New York State sues federal transportation regulators over loss of $73.5 million in grants
New York State has formally sued the U.S. Department of Transportation (DOT) and the Federal Motor Carrier Safety Administration (FMCSA) over the withholding of $73.5 million in federal highway grants. The dispute centers on whether the state's issuance of commercial driver's licenses (CDLs) to non-residents, including non-citizens, complies with federal standards. The state government insists its practices are compliant and alleges that federal pressure to revoke the relevant licenses is unlawful.
Key Takeaways
- New York State has filed a lawsuit over the loss of $73.5 million in federal grant funding, naming the federal government and the head of the Department of Transportation as defendants. The core of the dispute is whether the state properly issued commercial driver's licenses (CDLs) and learner's permits to non-residents.
- The state government says the U.S. Department of Transportation has pressured it for months to revoke some CDLs held by non-citizen drivers, while the state maintains that the licenses it issued meet federal standards, including requirements for lawful immigration status.
- "New York State has always followed federal rules when issuing CDLs, and even the previous Trump administration confirmed this year after year," New York Governor Kathy Hochul said in a press release. "Taking away funding used for critical safety upgrades on our roads is both reckless and unlawful."
In-Depth Analysis
Similar to New York State, California is also challenging the threatened loss of $158.3 million in federal funding. California has been cited for noncompliance in issuing certain non-resident CDLs, and related litigation is already underway in Alameda County Superior Court.
The threat of funding revocation originally stems from the Federal Motor Carrier Safety Administration's (FMCSA) annual review findings. The agency noted that several states, including New York, set validity periods for CDLs that extended beyond the expiration dates of the underlying immigration documents.
As planned, if the disputes remain unresolved, the loss of federal funding for these states will take effect in fiscal year 2027, which begins in October 2026. New York State emphasized in its statement that the funds support road maintenance, safety improvements, and infrastructure upgrades. New York has now filed suit in the U.S. Court of Appeals for the Second Circuit in New York, naming the U.S. Department of Transportation, FMCSA, Transportation Secretary Sean Duffy, and FMCSA Administrator Derek Barrs as defendants.
Meanwhile, non-resident commercial driver groups in California and Florida have also filed lawsuits in state and federal courts, respectively, over interruptions to their driving privileges. In these lawsuits, the drivers say their livelihoods have been directly affected as states adjusted policies to align with federal standards.
The federal government previously stated that thousands of non-resident drivers in New York State may have noncompliant driving credentials and called on the state to revoke those licenses and permits. The final determination document was issued by the Department of Transportation on April 16, 2026, and Transportation Secretary Duffy also publicly announced the decision to withhold $73.5 million in funding from New York.