In the Matter of J-P Group, LLC, Respondent,v.New York State Department of Economic Development, et al., Appellants, et al., Respondent.BriefN.Y.April 23, 2013 To be argued by: OWEN DEMUTH Time Requested: 20 minutes Court of Appeals of the State of New York In the Matter of the Application of J-P GROUP, LLC, Petitioner-Respondent, -AGAINST- NEW YORK STATE DEPARTMENT OF ECONOMIC DEVELOPMENT, EMPIRE STATE DEVELOPMENT CORPORATION, COMMISSIONER OF ECONOMIC DEVELOPMENT, DENNIS MULLEN, EMPIRE ZONE DESIGNATION BOARD, Respondents-Appellants. REPLY BRIEF FOR RESPONDENTS-APPELLANTS BARBARA D. UNDERWOOD Solicitor General ANDREW D. BING Deputy Solicitor General OWEN DEMUTH Assistant Solicitor General of Counsel ERIC T. SCHNEIDERMAN Attorney General of the State of New York Attorney for Respondents-Appellants The Capitol Albany, New York 12224 Telephone: (518) 474-6639 Facsimile: (518) 473-8963 Dated: August 31, 2012 Reproduced on Recycled Paper i TABLE OF CONTENTS PAGE TABLE OF AUTHORITIES ................................................................................ ii PRELIMINARY STATEMENT............................................................................1 ARGUMENT POINT I - THE LEGISLATURE INTENDED THE APRIL 2009 AMENDMENTS TO THE PROGRAM TO APPLY RETROACTIVELY TO JANUARY 1,2008......................................1 POINT II- THE LIMITED RETROACTIVE APPLICATION OF THE APRIL 2009 AMENDMENTS DOES NOT VIOLATE THE DUE PROCESS CLAUSE .......................................................8 A. Petitioner’s Reliance On The Pre-April 2009 Version Of General Municipal Law § 959 Was Neither Reasonable Nor Justifiable..........................................................9 B. The Retroactivity Period Was Not Excessive...........................15 C. The Amendments Serve Valid Public Purposes ......................16 D. Even If The Period Of Retroactivity Were Measured From The August 2010 Amendments, There Would Be No Violation Of Petitioner’s Due Process Rights ....................17 CONCLUSION....................................................................................................19 ii TABLE OF AUTHORITIES CASES PAGE Burlington Northern R.R. Co. v. Strackbein, 398 N.W.2d 144 (S.D. 1986)......................................................................14 Canisius Coll. v. United States of Am. 799 F.2d 18 (2d Cir. 1986), cert. denied, 481 U.S. 1014 (1987)...............18 Capital Fin. Corp., Matter of v. Commissioner of Tax. & Fin., 218 A.D.2d 230 (3d Dep’t), appeal dismissed, 88 N.Y.2d 874 (1996), lv. denied, 88 N.Y.2d 811 (1996).................... 14-15 Chrysler Props., Matter of v. Morris, 23 N.Y.2d 515 (1969).................................................................................13 Clarendon Trust v. State Tax Comm’n, 43 N.Y.2d 933 (1978)............................................................................13,14 Duell, Matter of v. Condon, 84 N.Y.2d 773 (1995)............................................................................... 5-6 Dutchess County Dep’t of Social Servs. [Day], Matter of v. Day, 96 N.Y.2d 149 (2001)...................................................................................5 Gleason [Michael Vee, Ltd.], Matter of, 96 N.Y.2d 117 (2001)...................................................................................8 Grand Jury Subpoena Duces Tecum [Museum of Modern Art], Matter of, 93 N.Y.2d 729 (1999)...................................................................................7 James Square Assoc. v. Mullen, 91 A.D.3d 164 (4th Dep’t 2011) ............................................................2,7,9 Keys v. Chambers, 209 Or. 640, 307 P.2d 498 (Or. 1957).......................................................14 iii Table of Authorities (cont’d) PAGE CASES Kingsbrook Jewish Med. Ctr. v. Allstate Ins. Co., 61 A.D.3d 13 (2d Dep’t 2009)........................................................................ Lacidem Realty Corp., Matter of v. Graves, 288 N.Y. 354 (1942)...................................................................................16 Long v. State of New York, 7 N.Y.3d 269 (2006).....................................................................................4 Majewski v. Broadalbin Perth Cent. School Dist., 91 N.Y.2d 577 (1998)................................................................................2,8 Milliken v. United States, 283 U.S. 15 (1931) .....................................................................................13 Monroe County Pub. School Dists., Matter of v. Zyra, 51 A.D.3d 125 (4th Dep’t 2008) ..................................................................4 Moran Towing Corp., Matter of v. Urbach, 1 A.D.3d 722 (3d Dep’t 2003)...............................................................17,18 Onbank & Trust Co., Matter of, 90 N.Y.2d 725 (1997)................................................................................4,5 Outlet Embroidery Co. v. Derwent Mills, 254 N.Y. 179 (1930)................................................................................ 12n Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717 (1984) ...................................................................................11 Replan Dev., Matter of v. Department of Hous. Preservation & Dev. of City of N.Y., 70 N.Y.2d 451 (1987)..................................................................... 8-9,10,11 iv Table of Authorities (cont’d) PAGE CASES Rocanova v. Unites States of Am., 955 F. Supp. 27 (S.D.N.Y. 1996), aff’d, 109 F.3d 127 (2d Cir.), cert. denied, 522 U.S. 821 (1997)..............................................................17 St. Clair Nation, Matter of v. City of New York, 14 N.Y.3d 452 (2010)...................................................................................2 Siwek, Matter of v. Mahoney, 39 N.Y.2d 159 (1976)..................................................................................... State v. Green, 96 N.Y.2d 403 (2001).............................................................................. 12n United States v. Carlton, 512 U.S. 26 (1994) .............................................................................passim United States v. Darusmont, 449 U.S. 292 (1981) ..............................................................................13,14 Usery v. Turner Elkhorn Mining Co., 428 U.S. 1 (1976) .......................................................................................11 Varrington Corp., Matter of v. City of New York Dep’t of Fin., 85 N.Y.2d 28 (1995)...................................................................................10 WL, LLC v. Department of Economic Development, 97 A.D.3d 24 (3d Dep’t 2012)................................................................. 11n STATE STATUTES General Municipal Law § 959 ............................................................................................5,7,9 § 959(a) ........................................................................................passim § 959(a)(v)(5)................................................................................................3 § 959(a)(v)(6)................................................................................................3 § 959(w) ........................................................................................passim v Table of Authorities (cont’d) PAGE STATE STATUTES (cont’d) State Administrative Procedure Act § 202(6)(a) .................................................................................................... Tax Law § 210 ..................................................................................................3 § 606 ..................................................................................................3 § 1456 ..................................................................................................3 § 1511 ..................................................................................................3 L. 2009, ch. 57 §§ 11-22 ..................................................................................................3 § 44(a) ..................................................................................................3 STATE RULES AND REGULATIONS 5 N.Y.C.R.R. § 11.9(c) ..................................................................................................7 § 11.9(c)(2) ............................................................................................... 6n MISCELLANEOUS Joint Budget Hearing of the Assembly Ways and Means Committee and the Senate Finance Committee on the Economic Development and Taxes Budget for Fiscal Year 2008-09........................................ 