New York Sues to Recover $73.5 Million in Highway Funds Cut Over Immigrant Driver's Licenses

On April 24, 2026, New York Attorney General Letitia James and Governor Kathy Hochul sued the Trump administration to restore roughly $73.5 million in federal highway funding that the Department of Transportation moved to withhold. According to the state, the department conditioned the money on New York changing its treatment of commercial driver's licenses issued to noncitizens. James and Hochul announced the filing jointly and framed the withholding as an attempt to coerce a change in state licensing policy through the transportation funding stream.

The suit belongs to a recurring pattern in which federal grant money administered by one agency is conditioned on state cooperation with immigration policy set by another. Under Supreme Court precedent, Congress may attach conditions to federal funds, but conditions must generally be set by Congress, related to the purpose of the funds, and not so coercive as to compel state policy changes. Highway formula funds are the kind of large, non-discretionary stream where those limits are most sharply tested.

The suit was filed April 24, 2026 and was pending as of the end of the month.