California Faces Federal Funding Cuts Over CDL Issues

On Tuesday, U.S. Transportation Secretary Sean Duffy announced that California will lose about $160 million in federal transportation funds starting in fiscal year 2027. This decision stems from the state’s failure to revoke over 17,000 commercial driver’s licenses (CDLs) deemed illegally issued according to federal safety regulations.

The penalty follows a “final decision” from the Federal Motor Carrier Safety Administration (FMCSA). This decision came after California missed a January 5, 2026, deadline for revoking the licenses. Federal officials expressed concerns that foreign drivers without the proper legal status were still allowed to operate large commercial vehicles on U.S. roads.

Duffy stated, “Today is a day of reckoning for [Gov.] Gavin Newsom and California. Our request was straightforward—revoking licenses illegally issued to dangerous foreign drivers and fixing the system to prevent this from happening again.” He emphasized that Newsom is prioritizing the needs of illegal immigrants over American safety.

In the past, the Trump administration had withheld $40 million from California due to issues related to English proficiency requirements for truck drivers.

Duffy further remarked that the administration is trying to prevent federal tax dollars from contributing to what he described as a troubling situation. The FMCSA’s audit indicated a significant failure in California’s nonresident CDL program. Federal officials reported that the state issued licenses with expiration dates that extended beyond a driver’s allowed stay and gave CDLs to people who shouldn’t have qualified under federal safety regulations.

According to the audit, California provided CDLs to over 20,000 active nonresidents, which violated federal laws. A national audit in September revealed that more than 25% of California’s non-domicile CDLs were issued unlawfully, including licenses that were extended without proper legal residence certificates.

Derek D. Bars, FMCSA Secretary, made it clear that federal standards require states to rectify safety issues according to an agreed-upon timeline. “California has not met its commitment to revoke these illegal licenses by January 5,” he said. “We cannot accept a remediation plan that disregards federal safety rules and leaves unqualified drivers behind the wheel of large trucks.”

The audit also flagged a specific incident where a CDL was granted to a Brazilian driver, allowing him to operate passenger and school buses—even after his legal residency had expired.

In November, California had pledged to revoke all illegally issued licenses within 60 days and to collaborate with federal authorities to correct the flaws in the licensing process. However, federal officials now assert that the state failed to follow through on this commitment, even trying to extend expiration dates without federal permission.

As of now, there has been no immediate response from Newsom’s office or the California Department of Transportation regarding these developments.