Minnesota stops issuing non-domiciled CDLs following USDOT’s warning that $30.4 million is at risk

Minnesota has hit pause on issuing non-domiciled commercial driver’s licenses (CDLs) after the U.S. Department of Transportation (USDOT) threatened to withhold tens of millions in funding from the state.

On December 3, 2025, Minnesota Driver and Vehicle Services (DVS) announced that it “has immediately paused issuing non-domiciled CDLs” and is working on a plan to come into compliance with federal licensing guidelines.

“DVS takes our role in issuing commercial driver’s licenses and keeping Minnesota roads safe very seriously” said DVS Director Pong Xiong.

USDOT Accuses Minnesota Of Illegally Issuing One In Three Non-Domiciled CDLs

The state’s non-domiciled CDL pause come after U.S. Transportation Secretary Sean Duffy said that Minnesota stands to lose $30.4 million in highway funding following a federal audit that showed that “one third of Minnesota’s non-domiciled CDLs reviewed by Federal Motor Carrier Safety Administration (FMCSA) were issued illegally.”

Minnesota DVS says that the state currently has 2,117 non-domiciled CDL holders.

In a December 1 letter, USDOT accused Minnesota DVS of acting improperly when it “issued non-domiciled CDLs that extend beyond the expiration of drivers’ lawful presence in the United States, issued non-domiciled CDLs to citizens of Mexico not present in the United States under the DACA program, issued non-domiciled CDLs to lawful permanent residents who should have been issued regular CDLs, and issued non-domiciled CDLs without providing evidence that it verified the driver’s lawful presence in the United States.”

USDOT gave Minnesota 30 days to pause issuance of non-domiciled CDLs and to identify all unexpired non-domiciled CDLs that fail to comply with FMCSA regulations in order to avoid losing federal funds.

State Complies But Pushes Back On USDOT Accusations

Minnesota DVS admitted to finding some “administrative errors with issuing non-domiciled CDLs,” but said that it has responded by notifying customers who were ineligible that their CDL privileges were canceled.

Minnesota DVS also disputed some of the claims made by federal officials and notes that FMCSA’s new CDL rules have been challenged in court:

“As DVS was implementing the corrective action, FMCSA conducted an audit that affirmed the issues already identified by DVS and have now been corrected. DVS was aware of, and prepared for, most of these findings.

DVS contests what we believe are inaccuracies in some of the findings listed in the letter received on Monday. The agency will also be seeking clarity on some required corrections that seem to be tied to the new CDL rules issued on Sept. 29. Those rules were not in effect at the time of the audit and are subject to a court-ordered stay by the U.S. Court of Appeals for the District of Columbia Circuit.“

USDOT has threatened to withhold funding from other states including Pennsylvania and California for allegedly improper CDL issuance.