III. Environmental Issues

Public Utilities Code section 851 requires advance, discretionary approval of certain leases. Advance approval is the mechanism by which the Pub. Util. Code ensures that financial and other transactions do not proceed until the Commission has had a chance to review and, if necessary, place conditions on those transactions. (E.g., Pub. Util. Code, §§ 851, 852, 854.) When the Commission engages in advance review of proposals requiring construction under § 851 applications, it routinely evaluates whether California Environmental Quality Act (CEQA) review is necessary. CEQA requires that an agency consider the environmental consequences of its actions before it makes a formal decision. CEQA is triggered when an agency has discretionary authority over an action prior to its completion.³

SCE supports this application by referring to a number of prior § 851 applications for approval of a lease agreement in which the Commission determined that although CEQA may apply, approval of the applications was found to be exempt from CEQA requirements.⁴ A review of these decisions indicates that in each instance the utility requested that the Commission approve a lease agreement for the use of existing cable, conduit or other facility space for the installation of fiber optic cable and facilities. In granting exemption from CEQA requirements, the Commission generally found that a) the proposal was exempt because the "project" was categorically exempt as a minor alteration of existing public utility facilities, consistent with CEQA Guideline Section 15301(b); and/or b) that it could be seen with certainty that there was no possibility that the proposal may have a significant effect on the environment, consistent with CEQA Guideline Section 15061(b)(3).

In this § 851 request, the facts do not support a similar application of either of the two CEQA exemptions. The Agreement is not limited to existing facilities. The documents indicate that existing facilities will be used only "where available."⁵ There is a provision for construction of new and additional (though unspecified) facilities. For example, the documents provide that Telecom Licensing is obtaining the use of optical fibers along two cable routes "being constructed,"⁶ and that SCE will "install new fiber optic cable, perfect land use rights, and construct necessary facilities."⁷ Given the intent for new construction, we do not believe it can be determined with certainty that there is no possibility that there was, or would be, a significant effect on the environment.

Thus, some form of CEQA review should be required for this project. GO 69-C cannot reasonably be read to allow utilities bifurcate their transactions so that they would perform construction under an agreement not subject to Commission review by virtue of GO 69-C, and then, after the facilities are installed, seek approval of the lease arrangements for those facilities. GO 69-C allows utilities to enter specified agreement without Commission approval only for "limited uses." We do not believe it is reasonable to consider a license that involves the construction of new facilities for the benefit of the licensee to be a "limited use" where doing so would circumvent environmental review. Such an interpretation would be contrary to the spirit and intent of GO 96-C as well as § 851. It would also contravene CEQA's prohibition against "piecemealing." (Cf., San Joaquin Raptor/Wildlife Rescue Center v. County of Stanislaus (1994) 27 Cal.app.4th 713; CEQA Guidelines 15165.) The potential to circumvent environmental review by segmenting projects becomes of great concern when we are presented with a transaction that clearly articulates (as in this case) the intention to split the project into two parts, one governed by GO 69-C, and the other subject to § 851 Commission approval as a long-term lease.

However, in this case both SCE and Telecom Licensing were granted their respective CPCN and certification authority under a pre-existing Commission authorized batch negative declaration process which we believe generally encompassed the nature of activity contemplated by this application.⁸ SCE's application states that it will comply with the mitigated negative declaration issues in Appendix D of D.98-12-083 for its construction. Therefore, to the extent no additional environmental review would be required if the GO 69-C agreement were subject to review under section 851 instead, the deal structure we are presented with here does not achieve any circumvention of the CEQA requirements appurtenant to § 851. However, we expect that construction completed under this authority will comply with the requirements of the various negative declarations.