SB 3773 amends chapter 1 of title 23 to give the Secretary of Transportation authority to withhold a portion of specified Federal highway apportionments from any State that the Secretary finds noncompliant with three immigration-related requirements: (1) state restrictions on sharing citizenship or immigration-status information with DHS in a manner inconsistent with 8 U.S.C. 1373, (2) issuance of driver’s licenses or ID cards without requiring proof of lawful presence as set out in the REAL ID Act, and (3) refusal to cooperate with ICE detainers issued under INA section 287(d).
The bill establishes a compliance regime that starts October 1, 2026, requires annual state certifications, authorizes audits and implementing regulations, and prescribes withholding percentages (5 percent in the first year of noncompliance, 10 percent thereafter). The practical effect is to convert a portion of highway formula funding into a tool of immigration policy, with direct implications for state DMVs, transportation projects, and jurisdictions that maintain “sanctuary” policies or non‑REAL ID licensing programs.
At a Glance
What It Does
Beginning October 1, 2026, the Secretary of Transportation must withhold specified portions of amounts apportioned under 23 U.S.C. 104(b)(1) and (2) from any State the Secretary determines is not complying with the bill’s immigration-related conditions. Withheld amounts are 5% for a State’s first year of noncompliance and 10% for each subsequent year, and can be restored if a State cures noncompliance before the fiscal year ends.
Who It Affects
State departments of motor vehicles and state legislatures that set driver’s license and ID policies, state and local law enforcement that interact with ICE detainers, Metropolitan Planning Organizations and highway project sponsors that receive 23 U.S.C. formula funds, and DHS/ICE who gain a stronger federal leverage point.
Why It Matters
The bill converts highway formula money into conditional spending tied to immigration enforcement practices, raising constitutional and operational questions about federal coercion, anti‑commandeering, and the practical capacity of states and the DOT to certify, audit, and enforce immigration-related compliance across diverse licensing systems.
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What This Bill Actually Does
SB 3773 inserts a new 23 U.S.C. §155 that ties two categories of annual federal highway apportionments to a State’s adherence to three specific immigration-related requirements. The bill defines “driver’s license” by reference to the REAL ID Act and makes compliance determinations effective each October 1 starting in 2026.
If the Secretary determines a State is noncompliant, the statute requires withholding a portion of that State’s apportioned amounts under the specific subsections of 23 U.S.C. 104(b) named in the bill.
Noncompliance is defined narrowly but with practical breadth: a State fails the test if it (1) has laws or practices that prohibit or restrict sending to or receiving from DHS information on an individual’s citizenship or immigration status in a way inconsistent with 8 U.S.C. 1373; (2) issues driver’s licenses or IDs without requiring the lawful‑presence evidence called for in REAL ID’s section 202(c)(2)(B); or (3) refuses to cooperate with ICE detainers issued under INA section 287(d). The bill requires States to submit an annual certification to the Secretary that includes statutes, policies, and data on license issuance practices; the Secretary may audit those certifications and issue implementing regulations.Mechanically, the withholding is modest at first—5 percent of the identified apportioned funds in a State’s first year of noncompliance and 10 percent in subsequent years—but those sums can be meaningful for multi‑year projects or smaller State programs.
The Secretary must restore withheld funds for a fiscal year if the State cures noncompliance before the end of that fiscal year. The statute also gives the Secretary authority to provide technical assistance and to promulgate rules, including procedures for appeals of noncompliance findings, which creates an administrative interface between DOT and States unlike traditional highway program enforcement mechanisms.The structure forces practical choices on States: change licensing and information‑sharing laws and practices to match federal expectations (including potentially rescinding non‑REAL ID licensing or “sanctuary” provisions), or risk reduced highway funds that support safety and infrastructure programs.
The bill leaves open how appeals, audits, and cooperation with federal immigration authorities will be operationalized, and it explicitly relies on Congress’s Spending Clause authority as its constitutional footing.
The Five Things You Need to Know
The enforcement date is October 1, 2026; on that date and every October 1 after the Secretary must withhold funds from States found noncompliant.
Withholding targets amounts apportioned to States under 23 U.S.C. 104(b)(1) and (2); the statute sets the reduction at 5% the first year of noncompliance and 10% for each subsequent year.
A State is noncompliant if it (a) restricts sending or receiving immigration‑status information in ways inconsistent with 8 U.S.C. 1373, (b) issues licenses without proof of lawful presence as described in REAL ID, or (c) refuses to honor ICE detainers under INA §287(d).
Each State must annually certify compliance to the Secretary and include relevant statutes, policies, and license‑issuance data; the Secretary may audit those certifications and provide technical assistance.
If a State cures noncompliance before the end of the fiscal year, the Secretary must apportion withheld funds back to the State on the day the Secretary makes that determination.
Section-by-Section Breakdown
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Definition of 'driver’s license' (REAL ID cross‑reference)
This subsection adopts the REAL ID Act’s definition of “driver’s license,” tying the bill’s licensing obligations to the federal REAL ID standard. Practically, that reference narrows disputes about what counts as a license under the statute but also imports REAL ID’s evidentiary framework—meaning States that issue non‑REAL ID 'driver privilege' cards or similar credentials will face scrutiny under the same standard.
