UNP Union Pacific Corp

BNSF Railway Co. is appealing a judge's ruling against the freight railroad's plan to build a rail yard near the ports of Long Beach and Los Angeles.

The judge ruled in March that an environmental review of the Southern California International Gateway project wasn't properly done, dealing a blow to BNSF"s efforts to expand its operations out of the largest import gateway in the U.S.

In a statement Tuesday, the railroad called the ruling "incorrect," adding, "The lower court applied an inappropriate evidentiary standard and disregarded a comprehensive eight-year environmental review in making its ruling." Unless the ruling is reversed, the railroad may walk away from the $500 million investment altogether, BNSF said in its statement.

Opponents of the project, which included nearby businesses, neighbors, air-quality regulators and the City of Long Beach, had claimed victory after the ruling, saying the expected increase in truck traffic, pollution and noise would have hurt their communities.

Supporters of project, which has been in development for nearly 10 years at a cost of more than $50 million, said the terminal would add badly needed rail capacity and reduce overall truck traffic in the region. Currently, the closest BNSF terminal to the ports of Los Angeles and Long Beach is roughly 25 miles away. Its new terminal would be 4 miles away from the ports.

The facility would load containers, trucked from nearby port terminals, onto trains bound for inland hubs such as Chicago and Houston.

The Port of Los Angeles also joined BNSF in appealing the ruling. "The SCIG Project is vitally important to improve the efficiency of the entire San Pedro Bay Ports complex," Port Director Eugene Seroka said in a statement. He added that port believed its environmental impact report "fully met all requirements."

BNSF and Union Pacific Corp. are the only two major railroads serving the Southern California ports. Both have run into trouble with recent expansion plans. Union Pacific has been locked in what the company has called "environmental review purgatory" at the ports for nearly a decade as it tries to double capacity to handle 1.5 million shipping containers annually.

Write to Erica E. Phillips at erica.phillips@wsj.com

(END) Dow Jones Newswires

August 02, 2016 17:25 ET (21:25 GMT)

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