At a Glance

  • California's legal challenge against the federal government over$160 millionin funding cuts has reached the U.S. Court of Appeals. Both parties (state and federal) have completed opening briefs, final briefs, and replies, with oral arguments scheduled before October 1.
  • The core of the case is whether California improperly enforced rules and compliance requirements for commercial driver's licenses (CDLs) for immigrants, specifically nonresident CDLs. The Federal Motor Carrier Safety Administration (FMCSA) ruled in early January that California had compliance gaps and failed to complete a corrective action plan by January 5, thus losing upcoming transportation funding.
  • The case is set for oral arguments on September 11 before the U.S. Court of Appeals for the D.C. Circuit. This dispute could impact other states facing similar funding threats, especially New York, which the federal government has announced willlose $73.5 millionin funding.

In-Depth Analysis

Related to this case, there is also atrial court casein Northern California seeking class-action relief for truck drivers holding nonresident CDLs. These drivers had received notices that their licenses would be canceled on March 6.

A judge in Alameda County Superior Court noted that approximately 20,000 nonresident CDLs were affected. The court ordered the California Department of Motor Vehicles (DMV) to allow individuals who received cancellation notices to reapply and required the state to process these applications.

California stated in an email to Trucking Dive that commercial licenses that were not canceled "remain valid until the expiration date printed on the card." However, due to the FMCSA's directive, California currentlyno longer issues nonresident CDLs。

"Without federal approval, the DMV cannot reissue nonresident CDLs," the state said in the email.

The federal government noted that California agreed to a corrective action plan in late 2025 but then unilaterally changed the 60-day timeline—which was originally set to end in early January, according to theopening briefandfinal briefshow. The FMCSA's 2025 review of California found improperly issued licenses and compliance deficiencies.

The state and federal government are at odds over whether California failed to meet federal regulatory requirements. The FMCSA stated that the approximately 20,000 nonresident CDLs were improperly issued "because the license expiration dates exceeded the applicant's lawful residency period."

The agency further noted that when employment authorization or lawful residency status "expires the next day," the state cannot issue a CDL valid for up to eight years, as this would create "contradictory" results.

California countered this argument in itsopening briefandfinal briefbrief, stating that "no federal law requires nonresident CDLs to expire on or before the date on the driver's lawful residency documents." Instead, the state said its cancellation of CDLs with expiration dates conflicting with lawful residency documents was based on state rules, not federal rules.

"The California DMV fully complies with federal law regarding expiration dates," the state said. "As long as federal maximum validity periods are met, states have the authority to regulate the validity of CDLs issued within their jurisdiction."

Meanwhile, the FMCSA issued aninterim final ruleon nonresident CDLs in September and afinal ruleearlier this year to tighten issuance standards, citing safety concerns.

"Domestic CDL applicants undergo rigorous driving record checks through the Commercial Driver's License Information System (CDLIS) and the Problem Driver Pointer System (PDPS), whereas nonresident applicants previously did not have their foreign driving records checked to the same extent at the time of application," the FMCSA said inits rule.

"This effectively concealed unsafe driving behavior—including serious violations or fatal accidents—simply because these incidents occurred outside the coverage of U.S. databases," the agency said.