Judge Norman Mordue

Under a lease and Brownfield Site Cleanup Agreement (BCA), Empire Generating Co. (EGC) spent $724 million to clean, and build a power plant on, a polluted site. It was entitled to an $86.87 million Brownfield Redevelopment Credit, which corporate parent Empire Gen Holdings Inc. (EGH) claimed in 2008. New York Tax Law §§33 and 34, enacted in 2010, required EGH to use certain credits to reduce its Capital Base Tax, limiting EGH’s refund to $1.6 million. But for §§33 and 34, EGH’s 2010 refund would have included the $86.87 million credit. Based on the Tax Injunction Act and principles of comity, district court denied EGC and EGH a declaration that §§33 and 34 were unconstitutional. Their challenge sought a prohibited “federal-court ruling on a local tax matter.” Sections 33 and 34 were part of New York’s 2010 budget bill, intended to create a balanced budget. By restricting certain tax credits for 2010, 2011 and 2012, §§33 and 34 increased tax revenues during those years. Plaintiffs’ proposed relief would interfere with New York’s assessment and collection of tax revenues, and thus with the administration of New York’s fiscal operations.