11. Applicability of the California Environmental
Quality Act to this Decision

CEQA applies to discretionary government activities, which are defined as "projects." The statutory definition of "project" is "the whole of an action, which has the potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect change in the environment, and that is any of the following:

1. An activity that is directly undertaken by any public agency.

2. An activity undertaken by a person which is supported in whole or in part through public agency contracts, grants, subsidies, loans, or other forms of assistance from one or more agencies.

3. An activity involving the issuance to a person of a lease, permit, license, certificate, or other entitlement for use by one or more public agencies."²³

The pertinent inquiry here is whether, in rendering a policy determination regarding distributed generation, the Commission possesses any discretion to require changes that would mitigate, in whole or part, one or more of the environmental consequences of installation of distributed generation that an environmental review might uncover. The distributed generation facilities under consideration in this proceeding are not within the Commission's permitting jurisdiction. These facilities are subject to CEQA review and permit issuance by local governmental agencies. Thus, it reasonably follows that the discretionary authority to require changes to mitigate potential environmental impacts of a proposal for distributed generation construction would occur at the local level, and is not a function of the Commission's policy determination regarding distributed generation. Accordingly, adoption of this policy decision is not a "project" and does not require CEQA review.