By: Dawn M. Lurie, Alexander J. Madrak, and Selene Malench*

This blog post was first published as an alert.

A fast-moving clash between federal regulators, state motor vehicle agencies, and the courts is reshaping who can legally hold and keep a non-domiciled commercial driver’s license (“CDL”). As California’s court-ordered reapplication process runs up against the Federal Motor Carrier Safety Administration’s (“FMCSA”) newly effective Final Rule, and as the U.S. Department of Transportation (“DOT”) escalates enforcement against other states, including New York, employers are left to navigate yet another layer of compliance uncertainty with immediate workforce implications.

Background

In March 2026, a California state court ordered the California Department of Motor Vehicles (“CA DMV”) to allow approximately 20,000 non-domiciled commercial drivers to re-apply for canceled CDLs, finding that the CA DMV could not summarily revoke these without due process, even when acting in response to federal guidance.

The ruling stemmed from a class-action lawsuit filed in December 2025 that contested mass CDL cancellations affecting drivers with certain lawful work authorization and presented additional compliance challenges for employers in an ongoing legal ping-pong battle between the CA DMV and affected drivers.

However, the California court order did not resolve the broader federal licensing issue. CA DMV’s current public guidance states that, although affected drivers may immediately reapply, the CA DMV is not currently issuing non-domiciled commercial learner’s permits (“CLPs”) or CDLs because, according to the CA DMV, FMCSA has directed California not to issue them. The CA DMV states that CDL applications may be placed on hold until the CA DMV determines it can act on them.

Just weeks earlier, on February 13, 2026, FMCSA issued a Final Rule adopting the core elements of its September 2025 Interim Final Rule (“IFR”). The Final Rule limited eligibility for non-domiciled CDLs to individuals holding H-2A, H-2B, or E-2 visas, and took effect on March 16, 2026. As a result, most noncitizens authorized to work are ineligible for a non-domiciled CDL, including most Employment Authorization Document (EAD) holders, such as those with Temporary Protected Status, DACA recipients, asylum seekers, asylees, and refugees.

FMCSA’s current guidance further provides that states unable to comply with the Final Rule as of March 16, 2026, must immediately pause issuance of non-domiciled CLPs and CDLs. FMCSA also treats issuance broadly to include renewals, transfers, upgrades, and reinstatements, creating practical consequences not only for new applicants, but also for existing drivers whose CDL privileges require renewal, correction, restoration, or reissuance.

The IFR itself followed a nationwide FMCSA audit that alleged systemic state-level failures in verifying immigration status through the Department of Homeland Security’s (DHS) SAVE system and raised public safety concerns related to non-domiciled drivers. Although enforcement of the IFR was stayed by the D.C. Circuit in November 2025, the Final Rule was implemented without substantive changes.

Recent Court and Enforcement Developments

On May 6, 2026, the U.S. Court of Appeals for the D.C. Circuit further signaled judicial support for FMCSA’s position by denying emergency motions filed by labor unions and affected workers seeking to stay enforcement of the Final Rule while simultaneously expediting merits review of the consolidated challenges. In a joint statement accompanying the order, Judges Gregory Katsas and Neomi Rao indicated that the petitioners were unlikely to succeed on several core arguments, including claims that FMCSA lacked statutory authority or acted arbitrarily in restricting eligibility for non-domiciled CDLs. The court specifically emphasized that the Final Rule was intended to ensure that vetting of foreign drivers is “no less rigorous” than vetting applied to U.S.-domiciled drivers.

The California dispute is also no longer occurring in isolation. On April 16, 2026, DOT announced that FMCSA was withholding more than $73 million from New York for allegedly failing to revoke illegally issued non-domiciled CLPs and CDLs. DOT stated that FMCSA’s audit of New York’s non-domiciled CDL issuance practices found that 107 out of 200 sampled records were issued in violation of federal law, a failure rate of more than 53%, and alleged that New York’s DMV systems defaulted to issuing eight-year licenses to foreign drivers for non-REAL ID licenses regardless of when their legal status expired. DOT further stated that FMCSA had issued a final determination of substantial noncompliance and was withholding $73,502,543, representing 4% of New York’s National Highway Performance Program and Surface Transportation Program Block Grant funds.

