The new rules allow 18,000 livery drivers to buy permits to collect people on curbs in upper Manhattan above 96th Street and the four other boroughs.
Advocates say it benefits millions of people in areas where yellow cabs aren't prevalent.
But owners of the city's signature yellow cabs have sued to try to stop it. The Metropolitan Taxicab Board of Trade says the plan is unfair to yellow cab owners who paid hefty fees for what has been an exclusive citywide right.
City lawyers say they're confident the plan meets legal requirements.
"A great deal of careful thought and consideration went into the adoption of this important new transportation initiative," City Law Department attorney Ave Maria Brennan said in a statement. "We are confident that it complies with all legal requirements - and that this challenge will be rejected by the courts."
The punishment for illegal operations would be much harsher for the livery drivers. Those who pick up even one illegal hail could lose their license and their vehicle.
The livery cabs could begin picking up street hails as early as late June.
The livery cabs will have a light on top and could possibly be green in color.
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