11-12 PRELIMINARY STATEMENT The State explained in its main brief that petitioner’s due process rights were not violated by the 15-month period of retroactive application of the April 2009 amendments to the Empire Zone Program. Petitioner argues that the period of retroactivity was actually 32 months because the Legislature did not make the April 2009 amendments retroactive until it enacted additional program amendments in August 2010. The Fourth Department correctly rejected this aspect of petitioner’s argument and concluded that the Legislature intended from the outset that the April 2009 amendments would apply as of January 1, 2008. As we explain at Point I, below, petitioner’s claim to the contrary is meritless, and the relevant period of retroactivity here is only 15 months. As Point II, below, we explain that 15 (or even 32) months of retroactivity would satisfy the Due Process Clause. ARGUMENT POINT I THE LEGISLATURE INTENDED THE APRIL 2009 AMENDMENTS TO APPLY RETROACTIVELY TO JANUARY 1, 2008 Petitioner mistakenly argues that it was not until August 2010 that the Legislature indicated that the amendments to General Municipal Law § 959(a) and (w) imposing the shirt-changer and 1:1 criteria were to operate retroactively 2 to January 1, 2008 (Br. at 12-13). The Fourth Department correctly held in James Square and below that the “Legislature intended that the pertinent 2009 amendments to the Empire Zones Act would apply retroactively to January 1, 2008.” James Square Assoc. v. Mullen, 91 A.D.3d 164, 166 (4th Dep’t 2011). Although retroactive operation of legislation is not favored, courts will construe statutes as retroactive in effect where “the language expressly or by necessary implication requires it.” Matter of St. Clair Nation v. City of New York, 14 N.Y.3d 452, 457 (2010), quoting Majewski v. Broadalbin Perth Cent. School Dist., 91 N.Y.2d 577, 584 (1998). This is such a case; both the structure of the legislation enacted in 2009 and its legislative history demonstrate that the Legislature intended that the 2009 amendments were to be effective on January 1, 2008. The structure of the statute points to that conclusion because the new eligibility criteria contained in the April 2009 amendments were linked to the April 2009 Tax Law amendments affecting carryover Empire Zone tax credits, and those Tax Law amendments “were expressly effective retroactive to January 1, 2008.” James Square Assoc., 91 A.D.3d at 172. And the legislative history points to the same conclusion because it shows that the 2009 amendments “were intended, at least in part, to generate revenue during 2009-2010, revenue that would not be generated if those amendments were to be applied prospectively.” Id. 3 The Legislature necessarily intended that decertifications issued pursuant to the April 2009 amendments to General Municipal Law § 959(a) and(w) were to take effect on January 1, 2008, because the 2009 amendments also changed the corresponding provisions of the Tax Law to disallow carry-over tax credits for companies that were decertified by the Commissioner following its required 2009 review, and those Tax Law amendments were expressly made effective retroactively to January 1, 2008 (110-112, 118). See Tax Law §§ 210, 606, 1456, 1511; L. 2009, ch. 57, §§ 11-22, 44(a). Only businesses that satisfied the criteria set forth in General Municipal Law § 959(w), as amended, would be issued a retention certificate, a prerequisite to claiming the carryover credits. Each of the Tax Law amendments refers to the retention certificate required by the amended section 959(w). Thus, the January 1, 2008 effective date is necessary to synchronize the timing of the amendments to General Municipal Law § 959(a) and (w) with the effective date of the portions of the 2009 amendments that made corresponding changes to the Tax Law. The Fourth Department correctly recognized that the January 1, 2008 effective date of the tax credit amendments would be rendered meaningless if the substantive provisions to which they refer, namely General Municipal Law §§ 959(a)(v)(5), (a)(v)(6) and (w), were not also effective on the same date. In other words, construing the statute to mean that the Department of Taxation 4 and Finance could disallow credits based on the Commissioner’s decertification as of January 1, 2008, but that the Commissioner could not actually make the decertification effective until April 2009, would produce a conflict that the Legislature could not have intended. Under the Tax Law amendments, the carryover credits from the pre-2008 years could only be claimed