New York sues US government over lost highway money linked to commercial licenses for immigrants

New York has filed a lawsuit against the federal Transportation Department to challenge the withholding of nearly $74 million in highway funding. The dispute centers on the state’s refusal to revoke approximately 33,000 commercial driver’s licenses (CDLs) issued to immigrants after a federal audit identified concerns last year.

The lawsuit, filed Friday, makes New York the second state after California to legally contest Transportation Secretary Sean Duffy’s efforts to enforce stricter rules regarding which immigrants can qualify for commercial driver’s licenses. Federal officials declined to comment on the new legal action but have previously cited significant problems with many of the licenses they reviewed.

During their audit, federal inspectors found that more than half of the 200 reviewed licenses contained major flaws. One critical issue was that New York’s computer system automatically issued licenses valid for eight years regardless of how long a driver’s visa remained valid, potentially allowing drivers to operate commercial vehicles after their legal authorization to be in the country had expired.

The controversy gained national attention following an August crash in Florida where a truck driver, who Secretary Duffy claimed should never have been licensed, performed an illegal U-turn resulting in three fatalities. This incident accelerated federal scrutiny of commercial licensing practices across the country.

The Department of Transportation has expanded its review to multiple states, with California already losing $200 million over concerns about its non-domiciled CDL program and questions about enforcement of English language requirements. Pennsylvania, Minnesota, and North Carolina have also received warnings about potential funding losses.

New York Attorney General Letitia James maintains that the state properly followed all regulations for commercial licenses that were in place when they were issued. State officials conducted their own review of the questioned licenses and claim all recipients were legally authorized to be in the country when licenses were granted.

“By canceling this funding, the federal government is putting jobs and communities at risk. New Yorkers are counting on these investments, and we will not let the president jeopardize our communities’ safety,” James stated.

Governor Kathy Hochul echoed this sentiment, noting that audits performed during the first Trump administration had confirmed the state’s compliance with federal regulations. She characterized the funding withholding as “political payback,” saying, “Ripping away money that goes toward critical safety upgrades on our roads is reckless and it is illegal.”

The dispute is part of a broader federal initiative to enhance safety standards in the trucking industry. Secretary Duffy has led efforts to shut down questionable trucking schools and penalize companies that violate regulations only to resume operations under new names. The administration has also begun enforcing existing rules requiring truck drivers to speak English proficiently—a requirement officials say is crucial during traffic stops or accidents, particularly when hazardous materials might be involved.

Trucking industry associations have generally supported these enforcement actions, arguing that unqualified drivers operating 80,000-pound vehicles pose significant public safety risks. Industry groups have long advocated for greater accountability and stronger standards for establishing trucking companies, noting that historically, virtually anyone with a few hundred dollars and proof of insurance could enter the business.

However, immigrant advocacy groups point out that while immigrants make up approximately 20% of all truck drivers, these contested non-domiciled licenses represent only about 5% of all CDLs—roughly 200,000 drivers nationwide. Some organizations have filed lawsuits claiming drivers are being unfairly targeted, with particular concern about Sikh truckers following their involvement in recent high-profile accidents.

Last fall, the Transportation Department attempted to implement emergency restrictions severely limiting which non-citizens could obtain commercial licenses, but a court halted implementation because the rules hadn’t undergone proper regulatory review. In February, Duffy announced new, properly vetted final rules that restrict commercial licenses to holders of specific visa types: H-2a (temporary agricultural workers), H-2b (temporary non-agricultural workers), or E-2 (substantial business investors).

As the legal challenge proceeds, the outcome will have significant implications for both state transportation funding and the approximately 33,000 commercial drivers whose licenses are now at the center of this federal-state dispute.