NEWPORT BEACH, Calif.—A company looking to build one of the two biggest desalination plants in the Western Hemisphere on the Southern California coastline failed to receive approval from a state board, but the $900 million project isn't sunk yet.

The California Coastal Commission voted Wednesday night to delay a decision on the proposed plant from Boston-based Poseidon, which withdrew its application while it does further study on how it would operate.

The unanimous vote came after an all-day hearing in front of hundreds of people where environmentalists voicing concerns over the effects on sea life faced off with Californians worried about securing a future water supply over the Huntington Beach plant that would procure 50 million gallons of drinking water a day.

Poseidon will now conduct a feasibility study on an alternate plan that it draw water from below the ocean's surface in order to protect marine life.

The company said in a statement that the delay offers it an opportunity to prove the site is appropriate for the plant.

"We consider today's decision a 'win/win' and look forward to working with the Coastal Commission staff to bring Orange County one step closer to securing a drought-proof water supply," Poseidon's statement said.

Commissioner Dayna Bochco said the proposal as it stands would undoubtedly harm marine life and a series of nine interconnected areas designed to help sea critters grow and replenish in the area near Huntington Beach.

"You can be in very strong support of desal as an alternative to other water programs, but you must get it right," she said, "and I do not believe this project is right."

Some commissioners also said they did not see evidence that using a subsurface intake wouldn't work.

"If Poseidon cannot recalibrate themselves to get into the 21st century, then they need to take their business model someplace else," said commissioner Jana Zimmer.

Poseidon officials said infiltration galleries that draw water from beneath the ocean floor won't work in Huntington Beach because of the volume of water required and the prohibitive cost of the technology. They point out that California coastal authorities have already signed off on a similar plant under construction in Carlsbad that uses an open intake and more than twice the amount of ocean water to produce the same amount of tap.

"It's an unproven technology. It cannot be financed. It would require us to start the entitlement process from scratch, and it essentially kills the project," said Scott Maloni, Poseidon's vice president of development.

Residents at the meeting waved dueling signs reading "Yes on Desal" and "Protect our Coast." Some local elected officials urged commissioners to back the plan while others, citing environmental concerns, pleaded with them to deny the project or force Poseidon to use subsurface intakes and diffuse a brine discharge released by the facility into the ocean.

"It's not appropriate moving forward in the future to use 1950s technology when they can do better," said Susan Jordan, director at the California Coastal Protection Network.