California misses DOT deadline risking $160 million in federal funding

California vs. DOT: $160 million at stake

The dispute began on August 21, when Duffy gave California 30 days to respond, warning that failure to do so would result in the loss of $33 million in federal funds. On September 25, Governor Newsom responded, leading to an extension of the conflict.

On December 30, California again challenged the Department of Transportation by notifying 20,000 non-domiciled commercial driver’s license holders that it had extended the revocation deadline from January 5 to March 6, 2026. That same day, Secretary Duffy responded by reiterating that the definitive deadline was January 5, stating that California had no extension to continue violating the law or putting the lives of American drivers at risk.

California maintains that it already enforces the Federal Motor Carrier Safety Administration (FMCSA) regulations requiring commercial drivers to speak and read English. The state also highlights the critical role that non-domiciled CDL holders play in its economy. However, no concrete measures have been announced to address deficiencies in the process of issuing these licenses within California.

On several occasions, Secretary Duffy has stated that it is not his intention to cut funding to the state of California, but he has emphasized that if federal law is not followed, the previously established sanctions must be applied. While the situation had previously been discussed only in hypothetical terms, the arrival of the deadline changes the circumstances for both the DOT and California, which finds itself in a critical position.

Currently, the state of California has an approximate annual budget of $300 billion, which includes a $11 billion contingency fund for the maintenance of highways and facilities, as well as for the training of law enforcement personnel.