2. Background
2.1 The Parties
PG&E is a public utility corporation that provides gas and electric service in California and is subject to Commission regulation. Lamar is a California Limited Liability Company operating an outdoor advertising business in California and a subsidiary of Lamar Advertising Company based in Baton Rouge, Louisiana, that owns over 150 outdoor advertising companies in more than 40 states and Puerto Rico.
2.2 The Property
PG&E now and in the past has had several advertising signboards on its properties near major thoroughfares.4 The properties at issue in this application and under the Master Agreement are PG&E's properties that PG&E has identified. There are approximately 300 additional potential outdoor advertising sites throughout its service territory that may be similarly suitable for and attractive to those interested in placing outdoor advertisement signboards, such as Lamar. Generally, those potential sites are located within 660 feet of a major thoroughfare and appear to meet other basic local and state requirements concerning outdoor advertising such as zoning and other land use restrictions as well as compliance with the California Outdoor Advertising Act, California Business and Professions Code Sections 5200, et seq.
2.3 The Master Agreement
Under the Master Agreement, Lamar would pay PG&E an
agreed-upon annual license fee, with the Master Agreement's term being ten (10) years from the date of the Commission's approval with potential renewal for two additional terms of five (5) years each.
Under the Master Agreement, Lamar and PG&E would enter into separate and site-specific license(s) to install individual signboards and related equipment on specific PG&E land, buildings, and structures. Lamar would first identify specific proposed PG&E sites for individual signboards. Lamar would thereafter prepare and submit to PG&E for approval a Site Application Form (SAF) containing detailed plans.5
Then PG&E, pursuant to the Master Agreement and specific site license(s), would license Lamar to use its property for constructing, maintaining, servicing, and removing signboards and licensee equipment, and would grant Lamar the non-exclusive, revocable right to access the site(s) to the extent and under the conditions specified in the SAF.
Notably included in the conditions is the requirement that the signboard may not interfere with utility operations. Thus, the Master Agreement has been structured to foreclose the possibility of adversely affecting electric or gas service to PG&E's customers, and PG&E has ensured sufficient oversight over Lamar's use to enable its facilities to be completely protected.
The Master Agreement also requires that no signs subsequently licensed pursuant to the Master Agreement may exceed a maximum of 14 feet high and 48 feet wide, with the most popular signboard sizes being 12' x 25', 10' x 30', and 14' x 48'. The majority of these signs will be held up by a freestanding monopole with a concrete footing of up to 48 inches in diameter. The sign face with the advertising copy will be bolted to the pole and the catwalks and lighting will be installed as part of the signboard design. PG&E's application indicates the construction of the proposed signboards generally will require digging a hole, ranging from 14' to 23' deep in the ground and from 36" to 48" in diameter that will be filled with concrete to support the pole that will hold up the advertising signboard. The exact hole depth and diameter measurement required for construction is unknown and will be dependent upon the size of the proposed sign. Both PG&E and Lamar anticipate no permanent changes to the PG&E properties from the construction of the proposed signboards.
With different site and signboard options available, the Master Agreement gives PG&E the discretion to review each SAF on case-by-case basis. Moreover, the Master Agreement provides several provisions for revocability (termination), including Section 11.1.3 allowing termination by PG&E with 30 days written notice at PG&E's sole discretion if determined necessary for the conduct of PG&E's current or future utility operations.6
Finally, the Master Agreement requires Lamar to ensure that each licensed signboard fully comply with all local agency zoning ordinances and other requirements such as those of California Department of Transportation.7
2.4 PG&E's Proposed Expedited Review Process
PG&E requests that the Commission also approve an expedited review process for the three potential types of future site-specific Section 851 filings under the Master Agreement, as follows:
CATEGORY 1: Where Statutory or Categorical Exemption is Shown (Request for approval within 45-90 days)
For those future site licenses qualifying for a statutory or categorical exemption from California Environmental Quality Act (CEQA), as for minor alterations to PG&E owned lands, buildings, and other structures, PG&E proposes to submit a Section 851 Advice Letter to the Commission under ALJ-202 or its successor.
Consistent with ALJ-202, the Commission would determine whether to approve or deny the request within 45 days of filing, if the filing was not protested and within 90 days of filing if it is protested:
· Where the Advice Letter is not protested by the 20-day deadline for protests, the Executive Director of the Energy Division shall issue an Executive Resolution approving the Advice Letter within 45 days of its filing date.
· Where the Advice Letter is protested, the Energy Division shall prepare a draft resolution within 30 days of the protest and place the draft resolution on the Commission's next decision conference agenda for a decision within 90 days of the Advice Letter's filings date.
