New York's so-called Green Light law, passed in Albany last year, allows undocumented immigrants to apply for drivers licenses.
But the bigger issue, federal immigration officials say, is that they can no longer access DMV data without a court order, making their jobs more difficult.
New York officials have reacted with outrage and, on Monday, a federal lawsuit.
"This ban has nothing to do with public safety," New York Attorney General Letitia James said at a news conference. "This is nothing more than an attempt to retaliate against New York state and to continue to feed red meat to President Trump's political base."
James and a separate lawsuit by the New York Civil Liberties Union contest the move on constitutional grounds, arguing among other things it violates the Tenth Amendment guarantee of state sovereignty.
"This latest retaliation against New York is a thinly veiled ploy to make all New Yorkers suffer for standing with immigrants," Donna Lieberman, the executive director of the New York Civil Liberties Union, said at the news conference.
Monday a coalition of Trump-appointed U.S. Attorneys in New York took the unusual step of issuing a joint statement condemning the Green Light Law, saying it will thwart investigations. Others, including Gov. Andrew Cuomo and Sen. Kirsten Gillibrand, say the law has no impact on the "trusted traveler" vetting process.
"Your felony convictions are going to be part of your criminal record. You don't need the DMV's database," Gillibrand said. "So that's a false excuse. It's a Red herring."
"How the heck they can defend — 'Well, because you have undocumented people on your driver's license program, that then affects the 'trusted traveler' program.' There is no connection," Cuomo said in an interview on WAMC's The Roundtable with Alan Chartock.
Meanwhile, Cuomo and Trump spent the weekend in a spat over a potential meeting on the subject that never materialized. Cuomo said Monday the two had spoken and a meeting could still be in the cards.
Image in the main story image above courtesy of the Department of Homeland Security.