A federal judge has dismissed the Minnesota Automobile Dealers Association's lawsuit against the Minnesota Pollution Control Agency (MPCA) over a proposed electric vehicle rule.

Environmental groups celebrated the decision as victory for clean air and consumer choice. The MPCA said the quick dismissal confirms that its rule-making is following the correct process "designed by the Legislature."

But the dealers vowed to keep fighting what they call a "divisive and unnecessary" mandate that will swamp them with thousands of unwanted electric vehicles.

The lawsuit was dismissed without prejudice, meaning the dealers could potentially sue again. Association President Scott Lambert said his organization is weighing its options.

"We are again asking the Walz administration to pause its effort to adopt California rules until we see what the Biden administration will do on greenhouse gas emissions, and what California plans to do with the imminent updates on the regulations," Lambert said.

At issue is the "Clean Cars Rule" the MPCA wants to adopt through rule-making and not legislative action. It would be the Midwest's first zero-emission vehicle, or ZEV, mandate, following California, Colorado and other states.

The rule would require carmakers to provide more electric cars, SUVs and pickups for sale in Minnesota, as well as low-emission vehicles. The standard will help speed the state's lagging shift to electric vehicles, the MPCA says, critical to addressing climate change.

Transportation is the state's No. 1 producer of greenhouse gas emissions.

The Minnesota Center for Environmental Advocacy issued a statement saying the MPCA's new rule will give Minnesotans more choices on the dealership lot.

"By affirming the rulemaking process, the court sent a clear signal that the MPCA is well within its authority to set the clean cars standards already adopted by 14 other states," said Joy Reopelle Anderson, a lawyer at the center.

According to Lambert, dealerships would be forced to buy the electric vehicles if they want to do business with an automaker. It's an unfair burden that approaches the problem the wrong way, he said.

"That is the crux of the disagreement" with the Walz administration, he said. "They want to get more EVs on the road through increased supply, and we think they should work on demand."

Lambert said his group supports a House measure by DFL Rep. Zack Stephenson of Coon Rapids. The legislation would require dealer employees to get training on electric vehicles, for example, and create both a grant program to help defray costs for dealers and a consumer rebate program for buyers.

It's one of several bills in play at the Legislature to establish incentives such as electric vehicle rebates and help for Minnesota's utilities and car dealerships in coping with the eventual shift to electric vehicles.

The public comment period on the MPCA's clean cars rule is open until mid-March. An administrative law judge will hold a virtual public hearing on the rule on Feb. 22-23.

Correction: A previous version mischaracterized the terms on which the lawsuit was dismissed.