The Appellate Division of New York State Supreme Court has given Harlem River Yard Ventures Inc. a new lease on life, overturning a lower court's ruling that blocked development of New York City's only intermodal yard.

The Appellate Division swept aside a March ruling from Bronx Supreme Court Judge Jerry Crispino, who tossed out the company's 99-year lease, signed in 1991, with New York State's Department of Transportation.Judge Crispino had sided with the South Bronx Clean Air Coalition and S.P.M. Environmental Inc., which oppose the DOT's approval for shrinking the proposed Harlem River Yard by two-thirds, or 62 acres. They argued that there had been no proper environmental review.

But the Appellate Division noted that, after a decade of study, the plan to downsize the yard had been included in a final environmental-impact statement and approved by the DOT in May 1994.

It said the lower court should not have substituted its analysis for the expertise of DOT simply because the agency rejected what is considered to be a less feasible alternative - keeping the yard its originally planned size.

"Clearly petitioners, in commencing this proceeding, were less motivated by environmental concerns than by economic, political or other factors . . . (their) petition should have been denied on the merits," the higher court wrote.

John McHugh, of the New York law firm of McHugh & Sherman, who represents S.P.M. and local activists, said he would appeal the decision to the Court of Appeals in Albany. The Court of Appeals is the highest court in the state.

The original plan for the intermodal yard was supposed to take 485 trucks off New York's highways, saving some 137,000 gallons of fuel and contributing to cleaner air, according to the South Bronx Clean Air Coalition.

But with the intermodal yard downsized, with only 25 to 28 acres slated for intermodal use and the remainder earmarked for recycling and warehouse distribution, fewer than 200 trucks would be taken off the highways. It would also add some 7,541 trucks to the streets of the South Bronx, the environmental group said.

The yard should be reduced in size because the loss of New York City's industrial base leaves little use for a full-size intermodal yard, said Anthony M. Riccio, Harlem River Yard Ventures' vice president.

As originally designed in 1982, the $51 million Harlem River Yard was to be a 96-acre centerpiece of the DOT's full-freight access program for New York City, and its lone intermodal yard.

The project's supporters hope to entice rail freight destined for New York City. Such freight is now handled by seven intermodal terminals in New Jersey.

The Harlem River Yard will eventually be connected by an 1.8-mile elevated trestle, called the Oak Point Link, that will carry freight trains above tracks used by 550 Metro-North Commuter Railroad and 10 Amtrak trains daily.

Without the trestle, freight can only be moved to and from the intermodal yard only in off-hours when there's no passenger traffic.