V. Conversion of License to Lease

According to the application, AT&T Wireless now seeks to transform its revocable license arrangement to a lease in order to gain assurance that its use of PG&E's property for communications equipment will not be terminated abruptly. Because GO 69-C does not apply to leases or to any arrangement that is not revocable as prescribed in GO 69-C, the transformation of the license to a lease requires Commission approval under §851.

While, as we will explain, we are granting this application, we do so with significant reservations. The Applicants in this case negotiated a single "Master License/Lease Agreement" which covers both the license and lease of the property. Under this single agreement, the Applicants have agreed that, upon Commission approval of the §851 application, the provision of the agreement that renders the entire agreement revocable becomes inoperative, which has the effect of transforming a fully revocable arrangement to a more durable lease arrangement.

Our reservations arise from the fact that, by virtue of the single agreement, it appears that the Applicants contemplated that they would eventually be seeking §851 approval. If parties anticipate that they will be entering into an agreement that will require such approval, they should file an application seeking such approval. When parties use the same agreement to convert a license to a lease, our concerns increase that the parties may be attempting to bootstrap upon a GO 69-C license to undermine our analysis of environmental and other factors in the §851 application.

However, we find here that there was no apparent intent to use the single agreement as a means of evading the requirements under §851. As explained above, the current use of the property is consistent with the requirements of GO 69-C, and we explain below that no additional CPUC environmental review is occasioned by the conversion of the license to a lease.

We give notice that single agreements that provide for the conversion of a license to a lease may not be approved in the future. To ensure that we are able to meet our obligations under §851, parties should avoid drafting a single agreement that contemplates the conversion of a license into a lease when they are aware, at the time that they are negotiating the use of utility property, that they will be entering into a lease or other arrangement that will require §851 approval. Instead, they should seek such approval at the outset.