Discussion

Section 851 of the Pub. Util. Code provides that no public utility "shall...lease... [property] necessary or useful in the performance of its duties to the public...without first having secured from the commission an order authorizing it so to do." The relevant inquiry for the Commission in Section 851 proceedings is whether the proposed transaction is "adverse to the public interest." The proposed lease satisfies this test. The public interest is not harmed since a lease will not affect in any way the utility's operation of the subtransmission lines on the site. Moreover, if the leased property becomes necessary for utility operations, SCE has reserved the right to exercise its power of condemnation to re-acquire any or all of the leasehold. The Commission has determined that the public interest is served when utility property is used for other productive purposes without interfering with the utility's operation.³ Because the proposed agreement will increase the level of revenues SCE can obtain from secondary use of the land in question, with no additional ratepayer risk, the application should be approved.

Approval of this lease is conditioned upon compliance by lessee with all applicable environmental regulations. Should environmental claims, in whole or in part, related to the tenancy or activities of the lessee be made on SCE subsequent to the execution of the lease, SCE shall not seek recovery of any such claims, or defense of such claims, from ratepayers.

In the past, the Commission has treated applications, such as the instant application now before us, merely as requests by the utility to allow it to transfer a leasehold interest in utility property. The Commission does not approve the project itself and does not issue a permit for the project development. The Commission conditioned its approval of such proposed leases on lessee's compliance with all applicable environmental regulations. The Commission reasoned that local authorities are generally in a superior position to evaluate local environmental impacts and develop appropriate mitigation strategies. (See D.99-02-036 and D.99-04-066.) Accordingly, the Commission deferred to the local authorities to approve the project as a whole, subject to CEQA requirements.

However, to ensure that no development will take place without CEQA review by the appropriate agency, the Commission now proposes to change its procedures for future applications. Henceforth, we will require the utility to include with its applications copies of the necessary documents issued by the local entity acting as the Lead Agency to establish that the environmental review has been conducted and any mitigation measures required under CEQA have been imposed, or that the Lead Agency found that the project in question is exempt from CEQA. The Commission would then assume the role of Responsible Agency for CEQA purposes.

Since this is a change in our procedures, we will in this instance approve the instant application on condition that SCE submits the necessary documents within 120 days, to confirm that the Lead Agency has, in fact, conducted environmental review for this project.