for 2008 if the taxpayer had a retention certificate, but under petitioner’s interpretation of the amendments to General Municipal Law § 959(a) and (w), the Commissioner could not issue a retention certificate effective for periods before April 2009. “Although statutes will ordinarily be accorded their plain meaning, it is well settled that courts should construe them to avoid objectionable, unreasonable or absurd consequences.” Long v. State of New York, 7 N.Y.3d 269, 273 (2006); accord Matter of Monroe County Pub. School Dists. v. Zyra, 51 A.D.3d 125, 130 (4th Dep’t 2008); see Matter of Onbank & Trust Co., 90 N.Y.2d 725, 731 (1997) (declining to read amended statute as prospective-only because such a construction would render some of its terms meaningless). In order to eliminate this conflict, the amendments to General Municipal Law § 959(a) and (w) must be effective at the same time as the tax credit amendments to which the Legislature linked them, i.e., January 1, 2008. Petitioner’s argument (Br. at 12) that retroactivity was not intended because the 2009 amendments to amendments to General Municipal Law 5 § 959(w), stating that they were to take effect “immediately,” ignores the corresponding amendments to the Tax Law, which were expressly made retroactive to January 1, 2008 (110-112, 118). The fact that petitioner is not seeking carryover tax credits here does not affect the interpretation of the statute. On the contrary, the entire statutory scheme reflects that the Tax Law amendments and the amendments to General Municipal Law § 959 are linked so that both must be effective on January 1, 2008, in order that both may function as the Legislature clearly intended. See Matter of Dutchess County Dep’t of Social Servs. [Day] v. Day, 96 N.Y.2d 149, 153 (2001) (where the Legislature does not indicate a contrary intent, related statutes must be construed “in a way that renders them internally compatible”) (citation omitted). Moreover, the record also demonstrates that the Legislature intended the January 1, 2008, effective date to govern the 2009 amendments, because the Legislature's 2009-10 financial plan, adopted in 2009, projected $90 million in savings from the decertifications during the then-current 2009-10 fiscal year (98). Those savings could not be realized unless the 2009 amendments of eligibility criteria were effective on January 1, 2008. This Court has explained that “the reach of the statute ultimately becomes a matter of judgment made upon review of the legislative goal.” Matter of Onbank & Trust Co., 90 N.Y.2d at 730, quoting Matter of Duell v. Condon, 84 6 N.Y.2d 773, 783 (1995). Here, an important legislative goal was immediately to generate significant revenues for the state by eliminating the availability of tax credits to businesses that were not fulfilling the Program’s ultimate purposes of creating new job and investment opportunities in the State (98). The denial of the tax credits for the decertified companies had to be effective for 2008 in order to prevent the decertified companies from claiming their tax credits for qualifying expenditures incurred in 2008 during the 2009-10 fiscal year; such tax credits would prevent the State from realizing the full amount of the intended savings in the 2009-10 fiscal year. The fact that the Legislature intended the savings to be realized in fiscal year 2009-2010 is further shown by the fact that General Municipal Law § 959(w), as amended, required the Commissioner to conduct a review of all program participants during 2009 and to determine whether any should be decertified. See General Municipal Law § 959(w). The statute and regulations effectively required the Commissioner to conduct this review on the basis of data from the period ending no later than December 31, 2007.1 Because the statute provides that decertification will take effect on “the date determined to 1 This is because the statute required the Commissioner to review at least three business annual reports (BARs) filed by the company, see General Municipal Law § 959(w), and the regulations required the review of the company’s BARs for any of the years from 2001-2007. See 5 N.Y.C.R.R. § 11.9(c)(2). The most recent BARs then available were those for 2007 (85). 