New York State has come out on top in a legal battle with the Department of Transportation over how long a non-domiciled CDL can stay in effect.
In a unanimous decision issued Friday by the U.S. Court of Appeals for the Second Circuit, a three-judge panel agreed with New York’s argument that denial of a portion of the state’s federal transportation funds over the issue of non-domiciled CDL eligibility was “arbitrary and capricious.”
The federal DOT in April said it was denying New York State approximately 4% of its normal funding after it objected to New York’s policies on non-domiciled CDLs.
Specifically, the federal government including the Federal Motor Carrier Safety Administration (FMCSA)–which was a defendant in the case brought by New York–said New York was granting non domiciled CDLs to non-citizens whose authorization to stay in the U.S. expired before the amount of time on the license, which could be as much as eight years.
New York’s counter argument was that there is nothing in federal law that requires a non-domiciled CDL to end prior to the expiration of a driver’s authorized stay in the U.S.
Lots of money at stake
The amount impacted by the DOT’s ruling: $73,502,543.
The panel was unambiguous in rejecting FMCSA’s argument that federal rules allowed denial of funds over the mismatch between expiration of a CDL and a person’s legal ability to stay in the country.
“As FMCSA itself concedes, the plain text of the federal regulations in place during the relevant period did not contain an expiration-matching requirement,” the judges wrote in their rejection of the federal government’s arguments. “The regulatory structure and history confirm that conclusion.”
To obtain a CDL, beyond the normal requirements of meeting the operational tests, non-domiciled CDL holders needed to present “lawful presence documentation instead of proof of citizenship or lawful permanent residency,” the judges said in summarizing the history of the dispute. The CDL could only have a term of “five years after initial issuance and eight years after renewal—the same as for domiciled licenses,” the court wrote.
That documentation could be an unexpired Employment Authorization Document (EAD) or a foreign passport along with an approved I-94 form. The I-94 is given to foreign visitors when they arrive legally in the U.S.
More than 30k potentially affected
The size of the universe in question is not small, according to the judges’ summary: about 32,600 non-domiciled CDLs or Commercial Learning Permit holders in New York, which it said was about 7% of the licenses in the state.
(New York is not the only state where this battle is ongoing. There is a similar suit before the U.S. Court of Appeals for the District of Columbia between the federal government and California).
After a review of the state’s practices in 2025, FMCSA found that “New York was substantially noncompliant with federal regulations,” the court said in its summary. Its objections were the CDLs that ran past a license holder’s expiration date for being in the U.S.
New York said that “requirement” wasn’t in the law and that it couldn’t be in violation of a rule that didn’t exist.
But as the court said in its summary, “FMCSA stated that the expiration matching requirement was ‘not a new requirement,’ and that its ‘focus on other aspects of a State’s CDL program in previous years’ did not preclude it from enforcing the requirement now.”
In backing New York, the court said FMCSA had “conceded in its final determination, throughout its appellate briefing and at oral argument that the plain text of the regulation does not contain a matching requirement.”
The ‘common sense’ defense
But the agency also argued against a “literal” reading of the regulation, the court said. FMCSA argued that its interpretation of the regulations was “common sense,” the court wrote.
“FMCSA’s concession that a ‘literal’ reading of the ‘clear’ words of its own regulations supports New York’s understanding should be the end of the matter,” the court wrote.
But asking New York to “infer” that what FMCSA’s actions were the intent of the law “is unsupported by the regulatory text,” according to the court.
“All in all, the regulatory history reflects that, before September 2025, states were not required to tailor non-domiciled CDL validity periods to the expiration dates on lawful presence paperwork,” the court wrote in its summary. The court said the 2011 rule that FMCSA was enforcing doesn’t contain such a matching requirement, and noted that FMCSA had decided “not to enforce an expiration-matching requirement until now.”
“FMCSA has not pointed to a single instance before the final determination in this case when it found a state noncompliant for failing to adhere to that requirement,” the judges wrote.
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