FMCSA withholds $73M from New York over 53% CDL failure rate

Why is FMCSA withholding highway funds from New York?

Transportation Secretary Sean Duffy announced April 16 that FMCSA is withholding $73,502,543 from New York after the state failed to complete required corrective actions following a federal audit. The audit found a 53 percent failure rate in New York's non-domiciled commercial driver's license program. Of 200 sampled records, 107 were issued in violation of federal law. The withheld funds represent 4 percent of New York's National Highway Performance Program and Surface Transportation Block Grant allocations.

The audit found New York's DMV computer system automatically defaulted to issuing 8-year licenses with non-REAL ID credentials to foreign nationals, regardless of when their work authorization expired. A driver with a 60-day work authorization walked out with a credential valid until 2032. A driver with a work permit expiring in May 2025 received a CDL expiring in May 2032 — nearly seven years beyond their legal presence in the country. Auditors also found cases where New York relied on expired lawful presence documents to issue licenses, meaning some drivers whose status had already lapsed were still being issued CDLs.

New York has 32,606 active non-domiciled CDLs in circulation, potentially making it the largest non-domiciled issuer in the country outside California. On March 13, FMCSA issued a formal response refuting New York's claims of compliance and reiterating that the state had not completed the required rescission of noncompliant licenses. After continued refusal, FMCSA issued a final determination of substantial noncompliance and moved to withhold the funds.

FMCSA Administrator Derek Barrs called it a systematic, grossly unacceptable deviation from federal safety regulations that have been on the books for a long time. This is not a misunderstanding of a new rule, he said. This is a state that had clear, longstanding federal requirements and programmed its own DMV system to ignore them.

What did New York say in response?

New York DMV spokesman Walter McClure issued a statement saying Duffy was lying about New York State once again in a desperate attempt to distract from the failing, chaotic administration he represents. McClure said every CDL New York issues is subject to lawful status verification. That statement does not square with the admissions New York officials made to federal auditors, which included confirming that their system was, in fact, programmed to default to 8-year expirations regardless of legal presence documentation.

In one documented case, a driver held a CDL with a Temporary Visitor expiration date of February 4, 2023, while the Non-Domiciled CDL remained valid until March 12, 2026. That means this driver held a CDL without a valid work authorization issued by New York for at least three years. A Temporary Visitor is a B-1/B-2 Visa, which typically means the holder is not allowed to work at all. The driver picked up a load. Neither the driver nor the load was ever seen again.

What does this mean for fleets operating in New York?

If you are a fleet based in New York or operating significant mileage in the Northeast corridor and you have non-domiciled drivers on your payroll holding New York-issued credentials, the time to audit your driver qualification files was yesterday. Under federal regulations, a carrier that dispatches a driver operating on a license issued in violation of federal requirements assumes significant exposure. That exposure exists regardless of whether the carrier knew the license was noncompliant. The burden is on you to verify that your drivers are legally qualified to operate the equipment they are driving.

If FMCSA's audit findings are applied to the broader population of New York's 32,606 non-domiciled CDL holders, and the 53 percent sample noncompliance rate holds, you may be looking at roughly 17,000 to 18,000 drivers in New York whose credentials may be deficient under federal standards. Those are not small numbers in a state that feeds the country's largest freight market.

Your driver qualification file obligations do not change because the state made a DMV programming error. Federal motor carrier safety regulations under 49 CFR Part 391 require you to verify that every driver you employ is properly licensed for the vehicle they operate. A CDL that was issued without proper lawful status verification may not constitute proper licensure for interstate commerce purposes. A CDL issued in violation of federal requirements is a noncompliant credential, and a carrier dispatching a driver on a noncompliant credential has exposure.

If you have non-domiciled CDL holders on your payroll in New York, check their SAVE verification status, check their license issuance and expiration dates against their visa and work authorization documentation, and document what you find. Do not wait for FMCSA to finish sorting this out.

What happens if New York refuses to comply?

The nuclear option is decertification under 49 U.S.C. Section 31312 and 49 CFR Part 384, Subpart E, specifically Section 384.405. Under that authority, FMCSA has the power to find a state in substantial noncompliance with federal CDL program requirements and prohibit the state from performing any CLP or CDL transactions. The regulation is explicit. Any state found in substantial noncompliance shall not issue any commercial learner's permit or commercial driver's license, shall not renew any CLP or CDL, shall not transfer any CDL, and shall not upgrade any CDL. Not just non-domiciled credentials. Every single one.

New York is not just a big trucking state. New York is the gateway through which an enormous share of Northeast corridor freight moves. The New York City metro is the largest consumer market in the country. The port complex at New York and New Jersey is among the busiest on the East Coast. Long Island, the Hudson Valley, the distribution networks feeding New England — all of it runs on New York-licensed commercial drivers.

Federal Bureau of Labor Statistics data puts the number of heavy and tractor-trailer truck drivers employed in New York at roughly 68,000 to 75,000, with median wages around $60,520. When you add in all CDL holders, including bus drivers, hazmat operators, straight truck drivers, and construction and specialized equipment operators, New York's total CDL population is substantially larger. Based on proportional estimates using California's known figures and New York's share of total national employment, a reasonable estimate puts New York's total CDL-holding population in the range of 300,000 to 400,000.

What would full decertification actually do?

Every driver in New York's CDL pipeline would freeze. New drivers in CDL school completing their training would have no pathway to receiving their credential until decertification is lifted and the state demonstrates corrective compliance to FMCSA's satisfaction. The existing CDLs already on the street, the ones held by 300,000-plus drivers who obtained them legitimately, would technically remain valid until their printed expiration dates under the plain language of the decertification authority, which prohibits new transactions but does not void existing credentials on day one.

Other states are not legally obligated to recognize CDLs issued by a state that FMCSA has placed in substantial noncompliance. The Commercial Driver's License Information System (CDLIS), which is the national database backbone that enables interstate CDL verification, could flag New York credentials as issued by a noncompliant jurisdiction. Enforcement agencies and border states could decline to accept New York CDLs at weigh stations and during roadside inspections. Carriers in other states dispatching drivers with New York credentials could face scrutiny over whether those credentials are valid for interstate purposes during the noncompliance period.

Freight moving through the Northeast corridor would face driver qualification uncertainty across a massive geography. LTL operations serving New York City, drayage at the Port of New York and New Jersey, temperature-controlled food distribution across the five boroughs and Long Island, bulk fuel delivery, construction material hauling, school transportation — all of it touches New York-licensed CDL holders.

What about insurance and liability exposure?

If you are dispatching a driver whose New York CDL is in a legally uncertain status due to a state decertification proceeding, and that driver is involved in a serious crash, your liability exposure in that case has just expanded in ways your insurance carrier may not have priced. The plaintiffs' bar is very good at finding the weakest point in a carrier's driver qualification process, and a driver qualification file showing a credential from a state that FMCSA had publicly identified as substantially noncompliant is not a comfortable exhibit in a wrongful death case.

What this means for drivers and fleets: If you are a fleet operating in New York or dispatching drivers with New York non-domiciled CDLs, audit your driver qualification files now. Check SAVE verification status, match license issuance and expiration dates against visa and work authorization documentation, and document what you find. If you are a non-domiciled driver operating on a New York credential and you have any uncertainty about whether your license issuance fully complied with federal documentation requirements, contact your carrier's compliance department, contact an attorney familiar with motor carrier safety regulations, or contact the New York DMV directly to request documentation of how your credential was issued and what documents were on file. You have the right to understand the status of your credential. The exposure is real, the numbers are large, and the time to act is before FMCSA moves to full decertification.