D. Discussion

We have reviewed the revised easements - which are set forth as Attachment 1 to the September 26 Submission and Attachment 1 to the
December 7 Submission, respectively -- and we agree with PG&E, Delta Energy and CPN Pipeline that they should be approved. As the parties point out, there have been no protests to the proposed modifications, and some of the changes (especially those relating to the insurance and indemnity provisions) are much more favorable to PG&E and its ratepayers than were the original provisions.

With regard to insurance, for example, the original versions of the easements required the grantees to carry insurance for commercial general liability and "business auto" of only $1 million for each accident or occurrence of bodily injury, property damage or personal injury, as the case might be. In the revised easements, the minimum limits for commercial general liability coverage have been increased to $10 million for each occurrence of bodily injury, death or property damage, $10 million for personal injury liability, $10 million aggregate for "products and completed operations," and $10 million for "general aggregate," with defense costs to be provided as an additional benefit and not included within these dollar limits. For business auto, the limit has been increased to $5 million per accident for bodily injury and property damage. In addition, pollution coverage of $5 million per occurrence for bodily injury and property damage has been added. These changes are obviously more in keeping with modern liability and tort exposure than were the original provisions.

With respect to the indemnity provisions, the most striking change in both the transition structure and gas pipeline easements is that they eliminate the language by which PG&E as grantor indemnified the grantees against claims arising from the actions of PG&E, its employees, agents, etc. in and about the easement area.⁵ Under the new language in the transition structure easement, the grantees expressly waive and release PG&E, its employees, agents, etc. from such liability, except to the extent that the injury, damage or loss is brought about by the gross negligence or willful misconduct of such persons.

It seems clear that after our order in D.01-08-069, PG&E decided that it should carefully review the easements it had originally submitted and seek to improve them. The changes set forth in the attachments to the September 26 and December 7 Submissions are significant improvements over the original versions of the easements, and indicate to us that the policy judgment reflected in footnote 16 of D.01-08-069 was a sound one.

"Grantor shall, to the maximum extent permitted by law, indemnify, protect, defend and hold harmless Grantee, its parent corporation, subsidiary corporations, members, officers, directors, representatives, agents and employees from and against all Claims, including, but not limited to: (a) Claims for injury or death to persons arising out of or in connection with: (i) Grantor's exercise of a right herein granted, or (ii) any act, omission or negligence of Grantor, or any of Grantor's agents, employees, contractors, or consultants; or (b) Claims for property damage, including, without limitation, Claims that are in any way connected with the presence, suspected presence, release or spill of any material or waste that is legally regulated or is designated as a hazardous material or waste by any law or regulation of any federal, state, county or local government agency, resulting from Grantor's use of the property subject to the easement granted herein, and including, without limiting the generality of the foregoing, Claims arising out of or in connection with: (x) Grantor's exercise of a right herein granted, or (y) any act, omission or negligence of Grantor, or any of Grantor's agents, employees, contractors or consultants occurring in, on or about the property subject to the easement granted herein. In the event any action or proceeding is brought against Grantee, its parent corporation, subsidiary corporations, members, officers, directors, representatives, agents or employees for any Claim against which Grantor is obligated to indemnify or provide a defense hereunder, Grantor upon notice from Grantee shall defend such action or proceeding at Grantor's sole expense by counsel approved by Grantee, which approval shall not be unreasonably withheld.