Highway Funds Frozen As New York Sues Trump Administration

NEW YORK, NY— New York officials filed a federal lawsuit seeking to recover more than $73 million in highway funding withheld by the U.S. Department of Transportation, escalating a dispute over commercial driver licenses issued to noncitizens.

Gov. Kathy Hochul and Attorney General Letitia James argue the state followed both state and federal law in issuing the licenses and accuse federal officials of improperly tying transportation funding to policy disagreements.

The withheld money represents about 4 percent of New York’s allocation under the National Highway Performance Program and supports road maintenance, safety improvements and infrastructure projects statewide, according to the state.

In a joint statement, Hochul and James said revoking the licenses would disrupt key industries and could lead to bus driver shortages.

Federal officials cite a different conclusion. The Federal Motor Carrier Safety Administration reported in a December audit that more than half of reviewed licenses had been issued in violation of federal requirements.

U.S. Transportation Secretary Sean P. Duffy said the funding decision holds the state accountable for failing to protect residents from “unvetted, unqualified foreign drivers,” including by issuing eight-year licenses without aligning them to immigration status timelines.

Following earlier federal warnings, the Hochul administration stopped issuing certain commercial driver licenses to immigrants, a move that drew criticism from transit unions concerned about workforce shortages.

Federal officials say New York remains out of compliance and have warned they could withhold an additional $147 million in highway funding annually if the state does not meet federal standards.

State officials said they will seek to expedite the case to prevent disruptions to ongoing and planned infrastructure work.

The lawsuit marks the latest clash between New York and the Trump administration over transportation policy.

Federal courts have previously blocked efforts to halt New York City’s congestion pricing program and ordered the restoration of funding for major projects, including the Second Avenue subway and the Gateway Hudson Tunnel.