VI. Comments on Draft Decision of the ALJ

A. Introduction

The Draft Decision of ALJ Thomas in this matter was mailed to the parties in accordance with Section 311(g)(1) of the Pub. Util. Code and Rule 77.7 of the Rules of Practice and Procedure. PG&E, ORA, US Dataport, Fremont, San Jose, ProLogis, Aglet and the ISO filed Opening Comments and the same parties (except US Dataport) filed reply comments. Save the Bay, an organization that did not participate in the hearings or earlier briefing, but did comment on the SDEIR, filed a motion for leave to intervene and proposed Reply Comments. Save the Bay agrees with Fremont's conclusion that undergrounding is a better option than overhead lines for the northern part of the transmission line. We deny Save the Bay's motion to intervene for two reasons. First, Save the Bay commented on the SDEIR and made its views known there, so it is not prejudiced by this denial. Second, Save the Bay's comments are not in the nature of a reply, which "shall be limited to identifying misrepresentations of law, fact or condition of the record contained in the comments of other parties."¹²⁷ Save the Bay's comments are supportive of Fremont's comments, and identify no such misrepresentations.

B. Cost Issues

Several parties comment on the costs of the project. PG&E's comments continue to assert the Commission lacks jurisdiction to impose a cost cap; this is simply reargument and is rejected. ORA and Aglet criticize the Draft Decision for allowing PG&E to recalculate its costs. ORA asserts it would be legal error to grant the CPCN without specifying a cost cap in the decision. While we disagree with ORA that the process the Draft Decision adopts fails to comply with the CPCN statute, in an abundance of caution, we will extend the effective date of this decision until after PG&E submits new cost figures, the parties comment upon them, and the Commission amends this decision to add the cost cap.

The Draft Decision provides that PG&E shall submit a detailed cost estimate of the environmentally superior route we select by Advice Letter no later than 30 days from the date the Commission decision is mailed. Other parties may file comments on the cost estimate no later than 15 days from the date PG&E submits the cost estimate.

We will modify this process without materially extending the time PG&E within which might start construction. Commission decisions ordinarily are effective 30 days after mailing. While we sometimes shorten this period, the 30-day period makes sense here because of the significant construction the project entails. Affected communities should have time between the decision's issuance and its effective date to be placed on notice of the commencement of construction in their areas.

PG&E will submit its new cost figures during the same 30-day period. It would have been unable to commence construction during this period in any event. The parties will comment on PG&E's new cost calculations during the subsequent 15 days. The Commission will then amend this decision to incorporate the cost cap and make any other necessary changes, and the amended decision will be effective immediately.

This approach is consistent with the cost cap provision of Pub. Util. Code § 1005.5(a) without unrealistically requiring us to set a cost cap based on stale data. Indeed, it is the best possible result. If we were to use data PG&E already submitted, it would be problematic because it reflects costs for a route different from the one we select here. The FEIR settling on the environmentally superior route did not issue until after hearings concluded, and in any event, neither PG&E nor anyone else could have been aware of the selected route until the Draft Decision issued. Thus, there must be a way to accommodate the obvious need for cost information reflecting the chosen route without undue delay to the project. We believe we have selected the proper solution.

Nothing in Pub. Util. Code § 1005.5(a) precludes us from issuing the CPCN with an effective date that allows for route specific cost information to be included. Finally, it would be unwise given the state of the cost information in this case and other parties' criticism of it to use cost information from other proposed routes to set a cost cap.

C. Substation Issues

US Dataport and San Jose oppose the Draft Decision's selection of PG&E's proposed substation location. US Dataport contends that the chosen location will interfere with its planned Internet server farm in the same vicinity. San Jose contends that contrary to the Draft Decision and PG&E's representation, it has proposed terms for an alternate substation site that should be acceptable to PG&E. PG&E counters that the San Jose's proposal for the alternate substation site, advocated by US Dataport and rejected in the Draft Decision, remains unreasonable. PG&E cites record evidence indicating its preference for the interest in substation sites with San Jose is offering a long-term (55-year) lease. PG&E also assails the other lease terms San Jose is offering as "fundamentally inconsistent with PG&E's obligation to serve. . . .¹²⁸

There is no need for us to decide one way or another whether San Jose is offering PG&E reasonable terms for the rejected substation location. It is sufficient that there is no agreement for the alternate location. This fact supports our decision to reject the alternate substation site, and none of the other extra-record information US Dataport furnishes in its comments changes our view. For example, US Dataport asks us, without record support, to consider that the proposed server farm will actually "reduce the net load" in "consolidating a very large number of data and telecommunications facilities in one large

facility. . . ."¹²⁹ Similarly, it asks us to acknowledge that the "current stressed condition of the Silicon Valley power grid will [not] persist into the

future. . . ."¹³⁰

At the same time, US Dataport inappropriately asks us to remove from the Draft Decision material of which we may properly take official notice. For example, US Dataport incorrectly claims we may not take official notice of the declining dot-com economy in Silicon Valley; in fact, this is an appropriate subject of official notice.¹³¹