7 be the earliest event constituting grounds for revoking certification”, General Municipal Law § 959(a), and such an event would be found no later than December 31, 2007, it is reasonable to infer that the legislature intended to make January 1, 2008 the effective date for decertifications based on the Commissioner’s review of data up through December 31, 2007. Consistent with this approach, the regulations provided that the decertifications would take effect on January 1, 2008. See 5 N.Y.C.R.R. § 11.9(c) (last sentence). Citing Supreme Court’s decision in James Square Associates, petitioner relies (Br. at 12) on the fact that the legislature did not enact an earlier version of the April 2009 legislation which expressly provided that the amendments to General Municipal Law § 959 were to be effective on January 1, 2008. But the failure to enact proposed statutory provisions is an unreliable guide to legislative intent. Although “legislative intent may be inferred from the omission of proposed substantive changes in the final legislative enactment,” the deleted language on which petitioner relies falls far short of “demonstrat[ing] a clear mandate from the Legislature” that the decertification of Program participants was to be prospective from April 2009. Matter of Grand Jury Subpoena Duces Tecum [Museum of Modern Art], 93 N.Y.2d 729, 738 (1999). Further, the fact that the amendments to General Municipal Law § 959 as enacted were to take effect “immediately” does not by itself establish an exclusively prospective 8 operation. It may alternatively be supportive of retroactive operation, see Matter of Gleason [Michael Vee, Ltd.], 96 N.Y.2d 117, 122 (2001) and, at worst, is not dispositive. See Majewksi, 91 N.Y.2d at 583-84. Thus, the Appellate Division’s determination that the retroactive period ran from January 1, 2008 to April 7, 2009, was correct. Petitioner was on notice as of April 2009 that it was subject to decertification retroactive to January 1, 2008. Thus, the period of retroactivity here is measured from the April 7, 2009 enactment date of the amendments back to January 1, 2008, a period of slightly more than 15 months. As explained in our opening brief and in Point II, below, that limited degree of retroactivity is consistent with the requirements of due process. POINT II THE LIMITED RETROACTIVE APPLICATION OF THE APRIL 2009 AMENDMENTS DOES NOT VIOLATE THE DUE PROCESS CLAUSE The State officials' main brief explained that retroactive application of the April 2009 amendments did not deprive petitioner of a property interest without due process (State's Main Br. at 20-38). Petitioner’s claim, which concerns the retroactive removal of tax credits, is properly analyzed under the standards for retroactive amendment of tax statutes provided by United States v. Carlton, 512 U.S. 26 (1994), Matter of Replan Dev. v. Department of Hous. Preservation & 9 Dev. of City of N.Y., 70 N.Y.2d 451 (1987), and other cases. Both petitioner (Br. at 13-14) and the Fourth Department, James Square Associates, 91 A.D.3d at 173-74, implicitly acknowledge that the tax cases govern here by basing their arguments on those cases. They are correct; the standards of those cases govern here. Under those standards, the limited degree of retroactivity in this case was permissible. Under Carlton and Replan, a tax statute may be amended retroactively if there was no reasonable and justifiable reliance on the unamended statute, if the period of retroactivity is not excessive, and if the retroactive amendment serves a valid public purpose. All three criteria are satisfied here. Petitioner could not reasonably or justifiably rely on their continued Program participation, the period of retroactivity was not excessive, and the amendments serve valid public purposes (State's Main Br. at 26-38). See Matter of Replan Dev., 70 N.Y.2d at 455-57. A. Petitioner’s Reliance On The Pre-April 2009 Version Of General Municipal Law § 959 Was Neither Reasonable Nor Justifiable. Petitioner’s argument that it “did not merely rely on a benefit from a tax statute but conducted its business [so] as to conform to the standard set forth in the [pre-amendment] statutes” (Br. at 22), does not establish that its reliance on the pre-April 2009 version of General Municipal Law § 959 barred retroactive 10 decertification. As we noted in our main brief (State’s Br. at 26-28), the United States Supreme Court has held that “reliance alone is insufficient to establish a constitutional violation” because “tax legislation is not a promise, and a taxpayer has no vested right” in whatever