The state's highest court is hearing arguments over a challenge to the city's plan to create a new type of taxi.
The "Street Hail Livery Law" went before the Court of Appeals on Wednesday.
Under the law, which was approved by the state legislature, the city would sell special permits to allow apple green cabs to pick up street hails in upper Manhattan and the other boroughs.
Opponents of the measure say Albany passed it only after Mayor Michael Bloomberg failed to get it approved by the City Council.
A New York State Supreme Court judge put the brakes on the law last year, saying it violated the state constitution by going around the Council.
Mayor Bloomberg says the plan would generate much needed revenue for the city and provide more New Yorkers with better access to taxi service.