PURPOSE: This rule complies with the requirements of 49 CFR sections 26.67, 26.87 and 26.89, by specifying the grounds for which MoDOT may institute proceedings to remove a firm’s DBE certification and eligibility, and the hearing or other due process procedures involved.

1. (1) Scope of this Rule.

   1. (A) This rule specifies the circumstances in which the Missouri Department of Transportation (MoDOT) will consider removing Disadvantaged Business Enterprise

2. (DBE) eligibility from a firm which is currently certified as a DBE, and the procedures which will be followed to reach a determination of continued DBE eligibility. This rule also specifies the procedures which MoDOT will use to afford an individual owner of a DBE-certified firm and the firm due process if that owner’s status is challenged or suspected as not qualifying that individual owner as socially and economically disadvantaged under 49 CFR part 26. This rule will apply to:

   1. 1. Complaints of a DBE firm’s ineligi-

bility under 49 CFR section 26.87(a) and rule 7 CSR 10-8.081, when MoDOT notifies the DBE firm that there is reasonable cause to remove its DBE eligibility on the basis of an ineligibility complaint and MoDOT’s review and investigation of that complaint;

1. 2. MoDOT-initiated proceedings, where

based upon notification by the DBE firm of a change in its status or circumstances, or other information which comes to MoDOT’s attention, and after any investigation MoDOT External Civil Rights Unit deems appropriate, the MoDOT staff determine that there is reasonable cause to believe that a currentlycertified DBE firm is ineligible. At that time, MoDOT shall provide written notification to the DBE firm by certified U.S. mail, return receipt requested, that MoDOT proposes to find the firm ineligible as a DBE, setting forth the specific reasons for that proposed determination. This statement of reasons for the finding of reasonable cause to remove the firm’s DBE eligibility shall specifically reference the evidence in the record which MoDOT has developed to date, on which each reason is based. These proceedings also include, but are not limited to, a potential removal of DBE certification where MoDOT has reason to believe that an individual owner classified as socially and economically disadvantaged is actually not so disadvantaged; and the loss of that disadvantaged status would likely result in the firm’s loss of DBE eligibility;

1. 3. United States Department of Trans-

portation (USDOT)-initiated proceedings, where a USDOT operating administration has determined that information in MoDOT’s records or other information available to USDOT provides reasonable cause to believe that a firm which MoDOT certified as a DBE does not meet the eligibility criteria of 49 CFR part 26. In such an event, the USDOT operating administration may direct MoDOT to initiate a proceeding to remove the firm’s certification. If USDOT does direct MoDOT to initiate a proceeding to remove a firm’s certification, that USDOT operating administration will provide the DBE firm and MoDOT with the reasons for that directive, including any relevant documentation or other information available to USDOT. When that USDOT action occurs, MoDOT will immediately commence and prosecute a proceeding to remove that firm’s DBE eligibility, as provided by 49 CFR section 26.87(b), and by paragraph 2. of this subsection, in accordance with 49 CFR section 26.87(c).

1. (B) This rule does not apply to:

   1. 1. Firms which are seeking initial certi-

fication as a DBE, or which previously have been certified as a DBE but are undergoing review to determine if the firm will be certified by MoDOT for an additional three (3)- year period. Their informal hearing or other administrative review process by an independent hearing officer within MoDOT after MoDOT External Civil Rights Unit has denied the firm’s certification is addressed in rule 7 CSR 10-8.051, section (9);

1. 2. An individual whose statement of

personal net worth shows that the individual owner’s personal net worth exceeds $750,000, and so that individual’s presumption of economic disadvantage is rebutted. In that event, MoDOT will simply notify that individual owner and the DBE firm in question in writing by U.S. mail that this owner is not economically disadvantaged and can no longer be used to support the firm’s eligibility as a DBE. However, if that individual’s loss of economic disadvantage status may render the firm ineligible as a DBE (which will usually be the case when an individual owner ceases to be economically disadvantaged), then MoDOT will immediately commence and prosecute a proceeding to remove that firm’s DBE eligibility, as provided by 49 CFR section 26.87(b) and by paragraph (1)(A)2. of this rule;

1. 3. An individual owner of a DBE firm

where MoDOT has reasonable cause to believe that such individual is not socially and/or economically disadvantaged, but that individual is only a minority owner and has no real control over the DBE firm, so his or her status is not necessary to continue the firm’s DBE eligibility. Under those circumstances, MoDOT may take no immediate action, but may wait to resolve that issue when the firm next applies for certification. However, if that individual’s loss of social and/or economic disadvantage status could possibly render that firm ineligible as a DBE (which will usually be the case when an individual owner ceases to be socially and economically disadvantaged), then MoDOT will immediately commence and prosecute a proceeding to determine whether that individual’s presumption of social and/or economic disadvantage should be rebutted, and if so, whether MoDOT should remove that firm’s DBE eligibility, as provided by 49 CFR section 26.87(b) and by paragraph (1)(A)2. of this rule.

