A federal appeals court ruled on Friday that the Trump administration overstepped its authority in April when it withheld $73.5 million in highway funding from New York over the state’s refusal to revoke some commercial driver licences issued to foreign drivers.

The US Transportation Department (USDOT) withheld the funding, citing an audit that found New York had been routinely issuing commercial driver licences to foreign drivers illegally.

The 2nd US Circuit Court of Appeals said USDOT’s decision went beyond its legal authority and “runs afoul of fair notice principles, departs from the regulatory text, and underestimates the complexity of its supposedly ‘common sense’ requirement.”

Spokespeople for Transportation Secretary Sean Duffy and New York Governor Kathy Hochul did not immediately comment.

New York state sued after USDOT withheld the funding when the state refused federal demands to revoke certain commercial driver licences.

New York said previously the loss of funding would put New Yorkers at risk, while USDOT also threatened to withhold an additional $147 million a year. New York said revoking these licences “would disrupt key industries that rely on commercial drivers and could lead to bus driver shortages affecting schools and families.”

New York, California and others have repeatedly sued the Trump administration over withholding transportation funds and accused it of political motivations.

A court earlier this year required USDOT to continue making ​payments for the $16 billion Hudson Tunnel rail project connecting New York and New Jersey. Another court blocked the Transportation Department’s efforts to stop New York City’s congestion pricing programme.

In March, a judge ordered USDOT to unfreeze about $3 billion in funding for rail projects in Chicago after the department cancelled at least $9.5 million in ‌reimbursements since October from grants previously approved under former President Joe Biden.

The city had ⁠called the ⁠funding suspension an unlawful act of political retaliation.