VIII. Environmental Matters

Katella has obtained all permits and approvals required by the appropriate governmental agencies having jurisdiction for the development of a vehicle and boat parking and storage facility on the Site. On June 7, 1999, the Anaheim City Planning Commission adopted the Negative Declaration in support of Conditional Use Permit No. 4126 and issued the conditional use permit for development of the project. In accordance with Article 6.2(h) of the Agreement, Katella has procured and delivered to SCE, evidence of compliance with all then applicable codes, ordinances, regulations, and requirements for permits and approvals, including but not restricted to grading permits, building permits, zoning and planning requirements, and approvals from various governmental agencies and bodies having jurisdictions.

Under the California Environmental Quality Act (CEQA), the Commission is obligated to consider the environmental consequences of a project that is subject to the Commission's discretionary approval. (Pub. Res. Code § 21080.) A project is an activity that "may cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment" and either (a) is directly undertaken by any public agency, (b) is supported by contracts, grants, subsidies, loans, or other forms of assistance from one or more public agencies, or (c) involves the issuance of a lease, permit, license, certificate, or other entitlement for use by one or more public agencies. (Pub. Res. Code § 21065.)

Development of the property by Katella was subject to all applicable laws and discretionary approvals from the City of Anaheim. The City's discretionary approval process triggered application of CEQA to the project resulting in the adoption of a Negative Declaration and the issuance of Conditional Use Permit No. 4126. Consequently, no additional CEQA review by the Commission is required at this time.

We note that SCE licensed the land to Katella pursuant to GO 69-C and the license agreement specifically contemplated the future conversion of the license into a lease. We are somewhat concerned with the apparent use of GO 69-C to seal a deal in advance, then seek subsequent approval under Section 851. We are troubled that in some circumstances, this chain of events might allow the transaction to escape legally mandated CEQA review. For instance, the property at issue here was converted from horticultural purposes to a storage facility without any Commission review, as allowed by GO 69-C.

The particular facts of this case, however, indicate that appropriate environmental review under CEQA was performed by the City of Anaheim prior to the date Katella exercised its option to license the site for a storage facility.⁴ For this reason, the deal structure we are presented with here does not circumvent any CEQA requirements. However, Commission approval of this lease is conditioned upon Katella's compliance with all applicable environmental regulations. Furthermore, we expect that any modifications to the lease agreement or subsequent changes to the use of the property must obtain subsequent CEQA review.

Should environmental claims be made on SCE subsequent to the sale, SCE shall not seek recovery of any cost of the claims or defense of the claims from its ratepayers.