A judge has turned down Montgomery County's attempt to block a proposed intermodal rail yard in Elliston.

In a decision that reached county officials Monday, Richmond Circuit Court Judge Melvin Hughes ruled Nov. 18 for Norfolk Southern Corp., which wants to build the yard, and the state of Virginia, which proposes to help pay for it.

Montgomery County Administrator Craig Meadows said he had not discussed the matter with the county's attorney. That left unclear whether the county might appeal its loss.

"We just learned about it and are still evaluating our options," Meadows said.

Joyce Howard, an Elliston resident whose home the railroad wants to buy, expressed regret. She said she does not want to move and had hoped the county would win. She wants the county to appeal.

"It's just a sad day," Howard said.

The rail project proposal, which would industrialize part of a valley in eastern Montgomery County, has "just tore the whole family to pieces."

The yard would be an open-air facility for transferring freight containers between trucks and trains. Located on a major rail line linking the Port of Virginia and Midwest markets, the facility is expected to cover 65 acres and cost about $50 million with related road work.

The county challenged giving state support to the project as an unconstitutional giveaway of public funds for a private purpose -- the expansion of Norfolk Southern, a Virginia Beach-based railroad and major freight carrier.

The judge disagreed, saying the project has primarily a public purpose and is in keeping with the state's function to maintain a quality transportation system.

"The facility will allow the transport of truck trailers by rail between cities for the purpose of reducing truck vehicular traffic on Interstate 81," the ruling said.

Giving money to such a project out of the state's Rail Enhancement Fund is permissible, the court said.

The Virginia Department of Rail and Public Transportation, which is backing the project financially, did not immediately return a call for comment. It has endorsed the project, stating, among other things, that "just one intermodal train has the equivalent carrying capacity of 200 long haul trucks, providing a competitive shipping option and reducing the number of trucks on highways."

The yard is expected to cost $24.8 million, with the state paying $17.4 million and the railroad $7.4 million, rail and transportation spokeswoman Jennifer Pickett has said.

Moving Cove Hollow Road, which the project overlaps, is expected to cost $11.3 million, with $7.9 million coming from the state and $3.4 million from the railroad, she said.

A second road project bears a price tag of about $15 million -- putting improvements together to widen North Fork Road between U.S. 460/11 and I-81.

Norfolk Southern, which has already bought some of the property it will need, said through spokeswoman Susan Terpay that it was pleased by the ruling.

Del. Dave Nutter, R-Christiansburg, said he was not surprised by the outcome and had advised members of the Montgomery County Board of Supervisors that they were battling "settled law" regarding the railroads.

"I told the county that this was not a very viable option," Nutter said. "Under Virginia law we give the railroads the power of eminent domain. I don't like that personally, but it's reflective that we recognize the unique public role they play already in our society.

"And that's why I felt like, at a time of just incredibly constrained resources, spending a lot of money to file suit just seemed to be a very challenging effort at this time."

Nutter said he would have preferred the rail yard be built in Salem and proposed a budget amendment last year that would have prevented the state from funding the facility unless it was built there. A year earlier, he sponsored bills that would require local government approval and partial local government funding of projects that receive money from the state's rail enhancement fund.

"I've always said the port has great value for the region, but I was also trying to reflect the will of the county and others to let's put it where people want it," he said.

Staff writer Michael Sluss contributed to this report.