SACRAMENTO, CALIFORNIA — The U.S. Department of Transportation said Wednesday, January 7, 2026, that it is withholding $160 million in federal funds from California after state officials failed to cancel more than 17,000 commercial driver’s licenses held by non-U.S. citizens by the agreed-upon deadline of January 5.

Federal transportation officials said California missed that deadline after a federal audit found the state “illegally issued licenses with expiration dates extending years beyond a driver’s lawful presence” and also issued commercial driver’s licenses to people who were ineligible to hold them. The department said California had agreed in November to revoke “every illegally issued license within 60 days” and work with the Federal Motor Carrier Safety Administration so the agency could verify the failures that allowed the licenses to be issued had been corrected.

Before New Year’s Eve, the California Department of Motor Vehicles announced it was extending the cancellation date for impacted license holders. The DMV said it would work with Federal Motor Carrier Safety Administration representatives to resolve concerns about the state’s CDL licensing process before March 6, 2026, and expressed hope that updated processes would allow California to promptly resume issuing nondomiciled commercial driver’s licenses. DMV Director Steve Gordon said in a statement, “Commercial drivers are an important part of our economy — our supply chains don’t move, and our communities don’t stay connected without them,” adding that the DMV was hopeful collaboration with the federal government would build confidence in California’s updated processes.

Transportation Secretary Sean Duffy has also been pressuring California and other states on commercial driver enforcement. The U.S. DOT announcement comes as Duffy had already withheld about $40 million in federal funding from California after the state refused to enforce English proficiency requirements for commercial truck drivers. California later sued.

The dispute over the 17,000-plus licenses follows a federal audit that found problems including CDLs for truckers and bus drivers that remained valid long after an immigrant’s visa or lawful presence documents expired. The audit also found that some licenses were issued to citizens of Mexico and Canada who did not qualify. Officials said more than one-quarter of a small sample of California licenses reviewed by investigators were unlawful.

California’s decision to delay revocations until March came after immigrant groups sued the state, raising concerns that some groups were being unfairly targeted. Duffy said the state was supposed to revoke the licenses by Monday, January 5.

In a written statement, Duffy said, “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,” adding that Governor Gavin Newsom had failed to do so. Newsom’s office did not immediately respond after the action was announced Wednesday afternoon.

Federal officials said concerns about immigrant truck drivers have intensified following deadly crashes involving tractor-trailers, including an August crash in Florida tied to a driver not authorized to be in the United States who allegedly made an illegal U-turn that killed three people, and a fiery October crash in California that also killed three people and involved a truck driver alleged to be in the country illegally. The department also noted that in September, Duffy proposed new restrictions that would significantly limit which noncitizens could obtain a license to drive a semi-truck or bus, but a court has placed those proposed rules on hold.

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