FMCSA Plans to Withhold $73.5 Million in Highway Funds from New York State Over Non-Resident Commercial License Compliance Issues
FMCSA informed New York State leaders on Thursday that the state will lose $73.5 million in federal highway funds due to non-compliant issuance of commercial driver's licenses and learner's permits. The issue stems from a July 2025 audit that found deficiencies in the state's standards for issuing non-resident CDLs and CLPs. FMCSA Administrator Derek Barrs called the situation "unacceptable and a significant safety risk" in a final determination letter. The funding loss targets fiscal year 2027 (starting October 1), and the state may also face risks of CDL program revocation.
Quick Overview
- The Federal Motor Carrier Safety Administration (FMCSA) told New York state leaders on Thursday that the state will lose $73.5 million in federal highway funding due to commercial driver's license (CDL) and commercial learner's permit (CLP) compliance issues.
- The issue stems from a July 2025 audit that found deficiencies in the state's standards for issuing non-resident CDLs and CLPs. These credentials are for individuals who are not U.S. citizens or lawful permanent residents, and the federal government has established regulations for states on the documents required for issuance and renewal.
- "This is unacceptable and poses a significant safety risk," FMCSA Administrator Derek Barrs said in the letter. The funding loss targets the federal government's fiscal year 2027, which begins October 1. The FMCSA also said the state could face the risk of having its CDL program revoked.
In-Depth Analysis
The FMCSA has flagged issues and threatened to withhold funding from multiple states beyond New York, includingIllinois、North CarolinaandPennsylvania. The agency found violations where non-resident CDLs remained valid after an individual's lawful residence documents expired.
The agency also determined California to be non-compliant and stated in January that the state wouldlose $158 millionin the upcoming federal fiscal year. California has sinceappealed to the U.S. Court of Appeals for the District of Columbia Circuit, putting the matter into litigation.
For New York, records from last year show approximately 25,000 drivers held such non-resident status, and the FMCSA said thousands of commercial drivers could face issues with expiring status.
According to Barrs' letter, New York disputed the findings, noting it had never been flagged for such issues in the past. The state and federal government also disagreed on the specific requirements of federal regulations before the FMCSA raised standards through aninterim final rulein September 2025.
Barrs warned that New York could face the risk of this funding loss doubling in fiscal year 2028.