Court Refuses to Derail the Wine Train : Environment: The state justices rule that railway owners may operate under a legal exception. The tourist line would carry 410,000 visitors a year to the wine country.

The California Supreme Court on Monday refused to allow state regulators to block operation of a controversial tourist train planned to transport more than 400,000 visitors annually into Northern California’s famed wine country.

Over sharp dissents, the court held 4 to 3 that under an exception in the California Environmental Quality Act, train owners need not submit to orders by the state Public Utilities Commission that would bar operation or require steps to avoid environmental damage to the area.

The ruling was a defeat for local officials, winery owners, environmentalists and others who fiercely oppose the Napa Valley Wine Train, which currently offers only limited service on a 21-mile line between Napa and St. Helena. Foes say the train eventually could turn the region into “an amusement park” and intensify traffic congestion, air pollution and noise--with its whistles tooting at rail crossings more than 4,000 times a day.

The court, in a majority opinion by Justice Edward A. Panelli, said the act’s strict requirements do not apply when a firm institutes passenger service on rail rights-of-way already “in use.” The track had not been used for passenger service for more than 50 years, but was used by the Southern Pacific Co. to haul freight before rights were sold to the Wine Train.

The Environmental Quality Act, Panelli said, allows a company to initiate or increase passenger service on such lines and modernize existing stations and parking facilities without state approval.

The decision was assailed by the court’s three dissenters--retired Justice Marcus M. Kaufman, participating by special assignment, and Justices Stanley Mosk and Allen E. Broussard.

Mosk, previously the author of major decisions expanding state authority to guard the environment, accused the majority of approving a “total evasion of societal protection” and said the court, in effect, had “turned the clock back to the pre-CEQA (California Environmental Quality Act), anything-goes days.”

Christopher M. Patti of San Francisco, an attorney for train owners, welcomed the ruling, saying the Wine Train “is now free to operate full service . . . without complying with any PUC order.”

Patti denied that the ruling would “turn back the clock” on environmental regulation. “The Legislature, in enacting the exception to the Environmental Quality Act, wanted to encourage preservation and expansion of passenger rail service and the court correctly recognized that,” he said.

Another lawyer for the owners, Victor D. Ryerson of San Francisco, said that had the court upheld the PUC, the commission could have imposed conditions that would have made full operation economically impossible. “Often in these cases, plans are derailed simply because of expensive and burdensome requirements,” he said.

The attorneys said they did not know when full service would be implemented.

An attorney for the opponents of the train, Michael S. Riback of San Leandro, voiced hope that the PUC, under different statutes, could still impose safety restrictions, limit service and take other steps to regulate the train.

Riback also said any plan to erect new facilities or start related services--such as a shuttle bus to the train--still would require approval of local authorities. A PUC spokeswoman declined comment, saying the court’s opinion was being studied.

The Napa Valley Wine Train was formed in 1984, three years before the owners bought the right-of-way from Southern Pacific. Plans were announced to operate an excursion line, with refurbished, turn-of-the-century trains making up to six round-trips daily, stopping at wineries along the way.

Opponents filed a complaint with the PUC, contending that the proposed tourist-attraction--with the capacity to bring in 410,000 visitors a year--could have significant detrimental effects and should be forced to comply with the strict provisions of the environmental act. Attorneys for the train replied that under both state and federal law, the PUC had no jurisdiction over the train’s operations and that the act exempts any project that institutes passenger service on a line already in use.

In July, 1988, the PUC asserted jurisdiction under the act and barred the train from going into operation until an environmental impact report was filed. The PUC, had its authority been upheld, eventually could have required “environmental mitigation measures” by the owners.

The operators appealed to the state Supreme Court. Last August, an interim agreement was reached, allowing the train to begin limited service but requiring it to begin preparation of an environmental impact report pending a final ruling by the high court.