The City of Vernon has lost a case in which it alleged that the California Public Utilities Commission should have required environmental review of a proposed rail yard expansion. A unanimous three-judge panel of the Second District Court of Appeal ruled that Vernon failed to prove that the project was unreasonable. The case demonstrates the differences between projects controlled by the California Environmental Quality Act, and projects that fall under other sections of the state Public Resources Code. "[U]nlike review under CEQA where the burden of demonstrating the reasonableness of a project lies with its proponent, the burden here was on Vernon as the opponent of the Hobart Yard expansion to show that it was unreasonable," Justice Robert Mallano wrote for the court. The Hobart Yard is a large "intermodal" facility partially located in the City of Vernon and owned by Atchison, Topeka & Santa Fe Railway. Large shipping containers are transferred from trains to trucks at the yard. In 1994, Santa Fe filed an application with the city for conditional use permits to allow an expansion of the Hobart Yard. Vernon refused to process the application, saying Santa Fe needed to file an application covering the entire yard, not just the additions. In 1995, Santa Fe sued the city; Vernon responded with a complaint to the Public Utilities Commission (CPUC). In February 1996, a Superior Court ruled in favor of Santa Fe, a decision that an appellate panel upheld later in an unpublished opinion. In November 1996, the CPUC also ruled for Santa Fe. The CPUC found that the project was exempt from CEQA because it was a project of a public utility that did not require approval or other discretionary acts. The CPUC held that Vernon could only complain about utility conduct that was unreasonable. However, the CPUC allowed Vernon to amend its complaint, which the city did. The city argued that the Hobart Yard expansion would increase truck traffic, that the additional trucks would cause unsafe conditions and lower the level of service at five intersections, and that Santa Fe could reduce the impacts by paying 7% of the cost of a $26 million intersection improvement project. In December 1998, the CPUC again rejected Vernon's complaint, citing Public Resources Code § 21082.2. The commission held that the impact on the intersections did not require mitigation because the level of service would be identical whether or not Santa Fe expanded its rail yard. The commission held that the significant environmental effects were unavoidable. Vernon sought a rehearing, which the CPUC denied. Vernon then took its case to the Second District Court of Appeal, where the city argued that the CPUC "clearly had an affirmative responsibility to conduct an environmental review which would give prime consideration to preventing environmental damage." But the court said Vernon had not proven its case. "Vernon had the burden of demonstrating to the Commission that changes to the Hobart Yard project ‘ought reasonably be made', giving consideration to the project's ‘influence on the environment,'" Justice Mallano wrote. He noted that Public Utilities Code §§ 762 and 762.5 controlled the Commission's decision, not CEQA (Public Resources Code § 21000). "[T]he commission … has not on any occasion that has been brought to our attention deemed itself to be generally bound by the requirements of CEQA," Mallano wrote. "In short, by no stretch of law or logic may the requirements of CEQA be engrafted onto a determination of reasonableness under Public Utilities Code §§ 762 and 762.5" Although Vernon and Santa Fe differed on the extent to which the rail yard expansion would increase traffic, Mallano wrote, "we find nothing in the record that would compel us to conclude that Santa Fe's projections were not supported by substantial evidence. More important, Vernon offers nothing that would cause us to question the Commission's findings … ." The Case: City of Vernon v. Public Utilities Commission of the State of California, No. B131559, 01 C.D.O.S. 3263, 2001 Daily Journal D.A.R. 4005. Filed March 26, 2001, ordered published April 24, 2001. The Lawyers: For Vernon: David Brearley, city attorney, (626) 336-3408. For CPUC: Peter Arth Jr., CPUC counsel, (415) 703-2015. For Santa Fe: John C. Nolan, Gresham, Savage, Nolan & Tilden, (909) 884-2171.