North Carolina is at risk of losing nearly $50 million in federal funding after the U.S. Department of Transportation and Federal Motor Carrier Safety Administration identified issues with the state’s non-domiciled CDL issuance practices.
In a Jan. 8 press release, DOT and FMCSA said its nationwide audit of state licensing practices found 54% of North Carolina’s non-domiciled CDLs and commercial learner’s permits reviewed by FMCSA were issued illegally.
“The level of noncompliance in North Carolina is egregious,” said FMCSA Administrator Derek Barrs. “Under Secretary Duffy, we will not hesitate to hold states accountable and protect the American people."
[Related: DOT makes it official: California loses $160M over non-domiciled CDL battle]
In a letter sent Thursday to North Carolina Gov. Josh Stein and North Carolina Division of Motor Vehicles Commissioner Paul Tine, FMCSA outlined three issues with the state’s non-domiciled CDL issuance:
- NCDMV issued non-domiciled CDLs that extend beyond the expiration of drivers’ lawful presence in the United States
- NCDMV issued non-domiciled CDLs to citizens of Mexico not present in the United States under the Deferred Action for Childhood Arrivals (DACA) program
- NCDMV issued non-domiciled CDLs without providing evidence that it verified the driver’s lawful presence in the United States
NCDMV issued a statement Friday morning that it is aware of FMCSA’s letter and “is committed to upholding safety and integrity in our licensing processes. We have been collaborating closely with our federal partners for several months to resolve these matters that are impacting many U.S. states.”
During its August 2025 Annual Program Review (APR) of North Carolina's non-domiciled CDL practices, it sampled 50 records of drivers that NCDMV issued a non-domiciled CDL and found that 27 of the driver records sampled -- approximately 54% -- failed to comply with federal regulations.
[Related: DOT's non-domiciled CDL crackdown went down in flames on the Federal Register, but owner-ops love it]
Of the 27 violations, 19 were for non-domiciled CDLs being issued with an expiration beyond that of the driver’s lawful presence documents. For another eight, FMCSA said NCDMV could not provide any evidence that it verified the drivers’ lawful presence with an unexpired Employment Authorization Document (EAD) or unexpired foreign passport and Form I-94 documenting the driver’s most recent admittance into the United States prior to issuance.
The final two records reviewed that were found to be problematic were issued to Mexican citizens who were not in the U.S. under the DACA program. Under federal regulations, states cannot issue non-domiciled CDLs to citizens of Mexico or Canada, unless they are present in the U.S. under DACA. The U.S. allows truck drivers with Canadian or Mexican CDLs to operate in cross-border freight operations, and thus do not need a non-domiciled CDL.
To resolve the issues, FMCSA is requiring that the state take the following corrective actions:
- Immediately pause issuance of non-domiciled CDLs
- Identify all unexpired non-domiciled CDLs that fail to comply with FMCSA regulations
- Revoke and reissue all noncompliant non-domiciled CDLs if they comply with the federal requirements
- Conduct a comprehensive internal audit to identify all procedural and programming errors, training and quality assurance problems, insufficient policies and practices, and other issues that have resulted in the issuance of non-domiciled CDLs that did not meet Federal rules
As was the case in several other states (including California, Colorado, New York, Pennsylvania and Minnesota), North Carolina has 30 days to come into compliance, FMCSA said. Failure to comply with the order could cost the state up to approximately $48,750,000 for fiscal year 2027.
California this week failed to meet its deadline for compliance to revoke 17,000 non-domiciled CDLs, and DOT announced it is withholding nearly $160 million from the state.
