Second Circuit rules Trump administration cannot withhold New York highway funds
Where it stands
The Second Circuit granted New York's petition for review and set aside FMCSA's April 16 final determination. The court held that the determination was arbitrary and capricious because the agency's expiration-date matching demand departed from the regulatory text and failed fair-notice review. No rehearing petition or stay of the judgment was identified by 5:01 p.m. EST.
Sources reviewed: Nov 13, 2026 · 5:01 PM EST
The U.S. Court of Appeals for the Second Circuit ruled November 13 that the Trump administration could not impose the challenged highway-fund penalty on New York. The complete opinion grants New York's petition for review and sets aside FMCSA's April final determination, which withheld $73,502,543, or 4% of the state's fiscal 2027 federal-aid highway apportionment.
The panel held that the rules then in force did not require every non-domiciled commercial driver's license to expire on the same date as the holder's federal work authorization and that the agency failed fair-notice and reasoned-decisionmaking requirements. Judge Alison Nathan wrote for the court; Judge Sarah Merriam joined, and Judge Matthew Schwartz concurred in the judgment.
The court did not invalidate FMCSA's later rulemaking or determine that every challenged license was valid.
The response.
USDOT's April final determination said an audit found New York substantially out of compliance with federal licensing standards, that 107 of 200 sampled records were issued contrary to federal requirements, and that the state refused corrective action. The determination imposed the 4% fiscal 2027 withholding and warned that a continued finding could trigger an 8% withholding of about $147,005,086 in a later year; the opinion does not say the larger sum had already been withheld. New York argued that the agency abruptly changed its interpretation, exceeded its authority and put transportation projects and industries dependent on commercial drivers at risk. Reuters initially reported no immediate federal response. AP updated its report at 3:48 p.m. EST with a Transportation Department response saying commercial licenses should not remain valid for years beyond a person's legal presence and that the department acted to protect driving safety. That is the agency's response to the ruling, not a change to the court's disposition. No separate same-day DOT release, announced rehearing petition, new stay or verified funding transfer was located by 5:01 p.m. EST.
Dates & scope
Source publication: Nov 13, 2026 · 1:03 PM EST
Event or conduct: 2026-11-13.
Full chronology and review notes
The Transportation Department issued its final noncompliance determination April 16, 2026. New York petitioned the Second Circuit for review April 24. The court heard the case September 28 and ruled November 13. Reuters published at 11:20 a.m. EST. AP published at 2:35 p.m. and updated its report at 3:48 p.m. with the department's response. The Ledger's initial review was at 1:03 p.m., the complete opinion was reviewed at 3:05 p.m., and the updated AP report was reviewed at 5:01 p.m. The agency action, petition, argument, ruling, news publication, reporting update and Ledger source reviews occurred on different dates and times.
This is a dated report. The source-review time records when the linked sources were checked; it is not a live update.
Coverage is non-exhaustive. Our source-review standards →
Open the original record.
- U.S. Court of Appeals for the Second Circuit: State of New York v. U.S. Department of Transportation, complete opinion ↗
Primary November 13 opinion granting the petition for review and setting aside FMCSA's final determination. It supplies the exact disposition, the fiscal 2027 withholding, the warned possible later penalty, the regulatory and fair-notice analysis and Judge Schwartz's separate concurrence in the judgment.
- Reuters: Appeals court rules against Trump administration on New York highway funds ↗
Published November 13 at 11:20 a.m. EST; reports the ruling, the stated fair-notice and regulatory-text grounds, the $73.5 million amount and the absence of immediate responses from Duffy and Hochul. The complete opinion became accessible later and is now the primary source for the disposition.
- Associated Press via WHAS11: Federal appeals court sides with New York state over truck drivers' licenses for immigrants ↗
AP report published November 13 at 2:35 p.m. EST and updated at 3:48 p.m. with the Transportation Department's response. The direct AP page was inaccessible in this review environment, so the updated AP syndication was relied upon for that response.
- Federal Motor Carrier Safety Administration: New York Final Determination of Substantial Noncompliance ↗
Primary April 16 agency determination stating USDOT's audit findings, legal position, corrective demands, $73.5 million withholding and possible additional annual penalty. The Second Circuit's November 13 ruling supersedes this determination's legal effect as described by Reuters.
- U.S. Court of Appeals for the Second Circuit via Just Security: State of New York v. U.S. Department of Transportation, petition for review ↗
Primary April 24 petition identifying the challenged final determination, the funding at issue and New York's requested relief. It records allegations and requested relief, not the November 13 holding.
- New York Attorney General: Attorney General James and Governor Hochul Sue to Restore $73 Million in Federal Highway Funds for New York ↗
Primary April 24 statement presenting New York's position on the agency action, industry effects and requested restoration. Its legal characterizations were advocacy at filing, not the court's reasoning.
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