After years of courtroom battles, NYC has lost out on their bid to force all taxis to go hybrid. The Supreme Court has refused to hear their argument, letting the ruling from the lower court stand.
Taxi owners argued the city was regulating fuel economy, something only the federal powers are allowed to do. And although some states have created emissions and fuel standards, those have come by a waiver issued by the EPA.
Really, taxi owners simply don't want to pay extra to purchase the hybrid cars. Taxi drivers love them because of the lower fuel costs and because customers have shown a preference for riding in them.
Still, a large percentage of NYC taxis have already gone hybrid. And more are expected to, so the effort by the city has not been wasted.