DOJ Ends Appeal in Lawsuit Over Transportation Money Cut to Sanctuary States

At stake are tens of billions of dollars the states receive from the U.S. Department of Transportation to build and maintain infrastructure.

Traffic in Sacramento, Calif., on Nov. 2, 2025. John Fredricks/The Epoch Times

The U.S. Department of Justice (DOJ) has dropped its appeal of a court decision barring the federal government from cutting off transportation-related funding to so-called sanctuary states—where law enforcement agencies are restricted from cooperating with federal immigration authorities.

The DOJ filed its motion to dismiss the appeal on Jan. 13, before the U.S. Court of Appeals for the First Circuit issued a ruling. The move concludes a legal battle brought by California and 21 other states over whether the Trump administration may tie federal funds used to build and maintain roads, bridges, and highways to state immigration policies.

At stake are tens of billions of taxpayer dollars that the states receive from the U.S. Department of Transportation (DOT). According to the complaint, based on the actual amounts received in fiscal years 2022 and 2023 and projected awards for fiscal years 2024 through 2026, the suing states expect to receive about $24.3 billion on average each year in highway formula funds alone.

California Attorney General Rob Bonta, who leads the multi-state lawsuit challenging DOT’s funding conditions, celebrated the outcome.

“California is not playing games when it comes to vital transportation dollars that support our public infrastructure, and we will continue taking the President to court each time he weaponizes federal funding to bully our communities,” he said in a statement.

The court fight began in May 2025 after Transportation Secretary Sean Duffy set out his department’s expectations for cooperation with immigration authorities in an April letter.

In that letter, Duffy wrote that as recipients of DOT funds, state governments have entered into legally enforceable agreements with the federal government and are obligated to “comply fully with all applicable federal laws and regulations,” including federal immigration laws.

He warned that failing to do so—including by declining to cooperate with U.S. Immigration and Customs Enforcement (ICE) or by taking steps to shield illegal immigrants from ICE detection—could result in the loss of DOT funding.

Such failures, he said, could “compromise the safety and security of the transportation systems” and amount to prioritizing illegal immigrants over the taxpayers who fund those systems.

In November 2025, Chief Judge John McConnell of the U.S. District Court for the District of Rhode Island sided with the states, ruling that Duffy had “blatantly overstepped” his authority by attempting to condition transportation funding on immigration cooperation. McConnell has ruled for states in other challenges to the Trump administration’s funding decisions, including ordering the U.S. Department of Agriculture to fully fund the Supplemental Nutrition Assistance Program during a government shutdown.

The DOT did not respond to a request for comment.

In a separate action, Duffy announced on Jan. 7 that his department had canceled $160 million in highway funding for California after the state missed a deadline to cancel 17,000 commercial driver’s licenses issued to people who had fallen out of lawful immigration status. He previously withheld $40 million from the state after it refused to enforce new English-language requirements for truck drivers.

On Jan. 8, Duffy threatened similar action against North Carolina, saying that more than half of the commercial driver’s licenses reviewed by DOT auditors in that state were issued to individuals who lacked proof of lawful presence in the United States or were otherwise ineligible.

“I’m calling on state leadership to immediately remove these dangerous drivers from our roads and clean up their system,” he said.

The DOT actions build on President Donald Trump’s directive to take measures against sanctuary jurisdictions, including by shutting off certain streams of federal funding to those areas.

Trump reiterated that stance on Jan. 14, warning that cities that do not comply with federal immigration law could lose federal dollars.

“Effective February first, no more payments will be made by the federal government to states for their corrupt criminal protection centers known as sanctuary cities,” he wrote on Truth Social. “All they do is breed crime and violence! If states want them, they will have to pay for them!”