FMCSA Suspends Federal Funding to California Over Non-Domiciled CDL Crisis

Washington, January 2026. The Federal Motor Carrier Safety Administration (FMCSA) announced the suspension of approximately $160 million in federal highway funding for California. The reason is the state's failure to meet federal requirements for revoking non-domiciled CDL issued with violations.

This concerns approximately 17,000 non-domiciled CDL, which, according to a federal audit, were issued to drivers without proper consideration of their legal stay duration in the US. FMCSA demanded these licenses be revoked by January 5, 2026, but California did not meet the deadline.

According to the results of the annual federal audit, the problems are systemic. In an official letter, FMCSA stated that some licenses were issued in violation of the basic principle: the validity period of a CDL cannot exceed the driver's legal presence in the country. This is considered a critical requirement directly related to interstate road safety.

US Secretary of Transportation Sean Duffy, commenting on the situation, emphasized that federal rules are mandatory for all states. According to him, the requirements for California were "clear and time-bound," and their disregard forced federal authorities to apply financial sanctions. These statements were confirmed in a publication by the industry outlet FreightWaves.

FMCSA notes that the issue of non-domiciled CDL goes beyond administrative formality. The agency believes that incorrect issuance of such licenses:

• undermines the unified federal CDL standard,
• creates risks for road safety,
• complicates control over drivers working in interstate transportation.

The official FMCSA document explicitly states that further non-compliance may result in additional measures, up to more severe sanctions against the state's entire CDL program. These conclusions are outlined in a letter following the annual review, published on the agency's website: fmcsa.dot.gov.

The California DMV, on its part, stated that it is working to address the identified issues and has requested an extension for revoking the licenses until March 2026. The agency explains the delay by the complexity of internal procedures and the need for additional verification of driver data. This position is reflected in an official DMV statement: dmv.ca.gov.

However, FMCSA refused to acknowledge the extension, stating that the original dates were agreed upon in advance and are not subject to unilateral change.

The situation surrounding California is significant not only for one state:

• California is the largest freight market in the US, and any restrictions in the CDL system affect the entire supply chain.
• The precedent shows that federal authorities are ready to apply financial sanctions for non-compliance with rules, rather than just issuing warnings.
• Carriers and logistics companies should carefully check the status of non-domiciled CDL with their drivers, especially when working on interstate routes.

The conflict between FMCSA and California has become one of the most notable examples of increased federal control in the field of commercial transportation in recent years—and, according to experts, may serve as a signal for other states to review their CDL issuance procedures.