The Department of Transportation on Tuesday filed a motion to dismiss its appeal of a November court ruling that blocked the agency from withholding billions in transportation funding from states refusing to cooperate with Immigration and Customs Enforcement. The move came ahead of any decision from the U.S. Court of Appeals for the First Circuit, effectively conceding defeat on this particular front.
California Attorney General Rob Bonta, who led 21 states in challenging DOT’s funding conditions, declared victory. But anyone in trucking who thinks this settles the matter hasn’t been paying attention to how this administration operates.
What we’re witnessing is a strategic retreat from one legal battlefield while DOT continues fighting on multiple others. Secretary Sean Duffy’s department may have abandoned this particular appeal, but the broader campaign against sanctuary jurisdictions and non-domiciled CDL holders continues unabated through separate enforcement mechanisms.
The Timeline
The lawsuit stemmed from an April letter in which Duffy threatened to withhold billions in transportation funding from states that don’t cooperate with federal immigration enforcement. Chief U.S. District Judge John McConnell wrote in his November ruling that Duffy and DOT had “blatantly overstepped” their authority in attempting to link highway funding to immigration demands.
“The Constitution demands the Court set aside this lawless behavior,” McConnell wrote.
What matters for trucking operations is that, while DOT lost this particular fight, the agency has pursued the same policy objectives through entirely different channels. Last week, Duffy announced the cancellation of $160 million in highway funding for California after the state missed a deadline to revoke 17,000 licenses issued to legal immigrants, including refugees and asylum seekers. That’s separate from the $40 million already withheld for California’s refusal to enforce English-language requirements for truckers.
These actions don’t require the same Congressional authorization that DOT sought in the dropped appeal. They’re structured as compliance enforcement actions under existing FMCSA authority, giving the agency a different legal footing entirely.
The Non-Domiciled CDL Situation Remains a Mess
For fleets relying on non-domiciled CDL holders, the regulatory environment has become nearly impossible to navigate. DOT’s September emergency interim final rule, which would have restricted non-domiciled CDL eligibility to only H-2A, H-2B, and E-2 visa holders, effectively eliminating approximately 194,000 drivers from the market, sits frozen under a D.C. Circuit Court stay.
The court’s November 13 order questioned whether non-domiciled CDL holders are actually underrepresented in fatal crashes. According to FMCSA’s own data, while they account for approximately 5% of all CDL holders, they represent only about 0.2% of fatal crashes. The court noted that DOT’s rule was based on five crashes out of more than 2,399 fatal crashes involving large trucks and buses through September 2025.
Even with the court stay in place, most states have chosen not to resume issuing non-domiciled CDLs. California is actively revoking 17,000 licenses it determined were improperly issued. Texas is conducting a full internal review with no timeline for reopening. Pennsylvania, Virginia, and Ohio are proceeding with extreme caution.
Arizona technically resumed issuing non-domiciled CDLs, but only to the narrow categories the stay rule would have allowed anyway, not the broader pre-September eligibility criteria.
What This Means for Motor Carriers
Fleet operators with non-domiciled CDL holders on their roster need to understand that Tuesday’s dropped appeal changes nothing about their immediate operational challenges. The regulatory pressure on immigrant drivers isn’t going away; it’s being applied through different mechanisms.
Current non-domiciled CDL holders aren’t losing their licenses immediately under the stayed rule. But as those licenses come up for renewal over the next two years, FMCSA anticipates that roughly 190,000 of approximately 200,000 current holders would fail to meet the new eligibility requirements. The court stay pauses that outcome but doesn’t resolve it.
Carriers that built capacity around non-domiciled drivers are already reporting disruptions. Spot rates have increased in multiple regions as driver availability tightens, according to industry reports. The U.S. Postal Service announced last week it will require contracted trucking providers to phase out any use of non-domiciled CDL operators who haven’t been thoroughly vetted by the Postal Inspection Service.
Meanwhile, the American Trucking Associations at its November conference made a notable shift, acknowledging that the industry faces a shortage of “quality drivers” rather than an absolute driver shortage. Secretary Duffy has been unambiguous in his position: “We don’t need non-domiciled CDL drivers to make sure our goods flow through the country.”
The States Are On Their Own
The dropped appeal means states can’t be forced to participate in immigration enforcement as a condition of receiving transportation funding. But individual enforcement actions against states for alleged CDL compliance failures continue.
California faces the most aggressive enforcement posture. DOT alleges that more than 25% of non-domiciled CDLs reviewed in the state were improperly issued, with some licenses valid for years beyond the expiration of drivers’ legal presence documentation. State officials dispute the findings and claim California’s CDL holders have a fatal crash rate nearly 40% lower than the national average.
The legal battle will continue through separate proceedings. States that issued non-domiciled CDLs under the previous regulatory framework now face potential funding consequences for compliance failures, regardless of Tuesday’s dropped appeal.
Whats Next
For carriers, the future requires acknowledging that federal policy is actively hostile to non-domiciled CDL holders regardless of their legal status in the country. If you’re running a fleet that relies on non-domiciled drivers, you need a transition plan. That doesn’t mean immediate panic; the court stay provides breathing room, but it does mean recognizing that the current situation is temporary. Either the D.C. Circuit will eventually rule on the merits of DOT’s emergency rule, or Congress will act to codify the restrictions permanently.
Representative David Rouzer has already introduced the Non-Domiciled CDL Integrity Act, which would make the Trump administration’s policy permanent through legislation. The Owner-Operator Independent Drivers Association supports the bill, arguing it protects “critical safety reforms from being undone by future court decisions or a new administration.”
The dropped appeal on transportation funding doesn’t change any of this. It’s one skirmish in a much larger campaign. Motor carriers would be wise to plan accordingly.
