XV. Assignment of Proceeding
Michael R. Peevey is the Assigned Commissioner and Jeffrey P. O'Donnell is the assigned Administrative Law Judge in this proceeding.
1. On May 6, 1999, PG&E and Broadwing entered into the Agreement that would (1) allow Broadwing to install underground and overhead fiber optic facilities on PG&E's electric transmission towers, substations, rights-of-way, and other facilities; (2) vest bare legal title in the fiber optic facilities in PG&E subject to Broadwing's right to use the optical fibers to service its customers; and (3) allow PG&E to use a portion of the fibers in connection with its needs. PG&E would maintain ownership of its facilities subject to Broadwing's right to use them. For purposes other than the bare legal title, Broadwing would be considered the owner of the fiber optic facilities installed pursuant to the Agreement, subject to PG&E's right to use them.
2. Until the Commission's approval is secured, PG&E has given Broadwing a revocable license to enter its facilities to install fiber optic systems.
3. The current revocable license will convert to an irrevocable lease, which contains the same terms, except as provided in the Agreement and First Amendment, upon our approval of this application.
4. Broadwing and PG&E executed the First Amendment on August 28, 2000.
5. PG&E filed a supplement to this application on August 29, 2003, submitting the First Amendment for Commission approval.
6. Construction of the Project on PG&E's property includes approximately 2.3 miles of new underground conduit that was installed by trenching or directional boring.
7. The work under the Agreement began on November 9, 1999. Most of the work was completed prior to June 28, 2000, with the remainder being completed by March 3, 2001.
8. The facilities that are the subject of this application were approved by D.02-02-023.
9. GO 69-C provides an exception to the § 851 requirement for prior approval of, among other things, licenses of utility property for limited uses. GO 69-C establishes three key criteria for the exception:
(1) The interest granted must not interfere with the utility's operations, practices, and service to its customers;
(2) The interest granted must be revocable either upon the order of the Commission or upon the utility's determination that revocation is desirable or necessary to serve its patrons or consumers; and
(3) The interest granted must be for "limited" uses of utility property.
10. In D.00-12-006, the Commission determined that "GO 69-C's provisions regarding `limited use' of utility facilities do not extend to the use of facilities that are to be constructed without the benefit of CEQA review." The Commission also stated that: "We do not believe that undertaking a commitment with long term implications is a `limited use' that qualifies for GO 69-C treatment." In addition, the Commission stated that it would "deny applications to convert GO 69-C agreements to lease agreements in the future, where the structure of those transactions was designed to circumvent the advance approval requirements of Section 851, and the associated CEQA review requirement."
11. Since D.00-12-006 was adopted after this application was filed and after most of the construction was completed, it may not have been clear to PG&E that a § 851 application was needed.
12. In D.04-04-014, the Commission considered the installation of fiber optic cable on existing electric utility structures, and held that the installation qualified as a "minor alteration of existing facilities" and was, therefore, exempt from further analysis under CEQA because none of the following exceptions to the exemption from CEQA applied:
(1) there is a reasonable possibility that the activity may have a significant effect on an environmental resource of hazardous or critical concern;
(2) the cumulative impact of successive projects of the same type in the same place, over time, is significant; or
(3) There is a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances.
13. There is no evidence that the Project was reviewed by another agency or in another forum.
14. CEQA reviews potential environmental impacts relative to a baseline established before a project is constructed in order to allow public input, and to mitigate any potentially significant environmental impacts.
15. Since construction of the Project was partially completed before the application was filed, and no baseline was established, any environmental impacts due to construction have already occurred, and the opportunity for public comment at this point would be meaningless.
16. In this instance PG&E's violation of § 851 and failure to comply with CEQA were inadvertent.
17. In D.00-07-010, the Commission stated that:
"It is sensible for California's energy utilities, with their extensive easements, rights-of-way, and cable facilities, to cooperate in this manner with telecommunications utilities that are seeking to build an updated telecommunications network. Joint use of utility facilities has obvious economic and environmental benefits. The public interest is served when utility property is used for other productive purposes without interfering with the utility's operation or affecting service to utility customers."
18. The Project results in the joint use of PG&E's facilities that will help facilitate Broadwing's service to its customers, while avoiding installation of duplicative infrastructure, by making use of existing PG&E plant.
19. The installed facilities form a part of Broadwing's fiber optic network.
20. Since Broadwing is a competitor in the telecommunications market, the facilities that are the subject of this application contribute to the development of competition.
21. The annual fee PG&E receives from Broadwing represents fair market value for use of its facilities.
22. PG&E receives dark fiber for its use, and the fiber optic cable will function as static wire for much of the route.
23. The annual fee, and the costs avoided by PG&E to install static wire are comparable to prices negotiated between other providers of rights-of-way and telecommunications companies.
24. The lease revenues related to PG&E's electric transmission system would be addressed by FERC.
25. After the execution of the Agreement but before the execution of the First Amendment, the Commission staff issued a Notice that required Broadwing to cease further construction of the Project until it received a CPCN authorizing such construction.
26. Broadwing continued construction in violation of the Notice.
27. PG&E became aware of the Notice at about the same time Broadwing received it.
28. Broadwing's telecommunications facilities, regardless of their location on PG&E property, are part of Broadwing's Project, and will be used by Broadwing to provide telecommunications services. A portion of the facilities will be used by PG&E in connection with its provision of services to its customers. The Project is not physically separable into a portion belonging to PG&E and a portion belonging to Broadwing, and Broadwing's use of the facilities is not incidental to PG&E's use.
