Appeals court says administration wrongly withheld $74 million in New York road funds

A federal appeals court ruled Friday that the U.S. Transportation Department wrongly decided to withhold nearly $74 million in highway money from New York state. The money was held back after New York refused to revoke nearly 33,000 commercial driver's licenses issued to immigrants, which an audit last year had called questionable ¹.

A three-judge panel of the 2nd U.S. Circuit Court of Appeals in Manhattan said in a written decision that the Federal Motor Carrier Safety Administration acted in a manner that was "arbitrary, capricious, or contrary to law." That agency is part of the Transportation Department ¹.

Why the court sided with New York

The court said the state can't be blamed for failing to cancel licenses when a commercial driver lost legal status to stay in the country. The rules that would require a cancellation were not in place at the time, the panel found ¹.

The licenses cover commercial vehicles such as trucks, trailers, limousines and buses ¹. New York's attorney general, Democrat Letitia James, sued in April. She said the federal government was unfairly holding back money the state needs to repair roads and bridges ¹².

From Channel GOPLetitia James declares victory in New YorkLetitia James · 256 plays · captioned, with the source named

The administration cannot promise funding to our state and then abruptly yank it away

Gov. Kathy Hochul, also a Democrat, called the federal cuts devastating this spring and described them as political payback ¹. She also said that New York has always followed federal rules when issuing commercial driver's licenses ².

What the administration says

The Transportation Department said in a statement Friday that it makes no sense for states to let trucking licenses for foreign drivers run years beyond the time the drivers are legally in the U.S. The statement said: "We've put a stop to the madness to keep the driving public safe" ¹.

Officials said they acted against states like New York after learning that some licenses stayed valid long after an immigrant was no longer authorized to be in the country. They said New York issued licenses valid for eight years regardless of how long a driver's visa lasted ¹.

My message to New York's far left leadership is clear: families must be prioritized on American roads.

The department says audits in every state found many licenses that stayed valid long after work permits expired, or that were issued without proper checks of citizenship status. It says about 30,000 commercial licenses were canceled because they were issued illegally. About 26,000 drivers were pulled off the road for failing to show English proficiency ¹.

Immigrant groups have said they believe many drivers are being unfairly targeted ¹.

What happens next

The Associated Press said a message seeking comment from the New York attorney general's office was not immediately returned ¹. The Transportation Department's statement did not say whether it will appeal. New York's lawsuit also warned that the state could lose $147 million in federal highway funds each year in future years if the penalty stood ².

That matters because the ruling puts a legal limit on the administration's use of federal money as leverage over states. The court did not say that states can ignore safety concerns about commercial licenses. It said the agency penalized New York under rules that were not in place when the licenses were issued ¹.

The pattern is that the administration has used funding threats to press states on immigration-related issues. This decision shows that courts will check whether the agency followed the law before it takes the money ¹.

The Record

1. Apr 24, 2026New York Attorney General Letitia James filed a petition in the 2nd Circuit challenging the withholding of $73 million in highway funds ².
2. Nov 13, 2026A 2nd Circuit panel ruled the Transportation Department acted arbitrarily and contrary to law in withholding nearly $74 million from New York ¹.

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<h2>Appeals court says administration wrongly withheld $74 million in New York road funds</h2> <p><em>By The GOP Files Courts Desk. This article first appeared on <a href="https://thegopfiles.com/story/appeals-court-says-administration-wrongly-withheld-74-million-in-new-york-road-funds">The GOP Files</a> on Friday, November 13, 2026.</em></p> <p>A federal appeals court ruled Friday that the U.S. Transportation Department wrongly decided to withhold nearly $74 million in highway money from New York state. The money was held back after New York refused to revoke nearly 33,000 commercial driver&#39;s licenses issued to immigrants, which an audit last year had called questionable .</p> <p>A three-judge panel of the 2nd U.S. Circuit Court of Appeals in Manhattan said in a written decision that the Federal Motor Carrier Safety Administration acted in a manner that was &quot;arbitrary, capricious, or contrary to law.&quot; That agency is part of the Transportation Department .</p> <h2>Why the court sided with New York</h2> <p>The court said the state can&#39;t be blamed for failing to cancel licenses when a commercial driver lost legal status to stay in the country. The rules that would require a cancellation were not in place at the time, the panel found .</p> <p>The licenses cover commercial vehicles such as trucks, trailers, limousines and buses . New York&#39;s attorney general, Democrat Letitia James, sued in April. She said the federal government was unfairly holding back money the state needs to repair roads and bridges .</p> <blockquote><p>The administration cannot promise funding to our state and then abruptly yank it away</p><p>&mdash; Letitia James, New York attorney general, Democrat</p></blockquote> <p>Gov. Kathy Hochul, also a Democrat, called the federal cuts devastating this spring and described them as political payback . She also said that New York has always followed federal rules when issuing commercial driver&#39;s licenses .</p> <h2>What the administration says</h2> <p>The Transportation Department said in a statement Friday that it makes no sense for states to let trucking licenses for foreign drivers run years beyond the time the drivers are legally in the U.S. The statement said: &quot;We&#39;ve put a stop to the madness to keep the driving public safe&quot; .</p> <p>Officials said they acted against states like New York after learning that some licenses stayed valid long after an immigrant was no longer authorized to be in the country. They said New York issued licenses valid for eight years regardless of how long a driver&#39;s visa lasted .</p> <blockquote><p>My message to New York&#39;s far left leadership is clear: families must be prioritized on American roads.</p><p>&mdash; Sean Duffy, U.S. Transportation Secretary, Republican</p></blockquote> <p>The department says audits in every state found many licenses that stayed valid long after work permits expired, or that were issued without proper checks of citizenship status. It says about 30,000 commercial licenses were canceled because they were issued illegally. About 26,000 drivers were pulled off the road for failing to show English proficiency .</p> <p>Immigrant groups have said they believe many drivers are being unfairly targeted .</p> <h2>What happens next</h2> <p>The Associated Press said a message seeking comment from the New York attorney general&#39;s office was not immediately returned . The Transportation Department&#39;s statement did not say whether it will appeal. New York&#39;s lawsuit also warned that the state could lose $147 million in federal highway funds each year in future years if the penalty stood .</p> <p>That matters because the ruling puts a legal limit on the administration&#39;s use of federal money as leverage over states. The court did not say that states can ignore safety concerns about commercial licenses. It said the agency penalized New York under rules that were not in place when the licenses were issued .</p> <p>The pattern is that the administration has used funding threats to press states on immigration-related issues. This decision shows that courts will check whether the agency followed the law before it takes the money .</p> <p><em>Read the original, with every source linked, at <a href="https://thegopfiles.com/story/appeals-court-says-administration-wrongly-withheld-74-million-in-new-york-road-funds">thegopfiles.com</a>. Republished under The GOP Files' <a href="https://thegopfiles.com/republish">free republishing terms</a>.</em></p> <img src="https://thegopfiles.com/api/rp/appeals-court-says-administration-wrongly-withheld-74-million-in-new-york-road-funds.gif" alt="" width="1" height="1" style="border:0;width:1px;height:1px">

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Sources

1. AP via PBS NewsHour, “U.S. wrongly withheld New York highway funds over immigrant licenses, appeals court rules” (2026-11-13). pbs.org/newshour/politics/u-s-wrongly-withheld-new-york-high
2. amNY, “NY sues Trump administration over pulled highway funding” (2026-04-25). amny.com/news/ny-sues-trump-pull-highway-funding/

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