Transportation Secretary Sean Duffy made good on his threat today, announcing that FMCSA will withhold approximately $160 million from California for failing to cancel over 17,000 illegally issued commercial driver’s licenses by the agreed-upon January 5 deadline.
“It’s reckoning day for Gavin Newsom and California,” Duffy said in his announcement. “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.”
This is basic compliance.
California agreed in November to revoke all illegally issued licenses within 60 days and to work with FMCSA to verify that the failures that allowed these licenses to be issued were corrected. They didn’t. The state announced Tuesday it would delay cancellations until March 6, a unilateral decision that FMCSA never approved and the federal government doesn’t recognize.
The Math Gets Worse
Today’s $160 million cut isn’t California’s first federal funding loss over CDL compliance this year.
Back in October, Duffy announced FMCSA was withholding $40,685,225 in Motor Carrier Safety Assistance Program funding because California refused to enforce English Language Proficiency requirements for commercial drivers. That’s the rule under 49 CFR § 391.11(b)(2) requiring drivers to read and speak English sufficiently to understand highway signs, respond to official inquiries, and make entries on reports and records.
California’s position? They test for ELP during CDL licensing, so they don’t need to enforce it at the roadside. FMCSA’s position? That’s not how this works.
From June 25 through August 21, 2025, California conducted roughly 34,000 inspections resulting in at least one reported violation. Of those inspections, exactly one involved an ELP violation resulting in a driver being placed out of service. Not one percent. One driver.
California is now the only state in the nation refusing to ensure commercial drivers can read road signs and communicate with law enforcement.
Pennies make dollars. $160 million today, plus $40 million in October, equals $200 million in federal funding that California has lost due to licensing and enforcement failures in less than three months. And Duffy has already signaled that more cuts are coming, potentially 4% annually, compounding, if the state continues to defy federal requirements.
Everyone’s Fighting Everyone
The legal situation has turned into a multi-front war.
California vs. FMCSA (ELP Lawsuit): In December, California filed suit against DOT, FMCSA, and Administrator Derek Barrs in the U.S. District Court for the Northern District of California, challenging the withdrawal of $40 million in MCSAP funding. The state argues its CDL testing procedures already satisfy federal ELP requirements and that roadside enforcement isn’t mandated by federal law.
Drivers vs. California DMV (Class Action): The Asian Law Caucus and Sikh Coalition, along with the law firm Weil, Gotshal & Manges, filed a class-action lawsuit against the California DMV over the mass CDL cancellations. They argue that the state’s own clerical errors, issuing CDLs with expiration dates that exceed work authorization documents, created this mess, and that drivers shouldn’t lose their livelihoods due to DMV administrative failures.
Rivera Lujan v. FMCSA (D.C. Circuit): The D.C. Circuit Court issued an emergency stay in November on FMCSA’s September interim final rule restricting non-domiciled CDL eligibility to certain visa categories. But here’s what California keeps getting wrong: it addresses only the new rule. It did nothing to resolve the pre-existing compliance failures FMCSA documented during its 2025 Annual Program Review, which found that approximately 25% of California’s non-domiciled CDLs were improperly issued under regulations that existed before September 29.
California finds itself caught between federal enforcement on one side and advocacy groups demanding protection for affected drivers on the other. The DMV’s website currently states that “until further notice, the California DMV cannot issue, reissue, or renew limited-term legal presence (non-domiciled) commercial driver’s licenses.” Field offices are telling drivers they have “no guidance” and cannot assist them.
The Pattern of California
If you’ve been following my work, none of this should surprise you.
California’s CDL program has been a documented disaster for decades. The DOT Office of Inspector General has investigated scheme after scheme involving California DMV employees, trucking schools, and third-party testers conspiring to issue fraudulent licenses to unqualified drivers.
Just look at the Eastern District of California prosecutions completed in 2022:
- Shawana Denise Harris, a long-time DMV employee, was sentenced to five years in federal prison for accepting bribes in exchange for fraudulently updating test scores for at least 185 CDL applicants. She and co-conspirators were typically paid $1,500 per applicant, resulting in approximately $277,500 in bribes. She used her access to DMV computers to enter fraudulent scores indicating applicants passed written and behind-the-wheel tests when they hadn’t.
- Kari Scattaglia, a management official at the Arleta DMV and Granada Hills Drivers’ License Processing Center, got 32 months.