credits, deductions, or other benefits may exist at any one time in the tax law. Carlton, 512 U.S. at 33; see Matter of Varrington Corp. v. City of New York Dep’t of Fin., 85 N.Y.2d 28, 33 (1995). The estate taxpayer in Carlton not only lost the more than $2,500,000 in estate tax savings that it claimed under the law that was retroactively amended, but also lost an additional $600,000 in the transaction that it entered into while the law was in effect in reliance on the law; even so, this degree of reliance did not establish a due process violation. See 512 U.S. at 33-34. As we explained in our main brief (State's Brief at 26-28), an Empire Zone program certification did not, as petitioner suggests (Br. at 15), entitle it to greater protection than that accorded to other taxpayers who made investments or otherwise detrimentally relied on statutory tax incentives that were later retroactively revoked, like the taxpayers whose claim of reliance was rejected in Carlton, 512 U.S. at 33-34, and Replan, 70 N.Y.2d at 457. Here, program certification was simply a prerequisite to the right to claim the tax benefits, and was explicitly subject to termination “by operation of law” (31). Thus, it constituted no more and no less of a “promise” than the statutes involved in 11 Replan, Carlton and other similar tax cases.2 Indeed, all tax credit statutes offer inducements upon which qualified taxpayers are intended to rely, but a legislature’s retroactive readjustment of the qualifications necessary for continued tax credits “is not unlawful solely because it upsets otherwise settled expectations.” Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 729 (1984), quoting Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15-16 (1976). Petitioner’s situation is no different from that of the taxpayers in Carlton and Replan. Moreover, there was ample indication that the criteria for tax benefits under the Empire Zone Program might be made more stringent. As we explained earlier (State’s Brief at 5-8, 30-31), the Program had been “under increasing scrutiny for several years with respect to its cost-effectiveness, strategic focus and accountability” because many companies had “received more in tax benefits than economic returns they [were] returning in the form of wages paid to workers and capital investments in their facilities” (83) (affidavit of Program Director Randal Coburn). See Joint Budget Hearing of the Assembly Ways and Means Committee and the Senate Finance Committee on the 2 In WL, LLC v. Department of Economic Development, 97 A.D.3d 24, 32 (3d Dep’t 2012), the Third Department also mistakenly concluded that the program certificate, rather than the resulting tax benefits, was the critical interest at stake, but then, like petitioner and the Fourth Department here, that court analyzed the due process issue based on the standards set forth in the tax cases. 12 Economic Development and Taxes Budget for Fiscal Year 2008-09, at pp. 11-12, 55-56, 79-82. (describing letters that were sent to Program participants in 2007, informing them that the Commissioner’s audits of these companies’ Program performance revealed that they were not meeting at least 60% of their job creation and investment goals under the Program, and that the companies might therefore be subject to Program decertification unless their performance improved).3 Even before the April 2009 amendments, General Municipal Law § 959(a) had provided notice that a decertification might operate retroactively: the section provided that a decertification would take effect on “the date determined to be the earliest event constituting grounds for revoking certification” (105), which could of course be substantially prior to the actual date of decertification. Thus, petitioner was forewarned that the statute conferring the credits could be further amended and that they could have no vested right in the tax credits. And contrary to petitioner’s argument (Br. at 11, 17-18), retroactivity was not defeated by the fact that petitioner may not have personally received advance notice of the April 2009 amendments. Even where a retroactive tax 3 Although the transcript of this hearing is not in the record, this Court may take judicial notice of it as a legislative proceeding. State v. Green, 96 N.Y.2d 403, 408 n.2 (2001); Outlet Embroidery Co. v. Derwent Mills, 254 N.Y. 179, 183 (1930). 