The three-member California State Lands Commission Monday rejected the environmental impact statement and report (EIS/EIR) for BHP Billiton's proposed offshore liquefied natural gas (LNG) receiving terminal, Cabrillo Port, 14 miles out to sea from Ventura County along the Southern California coast. The 2-1 vote puts a potentially fatal roadblock in front of the $550 million project, although the action could be overturned by a court appeal.

The state agency, with California's Lt. Gov. John Garamendi and state Controller John Chiang casting the "no" votes, denied the 3,000-page EIS/EIR that identified numerous environmental concerns and rejected BHP's application for a lease over the three-mile-wide state lands portion of the proposed 23-mile underwater natural gas pipeline that would carry regasified LNG supplies to shore for interconnection with the existing Southern California Gas Co. transmission pipeline network.

Technically, the lands commission action only pertains to the three-mile swatch of offshore land closest to the coastline over which the proposed pipeline would travel. The rest of the project is in federal waters and is subject to permitting by the U.S. Coast Guard and Maritime Administration (MARAD), which held its public hearing earlier this month and will render a final decision on the project in early July. The California Coastal Commission will still hold its hearing on the project Thursday to determine if it meets federal and state coastal protection laws.

Processing of the Cabrillo Port project application will continue, and California Gov. Arnold Schwarzenegger will still render his decision on the federal waters portion of the project by late May, following MARAD processes dictated in the federal Energy Policy Act of 2005 (EPAct). In response to Monday's action, Schwarzenegger said he supported the state's need for a "diverse, dependable and environmentally sound mix of energy supplies."

"Despite the action taken [Monday] by the State Lands Commission, my office, pursuant to federal law, is using the allotted 45-day review period to make sure that the project meets strict standards of public and environmental safety," Schwarzenegger said. "It would be inappropriate for me to take a position on any application before the review process is complete, but I do believe that LNG should be part of California's energy portfolio. Natural gas is the cleanest-burning fossil fuel, and an LNG facility to serve our state would make California less vulnerable to variations in supply and price."

At Monday's hearing, Lands Commission member Garamendi challenged BHP for not allegedly doing enough to curb air emissions from the proposed project. He also questioned the review of alternatives, noting that he thought a combination of stepped-up conservation, more renewable energy use and expanding the Sempra Energy LNG terminal under construction along the Pacific Coast of North Baja California in Mexico, 60 miles south of San Diego, would supply adequate amounts of imported gas for California.

Sierra Club California Coastal Director Mark Massara called the lands commission action "the biggest decision on California's energy future in decades," according to a report in the Los Angeles Times.

The same report said BHP had undertaken a full-court media and lobbying effort over the past year, noting that the Australian company reportedly spent $2.8 million on lobbying efforts in Sacramento in the 2005-2006 reporting period and ended last week with a series of full-page newspaper advertisements promoting the need for its LNG project.

©Copyright 2007 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.