5. A "Legalistic" Proposal

Finally, a number of Parties suggested the following approach to resolving some of the issues raised during the Workshop. Parties suggested that the Commission maintain a purely legalistic approach: (1) once the criteria for "revocability" and "limited use" are clarified, a license is allowable under
GO 69-C regardless of what the specific transaction involves (provided it meets the clarified criteria); and (2) if a lease is required by either party to the transaction, or if the specific transaction activity is outside of the bounds of GO 69-C, then a formal filing with the Commission is required pursuant to Section 851. According to at least one Party, the market will determine if a license or lease is appropriate: a license will be called for when there is a limited use involved, less revenue is involved, revocability is not a problem for the third party, and no significant property right is transferred; a lease would be called for when the third party wants irrevocability, property rights are transferred, and the transaction is a significant financial event. Parties indicated that if the transaction involves construction (and/or demolition) and requires CEQA review, such a review can be obtained at the local level.

Parties noted that under this paradigm, the "uses" themselves are not relevant - a five-story parking structure could be developed pursuant to a license, as long as the third party did not object to the revocability and, if required, local CEQA would be done (note that this example implies potential demolition of the parking structure to satisfy the "revocability" clause). The Commission staff noted that converting such an agreement to a lease pursuant to Section 851 via Advice Letter would likely be problematic for the Commission. If CEQA were required for the transaction, the Commission would have to act as a Responsible Agency under CEQA for Section 851 proceedings and carry out obligations such as making Findings for significant impacts and deliberating Overriding Considerations. The staff indicated that the Advice Letter process might not be adequate for such streamlined Section 851 proceedings or for license-to-lease conversions when either CEQA was required or when a ministerial exemption had been issued at the local level.