IX. Environmental Matters

The application asks the Commission to find that the request for exemption from Section 851 for the proposed sale of generating assets is not a "project" requiring review under the California Environmental Quality Act (CEQA), or is categorically exempt from CEQA.²¹ In the alternative, the application requests that the Commission issue a Negative Declaration under CEQA because the change in ownership of the plants will not produce environmental impacts requiring mitigation. Applicant submitted a PEA along with the application in accordance with Rule 17.1 which states that "Given the lack of changes in the assets or their operation, this proposed ownership transfer is not a "project" within the meaning of CEQA and no additional CEQA inquiry is required." (PEA, pg. 2.) The PEA goes on to state:

"Notwithstanding that this proposed divestiture is not a project requiring CEQA analysis...(t)his PEA concludes that the proposal presents no potentially significant environmental impacts, nor any other reasonably foreseeable environmental impacts of any magnitude."²²

Contrary to the PEA's assertion, transfers of utility assets are generally projects subject to CEQA review by the Commission. Nevertheless, because this decision rejects the proposed settlement to move forward with the auction, we do not need to address the question of whether there are environmental effects from the proposed asset sale at this time.