Manhattan Supreme Court Justice Arthur Engoron (See Profile) on Friday blocked a state law that would allow livery cabs to accept street hails in the outer boroughs, ruling that the law “runs roughshod” over powers that rightly belong to the City Council.

The law, known as the Street Hail Livery Law, would allow the Taxi and Limousine Commission to issue 18,000 licenses for livery cabs to pick up street hails in the outer boroughs and upper Manhattan. It would also allow the mayor to issue 2,000 new taxi medallions. Supporters of the law have said that it would raise about $1 billion for the city. The Legislature passed the law at Mayor Michael Bloomberg’s urging after the plan was rejected by the City Council, which holds the power to issue new medallions under the city charter (NYLJ, June 5).

In April and May, groups of medallion owners, credit unions that finance the purchase of medallions and a city councilman challenged the law by filing suits against the state, which were consolidated before Engoron. The judge granted the plaintiffs a temporary restraining order in June.

In Friday’s decision, Engoron ruled that the law could not stand because city taxi regulation “is not a matter of substantial State interest or concern.”

“The contents of the subject legislation are all New York City ‘stuff,’” he wrote. “The new medallioned taxicabs and HAIL vehicles would be picking up passengers, and almost always dropping them off, in New York City. The Mayor, the [The Taxi and Limousine Commission,] the City Council, are all components of New York City government. The new medallions and licenses would be auctioned or sold by the City, for the City’s financial benefit. The City is up to the task of regulating its own taxicabs.”

Taxi and Limousine Commission chairman David Yassky said in an emailed statement that the decision is “a great loss to millions of New Yorkers outside of Manhattan, as well as for the professional livery drivers whose ability to feed their families by providing a popular service their communities want and deserve is now in jeopardy.”

City Corporation Counsel Michael Cardozo said that the city would appeal.

The Taxicab Service Association, the association of credit unions that finances medallion purchases and one of the plaintiffs in the case, released a statement in support of Engoron’s decision.

“The Judge saw right through the Mayor’s scheme to bypass the City Council, giving more power to rural legislators to decide taxi service in Queens then Queens City Council members,” the group said. “Now is the time for all parties to renew negotiations to devise a fair and equitable plan that respects the delicate balance while enhancing taxi and for hire service in all five boroughs.”

The case is Taxicab Service Association v. State of New York, 102553/12.