DOT withholds $73.5M in highway funds from New York

The Department of Transportation (DOT) withheld $73.5 million in federal highway funds from New York on Thursday after the Federal Motor Carrier Safety Administration concluded the state failed to revoke nearly 33,000 commercial driver's licenses held by people whose immigration status had expired.

The FMCSA audited a sample of 200 CDL records and found more than half contained significant errors, including licenses that remained valid after the holder's legal presence in the United States lapsed. Federal officials say New York defaulted to issuing eight-year CDLs without regard to immigration status. The agency ordered a review of all non-domiciled CDLs last year and required revocations where licenses violated federal law. Because the state has not completed the review, the DOT executed the $73.5 million funding hold and warned an additional $147 million could be withheld. The department also said it could bar New York from issuing new CDLs until the flagged licenses are revoked.

Transportation Secretary Sean Duffy wrote in a DOT press release that he would hold state leaders accountable for failing to keep roads safe and added,

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

New York Governor Kathy Hochul's office rejected the federal action. Spokesman Sean Butler wrote that the state follows federally issued rules when issuing CDLs, that the DMV verifies lawful status using federally accepted documents for every applicant, and that audits during the first Trump administration confirmed the state's practices. Butler called the funding cut a baseless attack on blue states and said the state will challenge the action.

The dispute traces to a DOT finding in December 2025. Federal officials say a nationwide CDL review followed a fatal crash in Florida in August 2025 that killed three people. After similar federal pressure, California revoked about 17,000 licenses and is considered compliant, a contrast federal officials cited in escalating the action against New York.

Trucking industry groups backed the DOT enforcement, saying improperly issued commercial licenses present public safety risks. Courts have previously blocked several attempts by the administration to withhold or redirect federal funds tied to state programs. Federal officials have used funding threats in other disputes involving New York, including congestion pricing, subway funding and rail grants.

If New York challenges the funding hold, courts will likely confront questions about federal oversight of state-issued commercial licenses and the limits on withholding highway funds for regulatory compliance. Federal officials say full highway funding will be restored once New York completes a corrective action that revokes the flagged licenses; state officials maintain their procedures meet federal standards.