The Federal Motor Carrier Safety Administration on Tuesday told the state of Colorado it could lose major federal funding over a "systemic breakdown" in its issuance of non-domiciled CDLs.
The state issued more than 20% of its non-domiciled CDLs out of spec with federal regulations, said a notice of Preliminary Determination of Significant Noncompliance from FMCSA Chief Counsel Jesse Elison.
FMCSA's move against Colorado represents the fifth such action against a state after its September rulemaking looking to broadly ban non-domiciled CDL issuance got stopped in court.
[Related: ‘No evidence’ non-domiciled CDLs bad for safety: Lawsuit to block DOT's new rule]
FMCSA said it reviewed Colorado Department of Motor Vehicles records and found that 1,848 drivers held an unexpired non-domiciled CLP or CDL issued by the state, as of August 20, 2025.
FMCSA conducts annual program reviews of state driver's licensing agencies and said during the 2025 review "FMCSA reviewed a random sample of 99 records of drivers issued a non-domiciled CDL by the Colorado DMV."
Of those 99, FMCSA found problems with 24. Six records of non-domiciled CDLs showed they were issued with expiration dates "that exceeded the expiration date of the driver’s lawful presence documents.
Another 18 went to Mexican citizens who were not living in the U.S. as a special class of childhood arrival immigrants known as the Deferred Action for Childhood Arrivals recipients.
"Approximately 22 percent of the driver records sampled failed to comply with requirements in 49 CFR parts 383 and 384," wrote FMCSA. The 2025 review "uncovered evidence of systemic policy, procedural, and programming errors."
In the case of CDL terms outlasting legal presence documents or work authorizations, FMCSA said Colorado's system sometimes defaults to issuing a CDL for a date four years in the future regardless of other documents.
"Colorado DMV was unable to provide evidence of sufficient management controls to prevent these errors or catch them if they occur," FMCSA wrote. "Further, the Colorado DMV has not programmed its system with sufficient measures to handle exceptions or with “stop procedures” to prevent the error from occurring."
In total, FMCSA called these problems a "systemic breakdown in Colorado DMV’s issuance process for non-domiciled CLPs and CDLs."
With this notice served, Colorado joins New York, California, Pennsylvania and Minnesota as states specifically threatened with highway funding cuts by FMCSA for bad licensing practices.
All those states now potentially face loss of funding, though California was allowed a few months to come back into compliance after a few missteps.
As such, FMCSA told Colorado to take corrective actions listed below:
- Immediately pause issuing non-domiciled CLPs and CDLs as required in FMCSA’s Sept. 29 final rule.
- Identify unexpired non-domiciled CLPs and CDLs that were not issued in compliance.
- Conduct an internal audit to identify all procedural and programming errors, training, quality assurance, and insufficient policies.
- Notify FMCSA of the audit findings and the number of unexpired noncompliant non-domiciled CDLs.
- Immediately void or rescind all unexpired noncompliant non-domiciled CDLs and reissue them correctly.
- Resume issuing non-domiciled CDLs only after the state ensures everything is done right.
Colorado has 30 days to respond or it risks losing up to $24.5 million in federal funding each year.
The U.S. Department of Transportation said Colorado's response “may explain why FMCSA’s preliminary determination is incorrect and may include any additional documentation the state wishes FMCSA to consider."
Colorado might follow California's lead, and dispute some of the federal regulations with DOT. California has sued DOT over its threat to cut funding as California refuses to enforce English language proficiency at roadside and tries to hasten back to resuming issuing CDLs to non-citizens.
Speaking to Fox News about Colorado Governor Jared Polis, DOT Secretary Sean Duffy said "you see time and time again you have liberal governors who are on the side of the illegal as opposed to their citizen."
Overdrive contacted Colorado DMV for a response to DOT's letter or Duffy's comments on Fox and will update this story if we hear back.