29. The Commission did not fine Broadwing in D.02-02-023 for constructing facilities without a CPCN or for violating the Notice.
30. Broadwing's error in violating the Notice was greater than PG&E's error in not stopping Broadwing from doing so.
31. The second paragraph of § 851 provides that "any disposition of property by a public utility shall be conclusively presumed to be of property which is not useful or necessary in the performance of its duties to the public as to any...lessee...dealing with such property in good faith for value..." The Commission has interpreted this provision as protecting innocent lessees from having their transactions invalidated solely because the utility leased the property without advance approval under § 851. However, this does not invalidate the primary requirement of § 851 for advance Commission approval.
32. The revocable license PG&E granted to Broadwing is a form of lease.
33. PG&E should be able to enforce its rights under the revocable license.
34. It would be inconsistent with § 851, and poor public policy to relieve a licensee of its obligations under a license because to do so would prevent PG&E from using its rights and powers under the revocable license to stop a licensee from using PG&E's property in a manner harmful to PG&E's performance of its duties to the public.
35. Public disclosure of the documents filed under seal would place PG&E and Broadwing at an unfair business disadvantage.
36. No protests to this application have been received.
37. Hearings are not required.
1. The purpose of § 851 is to enable the Commission to review a proposed transaction before it takes place in order to take such action as the public interest may require.
2. Since the 2.3 miles of trenching and boring are significant and permanent structures and not easily removed, the revocable license is essentially irrevocable for practical purposes.
3. The Project exceeded the scope of the limited uses permitted by GO 69-C, and PG&E has violated § 851.
4. PG&E should not be fined for violating § 851.
5. The exemption granted in D.04-04-014 appeared to contemplate activities that would have no significant environmental impact, such as installing fiber optic cable on existing electric utility structures.
6. Since the Project includes 2.3 miles of trenching or boring, it involved alterations of existing facilities that were not minor, and involved physical expansion beyond the previously existing facility use that was not negligible and that could potentially cause environmental impacts.
7. A CEQA review of the entire Project was required.
8. Since the Project was partially completed before this application was filed and without a CEQA review, PG&E failed to comply with CEQA.
9. A CEQA review at this time would serve no useful purpose.
10. Since removal of the installed facilities could impact the environment, the Commission should not require removal of the facilities.
11. Because it may not have been clear to PG&E at the time the Project began that a § 851 application was needed, and because the § 851 application is the trigger for Commission CEQA review, PG&E's failure to comply with CEQA does not warrant a fine.
12. Denying this application and/or requiring removal of the installed facilities would not serve the public interest.
13. This application serves the public interest, and should be approved.
14. Since the portion of the Project belonging to Broadwing is subject to the Notice, the whole Project is.
15. PG&E improperly allowed Broadwing to continue construction of facilities after receipt of the Notice.
16. The Commission should not fine PG&E for allowing Broadwing to violate the Notice.
17. PG&E should be required to ensure compliance with Notices.
18. While we should approve this application prospectively, PG&E should be at risk for any adverse consequences that may result from its misuse of GO 69-C, violation of § 851, and failure to comply with CEQA.
19. Our approval of this application should be limited to those previously completed facilities specifically identified in the application, and subsequent supplements filed in this proceeding.
20. Even though we find that PG&E misused GO 69-C, violated § 851, and failed to comply with CEQA, the Commission should not by this decision relieve Broadwing of its obligations under the revocable license.
21. PG&E's motions to keep the unredacted versions of the Agreement and the First Amendment under seal should be granted for two years.
22. This order should be effective immediately.
IT IS ORDERED that:
1. Pacific Gas and Electric Company (PG&E) is authorized prospectively under Pub. Util. Code § 851 (§ 851) to enter into an irrevocable lease, pursuant to the Optical Fiber Installation and IRU Agreement (Agreement) and the First Amendment to the Agreement between PG&E and Broadwing Communications Services, LLC (Broadwing), that would permit the installation and use of fiber optic facilities on PG&E's electric transmission towers, substations, rights-of-way, and other facilities.
2. The authority granted herein is limited to those previously completed facilities specifically identified in this application, and subsequent supplements filed in this proceeding.
3. PG&E shall comply with Stop Work Notices issued by the Commission's staff, and shall ensure that other entities performing construction located on PG&E's facilities or property comply with such Stop Work Notices.
4. The prospective authorization granted herein does not relieve Broadwing of its responsibilities under its revocable license from PG&E.
5. PG&E's motions filed with the application, and on August 29, 2003, to have the unredacted versions of the Agreement and First Amendment kept under seal are granted for two years from the effective date of this decision. During that period, the materials kept under seal shall not be made accessible or disclosed to anyone other than the Commission staff except on the further order or ruling of the Commission, the Assigned Commissioner, the assigned Administrative Law Judge (ALJ), or the ALJ then designated as Law and Motion Judge.
6. If PG&E believes that further protection of the materials kept under seal is needed, it may file a motion stating the justification for further withholding of the materials from public inspection, or for such other relief as the Commission's rules may then provide. This motion shall be filed no later than 30 days before the expiration date.
7. Application 00-03-043 is closed.
This order is effective today.
Dated September 22, 2005, at San Francisco, California.
MICHAEL R. PEEVEY
President
GEOFFREY F. BROWN
SUSAN P. KENNEDY
DIAN M. GRUENEICH
JOHN A. BOHN
Commissioners
