IX. Prospective Approval

The purpose of § 851 is to enable the Commission to review a proposed transaction before it takes place in order to take such action as the public interest may require. In this instance, only prospective approval of the irrevocable lease is requested. However, as discussed previously, the facilities constructed pursuant to the revocable license did not qualify under GO 69-C. Therefore, while we approve this application prospectively, PG&E is at risk for any adverse consequences that may result from its misuse of GO 69-C, violation of § 851, and violation of CEQA. In addition, our approval of this application is limited to those previously completed facilities specifically identified in the application, and subsequent supplements filed in this proceeding.

The second paragraph of § 851 provides that "any disposition of property by a public utility shall be conclusively presumed to be of property which is not useful or necessary in the performance of its duties to the public as to any...lessee...dealing with such property in good faith for value..." The Commission has interpreted this provision as protecting innocent lessees from having their transactions invalidated solely because the utility leased the property without advance approval under § 851.¹⁴ However, this does not invalidate the primary requirement of § 851 for advance Commission approval.¹⁵

The revocable license PG&E granted to WilTel is a form of lease. We assume that WilTel dealt with PG&E in good faith, and intends to be bound by the license. Therefore, PG&E should be able to enforce its rights under the revocable license. It would be inconsistent with § 851, and poor public policy to relieve a licensee of its obligations under a license. To do so would prevent PG&E from using its rights and powers under the revocable license to stop a licensee from using PG&E's property in a manner harmful to PG&E's performance of its duties to the public. Therefore, we do not, by this decision, relieve WilTel of its obligations under the revocable license.