Mechanics of withholding—timing and percentages
This is the bill’s enforcement engine: starting October 1, 2026, the Secretary must withhold the applicable percentage from amounts a State would receive under 23 U.S.C. 104(b)(1) and (2) when the State is found noncompliant. The statute specifies 5% for a State’s first year of noncompliance and 10% thereafter, and it allows full restoration of withheld funds if the State cures noncompliance before the fiscal year ends. Because the withheld amounts are taken from apportioned funds (not discretionary grants), the provision directly interrupts formula flows that fund routine highway and safety programs.
Three specified compliance tests
Subsection (c) lists the precise triggers for noncompliance: prohibitions or restrictions on sending/receiving immigration‑status information in ways the bill treats as violating 8 U.S.C. 1373; issuing IDs without the lawful‑status proof called for in REAL ID; and failing to cooperate with ICE detainers under INA §287(d). Each trigger raises distinct implementation questions—information‑sharing rules implicate privacy and state law; licensing standards implicate DMV administrative practices and state statutory schemes; detainers implicate law‑enforcement policy and potential civil‑liability concerns.
Annual state certification requirement
States must submit an annual certification to the Secretary attesting to compliance with subsection (c) and must include statutes, policies, and data on license issuance. That creates an affirmative documentation obligation for States and establishes the evidentiary record the Secretary will use for audits and determinations. It effectively shifts some enforcement work into the DOT’s administrative review process rather than into ad hoc enforcement or litigation alone.
Audit, regulation, and assistance authority for the Secretary
The Secretary may audit State certifications, issue implementing regulations (including appeals procedures), and provide technical assistance. Those powers give DOT administrative latitude to define compliance details, set audit standards, and mediate disputes—but they also mean implementation will turn heavily on rulemaking choices and the agency’s resource capacity to carry out audits and provide consistent technical support.
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Explore Transportation in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- U.S. Department of Homeland Security / ICE — Gains stronger leverage to secure state cooperation on information sharing and detainers by tying those practices to transportation funding.
- States already aligned with REAL ID and 8 U.S.C. 1373 (e.g., those requiring lawful‑presence documentation) — Face little operational change and avoid funding penalties, preserving predictable highway apportionments.
- Federal policymakers advocating tighter immigration enforcement — Obtain a non‑criminal enforcement tool that uses formula spending as leverage rather than creating new enforcement programs.
- Vendors and contractors that provide DMV systems, identity‑verification technology, and data‑sharing platforms — May see new business opportunities if states choose to upgrade systems to pass audits and certifications.
Who Bears the Cost
- States with licensing programs that do not require proof of lawful presence or that limit information sharing (often called 'sanctuary' jurisdictions) — Risk losing 5–10% of specified highway formula funds until they change laws or practices.
- State departments of motor vehicles — Face additional administrative burdens and compliance costs from annual certifications, system changes to support data sharing, and responding to federal audits.
- Local governments and transit agencies that rely on 23 U.S.C. formula funds — Could see project delays, scaled‑back maintenance, or interrupted capital programs if a State’s apportionments are reduced.
- Undocumented or non‑lawfully present individuals and communities served by non‑REAL ID licensing programs — Could lose access to driver’s licenses or face tougher documentation requirements, with downstream effects on mobility and insurance coverage.
- States that must decide whether to honor ICE detainers — May face operational stress, increased litigation risk, and policy tradeoffs between community‑policing goals and federal funding pressures.
Key Issues
The Core Tension
The central tension is between federal interest in uniform immigration‑related information sharing and enforcement, enforced through conditional spending, and state sovereignty over licensing and public‑safety policy: the bill seeks nationwide uniformity by withholding transportation dollars, but that tool risks constitutional limits on federal coercion and practical harms to state infrastructure programs and local communities if States are forced to choose between funding and established local policies.
The bill creates several legally and operationally fraught tradeoffs. First, conditioning highway funds on state compliance with federal immigration priorities may prompt constitutional litigation.
Plaintiffs likely will test whether this is permissible use of the Spending Clause or whether it constitutes coercion that leaves States 'no real choice'—an analysis courts applied in NFIB v. Sebelius.
Second, the statute’s demand that States not 'restrict' information sharing in ways inconsistent with 8 U.S.C. 1373 intersects with existing state privacy laws and municipal ordinances; resolving those conflicts will require specific rulemaking and potentially court interpretation about the scope of permissible restrictions and what counts as a violation.
Operationally, the Secretary’s audit and certification regime raises capacity questions. DOT will need criteria for assessing license‑issuance data, interpretive guidance on REAL ID compliance, and protocols for evaluating cooperation with detainers—each of which involves different agencies (DOT, state DMVs, DHS/ICE) and different evidentiary standards.
The bill offers technical assistance but no dedicated grant or appropriation for DOT to build that oversight capacity. There is also the risk of perverse outcomes: states may restrict licensure to avoid federal interference, leaving more unlicensed drivers on roads and potentially worsening the safety issues the bill cites.
Finally, honoring ICE detainers raises liability and due‑process concerns; detainers are civil requests that historically have produced litigation when honored without judicial process, and the bill does not address indemnity, training, or liability protections for state actors.
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