Colorado Defies Feds: $24M Highway Funds at Risk Over License Scandal

Paul Riverbank, 12/23/2025Colorado faces losing $24 million in highway funding unless it revokes improperly issued truck licenses. Federal pressure is mounting, with public safety and state compliance on the line—putting critical roadwork and local trucking jobs at risk. The outcome could reshape state-federal relations nationwide.

At the heart of the standoff: a 2016 Colorado policy that let state agencies issue commercial driver’s licenses (CDLs) to certain non-citizens. Audit teams later uncovered that about one in five CDLs handed to noncitizens—mostly Mexican nationals—not only violated federal rules but at times were valid even after the holders’ legal residency in the U.S. had expired. That’s not just a paperwork glitch. These are licenses for operating 18-wheelers, the vehicles most drivers hope to keep at a healthy distance on the highway.

Federal law, for the most part, says commercial drivers from Mexico and Canada should obtain these credentials from their home countries. There are exceptions, but as it turns out, Colorado’s approach was a generous interpretation at best and a flat breach at worst. After a government review, Transportation Secretary Sean Duffy pulled no punches: “Colorado doesn’t get to pick and choose what federal rules it follows—especially when the driving public is at risk.” He even went further, warning that each day the wrong people are on the road, every driver in Colorado is taking a gamble.

Once the audit landed, Colorado was told to come clean by identifying every improperly-issued license, voiding them, and demonstrating it had fixed its internal process. Yet, months later, federal officials report the state hasn’t provided a complete answer or a full audit. That, for the Department of Transportation, signals a dangerous lack of urgency.

The stakes aren’t abstract. Duffy’s bottom line: “Revoke the licenses immediately, or I will pull federal funding.” $24 million might sound like a government abstraction, but in practice, it means highways repairs paused or canceled, construction crews put out of work, and perhaps even a wider shakeup for the state’s motoring and shipping industries. The feds say if Colorado drags its feet, it could ultimately lose the right to issue truck licenses at all—a scenario that no other state wants to contemplate.

Strikingly, Colorado’s public response has been muted. Governor Jared Polis’ office has so far sidestepped direct questions about both the audit and the federal deadlines. Even the Colorado Department of Transportation has redirected inquiries, sending reporters to the Department of Revenue, which oversees the DMV. So far, the only visible move has been to suspend new noncitizen CDLs and put existing ones under review.

For locals, the issue may seem distant until potholes remain unfilled or delivery routes slow to a crawl. One can imagine a Denver-based trucking small business—say, Iron Mountain Haulage—eyeing the statehouse with growing frustration as supply chains hang in the balance. And Colorado isn’t alone in the crosshairs: Texas, faced with a similar audit, slammed the brakes on questionable licenses almost overnight. New York and Minnesota have also been scrutinized as Washington ramps up its drive for uniform trucking safety standards.

In the end, Colorado faces a simple, if unenviable, choice: clean up the licensing mess or brace for consequences that will be felt from the Rockies to the Front Range. Highway cones sidelined, jobs in limbo, and the spotlight squarely on state leaders—who now have little room left to dodge. Time, as they say, is running out.

Colorado has found itself toe-to-toe with the federal government over a mistake that’s more than just a bureaucratic fumble—it has real money and public safety on the line. A stark warning from the U.S. Department of Transportation puts $24 million in federal highway funding at risk, all because of a policy misstep involving commercial truck driver’s licenses.At the heart of the standoff: a 2016 Colorado policy that let state agencies issue commercial driver’s licenses (CDLs) to certain non-citizens. Audit teams later uncovered that about one in five CDLs handed to noncitizens—mostly Mexican nationals—not only violated federal rules but at times were valid even after the holders’ legal residency in the U.S. had expired. That’s not just a paperwork glitch. These are licenses for operating 18-wheelers, the vehicles most drivers hope to keep at a healthy distance on the highway.Federal law, for the most part, says commercial drivers from Mexico and Canada should obtain these credentials from their home countries. There are exceptions, but as it turns out, Colorado’s approach was a generous interpretation at best and a flat breach at worst. After a government review, Transportation Secretary Sean Duffy pulled no punches: “Colorado doesn’t get to pick and choose what federal rules it follows—especially when the driving public is at risk.” He even went further, warning that each day the wrong people are on the road, every driver in Colorado is taking a gamble.Once the audit landed, Colorado was told to come clean by identifying every improperly-issued license, voiding them, and demonstrating it had fixed its internal process. Yet, months later, federal officials report the state hasn’t provided a complete answer or a full audit. That, for the Department of Transportation, signals a dangerous lack of urgency.The stakes aren’t abstract. Duffy’s bottom line: “Revoke the licenses immediately, or I will pull federal funding.” $24 million might sound like a government abstraction, but in practice, it means highways repairs paused or canceled, construction crews put out of work, and perhaps even a wider shakeup for the state’s motoring and shipping industries. The feds say if Colorado drags its feet, it could ultimately lose the right to issue truck licenses at all—a scenario that no other state wants to contemplate.Strikingly, Colorado’s public response has been muted. Governor Jared Polis’ office has so far sidestepped direct questions about both the audit and the federal deadlines. Even the Colorado Department of Transportation has redirected inquiries, sending reporters to the Department of Revenue, which oversees the DMV. So far, the only visible move has been to suspend new noncitizen CDLs and put existing ones under review.For locals, the issue may seem distant until potholes remain unfilled or delivery routes slow to a crawl. One can imagine a Denver-based trucking small business—say, Iron Mountain Haulage—eyeing the statehouse with growing frustration as supply chains hang in the balance. And Colorado isn’t alone in the crosshairs: Texas, faced with a similar audit, slammed the brakes on questionable licenses almost overnight. New York and Minnesota have also been scrutinized as Washington ramps up its drive for uniform trucking safety standards.In the end, Colorado faces a simple, if unenviable, choice: clean up the licensing mess or brace for consequences that will be felt from the Rockies to the Front Range. Highway cones sidelined, jobs in limbo, and the spotlight squarely on state leaders—who now have little room left to dodge. Time, as they say, is running out.