IV. Discussion

A. License vs. Lease

A threshold issue is whether the conversion of the Master Agreements into "leases" creates genuine lease agreements or whether the Agreements in question are in fact consistent with G.O. 69-C licenses, both before and after the proposed conversion.

We find that the Master Agreements do not create genuine leases, and therefore cannot be converted into such. The Master Agreements remain in effect, as they have since they were entered into, as licenses. As described below, the Agreements appear to be for limited use in that they authorize only the installation of minor telecommunications equipment on existing electric distribution facilities, the Agreements can be revoked by PG&E consistent with G.O.69-C, the telecommunications equipment can be easily removed from PG&E's facilities, and the telecommunications equipment will not interfere with PG&E's utility operations, practices or service.

Section 2.1 of the Master Agreements declares the rights granted therein as those of a license. A "license" is generally defined as an agreement that confers a right to occupy, while a "lease" is an agreement that confers exclusive possession.⁷ The reference in Section 2.2 of the Master Agreements to a "lease" is not dispositive. The use of "lease" language is inconclusive as to a party's intentions to establish a lease.⁸ Section 2.2 also goes on to state that the use of the facilities under a Master Agreement continues pursuant to its terms and conditions. All installations that were made pursuant to the G.O. 69-C licenses automatically become subject to the "leases" upon conversion.

In addition, the converted Master Agreements do not convey an interest in real property. Section 1.2 of the Master Agreements states that PG&E "does not convey any interest in real property." A license does not create an interest in the land of the licensor.⁹

Lastly, the rights granted in the Master Agreements are subject to termination by PG&E under the same terms and conditions as contained in G.O. 69-C.¹⁰ Section 10.1(b)(4) of the Master Agreements allows termination "in accordance with the provisions of Section 2.1, if PG&E or the CPUC invoke the provisions of G.O. 69-C." Section 7.1 also states that "PG&E shall be entitled at any time to discontinue PG&E's use of PG&E's facilities located on the PG&E Right-of-Way, and Permittee shall immediately remove its Attachments."

Additionally, Section 7.3 allows PG&E to revoke the privileges granted under the Master Agreement immediately and for the same reasons, as provided by G.O. 69-C. Section 7.3 provides that if

(i) PG&E needs the space or capacity occupied by the Permittee's equipment for its own use, or (ii) should any Pole to which Permittee has attached an Attachment be taken by the power of eminent domain, then on being given at least ninety (90) days' written notice by PG&E to do so, or in cases of emergency on such notice less than ninety (90) days as the circumstances reasonably permit (which emergency circumstances may include no notice), the Permittee shall remove its Attachments from the PG&E poles as PG&E shall designate and at the expiration of the time specified in the notice all rights and privileges of the Permittee in and to the PG&E poles designated shall terminate.

A notice requirement does not change the legal nature of the right to attach to PG&E's poles. Advice Letter 2063-E filed by PG&E on December 20, 2000 contains three G.O. 69-C license agreements. These agreements provide for the exact same notice requirements as the Master Agreements herein. Each of the agreements allows a carrier to attach its equipment to PG&E's facilities; none of these agreements requires the licensee to pay any fees associated with Section 851.

We also do not find any apparent benefit to telephone carriers in the Master Agreements which warrants or necessitates an additional one time $10,000 fee and a $5,000 fee for each additional application. As Protestants fear, such fees would artificially inflate the costs of competing telephone carriers and undermine our policy objectives in the telecommunications sector. While the revenue from the proposed additional fees could benefit PG&E customers, as it argues, the unreasonableness of the fees outweighs any benefits.

For these reasons, we reject PG&E's assertions and find that Master Agreements do not create genuine leases; nor do they produce any additional benefits to Permittees that is commensurate to the added costs in fees and process. The Master Agreements are in substance licenses authorized by G.O. 69-C.

B. Public Utilities Code § 851

For the above stated reasons, we find that the Agreements in question are properly license agreements consistent with the terms of G.O. 69-C. Because the Master Agreements do not create genuine leases, Section 851 review and approval is not necessary.

Additionally, because no Section 851 approval is required in this instance, a review by the Commission under CEQA is also unnecessary. There is no discretionary decision by the Commission which triggers CEQA.

C. Compliance with Section 851 and CEQA

We have expressed concern in recent decisions that utilities might instigate transactions and activities under G.O. 69-C in order to evade the advance review and approval requirements of Section 851 and CEQA.¹¹ We have carefully reviewed the Master Agreements and find that the Agreements do not circumvent Section 851 or CEQA. This is because the Agreements properly grant G.O. 69-C licenses for the use of PG&E's facilities.

However, we remain concerned that utilities might attempt to use G.O. 69-C to circumvent Section 851 and CEQA. We caution utilities that any use of G.O. 69-C to evade Section 851 and CEQA will be subject to monetary penalties and other sanctions.

⁹ Johnson v. Kenneth I. Mullen, Inc. (1989) 211 C.A.3d 653, 657; Nahas v. Local 905, Retail Clerks Assn. (1956) 144 C.A.2d 808, 821.