Discussion

One of the fundamental purposes of Section 851 approval of the sale or transfer of utility assets is to permit the Commission to make a determination that the assets transfer will not impair the ability of the utility to provide adequate service to its customers following the transaction. (See Camp Meeker Water Co., 66 CPUC 2d 314 (1996).) Here, SBC ASI plans to transfer a limited group of assets, essentially trucks, test kits, and garage space to its affiliate SBC California where the assets will continue to be utilized in the same manner and by the same personnel to support DSL Transport service to California customers. Thus, we find that following the transfer of these assets to SBC California, SBC ASI's customers should see no change in the nature of the DSL LFO service and repair activity that they currently experience.

Another important function of the Commission's Sections 851 and 854 approval process is the determination that the selling/transferring utility has obtained a fair price for the assets in question. (Re AT&T Corporation, 85 CPUC 2d 249, 256 (1999).) In this transfer proposed by SBC ASI, the price to be paid by SBC California is to be determined by the Commission's and the FCC's affiliate transaction rules. Under the Commission's rules, for the sale of assets by Applicant to SBC California, SBC ASI will be paid the lower of net book value or fair market value for assets it purchases from its affiliates. These rules appear to have been followed here in determining the appropriate transfer price.

In their joint response, DRA and TURN recommend that the Commission "approve ASI's request for exemption of this particular transaction" from its Section 851 requirements. (Joint Response at 4.) Their support is based on their review of the application, their determination that reintegration of the LFO functions back into SBC California is a good idea and on an accord reached with Applicant and SBC California, and appended to the joint response. That agreement simply preserves the right of DRA and TURN to review the valuation of these LFO assets by SBC ASI and their booking by SBC California in a separate appropriate proceeding. It further acknowledges that Commission approval is limited to the facts of this case. SBC ASI affirms the commitments it made in the agreement, one of which was to provide a copy of the valuation of the LFO assets that are to be transferred to SBC California. Given the DRA/TURN recommendation, the fact that the absolute value of the assets is small both in absolute terms and in relation to the overall assets of both Applicant and SBC California, we find little merit in subjecting this aspect of the transaction to a full Section 851 inquiry.

The California Environmental Quality Act (CEQA) requires the Commission, when approving "projects," to assess the impact of its approval on the environment. These LFO assets will be used by SBC California in the same manner as they have been used by SBC ASI, installing, maintaining, and repairing equipment located in the field at the customers' premises. Since it can be seen with certainty that the transfer of these will have no significant impact on the environment, we find CEQA review is not required; thus, a Section 851 assessment is unnecessary.

Regarding CISPA's recommendation, there is not any specific problem with SBC ASI's local field organization activities that would justify the new reporting requirements it urges. Moreover, there does not appear to be any allegation that the LFO function is inadequate currently or will become inadequate upon transfer to SBC California. Thus, there is no basis to impose the reporting condition that CISPA recommends.

When all of the above factors are considered, application of the requirements of Section 851 to this transaction "is not necessary in the public interest." Accordingly, we grant SBC ASI's application pursuant to Section 853(b) and exempt SBC ASI from the requirements of Section 851 with respect to the transfer by SBC ASI of certain LFO assets, primarily trucks, test kits, and certain leases relating to garage space, to its affiliate, SBC California.