13 amendment imposes a new liability on the taxpayer -- which the April 2009 amendments to Program tax credits do not -- a taxpayer “’should be regarded as taking his chances of any increase in the tax burden which might result from carrying out the established policy of taxation.’” Carlton, 512 U.S. at 34, quoting Milliken v. United States, 283 U.S. 15, 23 (1931). In any event, petitioner offered no evidence of specific actions it took in 2008 in reliance on the Program tax credits it expected to claim for that year. It continues vaguely to allege that it was “induced by [the State] to operate its business in such a way in specified disadvantaged areas in reliance upon the Empire Zones’ tax credits” (Br. at 21), but this conclusory allegation fails to demonstrate that it would have “altered [its] behavior to avoid [the loss of tax credits for 2008].” United States v. Darusmont, 449 U.S. 292, 299 (1981). Moreover, petitioner mistakenly relies on this Court’s decisions in Matter of Chrysler Props. v. Morris, 23 N.Y.2d 515 (1969) and Clarendon Trust v. State Tax Com’n, 43 N.Y.2d 933 (1978) (Br. at 16, 20, 21, 25). Neither of those cases directly addressed the constitutionality of a statute that retroactively adjusted the availability of tax credits: Chrysler Properties involved the retroactive application of a statute providing a new layer of judicial review for determinations of the New York State Tax Commission, and Clarendon Trust involved the retroactive reduction of a tax deduction for net long-term capital 14 gains, thereby increasing the taxpayers’ taxable income. Tax credits differ from tax deductions and other types of tax statutes, however, in that they merely lower existing liabilities; they do not impose new ones. See Keyes v. Chambers, 209 Or. 640, 645, 307 P.2d 498, 501 (Or. 1957) (“A provision allowing a credit against a state tax is, in effect, an exemption from liability for a tax already determined and admittedly valid”). Retroactive tax credit legislation therefore presents fewer constitutional notice and reliance issues than legislation that “create[s] a new tax” and seeks to apply it retroactively. Darusmont, 449 U.S. at 300; see Burlington Northern R.R. Co. v. Strackbein, 398 N.W.2d 144, 147 (S.D. 1986) (retroactive application of statute changing railroad’s entitlement to tax credits did not constitute an unconstitutional taking of the railroad’s property rights in part because “[a] tax credit is a rebate and not a tax”). In addition, Clarendon Trust cited “the apparent absence of a persuasive reason for retroactivity” in that case, but here, there were two “persuasive reasons,” as discussed at Point II (C) below: to cure Program defects and to ameliorate the State’s fiscal crisis. The only New York case cited by the parties that specifically dealt with the retroactive elimination of tax credits is the Third Department’s decision in Matter of Capital Finance Corporation v. Commissioner of Taxation & Finance, 218 A.D.2d 230 (3d Dep’t), appeal dismissed, 88 N.Y.2d 874, lv. denied, 88 15 N.Y.2d 811 (1996). See State’s Main Br. at 29 n. 5. In that case, the court upheld the retroactive elimination of mortgage recording tax credits that the taxpayer had earned under the law as it existed before the relevant statute’s amendment. The Third Department held that “[i]n sharp contrast to claims arising out of an actual overpayment of tax . . . petitioner has no vested entitlement to a continuation of the legislative favor of permitting excess credits to be applied against future tax liabilities.” Id. at 233 (citation omitted). For all these reasons, petitioner has failed to demonstrate, under the precedents of this Court and the United States Supreme Court, that it reasonably and justifiably relied on the Program tax credits for 2008 that it would have received but for the enactment of the April 2009 amendments. B. The Retroactivity Period Was Not Excessive. We have explained above and in our main brief (State’s Main Br. at 20 n. 4, 30-34) that the period of retroactivity should be measured between January 1, 2008 and April 7, 2009, when the 2009 amendments were enacted, and that this modest period was not excessive. Petitioner protests that it was not decertified until “well after the taxable year for 2008 came to an end” (Br. at 20), but that claim ignores the settled rule that even tax legislation that imposes new liabilities may constitutionally be applied to the beginning of the year