Second Circuit Voids FMCSA Funding Cut Against New York
The Second Circuit granted New York's petition for review and set aside a final FMCSA determination that the state had failed to comply substantially with federal commercial driver's license rules. FMCSA had found New York noncompliant because it issued non-domiciled CDLs with the same five-year and eight-year validity periods as domiciled licenses, instead of matching expiration to the dates on drivers' immigration paperwork. The agency withheld four percent of New York's federal-aid highway funds for fiscal year 2027, about $73.5 million, and threatened up to eight percent in later years.
The court held the regulations in place before September 2025 contained no expiration-matching requirement. FMCSA itself conceded at every stage that the plain text did not support its reading, the opinion said, and regulatory history showed the agency had considered and rejected such a requirement in 2011. Judge Schwartz concurred only in the judgment, saying the majority should have stopped at the text instead of discussing regulatory history and a newer rule that explicitly requires expiration matching and is being challenged separately.
FMCSA's post-2025 rule, effective March 16, 2026, already imposes an expiration-matching requirement and is not affected by this ruling.
What's next
- Watch the separate D.C. Circuit litigation over FMCSA's February 2026 final rule (91 Fed. Reg. 7044), which already requires expiration matching.
- No indication yet whether FMCSA will seek rehearing or Supreme Court review of this decision.
All sources
- Opinion: State of New York v. U.S. Department of Transportation — CourtListener (Court of Appeals for the Second Circuit), 2026-11-13
