The U.S. Department of Transportation (DOT) Secretary Sean P. Duffy recently announced an emergency interim final rule to restrict non-domiciled Commercial Driver’s Licenses (CDLs), causing significant disruptions in the trucking and supply chain industries. Issued by the Federal Motor Carrier Safety Administration (FMCSA) on September 29, 2025, the rule addresses widespread abuse in the issuance of these licenses to immigrants. The rule requires that states immediately stop issuing new non-domiciled CDLs, but created a two-year phase in period before all non-domiciled CDLs are invalidated.
Non-domiciled CDLs, originally intended in 2017 to allow drivers residing in one state to obtain a license in another, evolved to include non-U.S. residents, sometimes without proper work permits. A DOT audit revealed that at least 200,000 such licenses were issued, with over 25% in California improperly granted.
In March 2019, FMCSA provided regulatory guidance stating that foreign drivers with employment permits or unexpired passports and CBP Arrival/Departure Records could obtain non-domiciled CDLs. However, many states failed to verify permits or align expiration dates, leading to concerns over fraud and safety.
The growth of these licenses coincided with an explosive increase in trucking capacity, contributing to the longest freight recession in history due to a glut of truck drivers.
USPS Implementation and Rapid Reversal
A few weeks ago, the U.S. Postal Service (USPS) implemented a policy banning the loading of contractors using drivers with non-domiciled CDLs, aligning with evolving federal guidelines on immigration and transportation. Facilities were instructed not to load trailers hauled by such drivers as part of efforts to improve safety across a network of asset carriers and brokers handling local, regional, and cross-country work.
The policy’s impact was immediate, resulting in canceled loads and widespread disruptions. USPS operations, heavily reliant on these drivers, saw trips missed and sorts delayed, exposing vulnerabilities in the postal linehaul network.
Within days, USPS reversed the ban, deeming the service and cost impacts too severe for an abrupt change. This highlighted the critical role non-domiciled drivers play in mail delivery reliability.
Key Insights from Leadership
Pete Routsolias, USPS SVP of Logistics, addressed suppliers in a call, explaining the reversal: “We didn’t understand the magnitude of how many people were using non-domiciled CDLs, and quite honestly, the amount of omits was astronomical. And right now, I am not willing to impact service that bad.” He added, “What we’re announcing is, as of right now, you can go back to using non-domiciled CDL drivers,” while emphasizing that other rules—such as English proficiency and two drivers per truck—still apply.
Initially, USPS planned a delayed ban until January 1, but supplier pushback led to indications that a full ban currently has an uncertain implementation date.
The proliferation of non-domiciled CDLs to immigrants has caught so many veteran trucking executives off-guard. For years, the trucking industry has been trying to understand how capacity had grown so substantially.
Since the FMCSA permitted foreigners to get a non-domiciled CDL in March 2019, over 200,000 have been issued. In that same period, the trucking industry has added more than 310,000 trucks, flooding the market with way too much capacity.
Due to the massive surge of trucking capacity, the trucking industry has been suffering from the longest downturn in history, we dubbed the Great Freight Recession. This freight recession started in March 2022 and has continued unabated ever since. The primary culprit: a way oversupplied trucking market. The elimination of non-domiciled CDLs pool will have a significant impact on the freight market as these drivers leave the service. After all, depending on how many of the 200,000 non-domiciled CDLs are currently active and hauling freight, it could wipe out 5%+ of all truckload capacity in the market.
The Administration’s other policies, including the English Language Proficiency (ELP) rule could have a big impact on capacity over time, as truck drivers that fail to speak, read, or understand English get put out of service. An insurance executive at a large agency suggested that at least 10% of the truck drivers on the road would fail an inspection if tested on their English language proficiency.
With all of the regulatory pressure to remove truck drivers from the industry which either have a non-domiciled CDL or lack English proficiency, a capacity crunch may happen sooner than later.