In short, employers are no longer facing only a California-specific due process dispute. DOT and FMCSA are taking the position that state-issued non-domiciled CDLs that do not comply with federal requirements must be revoked and cannot be reissued unless the driver satisfies current federal standards.

What Employers Should Do Now

Among other compliance challenges, employers now have other items to add to their list of ongoing compliance obligations.

• Stay Informed of Immigration Status Changes: Companies that employ individuals with valid work permits should closely monitor whether those work permits or underlying immigration statuses could be affected by recent federal action. Because State Driver Licensing Agencies (“SDLAs”) share information with DHS, the State Department, and FMCSA, if an SDLA learns that a driver no longer has qualifying lawful status, it may be required to downgrade the CDL by removing the CDL privilege from the license.

• Do Not Assume Work Authorization Equals CDL Eligibility: A driver may remain work-authorized for Form I-9 purposes but no longer qualify for a non-domiciled CDL under FMCSA’s Final Rule. This distinction is particularly important for EAD holders who may be lawfully employed but no longer eligible for issuance, renewal, transfer, upgrade, or reinstatement of a non-domiciled CDL.

• Confirm Current CDL Privileges Before Dispatch: Employers should verify that affected drivers have active commercial driving privileges before assigning commercial motor vehicle work. This is especially important for drivers with cancelled, downgraded, expiring, or reinstated licenses, and for drivers whose applications are pending or on hold with a state DMV.

• Plan for Ongoing Reductions: Employers that rely on workers with non-domiciled CDLs outside the three qualifying visa categories should expect constraints on future renewals, transfers, upgrades, and reinstatements, and may need to reconsider recruitment, staffing, subcontracting, and/or sponsorship strategies.

• Monitor State-Specific Enforcement Risk: Employers should not assume this issue is limited to California. DOT’s April 2026 withholding of more than $73 million from New York demonstrates that FMCSA is willing to escalate beyond audits and guidance to funding penalties where it believes a state has failed to revoke noncompliant non-domiciled credentials. Employers with drivers licensed in multiple states should monitor each issuing state’s posture.

• Do Not Assume the Rule Will Be Immediately Enjoined: Although multiple legal challenges remain pending, the D.C. Circuit recently denied emergency efforts to stay the Final Rule and signaled skepticism toward several challenges to FMCSA’s authority and rationale. Employers should therefore plan operationally for continued enforcement rather than assuming the rule will be suspended in the near term.

• Stay Engaged: Maintain contact with your immigration counsel, monitor litigation updates, and follow our blog for continued analysis and updated guidance.

Final Word

Despite ongoing litigation challenging the Final Rule, the D.C. Circuit recently denied emergency motions to block enforcement and signaled skepticism toward several of the challengers’ core legal arguments. Although expedited judicial review is continuing, the current trajectory favors continued enforcement while the cases proceed.

Policy changes remain possible, particularly if workforce disruptions become significant.

Importantly, the issue has now moved beyond California’s court-supervised reapplication process. While California drivers may retain procedural reapplication rights, the CA DMV currently maintains that non-domiciled CDL/CLP applications are being held pending resolution of federal restrictions. At the same time, DOT and FMCSA are actively challenging state non-domiciled CDL programs and, in New York, have sought to withhold federal highway funds based on alleged failures to revoke noncompliant credentials.

Employers and employees should continue monitoring developments and consult legal counsel as needed. For now, employers should treat non-domiciled CDL eligibility as a nationwide, state-by-state compliance issue involving federal rulemaking, FMCSA enforcement, state DMV implementation, and ongoing litigation.

For more information contact  Dawn M. Lurie or Alex Madrak directly. Seyfarth’s Immigration Compliance & Investigations specialty group is recognized as a national leader in the field. Trusted by Fortune 100 companies and small businesses nationwide, the team provides strategic, practical guidance across the full spectrum of immigration compliance. The group advises on Form I-9 and E-Verify compliance; ICE inspections and worksite enforcement actions; internal immigration assessments and I-9 audits; DOL immigration-related wage and hour investigations; H-1B compliance; and DOJ’s IER and OCAHO anti-discrimination matters, including foreign sponsorship and export control/ITAR issues.

*Selene Malench is a Case Assistant on Seyfarth’s Immigration Compliance & Enforcement team. Many thanks for her contribution to this legal update.