Whether the facts behind the revocation of California’s 17,000 indirect CDL holders agree with California Governor Gavin Newsom or US Transportation Secretary Sean Duffy, industry watchers are warning motor carriers that it could mean new limits on operator liability and carrying capacity.
“The back-and-forth between Governor Newsom and Secretary Duffy distracts from the reality that DOT’s evolving regulatory and enforcement initiatives to address safety and security on the nation’s roadways will have a meaningful impact on the public transportation and commercial transportation industries,” said Greg Reed, a partner at the law firm Hanson Freregulatory Special Analysis in LL.
Newsom’s office earlier this week accused Duffy of claiming in a press release issued by the DOT that California illegally issued 17,000 unauthorized commercial driver’s licenses.
Newsome insisted the licenses were legally issued, but should have been revoked simply because they no longer meet the new indirect CDL restrictions imposed by the DOT in September.
In a social media post, Duffy responded by saying that Newsom is blatantly lying to the American people, saying that the DOT is “reprimanding California for violating key FMCSA rules.
However, Reed argues that “this is not a California issue, but a product of having a CDL licensing regime administered by fifty different state driver licensing agencies, each influenced by state policy and operating under prior federal guidance that paid very little attention to transportation safety and security.
“Transportation companies, both public transit agencies and those in the commercial trucking industry, must be proactive in ensuring that these regulatory and enforcement changes do not impact operations or expose them to unnecessary liability,” when hiring drivers who hold unlicensed CDLs.
TD Cowen analyst Jason Seidel sees more CDL cancellations in the future. “We would not be surprised to see DOT issue similar revocations in other states identified as violators,” Seidel said in a research note. “Most likely it will be goals [Illinois] and [Washington] As our FMCSA analysis shows, these states have had the largest increases in CDLs.
Seidel also noted that the 17,000 CDLs make up more than 9 percent of California’s rental base. Additionally, this represents half of the total increase in CDLs between 2019 and 2025, which the FMCSA data is tracking. [approximately 38,000]. “This represents a significant capacity impact in California, and the withdrawal of these stimulus will likely stabilize exit rates, preventing additional legal challenges.”
Related articles:
- DC court blocks FMCSA’s non-stationary CDL rule
- The non-resident CDL emergency rule can cause a reduction in capacity
- California, Oregon freeze non-residential CDLs amid federal crackdown
Click for more FreightWaves articles by John Gallagher.
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