- Jagpal Singh, owner of Calcutta Truck School in Los Angeles, bribed DMV employees to access and alter database records.
- Jagdish Singh, owner of Gobind Truck School, conspired with Harris to obtain commercial permits for applicants who never took the required tests.
The list goes on. Ruvila Lima. Poya Khanjan. Lisa Terraciano. Donald Freeman Jr. A web of DMV employees, trucking school operators, and facilitators running parallel fraud operations across the Central Valley, Los Angeles Basin, and as far north as Eureka.
U.S. Attorney Phillip Talbert said the defendants “helped put unqualified commercial drivers on the nation’s highways operating large commercial vehicles even though those drivers had not passed the necessary written and driving tests.”
When investigators first announced the CDL fraud investigation in 2015, they had already linked 23 traffic accidents to the scheme. As one federal agent said at the time: “Allowing unqualified drivers to operate heavy commercial trucks on our highways is honestly quite chilling.”
The Interstate Problem
This isn’t just California’s problem. When California issues a CDL to someone who doesn’t meet federal requirements, that driver doesn’t stay in California. They operate in interstate commerce. They drive through Nevada, Arizona, Oregon, and Texas. They share highways with families in Utah and Colorado. They deliver freight to the Port of Long Beach and then haul it across 48 states.
The Commercial Motor Vehicle Safety Act of 1986 created a unified national CDL system precisely because a patchwork of inconsistent state standards was getting people killed. One CDL, valid nationwide, with standardized federal requirements. That only works if states actually enforce those standards.
California has more than 700,000 CDL holders, the nation’s largest trucking workforce, with more than 138,000 truck drivers. When 25% of your non-domiciled CDL sample fails federal compliance, you’re not just failing California. You’re exporting noncompliant drivers onto every interstate highway in America.
The FMCSA audit found CDLs issued years beyond the drivers’ lawful presence authorization. It found licenses granted to Mexican nationals who are prohibited from holding non-domiciled CDLs under existing reciprocity agreements. In one case, California issued a driver from Brazil a CDL with endorsements to drive a passenger bus and a school bus, valid for months after his legal presence documentation expired.
These aren’t technical violations. These are fundamental failures of a system designed to keep 80,000-pound trucks out of the hands of unqualified operators.
Nuclear Options Remain on the Table
The $160 million withholding isn’t even Duffy’s biggest hammer.
Under 49 U.S.C. § 31312 and 49 CFR 384.405, FMCSA has the authority to fully decertify California’s CDL program if the state is found in “substantial noncompliance” with federal requirements.
Decertification would prohibit California from issuing, renewing, transferring, or upgrading any commercial learner’s permits or commercial driver’s licenses,not just non-domiciled credentials, but every single one, until FMCSA determines that the state has corrected its deficiencies.
Other states could refuse to recognize California credentials during the noncompliance period. FMCSA could issue guidance declaring CDLs issued by a noncompliant state invalid for interstate commerce. The Commercial Driver’s License Information System, which enables interstate verification, could flag every California license.
For more than 700,000 CDL holders in the Golden State, decertification would effectively ground them from operating in interstate commerce. Supply chains would seize. The 2021 port backups would look like a minor inconvenience.
Duffy has made clear this is where continued defiance leads: “Eventually, we can pull their ability to issue commercial driver’s licenses. We will get compliance. They will comply.”
What Happens Next
California now faces a choice.
It can continue fighting federal enforcement while its own DMV field offices tell drivers they have “no guidance.” It can keep litigating while $200 million in federal safety funding evaporates. It can be maintained that issuing CDLs years beyond legal presence authorization was somehow compliant with regulations that have existed for decades.
Or it can fix its program.
The affected drivers caught in this mess deserve a resolution. Many followed every rule presented to them, they applied, tested, and received licenses through California’s system. The fact that California’s system was fundamentally broken isn’t their fault. But the solution isn’t to maintain the broken status quo. It’s to build a compliant program that serves qualified drivers and protects the traveling public.
The fraud factory has been running in California for a long time. Federal investigators have documented it. Prosecutors have convicted participants and still, FMCSA’s 2025 audit found systemic failures persisting.
Today’s funding cut is a consequence. The question is whether California treats it as a wake-up call or doubles down on defiance.
