The US federal government has imposed a hefty financial penalty on California, stripping the state of $160 million in transportation funding. This decisive action comes as a direct response to California's failure to meet a deadline for revoking thousands of commercial driver's licences held by immigrants.
Federal Crackdown on Licence Compliance
Transportation Secretary Sean Duffy announced the punitive measure on Wednesday, 7 January 2026. He stated that California had reneged on a promise made in November to revoke 17,000 commercial licences by Monday, 5 January. The licences in question were issued to immigrants, many of which remained valid long after the holder's visa or work permit had expired.
This is not the first financial sanction against the state. Duffy had previously withheld $40 million because California was not enforcing English proficiency requirements for truckers. The current penalty brings the total withheld funds to $200 million.
"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," Duffy said in a written statement. He accused Governor Gavin Newsom of "putting the needs of illegal immigrants over the safety of the American people."
Legal Challenges and Safety Concerns
The federal government's scrutiny intensified last summer. A tragic incident in August, where a truck driver unauthorised to be in the US caused a fatal crash in Florida, brought the issue to the forefront. A subsequent federal audit revealed significant problems, finding that more than a quarter of a sample of reviewed Californian licences were unlawful.
However, after the state began notifying drivers of the revocations last autumn, immigrant advocacy groups filed a class-action lawsuit. The Sikh Coalition and the Asian Law Caucus argued that immigrant truck drivers were being unfairly targeted, noting that Sikh drivers were involved in the Florida crash and another in California in October. In response to the lawsuit, California announced a delay in the revocations until March.
Derek Barrs, Administrator of the Federal Motor Carrier Safety Administration, was unequivocal in his criticism. "We will not accept a corrective plan that knowingly leaves thousands of drivers holding noncompliant licenses behind the wheel of 80,000-pound trucks in open defiance of federal safety regulations," he stated.
Broader Implications and Industry Reaction
The dispute highlights a wider federal push for stricter enforcement. Duffy has previously threatened funding for several states, including Pennsylvania, New York, and Texas, after audits found similar compliance issues. The Transportation Department has also proposed new rules to severely limit which noncitizens can obtain a commercial licence, though these are currently on hold by a court.
Trucking trade groups have supported the federal government's stance, praising efforts to remove unqualified drivers from the roads and to investigate questionable commercial driving schools. They argue that upholding safety standards, including language proficiency, is paramount.
While immigrants constitute roughly 20% of all truck drivers in the US, the specific category of "non-domiciled" licences at the centre of this controversy represents only about 5% of the total, or approximately 200,000 drivers nationwide. The standoff between Sacramento and Washington continues, with significant funds and road safety policies hanging in the balance.