US Dataport also states that it has "secured the principle (sic) permits required for construction" of the server farm and that the City of San Jose has certified an EIR for its project. While these are proper subjects of official notice,¹³² it is nowhere clear from the documents US Dataport attaches that San Jose has granted "principal" permits or that it has chosen the server farm location that conflicts with the Draft Decision's substation location. (Indeed, the EIR for the US Dataport project reflects less environmental harm from a US Dataport alternate location that accommodates the substation location we have selected than from US Dataport's proposal.)¹³³

Thus, US Dataport's comments do not persuade us to change any aspect of the Draft Decision.

D. ISO's Role

The CA ISO criticizes the Draft Decision's analysis of the Commission's determination that the project is needed. The ISO claims the Commission should give greater deference to the ISO's role in determining need for the project. We believe the Draft Decision strikes an adequate balance between deferring to the ISO's need determination and acknowledging the aspects of the project the ISO did not analyze. Moreover, the Draft Decision reaches the same conclusion as did the ISO. Thus, we do not change the Draft Decision in response to the ISO's comments.

E. Undergrounding

Fremont renews its claim that the Commission gives undergrounding options too little consideration: "Fremont is frustrated that undergrounding the line entirely through Fremont has not been achieved. . . ."¹³⁴ However, the EIR did consider routes that were entirely underground. The combination of the Northern Underground Alternative with the Underground Through Business Park alternative would have resulted in an entirely underground route through the City of Fremont, but the Draft Decision selected the route with the lowest potential for environmental impact. Fremont suggested no other underground routes, nor did the Commission locate any other feasible underground alternatives.¹³⁵ The EIR adequately considered an all-underground alternative and we see no reason to change the Draft Decision's and FEIR's conclusion rejecting that alternative as environmentally inferior.

ProLogis contends undergrounding should continue further south than the Draft Decision finds. However, PG&E's comments on the SDEIR pointed out that predation impacts can be completely mitigated by means other than undergrounding in the area ProLogis addresses, and the EIR agrees. The EIR now contains stepped up mitigation and a comprehensive approach to preventing bird predation.

F. Conclusion

The other issues the parties raise either are reargument or fail to persuade us to change the Draft Decision, and are hereby rejected. Likewise, where parties raise concerns that the EIR documents address adequately, we make no changes to the Draft Decision. We make a few additional minor changes to the Draft Decision to reflect the parties' comments.

Findings of Fact

1. The environmentally superior route, as set forth in the FEIR, is the appropriate choice for this project.

2. The environmentally superior transmission line route, in its entirety, poses less harm to the environment than do the alternate routes proposed by PG&E and other parties to this proceeding.

3. The substation location we select (and that PG&E advocates) poses equivalent environmental impacts to the location US Dataport proposes, but with fewer cost, logistical, land acquisition and other barriers than the US Dataport choice.

4. Much of the proposed transmission line will be located near significant wildlife areas populated primarily by birds, including endangered, threatened, and other special concern species.

5. The project is needed to maintain reliability of the electric transmission system in and near the northeast San Jose area south of San Francisco.

6. The environmentally superior route meets the ISO's reliability criteria.

7. We agree with the ISO's determination that the project is needed to meet projected demand for electricity in the northeast San Jose area. We do not, however, defer entirely to the ISO's determination of need. The ISO deferred to PG&E's assertions in many cases rather than testing PG&E's conclusions.

8. PG&E's cost justification for the project is not adequate. New cost information as required with regard to the route we select in this decision.

9. PG&E's estimates of land acquisition costs for overhead vs. underground construction are not reliable and require revision.

10. It is unclear from the hearing record whether overhead and underground construction costs differ because of PG&E's inadequate cost showing, especially related to land acquisition costs.

11. We are not obligated to choose the least costly route if that route causes greater environmental harm than more costly routes.

12. The ISO did not analyze the costs of PG&E's proposed route or any other route.

13. An ISO reviewer for the project worked on the project while employed by PG&E immediately prior to joining ISO staff.

14. There is no substantial evidence that the proposed project will adversely affect property values.

15. The Commission is the lead agency under CEQA with respect to the environmental review of the project and preparation of the FEIR.

16. The Commission has conducted an environmental review of the project pursuant to CEQA.

17. The FEIR consists of the DEIR and SDEIR, revised to incorporate comments received by the Commission from the proponent, agencies, and the public, and the responses to comments.

