A federal judge in Manhattan ruled Tuesday that the Trump administration's attempt to terminate New York City's congestion pricing program was unlawful, preserving the tolling system that charges drivers to enter much of Manhattan.

U.S. District Judge Lewis J. Liman issued a 149-page decision finding that U.S. Transportation Secretary Sean Duffy lacked the authority to unilaterally rescind the program's federal approval, originally granted under the Biden administration in 2024. Liman described the administration's February 19, 2025, letter demanding cancellation as a "definitive repudiation of contractual obligations" and the move as arbitrary and capricious for lacking sufficient explanation.

The congestion pricing program, known as the Central Business District Tolling Program, took effect on January 5, 2025. It imposes a $9 fee on most passenger vehicles entering Manhattan south of 60th Street during peak hours, with trucks charged up to $21.60 and overnight rates reduced to $2.25 for most vehicles. The tolls fund Metropolitan Transportation Authority improvements and has generated between $518 million and $550 million in its first 11 months, exceeding projections. The MTA reports a 11% drop in traffic, 27 million fewer vehicles, 22% less air pollution, and faster commutes.

The Trump administration, after taking office in January 2025, opposed the program, arguing it harmed working-class Americans, small businesses, and the regional economy without providing evidence. Secretary Duffy threatened to withhold federal funding for New York highway and transit projects unless the tolls ended. President Trump, whose properties, including Trump Tower, fall within the zone, campaigned on killing the plan.

Liman had previously granted a temporary restraining order on May 27, 2025, allowing cameras to remain active and blocking funding threats. He emphasized that New York's legislature had approved the program, the governor signed it into law, and the democratic process had worked.

New York Governor Kathy Hochul hailed the decision, stating, “Donald Trump’s unlawful attempts to trample on the self-governance of his home state have failed spectacularly. Congestion pricing is legal, it works, and it is here to stay.” MTA CEO Janno Lieber added, “Traffic is down, business is up, and we’re making crucial investments in a transit system that moves millions of people a day. New York is winning.” The U.S. Department of Transportation did not immediately comment.

While this ruling ends the primary federal challenge, the program faces other lawsuits from opponents, including New Jersey officials, trucking groups, and suburban leaders. Liman has dismissed some prior challenges but left room for future efforts to challenge the tolls.