Background

This application seeks Commission authorization to transfer ownership and control of Newhall to Lennar Corporation and LNR Property Corporation. Newhall owns all outstanding capital stock of Valencia. The other entities are corporate and transactional intermediaries. The post transaction corporate configuration is set out in Attachment A.

The Santa Clarita Organization for Planning the Environment (SCOPE), the Friends of the Santa Clarita River, and the Los Angeles Chapter of the Sierra Club filed protests. These organizations requested hearings on: (1) the acquiring firms' technical and financial abilities, (2) local control of Valencia, (3) preferential service extensions for the affiliated land development companies, (4) spread of existing perchlorate pollution in groundwater due to increased pumping, and (5) disclosure of all merger documents and inter-company loan status.

The applicants submitted a response contending that the protests did not show a sufficient basis for hearings. The applicants pointed out that the proposed transaction would result in a change in ownership of Newhall, the owner of all capital stock in Valencia, but would have no effect on Valencia's management team, revenue requirement, rate base, capital structure, or the Commission's authority over any future Valencia expansion.

On October 3, 2003, the assigned Commissioner and Administrative Law Judge (ALJ) issued a joint ruling finding that an evidentiary hearing was not necessary because there were no disputed issues of material fact. The ruling set a briefing schedule to address disputed policy and legal issues.

On October 23, 2003, the ALJ issued a ruling modifying the schedule at the request of two protestants, and seeking comment on a draft set of conditions attached to the ruling. In their comments, the parties generally supported the draft conditions but the applicants sought several changes and the protestants requested additional more stringent conditions.

The Sierra Club and the Friends of the Santa Clarita River, jointly, and SCOPE filed opening briefs. The applicants filed opening and reply briefs.