1. (2) MoDOT Hearing or Other Due Process Review. When MoDOT notifies a firm that there is reasonable cause to remove its DBE eligibility for any basis specified in section
2. (1) of this rule, MoDOT will follow the procedures required by 49 CFR section 26.87(d), and offer the DBE firm an opportunity for an informal hearing with a complete and verbatim record, or if the firm elects, an opportunity to present information and arguments in writing for a written record review, without going to a hearing. Such a reasonable cause notice shall be sent to the DBE firm by certified U.S. mail, return receipt requested. Such an informal hearing or written record review will be conducted and decided by an independent hearing officer for MoDOT. In the event the firm requests either an informal hearing or a written record review of the reasonable cause determination, MoDOT shall bear the burden of proving, by a preponderance of the evidence, that the firm does not meet the certification standards of 49 CFR part 26 and this chapter. If the firm does not request either an Transportation Commission

informal hearing or the opportunity for a written record review within thirty (30) days after the date the firm receives the reasonable cause notice, as shown on the return receipt card, then the file MoDOT’s External Civil Rights Unit has developed on this eligibility complaint (along with any sworn affidavits of the staff or others) shall be turned over to the independent hearing officer to determine if, by a preponderance of the evidence present in the file before the hearing officer, MoDOT has proven that the firm does not meet the certification standards of 49 CFR part 26 and this chapter.

1. (3) The Hearing Officer. The hearing officer which conducts the informal hearing or written record review shall also determine the decision in that proceeding for MoDOT. The hearing officer shall be knowledgeable about the DBE certification requirements of 49 CFR part 26 and this chapter. At MoDOT’s sole election, the hearing officer may be a licensed attorney, a registered professional engineer, or any other qualified individual. If the hearing officer is not a licensed attorney, the hearing officer may have present or receive assistance from a licensed attorney knowledgeable about the DBE Program, to aid and advise the hearing officer on evidentiary issue rulings and other legal or procedural questions. In any event, the hearing officer will not be from MoDOT’s External Civil Rights Unit, and will not take any direction from that unit, its personnel, or other MoDOT personnel who may have taken part in actions leading to the reasonable cause determination, or in seeking to implement the proposal to remove the firm’s DBE eligibility. The hearing officer shall decide all evidentiary or other procedural issues which arise in the course of the informal hearing or written record review proceedings, as well as solely issuing the final written determination of the firm’s DBE eligibility for MoDOT. The hearing officer shall also be the sole judge of the credibility of witnesses in any MoDOT informal hearing or written record review.

2. (4) The Informal Hearing Process.