CATEGORY 2: Where Filing Attaches Documentation of Local
Lead Agency's CEQA Findings
(Request for approval within 90-120 days)
For those future site licenses that will be subject to CEQA review by a local agency acting as the lead agency, PG&E proposes to file an Advice Letter including the local agency's CEQA documentation and findings, to enable the Commission to conduct its review as a responsible agency. PG&E argues such licenses should qualify for Advice Letter treatment. Alternatively, if the Commission does not share PG&E's view, PG&E requests approval, as follows:
PG&E's Preferred Expedited Approval Process:
PG&E will provide advance notice to Energy Division shortly after PG&E and Licensee enter into a specific site license agreement. Advance notice shall be provided in the form of a letter and the listing will include: 1) the proposed site(s); 2) a description of the location; 3) site zoning; 4) the nature of local review (if required); and 5) whether the site is subject to local agency CEQA review. PG&E will periodically update this letter listing, approximately every quarter, for the purpose of keeping Energy Division apprised of local reviews for sites that will later become Section 851 filings with the Commission.
Once the necessary local review has been completed, PG&E will submit an Advice Letter including the underlying agency's CEQA review seeking Commission ratification of local agency decision as follows:
In each Advice Letter, PG&E would provide the Commission with specific information about the project such as: description of proposed project and environmental setting; sign schematics and construction work plan; information about all underlying CEQA findings and other local review. At that point:
· If no protest is received within the 20 day protest period, the Executive Director may issue an Executive Resolution of approval within 15 days following the protest period.
· If a protest is received, the Advice Letter will be processed within 60 days for a Commission Resolution within 45 days of the end of the protest period.
· If the Commission's decision on the Advice Letter does not ratify the lead agency's underlying environmental review, the project would be rejected without prejudice and refiled as an Application for further Commission review under Category 3, below.
Alternative Expedited Approval Process:
PG&E argues that even if the Commission believes that Category 2 transactions may require an application, the Commission should still adopt a target timetable for issuing its approval of such applications on an expedited basis. Specifically, PG&E requests approval within 90 days where no protest is received, and within 120 days where there is a protest. PG&E requests this timetable apply regardless of whether an Advice Letter or application is used.
PG&E states it will work informally with the Energy Division and the Commission to help meet these proposed expedited deadlines or target dates to minimize undue delays, including holding pre-filing meetings to define desired showings as well as expedited responses to subsequent data requests. In addition, PG&E plans periodically to provide Energy Division with advance notice by letter of the sites for which site license agreement negotiations are completed. This listing will include: 1) the proposed site(s); 2) a description of the location; 3) site zoning; 4) the nature of local review (if required); and 5) whether the site is subject to local agency CEQA review. PG&E proposes to periodically update this letter, approximately every quarter, for the purpose of keeping Energy Division apprised of sites that will later become Section 851 filings with the Commission, pending completion of local reviews.
CATEGORY 3: Where Site License is Neither CEQA Exempt nor
are there Local Agency CEQA Findings
In instances when there is no categorical or statutory exemption under CEQA and there are no other CEQA reviews or other processes (i.e., Commission is lead agency), PG&E proposes to file a Section 851 application including a proponent's environmental assessment to enable the Commission to initiate its environmental review. In these instances, PG&E acknowledges that the standard Commission Section 851 review process should apply. PG&E is not proposing a specific target for expedited review. However, PG&E urges for expeditious treatment and review of Category 3 types of Section 851 filings.
2.5 Environmental Review
CEQA requires any California government agency approving a discretionary project to consider the environmental impacts of its decisions. (Cal. Pub. Res. Code, § 21080.) A project is an activity that "may cause either a direct physical change in the environment, or a reasonable foreseeable indirect physical change in the environment" and either (a) is directly undertaken by any public agency, (b) is supported by contracts, grants, subsidies, loans, or other forms of assistance from a public agency, or (c) involves the issuance of a lease, permit, license, certificate, or other entitlement for use by one or more public agencies. (Cal. Pub. Res. Code, § 21065.)
The CEQA review process informs "the decision makers and the public about the potential, significant environmental effects of the proposed activities," and allows the decision makers to consider the environmental consequences of projects that are subject to the Commission's discretionary approval. (Title 14 of the California Code of Regulations, hereinafter "CEQA Guidelines," Section 15002.)
Under the CEQA Guidelines (14 Cal. Code. Regs., § 15000, et seq.), where a project is to be approved by more than one public agency, only one agency becomes the "Lead Agency" and is responsible for providing the Environmental Impact Report (EIR) or negative declaration. (CEQA Guidelines, § 15050; Pub. Res. Code, § 21165.) "If the project will be carried out by a public agency, that agency shall be the Lead Agency." (CEQA Guidelines, § 15051(a).) All other agencies with discretionary approval over the project are "Responsible Agencies." (Id., § 15381.)
To comply with CEQA, a Responsible Agency must consider the Lead Agency's EIR, negative declaration, or other CEQA analysis. However, the Lead Agency's determination is final and conclusive on the Responsible Agency unless the determination is challenged under
Pub. Res. Code Section 21167, circumstances or conditions change, or the Responsible Agency assumes the Lead Agency role. (Pub. Res. Code, § 21080.1(a); CEQA Guidelines, § 15050(b)-(c).)
