Second Circuit Voids $73.5 Million New York CDL Funding Penalty

The U.S. Court of Appeals for the Second Circuit set aside an FMCSA determination that would have withheld $73,502,543 in fiscal 2027 federal-aid highway funding from New York. TheTrucker.com reported the November 13 decision involving the state's former practice for non-domiciled commercial driver's licenses. The penalty equaled 4% of affected highway and transportation funding, according to the court's opinion.

FMCSA had concluded that New York failed to comply substantially because some non-domiciled CDLs lasted beyond the expiration dates shown on drivers' lawful-presence documents. The three-judge panel held that the federal regulations governing the relevant period did not contain an expiration-matching requirement. The court therefore found the agency's final determination arbitrary, capricious or contrary to law and granted New York's petition for review.

The decision is narrow. It addresses the rules that were in force when New York issued the licenses and the legal basis for this specific funding action. It does not declare that every non-domiciled CDL is valid, excuse false documentation or prevent FMCSA from enforcing requirements adopted through later rulemaking. The opinion expressly noted that the agency was free to create new requirements through the rulemaking process; it could not penalize the state for violating a requirement that did not yet exist.

Drivers and carriers should not treat the ruling as a change to an individual license record. A driver must still hold a current CDL or CLP issued under applicable federal and state requirements, maintain lawful work authorization where required and satisfy medical, testing and endorsement obligations. New York applicants should verify their status directly with the state licensing agency. The ruling restores the challenged funding determination, but it does not automatically reinstate a canceled credential or override a separate disqualification.