RALEIGH, N.C. — A national animal rights group is waging a legal fight to stop a small North Carolina mountain town's tradition of lowering a caged possum on New Year's Eve.

Senior Administrative Law Judge Fred Morrison refused Tuesday to dismiss a legal challenge filed by People for the Ethical Treatment of Animals against the North Carolina Wildlife Resources Commission. The state agency issues a permit for the annual Possum Drop held in Brasstown, located near the state's western tip.

PETA's lawyers contend the possum drop is illegal and cruel.

Despite the name, no possum is dropped at the event, which attracts thousands to the tiny hamlet. Rather, the captive critter is suspended in a see-through box covered with holiday tinsel and gently lowered to the ground at midnight.

"This possum that we use is taken care of," Clay Logan, who started the event 20 years ago and catches each animal used, told CBS News last year.

"Matter of fact, there are probably possums up around my house holding little signs saying, 'Use me next year,'" Logan said.

PETA attorney Martina Bernstein said possums are timid animals and can actually die from the stress. She likened the New Year's Eve event to torture for the animal.

"It is something you wouldn't do to your own dog or cat – have them hoisted up on a Plexiglas contraption for several hours with fireworks going off you know swinging in in the cold air," Bernstein said.

She argued that the state permit for the event was improperly issued because North Carolina law doesn't allow wild animals to be kept captive unless it's for rehabilitation – and that requires a captive animal permit.

"There are very strict rules for that. It's not a free-for-all," she said. "But apparently the agency believes, if you don't fit into these permits, we're just going to make up something."

Norman Young, the assistant attorney general representing the Wildlife Resources Commission, said the permit was legal. New Year's Eve falls during possum season in the state, so Logan's hunting license allows him to trap one for the drop, he said.

"(This is) an event that does not show any particular harm to the opossum and I might add doesn't meet the elements of the animal cruelty statute," Young said.

Morrison is expected to rule on the matter in a few weeks.