Coastal Panel Votes to Extend Permit for L.A.-Texas Oil Line

Pacific Texas Pipeline Co., which seeks to build a 1,000-mile pipeline to carry crude oil from Los Angeles Harbor to Texas, won a crucial battle Wednesday when the California Coastal Commission voted to extend the company’s permit for one year.

The extension was approved over the objections of several critics, who argued, among other things, that a proposed project for Batiquitos Lagoon in Carlsbad to compensate for the pipeline’s environmental damage will do more harm than good.

The critics also contended that the company has not proved that the project is financially viable and that oil tankers coming to the port will pollute the air.

Delores Welty, a Leucadia resident, wrote the commission that Pac-Tex President Cecil Owens “does not appear to be a good business risk”--an apparent reference to complaints from Pac-Tex investors that led to a run-in the company had with the U.S. Securities and Exchange Commission last year.

Complaint Settled

The SEC accused Owens and Pac-Tex of committing stock fraud by raising $2 million from investors by selling unregistered stock. The complaint was settled immediately, without a denial or admission of guilt by either defendant. Pac-Tex and Owens were enjoined from selling unregistered stock.

Welty’s main complaint, however, had to do with the mitigation project involving the Batiquitos Lagoon.

Under its agreement with the Coastal Commission, Pac-Tex is to pay up to $20 million to restore the lagoon, a wetland that dries up and emits foul odors in the summer because it is cut off from the ocean. The project calls for engineers to dredge part of the lagoon and install a mechanical system allowing “tidal flushing”--daily infusions of salt water--to resume.

Destruction Feared

However, Welty and another critic, Carlsbad resident Inez Yoder, who is president of a nonprofit agency that researches environmental issues, said the project will destroy the wetland by converting the lagoon into a shallow harbor. They are particularly concerned that the shore birds that visit Batiquitos will no longer be attracted to the lagoon.

One of the commissioners who voted against the extension, Mary Lou Howard, said she believes the mitigation project should be closer to the site of the environmental damage.

Pac-Tex needed the extension because it has failed to begin construction on the $1.7-billion pipeline within the two-year period stipulated in the original permit. The vote for the extension was 9 to 2. Under commission rules, had one more member voted no, the extension would have been denied and the project would have required an entirely new permit.

The permit, which was approved in March, 1986, allows the company to construct a 106-acre landfill in the harbor for its operations and to lay 4 miles of pipeline in the coastal zone. The extension will expire in March, 1989.

Several commission members expressed reservations about whether the project will ever be built, citing the delays and Pac-Tex’s financial problems, which included the allegations by the SEC.

“I am very concerned about the fact that there has been no fiscal evidence of progress,” said Commissioner Madelyn Glickfeld. In an interview last month, Coastal Commission Chairman Michael Wornum said he had “grave doubts” that the pipeline would be built. But both voted for the extension.

Owens told the commissioners that he expects to complete the project. “We are still viable, ready, willing and able to accomplish our purpose,” he said.

Pac-Tex, based in San Pedro, has had to apply for hundreds of local, state and federal permits to move forward with its project. Company officials have said they have obtained all the major permits they need to begin construction.

But the work cannot begin until Pac-Tex secures financing. In the past, company officials said they had obtained an agreement from only one oil company to use the pipeline and that agreement with two companies is crucial to its feasibility. In an interview Wednesday, Owens would say only that “we are very happy with our financial arrangements.”

The 42-inch wide, 1,030-mile-long underground pipeline, which company officials estimate would take about a year to build, could carry 900,000 barrels of crude oil a day to Midland, Tex., where it would enter 14 other pipeline systems for transportation to Gulf Coast, Midwestern and Eastern refineries.

The oil would come primarily by ship from Alaska’s North Slope, but also from the California outer continental shelf, onshore sources and Pacific Rim countries, according to a recent statement by Pac-Tex.

Easier Process

Had the extension been denied, a new hearing process would have been required, which could have raised a broad range of issues about the proposal. Extensions, on the other hand, may be granted on narrow grounds as long as the Coastal Commission finds there has been no “substantial change in circumstances” since the original permit was issued.

In recommending approval of the extension, the Coastal Commission staff argued that there had been no change in circumstances. Critics of the pipeline project, four of whom submitted written objections, disagreed.