FMCSA Proposes Withholding $73.5 Million in Federal Highway Funds from New York State Over Non-Resident Commercial Driver's License Compliance Issues
FMCSA informed New York State on Thursday that it will lose $73.5 million in federal highway funds due to deficiencies in its standards for issuing non-resident commercial driver's licenses and commercial learner's permits. The issue stems from a July 2025 audit involving identity document management for individuals who are not U.S. citizens or lawful permanent residents. FMCSA Administrator Derek Barrs called this an "unacceptable and significant safety risk" and warned that the state's CDL program could face decertification.
Quick Overview
- The Federal Motor Carrier Safety Administration (FMCSA) notified New York state leaders on Thursday that the state will lose $73.5 million in federal highway funding due to compliance issues with commercial driver's licenses (CDL) and commercial learner's permits (CLP).
- The issue stems from an audit in July 2025 that found deficiencies in the state's standards for issuing non-resident CDLs and CLPs, according to afinal determination letter. Such licenses are for individuals who are not U.S. citizens or lawful permanent residents, and the federal government has regulations on the documentation required for states to issue and renew these licenses and permits.
- "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. FMCSA also stated that the state could face the risk of having its CDL program decertified.
In-Depth Insights
FMCSA has raised similar issues with other states and threatened to withhold funding, includingIllinois、North CarolinaandPennsylvania. The agency found violations where non-resident CDLs remained valid beyond the expiration of the individual's lawful residence documents.
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 D.C. Circuit, putting the matter into litigation.
In New York's case, records from last year show approximately 25,000 drivers held such non-resident status, and FMCSA indicated that thousands more commercial drivers may face identity expiration issues.
According to Barrs' letter, the state disputes the findings, noting it has never been flagged for such issues in the past. The state and federal government are also at odds over what federal regulations required before FMCSA raised the standards through aninterim final rulein September 2025.
Barrs warned that New York could face a doubling of this funding loss in fiscal year 2028.