18. The FEIR has been completed in accordance with CEQA Guidelines, Sections 15120 through 15132.

19. The Commission has reviewed and considered the information in the FEIR before approving the project.

20. The FEIR identifies significant environmental effects of the environmentally superior route that can be mitigated or avoided to the extent that they become not significant. The FEIR describes measures that will reduce or avoid such effects.

21. The mitigation measures identified in the FEIR are reasonable.

22. As lead agency under CEQA, the Commission is required to monitor the implementation of mitigation measures adopted for this project to ensure full compliance with the provisions of the monitoring program.

23. The Mitigation Monitoring, Compliance, and Reporting Plan in Section C of the FEIR conforms to the recommendations of the FEIR for measures required to mitigate or avoid environmental effects of the project that can be reduced or avoided.

24. The Commission will develop a detailed implementation plan for the Mitigation Monitoring, Compliance, and Reporting Plan.

25. The FEIR identifies the route identified as the environmentally superior route, and depicted in Appendix C to this decision, as the environmentally superior alternative to PG&E's proposed route.

26. The FEIR identifies significant environmental effects of the environmentally superior route that cannot be mitigated or avoided, as follows: (a) potential bird collision with the new overhead transmission line between Mileposts 4.1 and 6.7, and (b) the conversion of Prime Farmland to non-agricultural use at the proposed substation site; and (c) inconsistency of the McCarthy Boulevard Alternative segment with the City of Milpitas' Open Space/Conservation policy.

27. For significant effects where no feasible mitigation exists to reduce the environmental effects to less than significant, the specific overriding benefits of the environmentally superior route outweigh the significant effects on the environment. The benefits of the transmission line and substation project, provision of increased electric supply, and increased reliability to the cities of San Jose, Santa Clara and Milpitas, outweigh the potential environmental impacts.

28. We have considered and approve of the discussion in the FEIR covering parks and recreation, cultural and historic resources, environmental impacts generally, and the public comment and response section, and find that it adequately reflects our consideration of the Section 1002 factors.

Conclusions of Law

1. The Commission has jurisdiction over the proposed project pursuant to Pub. Util. Code § 1001 et seq.

2. The Commission has authority to cap project costs pursuant to Pub. Util. Code § 1005.5.

3. We do not have authority to impose a "hard" cost cap that may never be increased in view of Pub. Util. Code § 1005.5(b)'s provision for increases in the cost cap.

4. The ISO has responsibility to ensure the reliability of the State's electrical system pursuant to Pub. Util. Code § 345. However, ensuring reliability and deciding that a particular transmission project should be built are two separate issues.

5. This Commission's cost cap set pursuant to Pub. Util. Code § 1005.5 has bearing on the amount of cost recovery PG&E may seek from the FERC.

6. The Commission retains authority to approve PG&E's EMF mitigation plan to ensure that it does not create other adverse environmental impacts.

7. Commission approval of PG&E's application is in the public interest.

8. The processing of the DEIR, the SDEIR, and the FEIR, in this proceeding comply with the requirements of CEQA.

9. The contents of the FEIR comply with the requirements of CEQA and represent the Commission's independent judgment.

10. The FEIR should be certified for the project in accordance with CEQA.

11. The approval of the application, as provided herein, should be conditioned upon construction according to the environmentally superior route and the completion of the mitigation measures identified in the FEIR. The mitigation measures set forth in the FEIR are feasible and will minimize or avoid significant environmental impacts. Those mitigation measures should be adopted and made conditions of project approval.

12. After considering and weighing the values of the community, benefits to parks and recreational areas, the impacts on cultural and historic resources, and the environmental impacts caused by the project, we conclude that the CPCN should be approved.

13. Based on the completed record before us, we conclude that the alternatives identified in the FEIR are infeasible, or pose more significant environmental impacts than the environmentally superior route we select in this decision.

ORDER

IT IS ORDERED that:

1. A Certificate of Public Convenience and Necessity is granted to Pacific Gas and Electric Company (PG&E) to construct an approximately 7.3 mile 230 kV double circuit transmission line from near PG&E's Newark substation in Alameda County to a new substation to be constructed on property known as Los Esteros; a new 24-acre combined distribution and transmission substation with 21 kV connections, at Los Esteros; a connection of the new Los Esteros substation to the 115 kV system, via the Los Esteros to Kifer 115 kV circuit, the Los Esteros to Trimble 115 kV circuit, the Los Esteros to Montague 115 kV circuit, and the Agnews 115 kV tap circuit; and the replacement of a segment of the existing Newark to Trimble single circuit 115 kV wood pole line located along Trimble Road and Montague Expressway with a 1.4 mile double circuit steel pole line to complete a 115 kV circuit between the Los Esteros substation and the existing Montague substation.

