Federal Appeals Court Blocks Trump Admin’s Funding Penalty Over NY Immigrant Truckers

A federal appeals court dealt a significant legal setback to the Trump administration on November 13, ruling against the effort to withhold more than $73 million in federal highway funding from New York over the state’s issuance of commercial driver’s licenses (CDLs) to immigrants. The ruling blocks the Federal Motor Carrier Safety Administration’s (FMCSA) attempt to enforce a licensing requirement that did not exist under federal regulations at the time.

Background of the Funding Dispute

The Trump administration targeted New York for issuing nondomiciled commercial driver’s licenses to certain foreign nationals, including DACA recipients, asylees, and refugees, allowing these licenses to remain valid beyond the expiration of the drivers’ immigration documents. The FMCSA argued that licenses should expire concurrently with immigration documents and sought to withhold 4 percent, or $73,502,543, of New York’s federal highway funding for fiscal year 2027. This funding comes from the National Highway Performance Program and the Surface Transportation Block Grant Program, which support state road and bridge projects.

New York had been issuing nondomiciled CDLs valid for five years initially and eight years upon renewal, even when immigration documents expired sooner. The state required applicants to show lawful presence documentation when applying.

Court Ruling and Legal Reasoning

The three-judge panel of the 2nd U.S. Circuit Court of Appeals ruled on Friday that the FMCSA could not withhold federal funds based on a requirement that was not present in the federal regulations in effect at the time. The court noted that while immigrants must present valid immigration documents when applying for a CDL, the rules did not mandate that the license expire when those documents expired. Generally, commercial licenses could remain valid for up to eight years.

The FMCSA had argued the requirement was implied to prevent unauthorized individuals from driving commercial vehicles, but the court rejected that interpretation as inconsistent with the regulations. Circuit Judge Schwartz agreed with the outcome but said the decision should rest solely on the wording of the old regulations. The court did not rule on newer FMCSA regulations explicitly linking license validity to immigration documents, which are still being challenged separately.

Impacts on New York and Broader Enforcement

New York officials warned that withholding the funds could have delayed safety and infrastructure work across the state. The state had about 32,600 nondomiciled CDL holders and learners’ permits as of July 2025, representing roughly 7 percent of active commercial licenses and permits.

New York Attorney General Letitia James and Governor Kathy Hochul issued a joint statement calling the ruling “a win for the millions of New Yorkers who rely on safe roads to travel and for the CDL drivers who power our state’s economy.”

Since January 20, 2025, Immigration and Customs Enforcement (ICE) made 4,795 CDL-related arrests nationwide, including 1,233 involving CDL holders, with a three-day operation in late October resulting in over 230 immigrant arrests across 15 states, including more than 40 CDL holders.

Administration’s Efforts to Tighten Licensing

The Trump administration has intensified enforcement on immigrant truck drivers through stricter licensing and English-language requirements, combined with joint immigration and transportation enforcement. In May, federal officials identified 30 states issuing licenses that did not comply with federal rules, taking action against 26 states and prompting revocation of over 28,000 licenses.

FMCSA began reviewing New York’s licensing program in July 2025 and found in a sample of 200 nondomiciled licenses that 101 were valid beyond the expiration dates of immigration documents. The agency directed New York to pause issuing such licenses and to rescind noncompliant ones. After New York challenged this, FMCSA issued its final determination in April 2026.

The court’s ruling underscores limits on the federal government’s ability to withhold highway funding based on regulatory interpretations that were not clearly established. It marks another defeat for the Trump administration’s crackdown on immigrant truck drivers and supports New York’s licensing approach amid ongoing legal challenges to newer FMCSA rules.