   1. (A) If a DBE firm requests an informal hearing to resolve the question of its DBE eligibility, that informal hearing shall be held at a location of MoDOT’s choosing in Missouri before a notary public who will administer oaths, and who will prepare a complete and verbatim written record of the hearing at MoDOT’s expense. The informal hearing is not a “contested case” under the provisions of Chapter 536, RSMo. The DBE firm and/or its owners need not be represented by an attorney licensed to practice in Missouri, but they have the right to such legal representation during the informal hearing process if they so choose. The DBE firm may be represented by a controlling owner, to the extent that practice does not constitute the unauthorized practice of law. MoDOT shall be represented by a member of the External Civil Rights Unit, and by a licensed attorney.
   2. (B) At least ten (10) days prior to an informal hearing, the MoDOT External Civil Rights Unit shall provide the DBE firm and the hearing officer with a copy of the entire record pertinent to the issues, upon which the reasonable cause findings were made. That record shall be received into evidence over any objection. The DBE firm and MoDOT shall have the right to supplement the record prior to or at the time of the informal hearing, by affidavit or other written documentation, as well as by sworn testimony given during the hearing. Within reason, all notarized affidavits sworn or affirmed under penalty of perjury, and all other competent and relevant evidence presented by the parties, shall be received by the hearing officer and considered for what it is worth. However, as to any affidavits or other documentary evidence which are disputed or objected to upon the record, the objecting party may present opposing sworn verbal testimony or affidavits at a later date (if the hearing officer deems that necessary), to be scheduled by the hearing officer so as to give the objecting party a fair and reasonable opportunity to respond. If a party wishes to do so, that party may, in addition to cross-examination of an adverse witness, present one or more sworn witnesses to rebut oral or written testimony given previously at the informal hearing.
   3. (C) All witnesses shall be sworn by the notary public, or declare or affirm their testimony under penalty of perjury, in accordance with section 492.060, RSMo and 49 CFR part 26, before they are permitted to testify. Sworn testimony may be given in statement form or in question and answer form. Each witness shall be subject to cross-examination. Depositions for testimonial purposes may be used when agreed to by both parties and when the witness agrees to appear voluntarily. Or, a deposition may be used if a Missouri court so orders and/or issues a subpoena or subpoena duces tecum to compel the witness’s attendance and testimony under such terms and conditions as the court deems appropriate, in order to provide a fair proceeding and due process to each party. Any opening or closing statements requested by the hearing officer from counsel or other party representatives shall not be considered as evidence, unless they are given as sworn testimony, or affirmed or declared under penalty of perjury, and they are subject to cross-examination by the opposing party. Any party, during the presentation of its case in chief or in its rebuttal evidence, may call as a witness any person or party present; but the hearing officer has no authority to issue subpoenas or subpoenas duces tecum to compel testimony or the production of evidence.
   4. (D) In proceedings where there is a complaining witness who has agreed to be identified and to disclose all of its prior submissions and complaints to the DBE firm, or in other proceedings under this rule upon written application to all parties; where the hearing officer deems it appropriate and in the best interests of developing a fair and complete record; a complaining witness may be authorized to participate as an additional party at the hearing, to present relevant and competent evidence and testimony, and to cross-examine and rebut witnesses and testimony, concerning whether the DBE firm should remain certified and eligible. Provided, however, that MoDOT shall also retain the full right and opportunity to present its relevant, competent and substantial evidence and testimony on the eligibility issues, and to cross-examine and rebut opposing witnesses.
   5. (E) As time, the interests of fairness, or scheduling needs may require, the hearing officer may continue or reschedule an informal hearing, to begin or to resume on a specific date, at the same or at another location. However, the hearing officer is not compelled to consider or rule favorably upon a written or oral request for a continuance or for resumption of the hearing on a later date, except when that is required to provide the minimum due process required for a fair hearing, such as when a later resumption may be warranted to provide an opportunity to complete a party’s case in chief, or to rebut unexpected opposing testimony and evidence. During the rebuttal phase of the informal hearing, no new oral, written, documentary or other evidence should be received unless it is relevant to rebut evidence previously presented by an opposing party.
   6. (F) A reasonable time after the conclusion of a hearing, the hearing officer shall provide each party with a complete copy of the transcript and the rest of the record evidence upon request, if that party is willing to pay MoDOT for the actual cost of preparing a complete copy of the record. If any party so requests, the hearing officer shall afford each party the opportunity to file a brief with proposed findings of fact and a recommended decision, which should be complete with 7 CSR 10-8

citations to the record and to other supporting record evidence, on a date specified.

1. (G) As specified in 49 CFR section 26.87(d)(1), MoDOT bears the burden of proving, by a preponderance of the evidence, that the firm does not meet the DBE certification standards of 49 CFR part 26, before the hearing officer may issue a decision that the firm is no longer eligible for DBE certification.

1. (5) The Written Record Review.

   1. (A) If a DBE firm requests a written record review to resolve the question of its DBE eligibility, the MoDOT External Civil Rights Unit shall provide the DBE firm by certified U.S. mail, return receipt requested, and the independent hearing officer with a copy of the entire record pertinent to the issues upon which the reasonable cause findings were made. That record shall contain one or more sworn affidavits or certifications, or possibly verbatim records of sworn verbal statements made under oath, affirmation or other declaration under penalty of perjury. That record shall be received into evidence by the hearing officer over any objection of the firm or its owners.
   2. (B) The DBE firm shall have up to thirty

2. (30) days after the date the External Civil Rights Unit mails the entire record to the firm in order to supplement that record with its own evidence, including affidavits and other sworn documents. Provided, that if the DBE firm intends to submit any verbatim records of sworn verbal statements, the firm or its legal counsel must make arrangements with the MoDOT External Civil Rights Unit so that legal counsel for MoDOT (an attorney who is not the hearing officer) may be present when the sworn statement is made, so MoDOT can also examine the witness; and the DBE firm may not use or abuse this process in lieu of having an informal hearing. Upon good cause shown, the independent MoDOT hearing officer may extend the time available to the DBE firm to submit its supplement to the record opposing the removal of eligibility.

