The U.S. Department of Transportation withheld $73,502,543 in federal highway funding from New York last Thursday after the state refused to revoke illegally issued commercial driver's licenses and learner's permits to non-domiciled foreign drivers.

Transportation Secretary Sean Duffy announced the action on April 16, citing an audit by the Federal Motor Carrier Safety Administration that revealed systemic failures in New York's commercial driver licensing program. The withheld funds come from the National Highway Performance Program and Surface Transportation Block Grant allocations, representing about 4% of the state's federal highway funding.

The FMCSA audit sampled 200 records and found a 53% noncompliance rate, with 107 issued in violation of federal law. New York's Department of Motor Vehicles automatically defaulted to eight-year expiration dates for non-REAL ID commercial licenses, even when drivers' legal status had expired. The state has approximately 32,600 active non-domiciled commercial driver's licenses, many extending years beyond work authorizations.

"I promised the American people I would hold any state leader accountable for failing to keep them safe from unvetted, unqualified foreign drivers," Duffy said. "I’m delivering on that promise today by refusing to fund Governor Hochul’s dangerous, anti-American policies."

Federal officials demanded that New York immediately rescind all noncompliant licenses, but the state refused. The Trump administration had tightened non-domiciled licensing rules earlier this year, prompting New York to halt new issuances in February.

Governor Kathy Hochul's office called the move a "baseless attempt to attack blue states," insisting New York follows federal rules for issuing commercial licenses. A DMV spokesman echoed that position, denying systemic issues despite audit findings.

The funding supports road and bridge repairs across the state. Continued noncompliance could lead to further withholdings or decertification of New York's entire commercial licensing program, disrupting trucking operations in the vital Northeast freight corridor.

This marks the latest federal action against states over driver licensing. California previously lost $200 million for similar violations.