2. Factual and Procedural Background

On June 1, 2000, PG&E filed Application (A.) 00-06-010 seeking Section 851 approval of 110 lease transactions. In the application, PG&E stated that it had not obtained Commission approval before entering into the leases - some of which were several years old - because the company in good faith believed that Section 851 approval was not required if the lease was for an adjunct use that did not affect the utility's use of the property. PG&E acknowledged that Commission decisions that recently had preceded its application prompted a change in the company's approach to Section 851 issues.

In A.00-06-010, PG&E stated that identifying the lease transactions required a significant amount of time and effort. PG&E owns almost 200,000 acres of land in 49 counties in California. PG&E states that it routinely receives requests from third parties to use utility property for various purposes. Until recent years, such requests were handled by PG&E land personnel located in the local offices responsible for the property in question. If granted, the documents evidencing the property grants would often be kept in the local offices, and local personnel would handle all communications regarding the transaction.

PG&E states that it has since instituted new policies requiring that all leases and licenses must be reviewed by the Law Department or the Corporate Real Estate Department in San Francisco to ensure compliance with Section 851. The new policies include weekly Section 851 meetings, presentations to the land agents on requirements of Section 851, and review and approval of all proposed encumbrances by PG&E's Land Department in San Francisco.

PG&E states that at the time it filed A.00-06-010, it believed that the central database maintained by its Land Department in San Francisco included records of all encumbrances of utility land, and that the leases and licenses for which approval was sought were limited to the 110 set forth in the application.

In addition to those 110 leases, PG&E in A.00-06-010 identified a number of other transactions that would require Section 851 approval later. These were leases or licenses for recreational use of PG&E property located on lands subject to Federal Energy Regulatory Commission (FERC) hydro-generation licenses. PG&E stated that it did not include these transactions in A.00-06-010 because it intended to include them in a later Section 851 application to be filed in connection with the utility's hydro-generation asset divestiture application. The hydro divestiture proceedings did not go forward. As indicated below, more than 70% of the transactions included in this application relate to lands subject to FERC licenses.

In A.00-06-010, PG&E was required to amend the application to provide specific information on each of the leases, and it was required to submit a brief addressing whether the leases in question should be deemed void and whether PG&E should be sanctioned for its failure to seek prior approval of the leases. PG&E filed the amendments and brief, and in this application it has filed six three-ring binders with copies of the 256 transactions for which approval is sought. A.00-06-010 remains pending, in part to consider a workshop report on utility license requirements now being developed by Commission staff.