II. CEQA Issues

In accordance with CEQA provisions, the Commission must assess the potential environmental impact of a CLC's proposed operation in order to determine that adverse effects are avoided, alternatives are investigated and, where applicable, environmental quality is restored or enhanced as necessary. To achieve this objective, Rule 17.1 of the Rules of Practice and Procedure requires the proponent of any project subject to Commission approval to submit with its application for approval of such project a Proponent's Environmental Assessment (PEA). The PEA is used by the Commission to focus on any impacts of the project which may be of concern, and to prepare the Commission's Initial Study to determine whether the project needs a Negative Declaration or an Environmental Impact Report (EIR).

Through the second quarter of 1999, the Commission staff's practice was to prepare a Negative Declaration covering all CLC petitioners filing for facilities-based CPCN authority during the previous quarter.

In D.99-12-050, the Commission concluded that more individualized treatment of the environmental review of each CPCN request was warranted. Thus, effective with D.99-12-050, each CLC request for CPCN authority is to be individually reviewed and, if it is determined that a Negative Declaration or EIR is necessary, it will be prepared on an individual basis.

In D.99-10-025, we noted that various CLC petitioners did not anticipate undertaking any new construction, at least for their initial start-up operations. Instead, they intended to collocate their network equipment within the existing structure of the central offices of the Incumbent Local Exchange Carriers (ILECs), and to provide service by purchasing an ILEC's existing local loop as unbundled network elements (UNEs) under federal law. Because UNEs are considered "facilities" under federal law, a facilities-based CPCN is still necessary for a CLC to operate utilizing collocation UNEs. The CLCs argued that the deficiencies identified in the negative declaration should not prevent the Commission from granting such limited facilities-based authority at this time where no construction is involved.

We concluded in D.99-10-025 that under the limited definition of facilities-based service utilizing equipment installed in previously existing structures, no material adverse environmental impacts would result since no external construction would be involved. Accordingly, for purposes of D.99-10-025, we granted limited "facilities-based" authority in this restricted manner to each of the Petitioners covered in that order. We shall grant a similar limited facilities-based authority to Sphera as ordered below.

Under the limited facilities-based authority granted herein, Sphera shall be prohibited from engaging in any construction of buildings, towers, conduits, poles, or trenches. At such time in the future that Sphera seeks to engage in the construction of facilities to be used in the provision of local exchange service, Sphera shall first be required to file a new application seeking to expand the limited facilities-based CPCN authority granted in this order. The application shall include a PEA providing a detailed description of the proposed construction. Sphera shall fully comply with CEQA.