V. Comments on Draft Decision
The draft decision of the ALJ in this matter was mailed to the parties in accordance with Pub. Util. Code § 311(g)(1) and Rule 77.7 of the Rules of Practice and Procedure. PPS filed comments on July 20, 2001. No reply comments were filed. The original decision proposed a penalty of $150,000 based on a 30-day continuing violation, and a $5,000 per day fine. While not done in response to PPS' comments, on reflection we have revised the fine's calculation to the formula set forth in Section III.C.8. However, we are persuaded that reasonable minds might differ as to whether PPS violated Rule 1, and have removed findings establishing such a violation.
We recite, and reject, each of PPS' remaining assertions in its comments on the decision.
PPS asserts that "the fine is predicated on certain erroneous findings and that the amount imposed is out of line with recent Commission precedent, and that it should, for those reasons, be reduced or eliminated."46 The allegedly erroneous factual findings relate to Qwest. PPS claims that its application did not actually seek approval to grant rights to Qwest and that in any event it disclosed Qwest's involvement, contrary to statements in the draft decision. We do not believe these issues warrant any change in the amount of the penalty, but address them for the sake of clarifying the record.
1. Qwest as Grantee
It is true that PPS LLC is the applicant, that it seeks to grant rights to PPS Holding Company (PPS Holding), and that PPS Holding will in turn grant rights to Qwest. PPS LLC, the applicant, claims, "PPS Holding can only convey those rights upon the Commission's approval of the IRU [indefeasible right to use] in the Application." Thus, it is clear that the effect of granting PPS LLC's application will be to allow PPS Holding to convey rights to Qwest without further Commission review. PPS LLC does not explain why it, and not PPS Holding, applied for leave to consummate the transaction. However, we change Finding of Fact 4 to state "PPS seeks to grant access to this fiber to third parties, including PPS Holding, which in turn will grant access to Qwest, for use in the construction of fiber optic telecommunications networks in California." We do not believe this change alters the outcome of the proceeding in any way.
2. Disclosure of Qwest Involvement
PPS argues, contrary to the draft decision's conclusion, that its application did reveal PPS Holding's intent to convey certain rights to Qwest. We disagree. The application does not mention Qwest, and Exhibit G, to which PPS cites, simply discusses the possibility of an agreement with Qwest, not that Qwest would be the primary beneficiary of the decision PPS sought. Moreover, the draft decision faulted PPS for not disclosing Qwest's involvement "prominently."47 Even if Exhibit G mentions Qwest, the mention is not at all prominent. Moreover, nothing in the challenged finding is inaccurate; it states "PPS did not reveal that Qwest would be the primary user of the new fiber optic lines until March 7, 2000. . ." and PPS does not challenge this statement.48 Moreover, the Qwest issue is but one portion of one "exacerbating fact" used to set the penalty, out of a total of five "exacerbating facts." (The relevant "exacerbating fact" describes the "fact" as follows: "PPS' failure to disclose in its application that [the] Project involved construction or Qwest."49) Finally, the draft decision's discussion and finding regarding the stop work order the Commission issued to Qwest is relevant to the decision to make the Commission's order subject to compliance with conditions we previously imposed on Qwest, not to the penalty. Thus, we do not change the decision in this regard.
3. Amount of Penalties
PPS also challenges the amount of the penalty based on allegedly contrary Commission precedent, citing In re Pacific Fiber Link, A.99-08-021. It also asserts that the decision did not make adequate findings to find a violation of Commission Rule 1, and that that failure undermines the amount of the penalty.
As to the issue of precedent, the Pacific Fiber Link case is distinguishable. The case involved work that occurred in 1998, at a time when Commission policy on CEQA was allegedly less clear to telecommunications companies than it was when PPS performed its work in 2000. The Presiding Officer's Decision in that case states:
We conclude therefore, after review of the record as a whole, that [Pacific Fiber Link's] PFL's cooperation with Commission staff, its efforts to comply with the substantive requirements of CEQA, and the Commission's own uncertainty in 1998 in dealing with the CEQA requirements for NDIEC entrants, mitigate against assessment of any further sanctions by this Commission against the company.
None of these factors is present in PPS' case.
As to PPS' Rule 1 challenge, we find that reasonable minds could differ as to whether PPS acted with gross negligence and on that basis remove the Rule 1 violation from this decision's findings and conclusions.
We decline to change the penalty amount, and reject PPS' other challenges to the draft decision.
1. PPS does not need the excess fiber capacity it seeks to lease to third parties.
2. It is generally appropriate from an environmental and economic standpoint to have parties share utility infrastructure where feasible.
3. PPS owns two crude oil pipelines in California. The first pipeline, the Pacific System, extends 120 miles from Kern County in Southern California to the Los Angeles basin. This Commission approved the Pacific System tariff and the certification of EIS/SEIR on April 10, 1996.
4. In addition to carrying oil, the Pacific System pipeline contains fiber optic cable that is used for communications purposes. PPS seeks to grant access to this fiber to third parties, including PPS Holding. PPS Holding in turn will grant access to Qwest for use in the construction of fiber optic telecommunications networks in California.
5. PPS' application was not complete until April 28, 2000, when its counsel submitted an executed copy of the USFS Project Stipulations.
6. PPS did not disclose in its initial application that the proposed project would require the installation of approximately 60 additional pullboxes; it made this disclosure on February 7, 2000 in response to an ALJ ruling.
