2. Background

A. The Project

PG&E is applying for authorization to grant a permanent easement for slope stabilization improvements to Triad across a parcel of PG&E land in Solano County that is known as Eastern Swett Ranch. The Solano County Farmlands and Open Space Foundation (Solano County Foundation) holds an option to purchase this property.³

Triad owns land adjacent to Eastern Swett Ranch that Triad is developing as the site for a residential subdivision. According to the application, during preparation of the site, Triad cut into a portion of the hillside in order to grade the property. Triad's grading activities destabilized the hillside, which necessitated slope stabilization improvements to prevent soil movement and hillside erosion onto PG&E's land. In addition, without PG&E's knowledge or consent, Triad moved a fence that marked PG&E's property line and excavated a benched cut into PG&E's property, which was to be backfilled with "engineered" backfill and geogrid reinforcing fabric in order to stabilize the slope.

According to the application, after PG&E discovered Triad's unauthorized activities, PG&E determined that since the rainy season was approaching, the best course of action was to permit Triad to complete the slope stabilization improvements in order to avoid a safety hazard and the risk of serious damage to PG&E's property. PG&E therefore entered into a revocable license agreement with Triad on November 5, 2003 pursuant to General Order (GO) 69-C (the license) so that Triad could enter the property and complete the slope stabilization improvements.

PG&E now wishes to convey a permanent easement to Triad so that Triad may maintain the slope stabilization improvements. If the easement is approved, Triad will pay PG&E $1,000 for the easement.

B. The Proposed Easement Agreement between PG&E and Triad

In the proposed easement agreement, PG&E grants Triad a non-exclusive easement for the purpose of performing maintenance, grading slopes, and constructing drainage facilities, such as drains, culverts and filter blankets, on the property. Triad may not assign the agreement with PG&E.

Triad may not erect or construct buildings or improvements on the easement area, except as necessary to maintain the slope. PG&E must approve any improvements or structures to be constructed on the easement area.

Triad has agreed not to interfere with PG&E's use of its property or to engage in activities on the site that would place PG&E in violation of applicable Commission General Orders or legal requirements. Triad must also conduct its activities in a manner that does not endanger PG&E property or facilities, the environment, or human health. If PG&E determines that any of Triad's activities on the site create a health or safety risk, PG&E may require Triad to stop its activities until appropriate protective measures are taken.

Under the agreement, PG&E retains the right to restrict Triad's access to the site when appropriate based on events affecting PG&E's business operations, in emergency situations, or when PG&E needs to perform maintenance in the area.

Triad must maintain its facilities and improvements on the site in good condition, repair any damage it may cause to PG&E facilities on or around the easement area, erect a fence or otherwise enclose the easement area when construction is being performed, and prevent vehicles from entering the easement area.

In addition, Triad must maintain the graded slopes and drainage facilities and take necessary action to prevent damage from earth slides or earth subsidences, including those caused by erosion and earthquakes. If earth slides or earth subsidences occur, Triad must repair, remove, or reconstruct the slide area, including installing additional facilities to prevent recurrences of earth slides or earth subsidences.

If Triad fails to perform any act or obligation required by the agreement, PG&E may, after giving Triad 15 days advance notice, perform the necessary act or obligation itself, and recover the costs from Triad.

Triad has agreed to indemnify, protect, defend and hold harmless PG&E from any and all claims, losses or liability arising out of or connected with Triad's occupancy or use of the easement area or Triad's activities under the agreement. This indemnification includes, but is not limited to, claims or liability for: 1) personal injury or death, 2) property damage, and 3) violation of legal requirements, including those related to human health or the environment, except for claims or liability resulting from the sole negligence or willful misconduct of PG&E. Triad has acknowledged that it is indemnifying PG&E for all claims or liability arising out of or connected with landslides, earth movement, erosion, or releases of hazardous substances that may occur as a result of Triad's occupancy or use of the easement area or the surrounding PG&E property or from any of Triad's activities. Under the agreement, Triad is responsible for all costs and expenses for environmental investigations, and any monitoring, containment, removal, repair, cleanup, restoration or remediation at the site.

C. The Previous License Agreement
between PG&E and Triad

The revocable license agreement entered into by PG&E and Triad in November 2003 granted Triad a temporary right of entry onto the easement area to perform grading and erosion control activities at Triad's expense. Triad paid PG&E $350 as a license fee.

The term of the license was 18 months. However, under the agreement, PG&E retained the right to terminate the lease at any time, for any reason or no reason, after giving 30 days advance written notice to Triad.

