- The letter explains that FMCSA’s heightened scrutiny of non-domiciled CDLs was part of a nationwide review conducted during 2025. FMCSA gave North Carolina 30 calendar days to respond to the preliminary determination.
Federal transportation officials estimate that more than half of North Carolina’s commercial driver’s licenses (CDL) issued to foreign nationals did not comply with federal law.
In an official warning letter sent Thursday, federal auditors reported that a review of 50 sampled commercial driver’s licenses found 27 were issued illegally, while in eight cases the state “could not provide any evidence that it verified the drivers’ lawful presence with an unexpired EAD or unexpired foreign passport and Form I-94 documenting the driver’s most recent admittance into the United States prior to issuance.”
The letter from the DOT says that serious deficiencies in the state’s CDL program could result in the loss of tens of millions of dollars in federal highway funding and the possible decertification of the state’s authority to issue CDLs.
The Jan. 8 letter to Gov. Josh Stein and NC Department of Transportation Commissioner Paul Tine from Derek Barrs, administrator of the Federal Motor Carrier Safety Administration (FMCSA) issued a preliminary determination of substantial noncompliance following a comprehensive audit of the state’s CDL program, focusing specifically on the issuance of non-domiciled commercial licenses. Non-domiciled CDL means that the license was issued to someone not permanently residing in a US state, typically foreign nationals authorized to work in the US.
The letter explains that FMCSA audits are conducted to ensure states meet federal standards governing CDL issuance, testing, and verification requirements under federal law. According to the agency, failure to meet those standards places a state at risk of federal sanctions.
“If FMCSA makes a final determination of substantial noncompliance,” the letter states, “FMCSA may initiate the withholding of certain Federal-aid highway funds and may decertify the State’s CDL Program.”
Federal funding at risk
The letter outlines the financial consequences North Carolina could face if the preliminary finding becomes final. FMCSA warns that the state could lose funding beginning in fiscal year 2027 under two major federal highway programs.
“Accordingly, upon a final determination of substantial noncompliance,” the letter states, “North Carolina risks losing up to approximately $48,750,000 for FY 2027.”
The agency further notes that additional funding could be withheld if the compliance issues persist beyond the first year.
Potential loss of CDL authority
Beyond funding penalties, the letter warns that North Carolina could lose the ability to administer its own CDL program altogether if the state is decertified.
While the letter does not immediately impose that sanction, it makes clear that decertification remains an option if compliance is not restored. Under federal regulations, decertification would prevent the state from issuing or managing commercial licenses until federal officials determine that deficiencies have been corrected.
The preliminary determination stems from FMCSA’s review of North Carolina’s procedures for issuing non-domiciled commercial learner’s permits (CLPs) and CDLs. The agency notes that federal law requires states to verify lawful presence and ensure that the validity of non-domiciled licenses does not exceed the period a driver is legally authorized to remain in the United States.
The letter explains that FMCSA’s heightened scrutiny of non-domiciled CDLs was part of a nationwide review conducted during 2025.
“As part of the 2025 comprehensive APRs,” the letter states, “FMCSA conducted an in-depth review of State procedures and policies in issuing non-domiciled CLPs and CDLs.”
State response required within 30 days
FMCSA gave North Carolina 30 calendar days to respond to the preliminary determination. The state may either outline corrective actions it plans to take or argue that the federal finding is incorrect, according to the letter.
“Alternatively, the State’s response may explain why FMCSA’s preliminary determination is incorrect,” the letter states, “and may include any additional documentation the State wishes FMCSA to consider.”
FMCSA emphasized that the determination is preliminary and that the agency is prepared to work with state officials to resolve the issues.
“FMCSA issues this preliminary determination of substantial noncompliance with a clear understanding of the gravity of the findings,” the letter states, “but also with the intent of working cooperatively with the State to bring its CDL program into substantial compliance.”