Trucking Laws · New York · November 14, 2026

Appeals Court Says U.S. Wrongly Withheld Nearly $74 Million in New York Highway Funds Over Immigrant CDLs

By Big Rig Daily Staff

A three-judge federal appeals panel in Manhattan ruled Friday that the U.S. Department of Transportation wrongly withheld nearly $74 million in highway money from New York after the state refused to revoke nearly 33,000 commercial driver's licenses issued to immigrants, a dispute many truck drivers have been following.

What the court decided

A three-judge panel of the 2nd U.S. Circuit Court of Appeals concluded that the Federal Motor Carrier Safety Administration (FMCSA) acted in a way that was "arbitrary, capricious, or contrary to law" when it penalized the state, The Trucker reports, in an Associated Press account also covered by CDLLife.

The judges said New York cannot be faulted for failing to cancel a license when a commercial driver lost legal status, because the rules that would require a state to cancel that license were not in place at the time.

How the fight started

An audit last year found problems with nearly 33,000 commercial driver's licenses New York had issued to immigrants. Federal officials told the state to revoke them. New York refused, and FMCSA held back nearly $74 million in highway money, funds the state says it needs for roads and bridges.

Authorities say New York issued those licenses for eight years, no matter how long the truck driver's visa lasted. The Associated Press account says Transportation Secretary Sean Duffy tightened rules on when immigrants can obtain a commercial driver's license, and that audits in every state found non-domiciled licenses that remained valid after work permits had expired, or that were issued without properly verifying citizenship status.

The wider crackdown

Nationwide, the DOT says about 26,000 truck drivers have been pulled off the road for failing English proficiency checks, and 30,000 commercial licenses were canceled as illegally issued. The Associated Press account also says immigrants account for about 20% of all truck drivers, while non-domiciled licenses represent about 5% of all commercial driver's licenses, or about 200,000 drivers.

New York Attorney General Letitia James said when the lawsuit was filed in April that the federal government was unfairly holding back money the state needs to repair roads and bridges. Gov. Kathy Hochul in the spring called the federal cuts "devastating" and characterized them as "political payback." Immigrant groups have said many truck drivers are being unfairly targeted in the wider crackdown. The DOT had no immediate comment Friday, The Trucker reported.

Why it matters to truckers

The ruling is about money owed to a state, but the underlying question is who should answer for a commercial license handed out under older rules: the state that issued it, or the truck driver who holds it. Other states have been changing their non-domiciled license programs as well, including California, where a pending court fight could affect whether that program resumes.

Quick facts

• Amount withheld: nearly $74 million in highway money.
• Licenses at issue in New York: nearly 33,000.
• Court: a three-judge panel of the 2nd U.S. Circuit Court of Appeals in Manhattan.
• The panel's finding: the agency acted in a way that was "arbitrary, capricious, or contrary to law."
• Nationwide, per DOT: about 26,000 truck drivers pulled off the road for failing English proficiency, and 30,000 licenses canceled as illegally issued.

FAQ

Why did the court side with New York?

The judges said the rules that would require a state to cancel a commercial license when a truck driver loses legal status were not in place at the time, so the state cannot be faulted for failing to cancel those licenses then.

Does the ruling change licenses already issued?

The decision addresses whether the federal government was right to withhold highway money. It does not, by itself, say what happens to each of the nearly 33,000 licenses at issue.

A question for readers

Truckers, who should answer for a commercial license handed out under the old rules: the state that issued it, or the driver who holds it?

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