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The Trump administration is withholding roughly $160 million in federal transportation funding from California beginning in fiscal year 2027 after the state failed to revoke more than 17,000 commercial drivers’ licenses (CDLs), which federal regulators say were unlawfully issued, by a federally agreed-upon deadline, U.S. Transportation Secretary Sean Duffy announced Tuesday.
The funding penalty follows a “final determination” issued by the Federal Motor Carrier Safety Administration (FMCSA) after California missed a Jan. 5, 2026, deadline to cancel the licenses. Federal officials say this allowed foreign drivers whose licenses did not comply with federal lawful-presence requirements to continue operating heavy commercial vehicles on U.S. roads.
“It’s reckoning day for [Gov.] Gavin Newsom and California. 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,” Duffy said in a statement.
“Gavin Newsom has failed to do so, putting the needs of illegal immigrants over the safety of the American people.”
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Duffy added the administration is pulling the funding “to ensure federal tax dollars don’t fund this charade.”
According to the FMCSA, the agency’s audit uncovered what it described as a “systemic collapse” of California’s non-domiciled CDL program. Federal officials said the state illegally issued licenses with expiration dates extending years beyond a driver’s lawful presence and granted CDLs to individuals who were ineligible to hold them under federal safety regulations.
Overall, more than 20,000 active non-domiciled — people whose permanent home is located outside the U.S. — CDLs were issued by California in violation of federal rules, according to the audit.
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“Federal regulations are clear: states must correct safety deficiencies on a schedule mutually agreed upon by the Agency, and California failed to meet its commitment to rescind these unlawfully-issued licenses by January 5,” FMCSA Administrator Derek D. Barrs said. “We will not accept a corrective plan that knowingly leaves thousands of drivers holding noncompliant licenses behind the wheel of 80,000-pound trucks in open defiance of federal safety regulations.”
Federal officials said a nationwide audit conducted in September found that more than 25% of California’s non-domiciled CDLs were unlawfully issued, including licenses extended as many as four years beyond the expiration of lawful presence documentation.
The audit cited one case in which California issued a CDL to a driver from Brazil with endorsements to operate a passenger bus and a school bus, even though the license remained valid for months after the driver’s legal presence expired.
In November, California agreed to revoke every illegally issued license within 60 days and to work with federal officials so the agency could verify that the failures allowing the licenses to be issued had been corrected, according to the release.
Federal officials said the state failed to meet that commitment and attempted to extend the revocation deadline without federal approval.
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Newsom’s office, the California Department of Motor Vehicles and the California State Transportation Agency did not immediately respond to Fox News Digital’s request for comment.
Fox News Digital’s Michael Ruiz contributed to this reporting.
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