preceding the legislation’s enactment, as in this case (See State's Br. at 33-34 and cases 16 cited therein). Thus, for example, in Matter of Lacidem Realty Corp. v. Graves, 288 N.Y. 354 (1942), this Court upheld the retroactive application of the 1941 Tax Law amendment back to January 1, 1940, the beginning of the year before the date of enactment. See id. at 357. Accordingly, the 15-month period of retroactivity at issue here is not excessive under Replan. C. The Amendments Serve Valid Public Purposes. The Program Amendments had two valid public purposes, both mistakenly discounted by petitioner and the Appellate Divisions. First, the amendments were designed to remedy the failing Empire Zones Program by enacting criteria that more accurately gauged a company’s performance and entitlement to the resultant tax benefits. Second, the amendments were designed to ameliorate the State’s fiscal crisis during 2009 and 2010. Both of these purposes find support in the record and case law, as demonstrated in our main brief on pages 35 through 38. Petitioner has not disputed the State's proof that the Program was not meeting its overall goals of increasing job creation and investment opportunities. Nor has petitioner disputed that the 1:1 benefit-cost standard was a reasonable remedy for the Program’s deficiencies. Finally, they have not alleged that they could meet that standard. 17 Moreover, the general cost-savings goals of the Program, which sought to save the State some $90 million during the 2009-2010 fiscal year, provide a separate rational basis for the statute’s retroactive operation. See Carlton, 512 U.S. at 32 (the Legislature may rationally retroactively amend a statute to stem “a significant and unanticipated revenue loss”); see Matter of Moran Towing Corp. v. Urbach, 1 A.D.3d 722, 724 (3d Dep’t 2003) (“when legislation is curative, retroactivity may be liberally construed”); Rocanova v. United State of Am., 955 F. Supp. 27, 29-30 (S.D.N.Y. 1996), aff’d, 109 F.3d 127 (2d Cir.), cert. denied, 522 U.S. 821 (1997) (Congress’s intent in enacting a retroactive amendment to the Internal Revenue Code -- “to raise revenue without raising taxes or imposing a new tax” -- was “rational and reasonable”) D. Even If The Period Of Retroactivity Were Measured From The August 2010 Amendments, There Would Be No Violation Of Petitioner’s Due Process Rights. In light of these authorities, the modest 15-month retroactivity period required by the April 2009 amendments does not violate petitioner’s constitutional rights. Moreover, even if this Court agreed with petitioner that the period of retroactivity must be measured from the enactment of the August 2010 amendments, the resulting retroactivity period of two years, eight months and 11 days would still pass constitutional muster, for the reasons stated above and in light of that amendment’s “curative purpose[s]” of correcting, as of 18 January 1, 2008, unanticipated costs incurred by the State in its administration of the Program. Canisius Coll. v. United States of Am., 799 F.2d 18, 27 (2d Cir. 1986), cert. denied, 481 U.S. 1014 (1987); see United States v. Carlton, 512 U.S. at 32 (upholding retroactive application of statute limiting estate tax deductions because the amendment was rationally adopted in order to stem “a significant and unanticipated revenue loss”); Matter of Moran Towing Corp., 1 A.D.3d at 724 (“when legislation is curative, retroactivity may be liberally construed”). Accordingly, the 2009 amendments to General Municipal Law § 959(a) and (w) are constitutional whether their period of retroactivity is measured from April 2009 or August 2010. 19 CONCLUSION The Fourth Department’s memorandum and order should be reversed insofar as it held that retroactive application of the April 2009 amendments to General Municipal Law § 959 to January 1, 2008, violated petitioner’s due process rights, and petitioner’s complaint should be dismissed in its entirety. Dated: Albany, New York August 31, 2012 Respectfully submitted, ERIC T. SCHNEIDERMAN Attorney General of the State of New York Attorney for Respondents- Appellants By: _________________________ OWEN DEMUTH Assistant Solicitor General Office of the Attorney General The Capitol Albany, New York 12224 (518) 474-6639 BARBARA D. UNDERWOOD Solicitor General ANDREW D. BING Deputy Solicitor General OWEN DEMUTH Assistant Solicitor General of Counsel Reproduced on Recycled Paper