2. The Final Environmental Impact Report (FEIR) is certified as the EIR for the project which is the subject of the application and is certified for use by responsible agencies in considering subsequent approvals for the project, or for portions thereof.

3. PG&E shall, as a condition of approval, build the project in accordance with the environmentally superior route specified in Appendix C to this decision and detailed in Section B.3 of the FEIR. In addition, PG&E shall comply with all mitigation measures specified in Section C of the FEIR (which is reproduced in Appendix E attached hereto) as directed by the Commission's Executive Director or his designee(s). PG&E shall work with the Commissioner's Energy Division to create more detailed maps for use in construction and mitigation monitoring of the selected route to supplement those provided in Appendix C to this decision.

4. PG&E shall perform a detailed cost estimate of the environmentally superior route we select in this decision. It shall complete and file by Advice Letter the estimate no later than 30 days from the date this decision is mailed. No later than 15 days from the date PG&E submits the cost estimate, other parties to this proceeding may file comments on PG&E's proposed estimate. This order shall become effective once the Commission reviews the cost data and comments thereon and incorporates a cost cap and any other necessary changes into this decision.

5. PG&E's cost estimate provided for in the preceding paragraph shall not be filed under seal unless each aspect of the estimate conforms to California Rule of Court 243.1(d), relating to sealed records.

6. PG&E's land value estimates shall be supported by current, expert appraisals of the actual land it must acquire in accordance with the environmentally superior route. The estimate shall also comply with Pub. Util. Code § 1005.5(a).

7. We will use PG&E's cost estimate, and the comments on it, to set the cost cap for the project. However, if, once PG&E has developed final, detailed engineering design-based construction estimate for the environmentally superior route, this estimate is one percent or more lower than the cost estimate PG&E must submit within 30 days, PG&E shall show cause why we should not lower the Pub. Util. Code § 1005.5 cost cap to reflect the final estimate.

8. PG&E shall, prior to commencing construction, submit a detailed EMF mitigation plan for approval of the Commission's Energy Division. The plan shall describe in detail each mitigation element, the cost of each element, and the percentage by which that mitigation will reduce EMF levels.

9. The Executive Director shall supervise and oversee construction of the project insofar as it relates to monitoring and enforcement of the mitigation conditions described in Appendix E to this decision. The Executive Director may delegate his duties to one or more Commission staff members or outside staff. The Executive Director is authorized to employ staff independent of the Commission staff to carry out such functions, including, without limitation, the on-site environmental inspection, environmental monitoring, and environmental mitigation supervision of the construction of the project. Such staff may be individually qualified professional environmental monitors or may be employed by one or more firms or organizations. In monitoring the implementation of the environmental mitigation measures described in Appendix E, the Executive Director shall attribute the acts and omissions of PG&E's employees, contractors, subcontractors, or other agents to PG&E. PG&E shall comply with all orders and directives of the Executive Director concerning implementation of the environmental mitigation measures described in Appendix E.

10. The Executive Director shall not authorize PG&E to commence actual construction until PG&E shall have entered into a cost reimbursement agreement with the Commission for the recovery of the costs of the mitigation monitoring program described in Appendix E hereto, including, but not limited to, special studies, outside staff, or Commission staff costs directly attributable to mitigation monitoring. The Executive Director is authorized to enter into an agreement with PG&E that provides for such reimbursement on terms and conditions consistent with this decision in a form satisfactory to the Executive Director. The terms and conditions of such agreement shall be deemed conditions of approval of the application to the same extent as if they were set forth in full in this decision.

11. PG&E's right to construct the project as set forth in this decision shall be subject to all other necessary state and local permitting processes and approvals.

12. PG&E shall file a written notice with the Commission, served on all parties to this proceeding, of its agreement, executed by an officer of PG&E duly authorized (as evidenced by a resolution of its board of directors duly authenticated by a secretary or assistant secretary of PG&E) to acknowledge PG&E's acceptance of the conditions set forth in Ordering Paragraphs 1 through 11 and 13, inclusive, of this decision. Failure to file such notice within 75 days of the effective date of this decision shall result in the lapse of the authority granted by this decision.

13. The Executive Director shall file a Notice of Determination for the project as required by the California Environmental Quality Act and the regulations promulgated pursuant thereto.

14. Upon satisfactory completion of the project, a notice of completion shall be filed with the Executive Director by the Energy Division.

15. Application 99-09-029 is closed.

Dated May 14, 2001, at San Francisco, California.

LORETTA M. LYNCH

President

HENRY M. DUQUE

RICHARD A. BILAS

CARL W. WOOD

GEOFFREY F. BROWN

Commissioners

SEE FORMAL FILE FOR APPENDX A-F