New York City’s Taxi and Limousine Commission has the authority to require drivers buy new, specialty cars from Nissan Motor Co. for its “Taxi of Tomorrow” project, a divided state appeals panel has ruled, reversing a lower court judge who found the mandate illegal last year.

The Appellate Division, First Department, ruled 3-1 on Tuesday that the TLC rules requiring drivers to purchase the Nissan NV200—a car designed to meet TLC’s safety and passenger comfort specifications—was within the agency’s authority.