   1. (C) Within fifteen (15) days after the DBE firm has submitted its supplement to the written record to both the independent hearing officer and the attorney for the MoDOT External Civil Rights Unit, the MoDOT External Civil Rights Unit’s attorney may request the hearing officer in writing to be granted leave to present additional sworn written evidence, solely to rebut any evidence submitted by the DBE firm or its legal counsel. The written motion and showing of good cause must be sent to the DBE firm (or its legal counsel) and must describe specifically what additional sworn evidence the MoDOT External Civil Rights Unit intends to develop, the identity of each additional witness, and what each witness is expected to testify to in rebuttal. Upon good cause shown, and after consideration of any written suggestions of the DBE firm or its legal counsel, the hearing officer may grant MoDOT leave to supplement the written record, under such terms and conditions as the hearing officer deems appropriate to assure a fair and accurate written record.
   2. (D) If any party so requests the hearing officer in writing before the written record is complete, the hearing officer shall afford each party the opportunity to file a brief with proposed findings of fact and a recommended decision, which should be complete with citations to the record evidence, on a date specified.
   3. (E) As specified in 49 CFR section 26.87(d)(3), MoDOT External Civil Rights Unit and its counsel bear the burden of proving, by a preponderance of the evidence, that the firm does not meet the DBE certification standards of 49 CFR part 26, before the hearing officer may issue a decision that the firm is no longer eligible for DBE certification.
3. (6) The Hearing Officer’s Determination. At a reasonable time after the conclusion of the informal hearing or the written record development phase, and any subsequent briefing, the independent hearing officer shall issue written findings and a determination of DBE eligibility of the firm in accordance with 49 CFR section 26.87(f) and (g), supported by citations to the record. The written findings and determination shall be mailed to the firm by certified U.S. mail, return receipt requested, and also served on MoDOT External Civil Rights Unit counsel; plus a copy shall be mailed to any third-party complainant or USDOT operating administration which caused the proceeding to be initiated. If the hearing officer finds that the MoDOT External Civil Rights Unit failed to prove by a preponderance of the evidence that the firm does not meet the certification standards for DBEs in 49 CFR part 26, then the hearing officer shall determine that the firm retains its status as a DBE firm. If the hearing officer finds that the preponderance of the evidence shows that the firm does not meet any one certification standard for DBE certification in 49 CFR part 26, then the hearing officer shall notify the firm in the written determination that effective that date, the firm has been declared ineligible as a DBE, and has been removed from the MoDOT roster of eligible, certified DBE firms, plus the consequences of that action. If the hearing officer’s decision is to remove the firm’s DBE certification eligibility, the written findings and determination shall also include the required notice of the availability of an appeal of the removal of eligibility to USDOT under 49 CFR sections 26.87(g) and (j), and 26.89. Also, if the proceedings were initiated based upon a third-party complaint of ineligibility and the hearing officer has not determined that the firm is ineligible for DBE certification, the written findings and determination shall include the required notice of the availability of an appeal to USDOT by the complainant, under 49 CFR section 26.89(a)(2).
4. (7) MoDOT Action Resulting From a Removal of DBE Eligibility. If the determination of the independent hearing officer is to remove the firm’s DBE certification and eligibility, then MoDOT External Civil Rights Unit staff shall separately but promptly take the actions required by 49 CFR section 26.87(i). Also, MoDOT’s resident engineers and their staff shall take any other or related actions which may be required by the USDOT-assisted contracts on which the firm was working, whose DBE eligibility has now been removed.
5. (8) The Finality of MoDOT’s Determination. The determination of the hearing officer under this rule is final as to MoDOT, but that determination remains appealable to USDOT under the provisions of 49 CFR sections 26.87 and 26.89, and until USDOT has resolved such an appeal, the determination is not final under 49 CFR part 26. Therefore, for purposes of Missouri law, the MoDOT determination is not a final state administrative decision, and it is not subject to judicial review in Missouri’s courts under the provisions of Chapter 536, RSMo, or 49 CFR part 26.

AUTHORITY: section 226.150, RSMo 1994*; Title 49 Code of Federal Regulations part 26; section 1101(b) of the Transportation Equity Act for the 21st Century (TEA-21), Public Law 105-178, 112 Stat. 107, 113; and MoDOT’s approved DBE Program submittals to the U.S. Department of Transportation. Emergency rule filed May 10, 2000, effective May 20, 2000, expired Nov. 6, 2000. Original rule filed May 10, 2000, effective Nov. 30, 2000. *Original authority: 226.150, RSMo 1939, amended 1977.