7. PPS did not reveal that Qwest would be the primary user of the new fiber optic lines until March 7, 2000 when it furnished a copy of a report it had provided to the USFS in September 1999 describing the project. That report revealed that the Pacific Pipeline fiber optic cable ultimately would form part of Qwest's 18,815-mile, 150-city nationwide network platform.
8. The Commission's Energy Division had issued a "stop work" order to Qwest prohibiting it from further work in California on its fiber optic network because of alleged CEQA violations. The Commission initiated an investigation into these alleged violations on March 2, 2000.
9. PPS did not disclose that any of the work would occur on private land adjacent to the Angeles National Forest until March 7, 2000.
10. The USFS issued PPS a permit to perform the proposed activity on April 7, 2000. It conditioned the permit on a series of Project Stipulations focused on mitigating the environmental impact of the proposed work.
11. PPS, through its counsel, disclosed to the assigned ALJ for the first time in July 2000 that all of the construction discussed herein had been completed without Commission review.
12. This Commission conducted an environmental review of the Pacific System pipeline in 1996.
13. PPS installed 60 pullboxes without Commission authorization.
14. The Commission did not grant PPS permission to proceed without CEQA review; PPS made a unilateral decision that such review was not required.
15. PPS' work did not cause environmental harm, and was overseen by USFS personnel.
16. PPS gained a benefit from proceeding with construction without waiting for Commission approval.
17. PPS promptly disclosed that it had completed the Project without CEQA review.
18. PPS failed prominently to disclose the necessary construction in its initial application, or the involvement of Qwest, which had been the subject of its own environment-related stop work order, in the Project. These factors were material to the merits of the application and should have been disclosed.
19. PPS apparently believed CEQA review of its Project was unnecessary.
20. This application did not seek approval solely of a paper transaction; there was construction incident to the application. PPS conceded this point in responding to the ALJ's ruling seeking information on construction related to the transaction.
21. CEQA benefits the public at large by ensuring proper environmental view prior to projects with potential impacts on surrounding areas.
1. Based on the PPS' lack of need for the leased fiber capacity, the Commission's interest in avoiding redundant infrastructure where feasible, and the lack of ratepayer impact, the leases are in the public interest, and should be granted pursuant to Pub. Util. Code § 851.
2. The work applicant proposes is a "project" not exempt from CEQA review.
3. Even if a project will occur entirely on federal land, it is not exempt from CEQA review. This Commission's jurisdiction over such projects stems from its regulatory authority over the applicant, not the land.
4. Under the unique circumstances present here, we need not conduct a duplicative environmental review of the project.
5. PPS should have sought environmental review by this Commission of the project.
6. The USFS Project Stipulations in Appendix A adequately protect the environment, and should be incorporated herein as conditions. We rely on the USFS conditions under the special circumstances presented in this case, and our decision here shall not be precedential in subsequent cases.
7. The conditions in the Qwest Fiber Optic Project Cultural Resources Protocols (Appendix B) bind Qwest and its agents, and should be binding on the work approved here to the extent it is performed for Qwest's fiber optic network.
8. PPS should be authorized pursuant to Pub. Util. Code § 851 to grant third-party access to fiber optic cable located in PPS' crude oil pipelines. All such access shall be subject to the conditions we impose in this decision.
9. We affirm the assigned ALJ's January 26, 2000 ruling granting PPS' Motion for Limited Protective Order seeking confidential treatment of the Indivisible Right to Use Agreement, as amended, between PPS and PPS Holding and attached as Exhibit G to the Application.
10. PPS violated Commission Rule 17.1 and Pub. Util. Code § 702 by constructing the Project without Commission approval.
11. PPS committed 60 separate violations.
12. PPS should be fined $1,750 for each violation, for a total fine of $105,000.
13. It is in the public interest to impose a fine on PPS.
IT IS ORDERED that:
1. Pacific Pipeline System LLC (PPS) is authorized pursuant to Pub. Util. Code § 851 to grant third-party access to fiber optic cable located in PPS' crude oil pipelines to the extent set forth in the Application.
2. PPS' construction activities necessary to the foregoing third party access is approved retroactively, subject to the conditions set forth herein.
3. PPS and all third parties installing fiber optic cable in PPS' pipelines shall be bound by the conditions set forth in the United States Forest Service Project Stipulations contained in Appendix A hereto. This decision shall not be precedential.
4. The conditions in the Qwest Fiber Optic Project Cultural Resources Protocols (Appendix B) bind Qwest Communications International, Inc. (Qwest) and its agents and affiliates, and shall be binding on the work approved here to the extent it is performed for Qwest's fiber optic network.
5. The ruling of the assigned Administrative Law Judge (ALJ) granting PPS' motion for protective order is affirmed.
6. PPS shall notify the Director of the Energy Division, in writing, of any substantial amendments to, extension of, or terminations of the agreements attached as Exhibits A-G to the Application within 30 days following the execution of such amendments, extensions or terminations.
7. PPS shall be assessed a penalty of $105,000 payable to the General Fund of the State of California within 30 days of the effective date of this order.
8. Upon making such payment, PPS shall file an advice letter with the Commission's Energy Division attaching a cancelled check or other proof of satisfaction of the penalty obligation we impose in this decision.
9. This proceeding is closed.
This order is effective today.
Dated October 2, 2001, at San Francisco, California.
LORETTA M. LYNCH
President
HENRY M. DUQUE
RICHARD A. BILAS
CARL W. WOOD
GEOFFREY F. BROWN
Commissioners
