Discussion

Rule 51.1 enables parties in a Commission proceeding to propose by written motion a settlement for adoption by the Commission. If the Commission grants the motion, the settlement has the force and effect of a Commission order. If, on the other hand, the Commission determines that the settlement is not in the public interest, it may reject it and hold hearings on the underlying issues, allow the parties to renegotiate the settlement, or propose alternative terms to the parties that are acceptable to the Commission, allowing the parties reasonable time within which to accept new terms or request other relief.

The concept of fashioning more flexible operating authority than we have traditionally granted to applicants in vessel common carrier proceedings is appealing, as the assigned commissioner and ALJ have acknowledged. The old regulatory model, under which private carriers sought authority to commence service that was expected to be paid for entirely by passengers' fares, does not fit the circumstances of most current ferry operations on San Francisco Bay. The contemporary milieu appears to favor the establishment of vessel service under sponsorship of local governmental agencies, real estate developers, and even major employers, who subsidize operations through the device of long-term operating contracts. The contracting process requires a prospective operator to possess appropriate operating authority from the Commission before bidding on the contract or commencing operation, necessitating a quick regulatory response from this Commission. However, our procedure for granting operating authority was developed long ago in a greatly different competitive environment, and is not well suited to the circumstances of ferry services that have commenced operations on the Bay in the past decade.⁶ We are therefore sympathetic to the parties' efforts to negotiate an agreement that would enable Marine Services to respond quickly to bidding requirements or operating contract timelines.

We nevertheless find ourselves confronted with a dilemma, because the proposed agreement here does not fit the context of the proceeding, and creates more regulatory problems than it would solve. The context of this proceeding is that of Marine Services' own effort to obtain open-ended authority to operate ferry services on San Francisco Bay under contractual arrangements with third-party sponsors, and not that of a rulemaking to effect sweeping changes in our certification procedure. However, the terms of the settlement would grant far broader relief than we are able to grant in an application proceeding. Moreover, it does not place any limitations on the blanket certificate that Marine Services seeks. The authority requested by Marine Services would be valid indefinitely, and the number of services it could operate would be unrestricted. There is no provision for reexamination of Marine Services' fitness prior to adding new services, or for evaluation of potential cumulative environmental effects of establishing such new services. The settlement also purports to bind the Commission to grant operating authority in the future, and in effect would create a new general rule for granting authority to other prospective applicants. In short, the settlement goes beyond the scope of what the parties may accomplish by mutual agreement in this proceeding.

To a certain extent this problem is the result of the fact that the amended application is overbroad. We are amenable to a request to find with limited prospective effect that Marine Services is financially and operationally fit to operate an existing vessel service like the Oakland/Alameda Ferry, and perhaps certain new services. We are also willing to accept the existence of a contract as a demonstration of public need, as the sponsoring agency or entity has already made a determination that the need exists, and in effect is willing to underwrite what amounts to a charter operation at its own expense to fulfill that need. Finally, changing the contractor for an existing vessel service has no foreseeable significant environmental effect, because the scope of the operation does not change. We can work within these parameters in fashioning an appropriate order.

By contrast, the prospect of granting unlimited authority to Marine Services would leave many questions unanswered. How many new services will the applicant undertake to operate altogether? How many vessels will be operated? Will Marine Services be financially and operationally able to undertake the operation of a potentially unlimited number of new vessel services? What will be the environmental impact of new services, individually and collectively? In the absence of detailed and reliable answers to these questions the Commission would be abdicating its regulatory responsibilities by granting unlimited authority without the necessary findings. No matter how well intended Marine Serivces' request may be, we cannot go this far.

Other aspects of the settlement proposal are also problematic. Several provisions purport to bind the Commission to adopt new general procedures, approve similar requests for operating authority from other vessel common carriers, and take all necessary action to carry out the parties' agreement. As a general matter, it is entirely inappropriate for the parties to attempt to bind the Commission in this fashion. Moreover, Rule 51.1(a) expressly limits a settlement to the issues in the immediate proceeding and prohibits the settlement from extending to substantive issues which may come before the Commission in "other or future proceedings," precluding the adoption of such a procedure.

Finally, the parties' agreement that the Commission will establish streamlined registration procedures is also invalid because we can only adopt such rules of general application using notice and comment rulemaking procedures. Although we can include reasonable terms and conditions in an order if they pertain specifically to the circumstances of the particular proceeding, we cannot make sweeping changes to our general procedures for granting vessel common carrier operating authority by implementing a private agreement between the parties in an application proceeding.

In summary, we are amenable to considering a settlement in which the parties (1) provide for the establishment of a reasonable and specifically defined number of new (to the applicant) services pursuant to public agency and private entity contracts, if those services will commence within a reasonable, specifically defined time period; (2) agree that the protestant waives any claim that the applicant is operationally and financially unfit to do so; (3) agree that the existence of a contract indicates that there is a public need; (4) agree that a protestant withdraws the protest in the proceeding; and (5) forecloses the applicant from filling a protest if the protestant should apply for operating authority for the same service within a defined time period. The terms and conditions we foresee adding to the order upon adoption of such a settlement include provision for an appropriate level of environmental review, particularly with respect to prospective service that is entirely new, and especially if new construction will be required.

Although we realize that our decision today may be discouraging to the parties, we encourage them to renew their settlement efforts if they can do so without exceeding these limitations. We want to provide the best possible environment for settlement negotiations, and our order therefore adopts an approach suggested by the second and third options in Rule 51.5: although we reject the settlement before us, we will give the parties 60 days to renegotiate their agreement so as to be consistent with the guidelines set forth above, and to resubmit it to us by new motion if they so choose. Alternatively, Marine Services may request other relief by again amending its application. If neither of these actions is taken by the expiration of the 60 days, we will dismiss the amended application.