Triad agreed to accept the site in its "as is" condition, to perform its activities in a way that did not place PG&E in violation of Commission General Orders or legal requirements, and did not interfere with PG&E's operations on the site or with service to PG&E customers. Triad also indemnified and held harmless PG&E from claims, liability or damages connected with its activities on the easement area pursuant to the license.

D. Environmental Review

The California Environmental Quality Act (Public Resources Code Section 21000, et seq., hereafter CEQA), applies to discretionary projects to be carried out or approved by public agencies. A basic purpose of CEQA is to "inform governmental decision-makers and the public about the potential, significant environmental effects of the proposed activities." (Title 14 of the California Code of Regulations, hereinafter CEQA Guidelines, Section 15002.)

Since the proposed project is subject to CEQA and the Commission must issue a discretionary decision without which the project cannot proceed (i.e., the Commission must act on the § 851 application), this Commission must act as either a Lead or a Responsible Agency under CEQA. The Lead Agency is the public agency with the greatest responsibility for supervising or approving the project as a whole (CEQA Guidelines Section 15051(b)).

Here, the City of Vallejo (City) is the Lead Agency under CEQA for the Triad Community Development Project, including the slope stabilization improvements for which PG&E seeks § 851 authority to grant a permanent easement to Triad Communities, L.P. The Triad Community Development Project was originally granted a permit by the City of Vallejo pursuant to Resolution No. 96-447 N.C., adopted by the Vallejo City Council on December 10, 1996. In support of the Resolution, the City of Vallejo prepared and approved an Initial Study in compliance with CEQA that found that the Triad Community Development Project would have no significant effect on the environment, provided that specific mitigation measures identified in the Initial Study were implemented. The Initial Study identified the grading and slope stabilization issues associated with the Project, including the issues specific to the adjacent PG&E property that is the subject of this Application, and provided specific mitigation measures designed to address the potential impacts of the slope stabilization effort. The City of Vallejo concluded that the Triad Community Development Project would not have a significant effect on the environment. Subsequently, on June 18, 2003, the City of Vallejo adopted a Mitigated Negative Declaration and made the necessary mitigation measures a condition of project approval. A Notice of Determination was filed with the County of Solano on July 31, 2003.

The Commission is a Responsible Agency for the project under CEQA. CEQA requires that the Commission consider the environmental consequences of a project that is subject to its discretionary approval. In particular, the Commission must consider the Lead Agency's environmental documents and findings before acting upon or approving the project. The specific activities a Responsible Agency must conduct are contained in CEQA Guidelines Section 15096.

PG&E seeks authority in this Application to grant a permanent easement to Triad Communities, L.P. to maintain in perpetuity slope stabilization improvements that have already been completed (on an emergency basis under a limited license) on PG&E property as part of Triad's residential subdivision development on adjacent land. Triad's project destabilized a hillside, and slope stabilization efforts extending onto PG&E's land were necessary in order to prevent soil movement or hillside erosion. These efforts were undertaken by Triad without the knowledge or consent of PG&E. Upon discovery of the slope stabilization problem and Triad's efforts to address the issue, PG&E determined that there was significant risk of property damage if the slope stabilization efforts remained incomplete. PG&E and Triad executed a license agreement pursuant to General Order 69-C for the limited purpose of permitting Triad to enter PG&E's property and complete the slope stabilization. A condition of the license agreement was a requirement that Triad enter into a permanent easement agreement, subject to Commission approval, agreeing to maintain the slope stabilization in perpetuity. The easement compels Triad and its successors-in-interest to maintain the slope in perpetuity, and it protects PG&E and ratepayers from any future liability associated with the slope.

In this application, PG&E requests that the Commission find that there will be no significant environmental impact associated with the authorization of the lease between PG&E and Triad. In support of its request, PG&E has provided both the Notice of Determination (NOD) for the Mitigated Negative Declaration and the Initial Study developed by the City of Vallejo for the community development project and submitted to the County of Solano on July 31, 2003. We have reviewed the NOD and associated Initial Study for the Triad Community Development Project (Exhibit D of the Application) and find these documents adequate for our decision making purposes.

We find that the City of Vallejo reasonably concluded that the slope stabilization improvements, and the activities required to maintain those improvements, associated with the Triad Community Development Project described above would have no significant impact on the environment. We adopt that finding and the associated mitigation measures for purposes of our approval.

E. Ratemaking Considerations

The PG&E land involved in this application is not used for utility purposes and is therefore not included in PG&E's ratebase. PG&E therefore proposes to record the $1,000 fee received from Triad for the easement as a gain to shareholders pursuant to D.01-05-076. This treatment of revenues from the proposed easement is unopposed.