FMCSA withheld $160 million in highway funds from California over delayed revocation of 17,000 commercial licenses

On January 7, 2026, the Federal Motor Carrier Safety Administration (FMCSA) announced it was withholding $160 million in federal highway funds from California after the state missed a January 5 deadline to revoke roughly 17,000 commercial driver's licenses. A federal audit had found the licenses — issued to non-domiciled drivers, including some whose visas or work authorization had since expired — were unlawfully issued, with more than a quarter of the reviewed sample non-compliant. California had agreed in November to complete the revocations, then told FMCSA it would delay them until March after the Sikh Coalition and the Asian Law Caucus sued the state on behalf of affected drivers, arguing they were being unfairly targeted. FMCSA said it never agreed to that extension.

Transportation Secretary Sean Duffy announced the funding withholding in a statement that framed it around immigration enforcement rather than a neutral compliance timeline: "Our demands were simple: follow the rules, revoke the unlawfully-issued licenses to dangerous foreign drivers, and fix the system so this never happens again. Newsom has failed to do so — putting the needs of illegal immigrants over the safety of the American people." FMCSA Administrator Derek Barrs said the agency "will not accept a corrective plan that knowingly leaves thousands of drivers holding noncompliant licenses behind the wheel of 80,000-pound trucks." The action followed an earlier, separate $40 million FMCSA funding withholding from California over the state's enforcement of English-language-proficiency requirements for truckers.

California DMV spokesperson Eva Spiegel said the state complied with applicable regulations and had been in productive talks with FMCSA about the delay, and disputed that withholding highway funds served public safety since that money funds road maintenance the state relies on. The dispute sat alongside a pending federal court challenge to a related DOT rule that would sharply restrict which noncitizens can hold a non-domiciled CDL at all, which a court had separately put on hold.

Updates

2026-03-02 — Alameda County court ordered DMV to accept CDL reapplications [4]

An Alameda County Superior Court judge ruled in Doe v. Department of Motor Vehicles that the California DMV must accept new CDL applications from drivers whose non-domiciled licenses were being cancelled, rejecting the state's request to instead let those drivers keep their existing licenses outright. The same week, the U.S. Court of Appeals for the D.C. Circuit denied DMV's request for an emergency stay that would have let it reissue corrected licenses without risking FMCSA retaliation.

2026-03-06 — California DMV canceled 13,000 licenses under federal order [4]

Effective March 6, 2026, the DMV canceled approximately 13,000 non-domiciled CDLs as FMCSA required, while FMCSA continued to bar the DMV from processing the reapplications the state court had ordered it to accept. DMV Director Steve Gordon said the administration was "using their war on immigration to remove qualified, hardworking commercial drivers from our workforce who meet language and safety rules." As of an April 2, 2026 status hearing, FMCSA still had not lifted its bar on reissuance and the presiding judge set the case for further review in October 2026 [5].

2026-06-12 — Sen. Schiff led 22 lawmakers demanding DOT restore the funds [7]

Sen. Adam Schiff and 21 other California congressional Democrats sent a letter to Secretary Duffy demanding the Department of Transportation restore the withheld $160 million in National Highway Performance Program funds to California and rescind FMCSA's rule restricting non-domiciled commercial driver's licenses nationwide, arguing the rule endangered road safety and supply chains by excluding roughly 194,000 experienced drivers who hold valid work authorization. The funding remained withheld as of the letter.

2026-09-02 — D.C. Circuit set Sept. 15 oral argument on FMCSA's CDL rule [6]

The U.S. Court of Appeals for the D.C. Circuit scheduled oral argument for September 15, 2026, before Judges Robert Wilkins, Patricia Millett, and Gregory Katsas, in Rivera Lujan v. FMCSA, the consolidated legal challenge to FMCSA's rule barring non-domiciled commercial driver's licenses — the same underlying rule whose enforcement triggered California's license revocations and this funding withholding. California itself is not a party to the case; amicus briefs on the case split along party lines, with Republican-led states backing FMCSA's rule and Democratic-led states backing the challengers.