Here, PG&E's application seeks the Commission's approval of (1) the Master Agreement and (2) an expedited Commission review process for future Section 851 filings pursuant to the Master Agreement. Neither of the two components of the PG&E's application proposes a "project" as defined by CEQA. Neither, in and of itself, has any potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment within the meaning of CEQA Guideline 15378(a). Rather, approval of this application merely establishes a standardized set of terms and framework applicable to future unspecified individual site licenses. The site-specific information and associated individual leases which could trigger the definition of a "project" will be subject to later filings and Commission review through a subsequent Section 851 discretionary approval review process.
Several courts have recognized that the adoption of broad-brush or preliminary planning tools-tools that establish some type of roadmap or framework for processing future approvals-do not commit an agency to a particular course of action on a particular project and thus do not trigger CEQA review. For example, in Environmental Council of Sacramento v. City of Sacramento (2006) 142 Cal.App.4th 1018, an agency adopted a Memorandum of Understanding (MOU) outlining a "joint vision" for processing future land-use agreements within a defined geographic area. Noting that the MOU did not approve any development, describe any specific development proposals, or change the existing land use designations, the court found that the MOU "is not a project within the meaning of CEQA, nor does it propose any specific project amenable to meaningful environmental review." (Id. at 1033.) The court recognized the practical problem with attempting an environmental review before specific improvements are proposed and stated: "It is both impractical and useless to consider the multitude of potential environmental impacts before the financial feasibility is determined and the scope of the project is defined. . . . . Far too little is known about the scope, the location, or the types of projects that might be proposed in the future to assist decision makers in evaluating any potential environmental trade offs." (Id. at 1032; see also Citizens to Enforce CEQA v. City of Rohnert Park (2005) 131 Cal.App.4th 1594; (Id. at p. 1601); see also City of Vernon v. Board of Harbor Commissioners (1998) 63 Cal.App.4th 677, 690; and Concerned McCloud Citizens v. McCloud Community Services District (2007) 147 Cal.App.4th 181, 197 (district's conceptual agreement to sell water was not a project under CEQA)).
Based upon the foregoing, the Commission finds that the application seeking approval of a Master Agreement and the related expedited review process does not present a "project" triggering a need for CEQA review and therefore determines that no CEQA review is required. However, PG&E shall comply with all local, state, and federal laws in constructing individual sign boards.
2.6 Ratemaking Considerations
No specific sites have been identified by PG&E in the Master Agreement. However, pursuant to the Master Agreement, the sites will be located on non-depreciable property lands, buildings, and other structures that are used to provide gas and electricity service to PG&E customers and are currently included in PG&E's rate base. PG&E proposes that accounting treatment for all financial proceeds resulting from the Master Agreement be distributed as follows:
2.6.1 Natural Gas Transmission and Storage Property
Proceeds from the license fees received for sites located on PG&E's natural gas transmission and storage property are subject to the Gas Accord,8 and all costs associated with gas transmission property are subject to Gas Accord ratemaking for gas transmission service in PG&E's gas transmission and storage rate cases.9 PG&E will account for site license fees as Gas Other Operating Revenue and will be used to reduce PG&E's revenue requirement consistent with conventional cost-of-service ratemaking.
2.6.2 Electric Transmission Property
Proceeds from the license fees received for sites located on PG&E's electric transmission property are subject to Federal Energy Regulatory Commission (FERC) jurisdiction for ratemaking. All costs for PG&E's electric transmission system are now part of FERC ratemaking for transmission service in PG&E's transmission owner cases. PG&E will account for license fees related to electric transmission property pursuant to applicable FERC rules for accounting and ratemaking.
2.6.3 Electric Distribution Property
Site license fees for sites located on PG&E's electric distribution property will be treated as Electric Other Operating Revenue and will be used to reduce PG&E's revenue requirement consistent with conventional cost-of-service ratemaking.
4 See, e.g., Decision (D.) 04-07-021.
5 See Master Agreement filed with application, Attachment 1 - Exhibit B.
6 See also: Section 11.1 providing additional grounds for PG&E termination; Section 11.3.2 (Termination by Either Party 180 days after the other party's receipt of written notice); and Section 11.7.2 providing that if PG&E, in its sole discretion, determines that any circumstance or condition relating to a signboard or Lamar's equipment requires immediate action to prevent or mitigate loss of, or damage to life, health, property or the interruption of PG&E's operations, whether or not resulting from Lamar's failure to perform any obligation hereunder, PG&E may take such action as it deems necessary without any prior notice to Lamar and Lamar shall reimburse PG&E for the cost thereof as Project Cost.
7 Pursuant to Outdoor Advertising Act, California Business and Professions Code Sections 5200, et seq.
8 The term "Gas Accord" generally refers to the original settlement of the issues pertaining to Pacific Gas and Electric gas transmission and storage (GT&S) system in the Gas Accord Settlement Agreement that was adopted in D.97-08-055 [73 CPUC2d 754]. The Commission has twice modified D.97-08-055 and has since also adopted D.03-12-061 (Gas Accord II Settlement Agreement), D.04-12-050, (Gas Accord III Settlement Agreement), and D.07-09-045 (Gas Accord IV Settlement Agreement).
9 Id.
