Appeals court sets aside FMCSA move to withhold $73.5M from New York over non-domiciled CDLs
Regulation · Nov 13 · By Truker
The 2nd U.S. Circuit Court of Appeals on Nov. 13 granted New York's petition and set aside FMCSA's final determination that withheld four percent of the state's federal-aid highway funding over how long its non-domiciled CDLs stayed valid.
The points
- 1The 2nd U.S. Circuit Court of Appeals decided State of New York v. U.S. DOT (No. 26-1097) on Nov. 13, 2026, granting New York's petition and setting aside FMCSA's final determination.
- 2FMCSA's April 2026 final determination found New York substantially noncompliant for not matching non-domiciled CDL expiration dates to drivers' lawful-presence paperwork, and withheld four percent of the state's federal-aid highway funds for fiscal year 2027.
- 3The court says the initial withholding amounted to $73,502,543, and that FMCSA had warned later withholdings could reach $147,005,086 if New York persisted.
- 4The court found the determination arbitrary, capricious, or contrary to law, writing that "as FMCSA itself concedes, the plain text of the federal regulations in place during the relevant period did not contain an expiration-matching requirement."
- 5The court notes FMCSA "was free to—and later did—" go through rulemaking on non-domiciled CDLs; its February 2026 final rule took effect March 16, 2026.
- 6The opinion says New York had about 32,600 non-domiciled CDL and CLP holders as of July 2025, about seven percent of the state's active CDL and CLP issuances.
Why it matters
The case was about the funding penalty tied to New York's past licensing practice under the old rules. The court did not rule on FMCSA's current non-domiciled CDL rule, which the opinion notes took effect March 16, 2026.
What we read
2nd U.S. Circuit Court of Appeals, State of New York v. U.S. DOT, No. 26-1097, decided Nov. 13, 2026: ww3.ca2.uscourts.gov