Whether the facts behind the cancellation of 17,000 non-domiciled California CDL holders align with California Governor Gavin Newsom or U.S. Department of Transportation Secretary Sean Duffy, industry observers caution motor carriers to pay attention to what the new restrictions will mean for carrier liability and freight capacity.
“The public back-and-forth between Governor Newsom and Secretary Duffy is a distraction from the reality that the DOT’s evolving enforcement and regulatory initiatives to address safety and security on the nation’s roadways will have a meaningful impact on both the public transit and commercial transportation industries,” Greg Reed, a partner at law firm Hanson Bridgett LLP specializing in regulatory analysis, told FreightWaves.
Newsom’s office earlier this week accused Duffy of “spreading easily disproved falsehoods” in a press release issued by DOT claiming that California had illegally issued 17,000 non-domiciled commercial driver’s licenses.
Newsome insisted that the licenses were issued legally, but had to be withdrawn only because they no longer align with new non-domiciled CDL restrictions put in place by DOT in September.
Duffy countered in a social media post that Newsome was “blatantly lying to the American people,” asserting that DOT “is reprimanding California for violating FMCSA’s original rules. “My emergency rule came as a consequence in part for California’s total disregard of those federal laws,” Duffy said.
Reed argues, however, that “this is not a California issue; it is the product of having a CDL licensing regime implemented by fifty different state driver licensing agencies, each influenced by state politics and operating under prior federal guidance that paid too little attention to transportation safety and security.
“Transportation companies, both public transit agencies and those in the commercial freight industry, need to be proactive to ensure that these regulatory and enforcement changes do not impact operations or expose them to unnecessary liability,” when hiring drivers who carry a non-domiciled CDL.
TD Cowen analyst Jason Seidl sees more CDL cancellations down the road. “We would not be surprised to see DOT issue similar revocations in other states that are known to be violators,” Seidl stated in a research note. “Most likely targets would be [Illinois] and [Washington] as our FMCSA analysis shows these states saw the largest surge in CDLs.”
Seidl also pointed out that 17,000 CDLs represents over 9% of California’s for-hire carrier base. “Moreover, this represents just under half the total increase in CDLs between 2019 and 2025 which FMCSA data pegs at [approximately 38,000]. This represents a substantial capacity impact in California and exit of these drivers would likely firm outbound rates barring additional legal contestation.”
Related articles:
- DC court blocks FMCSA’s non-domiciled CDL rule
- Non-Domiciled CDL Emergency Rule could cause capacity crunch
- California, Oregon halt non-domiciled CDLs amid federal crack down
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