Appeals court: Trump's DOT wrongly pulled $73.5 million from New York over immigrant truckers' licenses
New York refused to cancel nearly 33,000 commercial licenses. The court said the rule DOT enforced wasn't on the books.
A federal appeals court ruled Friday that President Trump's Transportation Department wrongly withheld about $73.5 million in highway money from New York after the state refused to cancel nearly 33,000 commercial driver's licenses held by immigrants, the Associated Press reported.
A three-judge panel of the 2nd U.S. Circuit Court of Appeals found that the Federal Motor Carrier Safety Administration (FMCSA) acted in a way that was "arbitrary, capricious, or contrary to law," according to the AP. Reuters reported the court said the department's decision "runs afoul of fair notice principles, departs from the regulatory text, and underestimates the complexity of its supposedly 'common sense' requirement." The case is State of New York v. U.S. Department of Transportation, No. 26-1097.
What the fight was about
In April, the FMCSA claimed New York's DMV broke federal rules by issuing commercial licenses to "nondomiciled" drivers (immigrants here on work permits or other temporary status) that stayed valid past the dates on their immigration papers, according to New York's petition. It moved to hold back about $73.5 million and threatened about $147 million more each year unless New York canceled thousands of licenses.
The court said New York can't be blamed for failing to cancel licenses when drivers lost legal status, because no rule requiring that was in place at the time, the AP reported. In plain terms: an agency can't punish a state for breaking a rule it never clearly wrote.
New York warned that revoking the licenses "would disrupt key industries that rely on commercial drivers and could lead to bus driver shortages affecting schools and families," Reuters reported. Gov. Kathy Hochul called the cuts "political payback" in the spring, according to the AP.
The department's response
The department said Friday that licenses shouldn't outlast a foreign driver's legal stay. "We've put a stop to the madness to keep the driving public safe," its statement said, per the AP. The court found New York followed the rules as they were written.
Immigrants make up about 20% of U.S. truck drivers, and nondomiciled licenses cover roughly 200,000 drivers, the AP reported. Reuters noted courts have also stopped the department from cutting off the Hudson Tunnel project, ending New York City's congestion pricing and freezing Chicago rail money.
It isn't yet known whether the department will appeal. It has since tightened its rules, so the ruling covers the penalty under the old ones.
Sources
- Appeals court says US wrongly withheld highway funds to NY over immigrant licenses, Associated Press (via KIRO 7)
- Appeals court rules against Trump administration on New York highway funds, Reuters (via Investing.com)
- Petition for Review, State of New York v. U.S. Department of Transportation, No. 26-1097 (2d Cir., filed April 24, 2026), New York Attorney General
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