investment and Jobs Act.

Like other federal programs that include preferences for minority and women-owned businesses, that aspect of the DOT DBE program has been challenged on equal protection grounds, leading not only to an injunction from a Kentucky federal court, but also to new rules from the DOT, and a pause on all DBE (and Airport Concessions Disadvantaged Business Enterprise or ACDBE) processing activities.  Moreover, the Kentucky DOT is now required to begin the re-evaluation process of all currently certified firms to ensure compliance with the new federally issued certification standards.

Here’s an update on the Kentucky court case and the related events:

MID-AMERICA MILLING CO. AND BAGSHAW TRUCKING

vs. U.S. DEPARTMENT OF TRANSPORTATION

Mid-America Milling Co. and Bagshaw Trucking, two entities claiming to have lost out on federally funded contracts to DBE firms even when their bids were lower, filed suit in Frankfort, Kentucky against the U.S. DOT. They asked the Court to permanently enjoin the DOT from applying race and gender-based classifications in the federal DBE program. On September 23, 2024, the Court granted a preliminary injunction against the DOT’s DBE program.

After President Trump was elected, he issued Executive Orders targeting preference programs based on race or sex. In response, the U.S. DOT, represented by the Department of Justice, changed its position in the lawsuit, essentially switching sides and agreeing with Mid-America and Bagshaw’s challenges, and declining to challenge the injunction. Although the court has entertained briefing from other parties seeking to enter the case, it has not issued a final ruling on the merits, nor has it ruled on a May 2025 motion from DOJ and the plaintiffs to make the injunction permanent via a consent order.

REVISED FEDERAL RULES PRESERVE THE DBE PROGRAM

WHILE ELIMINATING RACE AND SEX PRESUMPTIONS

In June 2025, the U.S. Solicitor General wrote to Congress that "[DOJ] has determined that an interest in remedying the effects of societal discrimination does not justify the use of race-and sex-based presumptions in the DBE program.”  U.S. DOT stated it agreed with this position and in September 2025 issued an Interim Final Rule removing such presumptions from the relevant DOT rules (49 CFR Part 26). The Interim Rule was published in the Federal Register and is now effective (though at odds with the statute itself).

So, what does this mean for Kentucky companies that were certified by the KY DOT as DBEs? According to the U.S. DOT, the changed rules “center the DBE program’s purpose of leveling the playing field for businesses owned and controlled by socially and economically disadvantaged individuals while providing excellent service to the American people.” In other words, there is still a standard for certification, but it will require company owners to “demonstrate that he or she is a ‘socially and economically individual’ [by] making the same individualized showing of disadvantage, regardless of the individual’s race or sex.” This will require reevaluation by Unified Certification Programs like the Kentucky Department of Transportation, and until it occurs, previously certified DBEs are not entitled to status-based contracting preferences.

Responding to the federal rule proposal, the Kentucky DOT announced in October it would be “temporarily pausing all DBE/ACDBE processing activities until further notice.”  KY DOT also published guidance on the reevaluation requirement for all DBE firms. This information is published here.

We will continue to monitor these developments. As of mid-January 2026, some intervenors in the federal court case have asked that the case be dismissed as “moot” in light of the federal rule changes that essentially cured the discrimination issue claimed by Mid-America and Bagshaw.

Those companies and DOJ oppose dismissal, arguing that since the law authorizing race and sex-based presumptions is still “permitted by federal law” and “explicitly authorized by the Infrastructure Act,” a future President could order reinstatement of the requirements removed by the DOT under President Trump.

If you would like additional information or support around this topic, the Kentucky APEX Accelerator team stands ready to assist. Email us at kyapex@kstc.com or visit our website at www.kyapex.com and click on the Get Started button at the top to request support.