The Federal Motor Carrier Safety Administration is withholding over $158 million from the state of California for failing to cancel over 17,000 illegally issued commercial driver’s licenses by the agreed-upon deadline of January 5, 2026.

The FMCSA issued a Final Determination after California refused to cancel the licenses on time, allowing foreign drivers with invalid licenses to continue operating in the United States.

The notice asserts that on December 10, 2025, the California DMV submitted a “Response to November 13, 2025 Conditional Determination Regarding Non-Domiciled Commercial Driver’s License and Learning Permits Issuance,” which stated that DMV issued cancellation notices to approximately 17,400 drivers and the cancellations would be effective on January 5, 2026.

However, on December 30, 2025, contrary to the mutually agreed upon date with FMCSA, DMV unilaterally informed the public that noncompliant non-domiciled CLPs and CDLs that were due to be cancelled on January 5, 2026 would not be cancelled until March 6, 2026. FMCSA subsequently reiterated to DMV that any extension was not approved and that failure or delay in the implementation of the required corrective actions would be contrary to the corrective action plan.

As a result, FMCSA is withholding four percent of the National Highway Performance Program and the Surface Transportation Block Grant Program funds beginning in Fiscal Year 2027 that would otherwise be allocated to California, which amounts to over $158 million.

As part of the DOT’s Nationwide Non-Domiciled CDL Audit, FMCSA said it uncovered violations in California’s non-domiciled CDL program, which allowed the state to illegally issue licenses with expiration dates extending years beyond a driver’s lawful presence and to grant CDLs to individuals who were ineligible to hold them. In total, more than 20,000 active non-domiciled CDLs were issued by California in violation of federal safety regulations.

To date, DOT has threatened to withhold funding from 18 states and the District of Columbia for issuing non-domiciled CDLs to foreign drivers.