IV. Discussion

No public utility may transfer property that is necessary or useful in the performance of its duties without first having secured the Commission's authorization.⁹ PG&E presently uses the Property as an off-site meeting facility. Therefore, the Property is useful, and Section 851 applies. PG&E must demonstrate that selling the Property is in the public interest in order to win Commission approval.

PG&E proposes to meet its burden to show that the sale of the Property is in the public interest in three ways. First, it proposes to secure protection from environmental claims by having Ministries execute the Release and Indemnity Agreement. We find that PG&E's proposed Agreement is inadequate, and must be revised as a condition of Commission approval of the Application.

PG&E asserts that ratepayers are protected from exposure to liability in Section 3.1 of the proposed Release and Indemnity Agreement. PG&E asserts that that Section protects PG&E (and ratepayers) from all claims by Ministries - as opposed to third parties - related to Hazardous Substances.¹⁰ However, PG&E does not assert that this is the most favorable release it could obtain. Indeed, California law allows express indemnity provisions to hold harmless the indemnified party (such as PG&E) for that party's own passive or active negligence.¹¹

Therefore, PG&E may legally obtain express indemnity for its own negligence, and the principal question - whether ratepayers are protected adequately from liability - remains. In order to secure such protection, we will grant this application subject to PG&E obtaining from Ministries a Release and Indemnity Agreement protecting PG&E from liability to the fullest extent allowed by law. This indemnity must include an express provision indemnifying PG&E for liability to third parties resulting from PG&E's own active or passive negligence.

PG&E shall make an advice letter filing no later than 90 days after the effective date of this decision attaching the revised Release and Indemnity Agreement. If the indemnity provision does not indemnify PG&E for liability arising from PG&E's own active or passive negligence, the approval granted in this decision shall have no force or effect.

Second, PG&E agrees to bear the cost of any additional easements or other rights it needs for access to its substation and power lines traversing the Property.¹² Such agreement is an express condition of the authorization we grant herein.

Finally, PG&E will credit ratepayers with the net gain on sale. The net book value of the Property on December 31, 1998 was $209. Consistent with prior treatment of gain on sales of miscellaneous depreciable assets, PG&E proposes to give ratepayers the benefit of the after-tax proceeds from the sale, estimated at approximately $88,600.¹³ PG&E proposes to credit such amount to the Competition Transition Charge (CTC) Revenue Account of its Transition Cost Balancing Account (TCBA). No party objects to this approach.¹⁴

In previous applications where we have examined similar agreements, we have concluded that environmental review for compliance under the California Environmental Quality Act, Public Resources Code Sections 21000, et seq. (CEQA) is not required. However, the Commission's staff has determined that actions like those proposed here constitute a "project" under CEQA.¹⁵

Nevertheless, since it can be seen with certainty that no significant effect on the environment could result from our granting the requested authorization, the "project" qualifies for an exemption from CEQA pursuant to the "common sense" exemption provision in Section 15061(b)(3) of the CEQA Guidelines.¹⁶ Therefore, no further environmental review by the Commission is required.

We find that the "common sense" exemption in § 15061(b)(3) of the CEQA Guidelines applies for three reasons. First, the application proposes no change to the Property upon the transfer. Rather the application states that Ministries will not perform any construction on the Property or its improvements:

Buyer does not proposes any change in the use of the Property as a condition or term of the sale . . . . Any subsequent change in use by Buyer of the Property would be subject to later review or permitting.¹⁷

Second, this is not a case like Davidon Homes v. City of San Jose, 54 Cal. App. 4^th 106, 117 (1997), where opponents of a proposed project "raised arguments regarding possible significant environmental impacts." Indeed, the application is unopposed; ORA simply proposes conditions relating to indemnity that are similar to those we impose here.

Third, since the 1980s, the Property has been used by PG&E as an off-site meeting facility for PG&E employees and community groups. The proposed use of the Property as a church retreat does not differ substantially from its use as a meeting facility for employees and community groups. Prior to the 1980s, the Property served to house and support PG&E construction personnel working on utility projects in the area. Thus, the Property's use will not change.

As we stated in D.99-04-022: ¹⁸

if and when Buyer proposes any change in use of the Property, the appropriate state and local authorities having authority over such proposed uses must conduct environmental review under CEQA. The Commission conditions its approval of the proposed sale on Buyer's compliance with all applicable environmental regulations.

We will impose the same condition here.

Because applicants propose no physical change to the Property, no party has claimed the Property's sale will cause adverse environmental impacts, and the essential use of the Property will not change, we are satisfied that the "common sense" exemption in Section 15061(b)(3) of the CEQA Guidelines applies in this case.