The US Department of Transportation (USDOT) has rescinded its approval of New York City’s congestion pricing scheme, effectively halting plans to toll vehicles entering Manhattan’s central business district (CBD).
In a letter to New York governor Kathy Hochul, the US Federal Highway Administration (FHWA) terminated the pilot project’s participation under the ‘Value Pricing Pilot Program’, arguing that the initiative unfairly burdens working-class commuters and small businesses.
US transportation secretary Sean Duffy described the programme, which launched on January 5 following years of uncertainty and delay, as a financial strain on drivers who already contribute to highway infrastructure through fuel and other taxes.
He said the plan “is a slap in the face to working-class Americans and small business owners” and argued that it leaves drivers with no free highway alternative.
According to Duffy, the scheme unfairly takes money from working people to pay for a transit system rather than roads and highways.
He also claimed that congestion pricing would increase costs for businesses that rely on customers from New Jersey and Connecticut, adding that higher tolls for trucks could result in increased prices for consumers.
The letter outlined two key reasons for terminating the plan. First, the department argued that the programme provided no toll-free route for drivers, making it an outlier compared to other congestion pricing schemes worldwide.
Second, it stated that the tolls were primarily designed to fund transit rather than control congestion, which it claimed violated the intended purpose of the ‘Value Pricing Pilot Program’.
The US FHWA confirmed it would work with local authorities on an orderly termination of the project.
The Metropolitan Transportation Authority (MTA) and governor Hochul swiftly responded, accusing the federal government of political interference.
Speaking at a press conference, Hochul said New York’s decision-making should not be dictated by Washington and rejected what she saw as federal overreach.
She framed the move as an attack on the city’s sovereignty, saying, “New York hasn’t laboured under a king in over 250 years, and we sure as hell are not going to start now.”
She also criticised the justification that congestion pricing faced opposition from neighbouring states, stating that New Jersey’s objections should not override the will of New Yorkers and their elected leaders.
She said the decision was part of what she called Donald Trump’s “revenge tour against New York” and accused his administration of disregarding the needs of commuters who rely on public transit.
MTA chair and CEO Janno Lieber challenged the legality of the decision, arguing that US federal law does not allow the government to unilaterally terminate an approved congestion pricing programme once it has begun.
He revealed that the MTA had anticipated the move and had a 50-page lawsuit ready to file within minutes of receiving the termination letter.
He insisted that US federal law explicitly prevents Washington from overriding an active congestion pricing initiative without state cooperation, stating, “There are lots of ways it can get terminated, but they always have to include the agency that’s running the programme.
“The federal government cannot unilaterally terminate the programme.”
Lieber also rejected USDOT’s claim that the state had failed to properly study congestion impacts before setting toll rates.
He pointed out that the MTA had conducted a 4,000-page environmental review over four years, which specifically examined how different pricing models would impact congestion levels.
Responding to Duffy’s assertion that governor Hochul never conducted such a study, Lieber said, “Contrary to what you just heard, we actually analysed the relationship between specific tolling amounts and reductions in congestion.”
Lieber also rejected the claim that congestion pricing would damage the city’s economy, arguing that data from the first few weeks of the scheme showed it was already having positive effects.
He pointed to a 9% reduction in traffic during January, with 1.2 million fewer vehicles entering the CBD.
He said bus speeds had improved and congestion at major bottlenecks such as the Holland Tunnel, and on major cross streets, such as Canal Street and 34th Street, had eased.
He noted that “people are flying through the Holland Tunnel” and that “cross-town traffic speeds are up significantly”, while “the streets are safer – half as many crashes, and that means pedestrians are not getting injured.”
Lieber suggested that many drivers were benefiting from reduced congestion, improved travel speeds, and shorter commutes, and that public sentiment had shifted in favour of the programe.
Lieber further dismissed concerns that congestion pricing would deter visitors, saying foot traffic in the CBD had increased.
He said restaurant reservations were up by 7%, while Broadway revenues had risen by 25% and audience attendance by 20%.
He added that yellow cab drivers, initially concerned about the toll’s impact, had actually seen an increase in trips and tips by around 10%.
He said there was no evidence that congestion pricing was keeping people away from the city, adding that commercial office leasing in January was 61% higher than the previous year.
Meanwhile, the MTA has confirmed that congestion pricing infrastructure remains operational, meaning drivers could still be charged unless a court orders an immediate halt. Hochul insisted that “the lights, the cameras, they are staying on.”
The political and legal battle over congestion pricing’s future is expected to escalate, with the US state of New Jersey, led by governor Phil Murphy, having previously sued New York over the programme.
The USDOT’s letter cited New Jersey’s opposition as part of its reasoning for the reversal.
Lieber questioned why governor Murphy was interfering in New York’s decision when New Jersey itself charges tolls on the Turnpike and Garden State Parkway.
“When are you going to say New Yorkers don’t have to pay tolls on the Garden State Parkway or the Turnpike?” he asked.
He also pointed out that Republicans traditionally support local control, yet were now trying to override New York’s authority to implement congestion pricing.
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Public opinion remains divided. While some commuters and businesses have welcomed the decision, citing financial strain, others argue that congestion pricing is necessary to reduce gridlock and improve air quality.
A recent poll found that 59% of New Yorkers believe the programme should continue, with seven in 10 drivers who regularly commute into Manhattan saying they supported congestion pricing.
Legal experts have suggested that the lawsuit could take months or even years to resolve, which means the future of New York’s congestion pricing scheme remains uncertain.
“Something of this kind cannot be taken away without a federal court order,” Lieber said. “We’re going to fight it all the way.”
The case is expected to have significant implications for urban transportation policy, state-federal relations and toll-backed infrastructure projects nationwide.
Lieber explained that many toll-backed bonds in US states such as Texas and Florida depend on federal approvals, and if the government sets a precedent for revoking approvals retroactively, investors could lose confidence in toll-financed infrastructure projects.
“That would really make bondholders nervous, and it would mean that future toll-backed revenue bonds would be a lot more expensive to issue,” he cautioned.
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