## Facts

- The New York City Taxi and Limousine Commission (TLC) first adopted rules requiring newly licensed taxicabs to meet minimum fuel-economy thresholds (25 mpg, then 30 mpg), which were understood to push fleets toward hybrid vehicles.
- Taxi fleet operators sued, and a federal district court enjoined those fuel-economy rules as preempted by federal law; the City repealed them.
- The TLC then amended “lease cap” rules governing the maximum amount owners may charge drivers to lease taxicabs per shift.
- The amended lease caps increased permissible lease charges for hybrid and clean-diesel taxis by $3 per shift and decreased permissible lease charges for other taxis by $12 per shift.
- The TLC stated the purpose was to create financial incentives to shift the fleet toward more fuel-efficient, lower-emission vehicles.
- Fleet operators (MTBOT) sued again and sought a preliminary injunction, arguing the lease-cap structure functioned as a de facto fuel-economy and emissions regulation preempted by the Energy Policy and Conservation Act (EPCA) and the Clean Air Act (CAA).
- The district court denied preliminary injunctive relief; MTBOT appealed.

## Issues

1. Whether the TLC’s differential lease-cap rules are “related to fuel economy standards” and therefore expressly preempted by EPCA.
2. Whether the lease-cap rules are also preempted by the Clean Air Act’s limits on state and local regulation of motor-vehicle emissions.
3. Whether MTBOT satisfied the requirements for a preliminary injunction, including likelihood of success and irreparable harm.

## Decision

- The Second Circuit reversed the order denying a preliminary injunction and remanded with instructions to enter a preliminary injunction barring enforcement of the lease-cap rules.
- The court held MTBOT showed a likelihood of success that EPCA preempted the rules because they were designed and structured to pressure owners to purchase and use higher-mpg vehicles.
- The court treated the CAA’s allocation of emissions-regulatory authority as reinforcing preemption concerns in this area.
- The court found irreparable harm because the rules would force near-term economic losses and business changes (fleet composition decisions) under a likely unlawful regulatory scheme.
- The balance of equities and public interest favored an injunction notwithstanding the City’s environmental objectives, because federal law reserved fuel-economy regulation to national standards.

## Legal Principles

- EPCA expressly preempts state and local laws and regulations “related to fuel economy standards” for covered vehicles, reflecting Congress’s aim of a single national regime rather than varied local requirements.
- Courts assess preemption by practical effect and purpose, not labels; a measure framed as economic regulation can be preempted if it operates as an enforcement mechanism for fuel-economy choices.
- Incentive structures may be preempted when calibrated to materially change industry economics to coerce adoption of fuel-efficient vehicles, effectively substituting for prohibited local fuel-economy standards.
- The CAA’s structure limits local authority over new motor-vehicle emissions regulation, supporting federal exclusivity in closely connected emissions and fuel-efficiency policy.
- In preliminary-injunction review, a strong showing of likely federal preemption can satisfy the merits requirement and support irreparable harm where compliance would compel significant, difficult-to-reverse business decisions.

## Conclusion

The Second Circuit ordered preliminary injunctive relief against NYC’s taxi lease-cap differentials because they were likely preempted by EPCA as regulations related to fuel-economy standards, with the CAA further supporting federal exclusivity over vehicle emissions and fuel-efficiency policy.


Metro. Taxicab Bd. of Trade v. City of New York, 615 F.3d 152 (2d Cir. 2010)