Caltrans warns of up to $158.3M federal funding penalty after FMCSA noncompliance finding

Caltrans budget staff told the California Transportation Commission on Jan. 29 that a Federal Motor Carrier Safety Administration (FMCSA) determination of noncompliance related to the issuance of certain commercial driver’s licenses could reduce California’s federal highway formula funds by roughly $158,300,000 in the coming federal fiscal year.

Keith Duncan, Caltrans budgets, explained the FMCSA determination targets issuance of approximately 17,000 commercial driver’s licenses and that FMCSA’s statutory penalty formula applies a 4% reduction to the two largest formula programs — the National Highway Performance Program (NHPP) and the Surface Transportation Block Grant Program (STBG). “That 4% equates about to a $158,300,000,” Duncan said during the budget allocation capacity update.

Caltrans staff and commissioners discussed how the withholding might be applied across programs and regions; staff said the agency has not been given implementation details and is running scenarios (drills) to estimate program‑level impacts, including potential effects on the Active Transportation Program (ATP). Caltrans also warned that if FMCSA again finds noncompliance in a second year the penalty would double to an 8% reduction (about $316 million). The department said any final assessment would be reflected when federal obligations are published next federal fiscal year and that DMV and state partners are working to resolve the issue.

Commissioners asked staff for further analysis of which projects would be directly affected and the potential economic ripple effects; staff agreed to provide additional modeling and impacts by program once more details are available.